Winners and Losers

In late 1847 and early 1848, while residing in Brussels, Belgium, Karl Marx at age 29 and his friend Friedrich Engels were working on an important document for the Communist League, as it recently had come out from underground and begun to operate as an open political party. Entitled “The Communist Manifesto”, the document was released in February 1848, making the League’s beliefs and intentions known to the public.

According to The Communist Manifesto, human history is just a story of class struggles between the rich and the poor, between the haves and the have-nots, between those who own the means of production (the bourgeoisie) and those who sell their labour for a living (the proletariat). Because the rich own the means of production, they become even richer, whereas the proletariat (the masses of the working class) only get exploited. Therefore, capitalism is unfair and unjust and should be replaced by a new system called “scientific socialism”, under which all property and means of production would be owned by society and class differences would be abolished. What a beautiful dream of social equality!

Karl Marx believed, “It is not the consciousness of men that determines their being, but, on the contrary, their social being that determines their consciousness.” So, it is understandable that the Communist League, a group of liberal intellectuals, took it upon themselves to organize and mobilize the proletariat (the working-class masses) by awakening their class-consciousness and appealing to their sense of self-interest with promises of material benefits. Members of the Communist League must have imagined themselves, I presume, as would-be bosses in charge of the proletariat as an instrument in their scheme to topple the bourgeoisie and seize the means of production.

Seventy years later, Karl Marx’s dream came true in Russia, where in late 1917 the Bolsheviks overthrew a provisional government, which had been installed after the collapse of the Tsarist Monarchy but which the Communists regarded as bourgeois. A new socialist system was established strictly according to Karl Marx’s theories and principles of “scientific socialism”. The comrades of the socialist Soviet government seized not only political power but also all property and means of production and became the new masters -- probably slave masters. No doubt, they were the big winners of “scientific socialism”. As to the citizens of new socialist Russia, they soon learnt to keep their mouths shut or say things that were 100% politically correct, pretending to be happy living under the tyranny of “scientific socialism”.

There was, however, one problem: The socialist command economy of Russia could not function as efficiently as America’s capitalist free-market economy-- for all the alleged virtues of socialism and all the evils of capitalism. The loss of individual freedoms and private property rights inevitably led to disincentives to spur enterprise profitability and the creation of wealth and jobs. On the world stage, Russia’s “scientific socialism” was unable to compete effectively with the vigour and vitality of corporate America’s spirit of free enterprise. Thus, “scientific socialism” collapsed in Russia in the end.

In China, Mao Zedong (the leader of the Communist Party), no doubt a very intelligent man, promptly saw Marxism as a useful political tool for his purposes and ambitions. Unlike many intellectuals who can only think and research but fail to act, Mao quickly grasped the essence of Marxism. He once told his followers, “The theory of Marxism can be interpreted in a myriad of ways, but in short it is only a justification for revolt.” Without question, by “revolt”, he meant a socialist revolution against capitalism designed to deprive the bourgeoisie of all the rights that people normally enjoy under capitalism, such as private property rights, free-speech rights, freedom-of-thought rights, freedom-of-religion rights and so on and so forth -- all in the name of “the collective interest of society and the people”.

Therefore, in my opinion and in the light of what really has happened under “scientific socialism” across the world, Marxism or Marxist “scientific socialism”, to put it bluntly, is obviously a justification for robbery -- not to mention the tens of millions of abnormal deaths that occurred in times of peace under Marxist “scientific socialism”. This is why socialism has a bad reputation among knowledgeable people. Hence, here comes something new: “Democratic Socialism”.

Whether you believe in “democratic socialism” or not, at the very least, this myth can’t fool me personally. First, the label “socialism” purports to hold “the moral high ground” by claiming it “works for everyone, or for all the people, or for the entire society”. Next, socialism, whether Marxist or “Democratic”, is sure to seek wealth redistribution in the name of “the collective interest of society”, inevitably encroaching upon individual rights and freedoms. The difference between Marxist socialism and Democratic socialism is that while the former seeks wealth redistribution by naked robbery, the latter does so by legislation. The problem with wealth redistribution is its negative impact on wealth creation, job creation and the growth of the economy itself.

