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Letters by a modern St. Ferdinand III about cults

Gab@StFerdinandIII -

Plenty of cults exist - every cult has its 'religious dogma', its idols, its 'prophets', its 'science', its 'proof' and its intolerant liturgy of demands.  Cults everywhere:  Corona, 'The Science' or Scientism, Islam, the State, the cult of Gender Fascism, Marxism, Darwin and Evolution, Globaloneywarming, Changing Climate, Abortion...

Tempus Fugit Memento Mori - Time Flies Remember Death 

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Saturday, January 15, 2011

Von Mises and the economic fallacy of Socialism

US education is an example of socialist destruction.

by StFerdIII

I was reading about the US public education system and the evidence for its destructive form of socialism is so obvious, that I could not help but think of Von Mises who in 1922 penned the decisive evisceartion of socialism's ever-present, ubiquitous and ultimate failure. The US school system is an exemplar of monopoly mismanagement, a lack of competition, union-control, ever rising costs and ever declining results. More money for less results. This is precisely what Von Mises predicted so long ago and which is still denied by most of our population. Socialism in any form – a program, a system, or a state – always fails. The US school system is an unmitigated mess, which alongside Government run health care [Medicaid, Medicare] and Social Security [Old Age Pensions]; proves not only the absurdity of socialism, but its destructive real-world impact. Funded by property taxes, richer areas will have reasonably good schools and teachers. Poorer areas will not. Thus the people that need education the most – the poor – are denied an opportunity to learn and escape their 'class'. Socialism is not only uneconomical, it is immoral.

Why is the US school system such an awful example of goverment socialism ? As Von Mises wrote, without prices there is only dysfunction. Within socialized schools systems there is no competition and no price points. Without a free interplay of supply and demand, there can be no prices. Without prices resources will not be efficiently allocated based on true market demand and supply. In the US socialized public school system, bureaucrats decide on resource allocation [budgets, cost inputs]; schools are given monopolies in their districts, there is no competition between schools for students; teachers are not paid on ability but on the number of degrees held and seniority; and schools produce to arbitary bureaucratic 'targets' including % of graduates [everyone will thus graduate]; standardized test scores [schools teach to the tests instead of teaching children to think]; or smaller class sizes [good for the teachers who have less work, but it increases costs and there is no proof whatsoever that smaller classes means better students]. In short the Sovietization of the US school system ensures ever higher costs including massive teacher pensions and benefits, and a decline in output quality and truly educated children. Worse, the poorest areas of the US including the inner-cities suffer the most.

As Von Mises explained in 1922:

"Without calculation, economic activity is impossible. Since under Socialism economic calculation is impossible, under Socialism there can be no economic activity in our sense of the word ... All economic change, therefore, would involve operations the value of which could neither be predicted beforehand nor ascertained after they had taken place. Everything would be a leap in the dark. Socialism is the renunciation of rational economy." -- Ludwig von Mises, Socialism, pp. 103-105.

Socialism is not only irrational, it is the lazy-man's way to organize society. It is the ultimate 'let someone else worry about it' theology. When a system is built in which there is little control, rationality, or transparency it has to fail. Before failing of course, it will go bankrupt. To avoid bankruptcy escalating taxes and fees will arise hiding the program's true economic status. Vested interests will be in control, and these self-interested parties [unions, politicians, bureaucrats] have no incentive to either tell you the truth about what is going on, nor to show real budgets proper financial accounting, nor are they interested in system reform [the more budget, the more power, the more bonuses etc.]. Perversely then, the exploding budgets one sees in a socialist system is actually beneficial to the selfish interests running the system!

Von Mises proved that the irrationality of socialism rests on the fundamental economic difference between capitalism and socialism, which economically consists of the private vs. communal ownership of the means of production. This salient difference can be found in any system of socialization – from universal health care, socialized education, to the state socialism of Nazism.

Von Mises outlines that under capitalism every individual plays a dual role in the determination of economic values. Individuals are not only consumers they are also producers. Consumers in aggregate will establish the valuation of goods and services ready for consumption. Producers will deploy productive resources to systems which yield the highest amount of product. There is thus some rationality in production and consumption alike. This quasi-rational system will generate price points. These prices will indicate the value of items within a supply or retail chain. There is no central planning and arbitrary capping or flooring of prices within a rational price system. This has to make it efficient or at least more efficient that a system beset by a planning regime, which is the essence of a socialist system.

Under a working market system, a school which has poor teachers, degraded facilities and violence will be 'priced' and valued lower than a school with the opposite characteristics. A badly managed school will thus eventually go bankrupt as families and students opt for other choices. The same is true for teachers. Under a competitive system bad teachers would be fired of course, but socialization simply moves the teacher around, since unions prevent any teacher from being fired, no matter how incompetent or how inane.

Within socialized education systems there are no market signals from either the consumer or the producers. The system is controlled and monopolized. Bureaucracies set standards, allocate resources and determine prices. But how can a bureaucrat know what a good teacher is worth? How can a central planner know the real value of a text book, school supplies, or the true cost of graduating everyone ? Without a price system to let us know of comparative values [a good teacher is paid well, a bad one is paid a lot less]; the school systems are bound to fail.

Without the guidance of price signals, there is only one way of selecting among those alternatives: The planners. This exposes the utter irrationality of socialism, expressed in Mises' statement that "Everything would be a leap in the dark." Mises readily accepted that government officials are totally dedicated to the efficient production of goods and services. The problem he identified was not lack of motivation on the part of planners. Instead, the cause of socialism's irrationality is that those highly motivated and competent civil servants have no rational mechanism to guide their productive efforts and thus any decisions they make are necessarily arbitrary. Without price signals, resources and decisions cannot be rationally allocated and decisions will be affected by politics, preferences, power struggles, and simply fancy.

Socialism in any form fails. What is less well known is that these failures are usually well hidden. Not many in America will blame the socialist system for the devastatingly bad school system that populates much of the country. They will instead point to a lack of funding, the lack of standards or large classes. None of these is valid. The US spends more per pupil, per capita and in total than other country on education. Yet in math and sciences its students rank 20th or worse in the developed world. In reading and comprehension the scores are lower. The travesty of socialism is that the purported targets of socialism's noblisse oblige – the poor and the disadvantaged – are the ones who suffer the most.

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