atomic_fungus (atomic_fungus) wrote,

#246: Social Credit Theory

Reference please this entry which I titled "The problem with utopia". Reader Social Credit posts a few interesting and cogent comments about my discussion of the issue. I didn't notice it until early on the morning of the 29th of January, but it seems he posted it on the 21st, so I guess it wasn't all that long ago.

But it's a good comment and it deserves a response, so here goes.

The sum total of my exposure to the Social Credit Theory is Heinlein's book. The skeptical thoughts are my own, but they do not result from any misunderstanding of how Douglas' theory works. Rather they result from my prior examinations of the history of socialist theories, and how well they have fared when put into practice. (For the record, they have not fared well.)

Douglas' social credit theory at least takes basic economic fact into account, such as the law of supply and demand. Marx's theory of value coming from labor is ludicrous--all the labor in the world won't make a cow turd worth the same as a fine diamond--but it works to an extent when you consider that wealth creation is the result of economically necessary labor. But "from each according to his ability, to each according to his need" utterly ignores basic human nature.

The problem that I have with socialist economic theories is that they tend to be "optimized"--particularly theories which are presented as the answer to all current economic woes. Most socialist theories tend not to take into account that people sometimes--more often than I'd care to think, rather--do stupid things for stupid reasons. In an ideal world (a utopia, perhaps) everyone would act in the way the social planners expect, and all would be well.

Douglas' social credit theory is similarly optimized, to this admittedly untrained economist. Heinlein's story places it in a social matrix wherein people always do the right thing; and if they don't do the right thing, they are reeducated hospitalized and treated for their "atavisms". People are infinitely perfectable, and there are no "bad people", just bad adaptations of behavior.

The problem of criminal recidivism is never dealt with in Heinlein's story, and it seems to ignore the fact that there are, in fact, bad people in the world. And not only are there bad people, but stupid and incompetent people as well.

This is where all socialist theory dies a messy and inconvenient death. The bad, stupid, and/or incompetent people don't do the "right" things, except accidentally. Someone living on the dole has nothing better to do with his time, so if he's got a stomachache, why not go to the hospital and have it checked out? All he needs is $0.50 worth of Tums, but the socialized medical system will end up costing the taxpayers hundreds of dollars to diagnose and treat this guy's stomachache because he's too stupid to understand that eating too many pork fritters at one sitting might have caused indigestion which he--in his ignorance--can't tell from a heart attack or appendicitis.

Now multiply this one case by, oh, thirty million--that's around 10% of the current population of the United States, including illegal immigrants "undocumented workers"--and you begin to understand the magnitude of the problem. Even with the partial socialization of the US medical system under Medicare and Medicaid, there are problems; what would happen under total socialization? (Hint: Look at the medical systems of Canada, Great Britain, and Cuba.)

The issue of the dividend also begs examination. Everyone in the US over the age of 18 (say) will receive it, regardless of income--who thinks that people who rely on class warfare for votes would stand for that? The same people who now insist that the rich "don't pay their fair share" of taxes would be standing up and screaming that the rich don't deserve dividend checks--or at least that the poor deserve larger dividend checks than the rich do. This would require a whole other bureaucracy to monitor and administer the disbursements. This bureaucracy would have to be at least as big and powerful as the IRS or Social Security Administration...or maybe as big as both of them combined.

What about individual investment in stocks and securities? Would that be allowed under Social Credit? I fail to see how it could be. Is it desirable to have consumption and production equalized? I'm not so sure it is. Would there be sufficient investment capital available to ensure continued economic growth? My analysis gives mixed results.

Absent a major "disconnect" in the working of American society--such as a major natural disaster or revolution--Douglas' social credit theory is unlikely ever to be tested here. Of all the socialist economic theories I've heard, Social Credit is the most credible--but that doesn't necessarily mean it is desirable.

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