It was at the turn of the century when the dotcom bubble burst. At the time, the share price of Jeff Bezos’s Amazon fell from US$90 to US$40, as it instead of making money was actually burning cash quarter after quarter. Some investors thought Amazon could go bankrupt. I said to myself, “Bezos, Bezos, you may turn out to be a bozo.” As it turned out, I was completely wrong. Mr. Jeff Bezos is a real business genius. Amazon soon started to turn a profit, and his Amazon Web Service is now the largest cloud service business in the world. It is also very profitable. As of 18th April 2019, Amazon stood at US$1861.69 per share. Its market capitalisation is US$916.05 billion. I regret that I missed a once-in-a-lifetime opportunity. Had I bought 400 shares of Amazon then at US$40 per share for a total of US$16,000 or so, they would be worth US$744,676 today.

Mr. Bezos is reportedly worth US$150 billion. You can call him a filthy capitalist if you please. But his ability to wisely and effectively deploy available capital where it can generate profits, wealth and jobs in the face of relentless competition is uncanny. His undeniable contributions to the economy deserve respect. Money in Jeff Bezos’s hands is money in the right hands, as the man is capable of generating more and more profits, more and more jobs and more and more tax revenues for the government.

Therefore, in the interest of stable economic growth, it certainly makes more sense to leave Jeff Bezos and other billionaire entrepreneurs alone to do what they are good at, than to threaten them with socialist wealth redistribution. Rather than chastise the super rich, those eager to help resolve society’s numerous problems ought to learn from Jeff Bezos, become super-rich themselves and pay more taxes to ease the welfare cost burden on society. It is glorious to win financially. Society should encourage people, especially young people, to win, win, win and win big-time! It benefits the winners as well as society at large, as it needs the tax dollars from the winners to pay its bills.

In the meantime, this is not to say that rich people should not pay a higher income tax than those who are not rich. The point is that excessively high taxes would surely cause capital to flee and the economy to shrink, leading to tremendous job losses. According to Adam Smith’s “The Wealth of Nations” (published in 1776), money in private hands tends to flow towards where it can be used to maintain productive labour that generates profits and tax revenues, whereas money in the hands of government tends to maintain unproductive people who do not generate profits. That is why money in private hands makes more and more money, whereas much of the money in government hands flows into a black hole -- either through corruption or through unaccountable waste.

Words and dreams tend to be beautiful; reality is often ugly. Socialism or capitalism, there are always winners and losers. Generally speaking, losers are louder than winners are. Winners usually want to keep their finances confidential, whereas losers, in need of sympathy and support, have no choice but to cry out loud for help.

Not far from where I live, there is a shop with a logo fixed on its front: LOTTO. Each time I pass by it, I see some people inside either purchasing lottery tickets or checking the numbers on their tickets against those on the wall. I think this may be close to “a system that works for everyone” -- at least for every participant in the lottery game if it is not rigged. For a few Canadian dollars, one can buy a chance to become a millionaire. If one wins, one has to pay, say, 30% of one’s winnings to the Government in taxes. So, the Government must be very happy. The lottery corporation hires many people, so its many employees receive their pay cheques month in and month out -- not bad at all. As to those who do not win, each day that passes is a day of hope of becoming a millionaire, which is not a bad feeling, until the release of the winning numbers. Yeah, it works for everyone, but still there are winners and many losers. Life is like this. Reality is not always pretty, capitalism or socialism.

Occasionally, I hear say, “We want a system that works for everyone, not just the rich.” Sounds like progressive “democratic socialism”. But please don’t be fooled into thinking that “a system that works for everyone” means a system that guarantees everyone to be a winner. There is no such system in practice. In order to be a winner, one needs to prepare oneself and be capable. In America, there are capitalist winners as well as socialist winners. They are all very capable. Examples:

Example A: As mentioned above, I missed a great opportunity to win big on Amazon’s stock. But there were much smarter people out there, one of whom told me that stock investment was about future earnings growth potential and that Amazon could become the next Wal-Mart. I did not listen, so I have only myself and no one else to blame for failing to win big. Amazon has since become even more powerful than Wal-Mart. Those smart investors with the foresight to see the potential of Jeff Bezos and his company Amazon deservedly have become American capitalism’s big winners.

