Is the U.S. on the Road to Socialism? (Part 2)

Last week, I looked at the first five planks of Karl Marx’s Communist Manifesto and the extent to which they have been integrated into the U.S. government. This week, I’ll examine planks 6-10.

6. Centralization of the means of communication and transport in the hands of the State.

Check. We have the Federal Aviation Administration (FAA), the Interstate Commerce Commission (ICC) and government ownership of Amtrak, the U.S. Interstate Highway System and its centralized funding, and the Federal Communications Commission (FCC) to regulate everything from radio and TV to telephones. Even satellite radio is regulated by the state, limiting the band to just two stations (Sirius and XM) who then had to ask the government’s permission to merge.

7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands; and the improvement of the soil generally in accordance with a common plan.

President Truman socialized the steel industry in 1952, reasoning that steel was vital to America’s defensive interests. With a military-industrial complex so vast, what isn’t “vital” these days? Regardless, the Supreme Court rejected this Marx-like expropriation after the fact. Would today’s SCOTUS remain as true to the Constitution? The EPA and various environmental regulations do much of what’s included in the second half of the plank above. Overall, we’re not quite there on #7 — a half-hearted cheer (perhaps more of a whimper) for capitalism.

8. Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.

Both John McCain and Barack Obama favor some type of mandatory “national service.” The Army Corps of Engineers is a psuedo-industrial army. FDR’s WPA projects would certainly fit the bill, and as the current recession turns into a depression, don’t be surprised to see the next president reinstitute public works projects.

9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equable distribution of the population over the country.

Various zoning, anti-”sprawl,” and “smart growth” policies fit the bill here.

10. Free education for all children in public schools. Abolition of children’s factory labour in its present form. Combination of education with industrial production.

Just as with plank #5 (”Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly”), the U.S. passes this test with flying colors. Not only is education in America “free and cumpulsory,” it is also federally controlled, now more than ever thanks to the disastrous No Child Left Behind. Anti-child workplace discrimination was codified by various “progressive” reforms in the early 20th century — long after most child labor had stopped, voluntarily, as living standards rose thanks to the free market — and today’s schools meet an updated version of combining education with “industrial production” in that they’re designed primarily to train children to be “good” employees.

In Conclusion

Karl Marx was a brilliant man who properly diagnosed the ills of what he called “capitalism” — a system in which the rich and propertied classes were given legal sanction to plunder the poor and working classes. Marx believed that all nations with “capitalism” (as he defined it) would eventually disintegrate into socialism and then the true worker’s paradise of Communism. The five tenets above, along with the previous five, were the preconditions that Marx thought needed to be met before a “capitalist” nation could become socialist (and then Communist). We’re almost there.

But as brilliant as Marx’s analysis of “capitalism” was, his solution — Communism — was utterly off the mark.

What we need in America is true capitalism: a system of peaceful and voluntary exchange, wherein capital is employed in the best interests of its private owners and without government interference. To the extent that capitalism and its Invisible Hand are allowed to operate, living standards of all from the poorest to the richest are improved. To the extent that the government intervenes, we become more like Marx’s version of “capitalism” and take another step on the road to his nightmarish vision of the total state.

Why Zoning Laws Are No Longer a Benefit to U.S. Home Buyers

Virtually every town in the United States has zoning laws which affect land use, lot size, building heights, density, setbacks, and other aspects of property use. Zoning laws are government regulated restrictions on how a particular piece of land can be used – residential, commercial, industrial, agricultural, and recreational. They impose many use restrictions, such as the height and overall size of buildings, their proximity to one another, what percentage of the area of a building lot may contain structures, and what particular kinds of facilities must be included with certain kinds of uses.

Zoning laws were introduced to tackle a real problem – if you do not want a noisy bar next to your house, there should be a law to prevent the bar from coming up in your neighborhood. Zoning law does not target the starting of the bar but the damage that you may suffer if the bar starts in your neighborhood.

Zoning laws restrict freedom by constraining the right to private property. If you own a piece of land and you want to build a factory on that piece of land and your neighbors have no problem, then you should be allowed to build the factory. But zone laws will not allow you to build the factory on your own land if your land is located in a residential zone. Not all factories are polluters. By preventing factories from being set up in an area even if the inhabitants have no problem, zoning laws hamper the local economy.

The negative impact of zoning laws is not restricted to the local economy. It has an impact at the national level, as well.

America is in the midst of an affordable housing crisis. How does zoning contribute to this? The cost of land is about 20% – 25% of the total cost of the house.

In simple economic terms, the price you pay for a house is the price of land + construction costs + a reasonable profit for the developer. But that is not the case in many American cities. The cost of land is about 20% – 25% of the total cost of the house.

Housing prices are determined by both demand and supply concerns. If the demand for housing is very high and the developers are able to make a fortune, then the market ought to be flooded with new houses which will drive the prices down. But that is just not happening. There is something wrong on the supply side. Edward Glaeser of Harvard and Joe Gyourko of the University of Pennsylvania studied this problem and attributed the error on the supply side to zoning restrictions. They studied the data from over two dozen American cities and concluded that zoning restrictions kept the housing prices high and did not allow competitive forces to correct the supply and demand position. The average American home buyer ended up paying not just the price of land + construction costs + a reasonable profit for the developer, but also the cost for regulatory compliance – zoning laws.