Convergence

How the six levers of Socialism can teach us something

The premise: economic equality is the desired end, and economic socialism is the means to that end. To achieve the desired end, we must “level the playing field.” The mechanism for leveling the playing field is The State. That’s it in a nutshell. We don’t need to make this complicated. Or do we?

Photo by David Birozy on Unsplash

Here are the familiar levers. I count six of them:

EFFORT - If we put in the same amount of effort, but you earn more than I do, the state should level the economic outcomes

CHOICES - If you make different choices than I do, and you do better than I do as a result, the state should level the economic outcomes

TALENTS - If you were born with more talents than I was, the state should level the economic outcomes

ACCESS - If you have more access to economic opportunities than I do, then the state should level the economic outcomes

FORTUNE - If you encounter better luck than I do, then the state should level the economic outcomes

INHERITANCE - If you were born into more wealth than I was, then the state should level the economic outcomes

The pattern: it’s worth noting at the outset that in every case it is The State that makes the correction. It’s not the individual who takes matters into their own hands in a way that suits their unique situation. It is the overarching power of government bureaucracy that balances the scales. But we’ll set that topic aside for a moment.

Let’s take them one at a time and we’ll start with EFFORT. Let’s say for example we have two waiters each working at a restaurant on the same street in the same city. Each waiter puts in a full 40-hour week, if not more. In one case the waiter makes $100,000 a year and then in the other case the waiter makes $50,000 a year. Both work hard, both work the same amount of time, both handle the same number of tasks. But in one case a restaurant average ticket per person is $100 and then in the other case, the average ticket is $25. With or without an imposed gratuity, the earnings of a waiter are largely driven by the amount spent by the clientele. And so it is not the effort that determines the economic outcome. It is the economic makeup of the workplace. It is about the earning power of one restaurant versus another. It could be as simple as a breakfast restaurant versus a fine dining restaurant. There are many more differences that could be spelled out, but clearly in this case it is not the effort that drives the economic outcome.

Moving on to CHOICES, we might take our waiter example further. We can consider someone who is interested in a software career but who is living in Los Angeles in the 1990s, someone who has decided to move to San Francisco because their options in LA are limited. This kind of choice can be very disruptive. It means leaving behind friends and family and social networks. It requires picking what you’ll take with you and choosing what you’ll leave behind. It requires planning and saving and discernment. It requires research and scouting and the willingness to make the hard choice. In fact, this person may even be a waiter working in a restaurant who taught themselves to write software code as a hobby. It should be obvious this is not a hypothetical example but a real one that many people lived through. Of course other choices were available. Staying put and showing up to work is one choice. And so is applying to more upscale restaurants on the same street. The choices are almost endless. But from an economic standpoint, if the state levels the outcome, what point is there in the choice?

And with regard to TALENTS, we must first ask ourselves what this entails? Are these the natural gifts at birth such as height and health? Is this a natural ability with numbers? Is this a keen sense of eyesight or exceptional eye-hand coordination? Let’s return to our hypothetical waiter. It could be that this waiter was an aspiring basketball player and did well in high school, had dreams of playing in college. But as is often the case, our waiter may have been born to become no taller than 5’8” and that kind of given talent is not distributed equally. But it might also be true that our waiter was a naturally gifted math student and consistently performed in the top 10 percentile. It could be that these talents were well suited for his hobby of writing software. We might ask, however, that if we were born tall, say seven feet tall, but we had no interest in basketball but instead were interested in navy submarines, would we have been given a talent or a curse?

When we think of ACCESS, we think of doors that we can open and walk through. If our waiter was instead interested in acting, and had an uncle who worked as a producer in Hollywood, the access to opportunity in that field was close and genuine. It is possible that this producer could make a call or two to get an introduction or even an entry level job opportunity. It’s also possible that the uncle despised the rest of his family and returned none of their calls. But if the uncle was amenable to opening the doors, our waiter would have an undisputed access advantage. That is, of course, assuming he was interested in acting. And he would be a fool to not take advantage of that access, but in the case of becoming a software engineer, his uncle provided no benefit except perhaps some encouragement at Christmas dinner. It’s also worth considering that our uncle may have been a member of The Party, and The Party was interested in more software talent. In that case, our waiter might have gone through that door. As it turns out, access is an equal opportunity employer.

And what are we to make of FORTUNE? And by fortune we mean being at the right place at the right time, or perhaps being in the wrong place at the wrong time. It’s true the planes fall out of the sky and that storms will sink fishing boats. A car crash could end an aspiring athlete’s career in seconds. But for our waiter, being born in the early 1960s was an exceptional bit of fortune with respect to the economic scenarios unfolding on the west coast of the United States in the 1990s. Perhaps it was just dumb luck that our waiter was born then. What if that same waiter was born in 1922, where at the age of 20, World War II was shipping soldiers overseas to storm beaches? While the state can certainly intervene to protect against bad fortune, it can also cause your bad fortune when the draft card lands in your mailbox, or when The Party sends you to a reeducation camp.

Our INHERITANCE was there before we were. Some people call it intergenerational wealth and some people call it intergenerational trauma. And there are those who call it both. Unless you believe in karma, you start where you start. It’s not a reflection on something you did or didn’t do. And if everyone were to start out economically in the same place, our inheritance would still be there. It would just be in a different form, a different time, a different place. We are still as far as I know the product of sperm and egg. We are all unique. Some of us are tall, some of us good at math, some of us born into squalor. Some of us are born into money, and some of us are born into food stamps. Some of us have good parents, some of us have bad parents, and some of us have no parents. In a real sense, we all have our own personal Big Bang to contend with.

Those are the six levers. So what are we to make of the argument that the state should level the economic playing field? The empirical truth is that in many ways it already does. Or at least it tries to do so, and it keeps on trying. The US government already redistributes almost 70% of the federal budget towards those who are deemed to need it. In fact, we redistribute wealth despite the fact that it puts the country deeper and deeper into debt. Nothing seems to be able to stop us from redistributing economic wealth. From SNAP to Earned Income Tax Credit to ACA to SSI to Medicare and on and on and on. It’s a long list. This is why the United States has what’s called a Mixed Economy. This designation is not even contested.

But all of this brings up a bigger question, the main question: do we actually desire a level playing field? Do we want the state making our choices economically irrelevant? An idealist will say “now people are free to choose what they want to do based on how they want to spend their time, and not on economic welfare.” In other words, the idealist believes that economic incentives are not the issue, that they create a corrupt society, a commercialized populace. The term that smuggles in the cynicism is consumerism.

Here we have empirical evidence to turn to. We can look for successful examples of socialist economies. We can learn from them: how to do it right. What to fix. What to emulate. And here is where we run into the fact that there are none. Not one example of success. Even the highly touted socialist experiments in places like the UK and Scandinavia, and even China, have all been abandoned. What these formerly socialist economic models have moved toward is a Mixed Economy. Just as the US has evolved into a Mixed Economy.

We don’t have to argue endlessly about concepts. We can admire the six levers of the socialist premise, look for evidence, and realize that we have no evidence of success. And that in the end, individual economic choice matters. Empowering individuals to confront all of our six levers: EFFORT, CHOICES, TALENTS, ACCESS, FORTUNE, INHERITANCE. And the key is CHOICE.

Individual choice is the engine that makes it go. What works is when individuals make CHOICES that converge their EFFORT, their TALENTS, their ACCESS, their FORTUNE, and their INHERITANCE. This is in fact what enables the Mixed Economy to redistribute wealth where it’s needed. It’s the convergence that works, and it leads to a life well lived.