Example B: Over the years, I have heard self-proclaimed experts tell the public how the Dow Jones Industrial Average could plunge sharply to 7000 or by 70% and so on and so forth. My suspicions are that such investment experts own no stocks at all. That’s why they can make their bold predictions. In my view, stocks are like dogs. One needs to own dogs to know the nature of dogs. It would be unwise to take investment advice from an “investment expert” who owns no stocks. Assuming that you have some extra money to put to work, my suggestion is that you take Mr. Warren Buffett’s comments seriously. Mr. Buffett is America’s best-known and most successful investor -- a real, huge financial winner. If you want to win, you should listen to this big winner. According to Mr. Buffett, it is not a winning bet to short America. Also according to him, it is best for ordinary people with little knowledge of how to pick stocks to put their savings in a low-cost S&P 500 index fund. If you know how to pick good-quality stocks, that is even better. According to Mr. Buffett, one should hold good-quality stocks forever.

On the other hand, if you have a way to make money as fast as or even faster than America’s blue chip companies, you should launch a company of your own. Otherwise, why not join the winners, own a piece of them and let the winners make money for you for your years in retirement?

According to news reports, about 60% of the value of America’s public employee pension funds is in stocks. This means that corporate America (the moneymaking machine of the nation or the means of production in Marxist terminology) is owned not only by the bourgeoisie, but also by working-class wage earners. So, when the Dow rises, the winners include rich investors, retail investors and working-class wage earners.

Years ago, President George W. Bush tried hard to convince Congress to let American workers invest part of their social security money in stocks. At the time, the Dow was fluctuating around 10,000. The Democrats immediately put out TV commercials depicting a senior citizen in wheelchair sliding down a steep slope due to stock market plunges. Of course, stocks can plunge, but let’s see who was right. The Democrats snuffed Bush’s plan when the Dow was at about 10,000. As of 18th April 2019, the Dow stood at 26,559. From whom should one take essential financial advice? It is completely your call, for it is your money, your future -- win or lose.

I have referred to some capitalist winners above. In fact, there are many of them. If you want to join them, the path to financial success is open under the conditions of American capitalism, and the opportunities are numerous, though it takes patience. Besides, you must first of all practise parsimony, as Adam Smith puts it in his great economics textbook “The Wealth of Nations”, to accumulate as much capital as possible, before you can start winning the capitalist way. However, the generosity of American capitalism is also embodied in the fact that it allows believers in socialism to prosper as well. Please read on.

Example C: Socialist Democratic Senator Bernie Sanders is a multi-millionaire. He earned a million dollars in 2016, another million dollars in 2017 and more than half a million dollars in 2018. Comrade Sanders writes books on socialist revolution. In case you are a conservative, you may grumble “socialist nonsense”. But Bernie’s books sell well. The American capitalist free market does not care if the author writes nonsense or truth. As long as it sells, it makes business sense. In my view, poor Bernie deserves to be a millionaire. He works so hard. In fact, he has been working very hard all these years. He had to work hard to convince enough people to vote him to the Senate. He had to work hard to compete against Mrs. Clinton in the 2016 primaries to turn himself into a world-famous political figure, thereby laying the groundwork for his successful and profitable writing career. He has shown to believers in socialism how to win financially in the face of capitalism.

Example D: AOC (Cortez) used to make a living as a bartender in New York City. Then, apparently, she saw a political career opportunity in her neighbourhood, where many residents held socialist beliefs. She successfully sold them on her version of socialism with free college and guaranteed income -- exactly what they wanted to hear, ran for Congress, convinced enough voters to support her and won in November 2018. Now, Congresswoman AOC earns a 6-figure annual salary. I wouldn’t be surprised if she soon became a millionaire. She is a very capable young woman and a big socialist winner, financially speaking. Judging by her big ambitions, she may even run for president in the years to come. Socialist President AOC? Who knows, but yeah, she is the big boss who might Make Socialism Great Again!

Hopefully, the above examples of financial winners may help you figure out a way to win too. Life is a gamble, and politics is a dirty business, which is very much about money. But what is important to you personally is to win and win big, either the capitalist way or the socialist way, because in life as in politics, success is measured in dollar terms. Nobody would run for Congress, if the expected reward were the minimum wage. The game is about winning, that is, about winning the money, but the talk is always about “how to work for everyone” or “for the people”.

(22nd April 2019)

By Robert M. Liu - author of “The Socialist Cuckooland”