Lara Hoffmans
The Global View

The EU Fights for Your Rights (to Party)

By, 04/22/2010
Lately in America it's fashionable to complain how socialist we've become and debate if we're headed to even greater socialism. If you're a fan of socialism, this doesn't trouble you and you can't see what all the fuss is about. If you're like me, you think socialism is slightly less heinous than fascism, and fellows like Stalin, Mussolini, Mao, and Chavez are all just different brands of crazy. Also, you prefer capitalism to every other economic system until they dream of one that's even more free. But you don't think we're socialist, headed for European-style socialism, or anything like it. (And, lo, even our nation's senators agree, having soundly voted down a potential VAT. Praise be to Hayek.)

The problem stems mostly from folks not understanding what socialism is. Socialism is when government owns the means of production. So when Hugo Chavez seizes assets and facilities owned by a foreign private firm and declares them property of Venezuela, that's socialism. And not very nice. When a bunch of US politicians sign a bill imposing increased taxes and price caps on health care services, that likely leads to unintended consequences and some inefficiencies, but it's not socialism. (Communism is when the people own the means of production, but that never works out. Takes a lot of antithetical centralized coercion to get "the people" to agree to communism in practice.)

No, we're not socialist (or communist—heaven forfend), but in fact, we're not actually fully capitalist either. (Though we're closer than most.) We fall short in many regards—our tax-code could use some simplification. And we could do with less tariffs and more free-trade agreements. Still, our trade policy is pretty darn liberal relatively. And unless you live in New Jersey or California, you likely pay a heck of a lot less in taxes than some of our euro friends. Fully unfettered capitalism in theory sounds nice but in practice might not be 100% practical. It's ok to have things like the FDA and the SEC and the Coast Guard to keep us safe from e.coli, rogue brokers, and pirates. We think a lot of the regulation is overwrought, inefficient, doesn't do what folks hope it does, and can be more politically motivated than not. But ultimately, I think we can all agree we benefit generally from the lack of e.coli and piracy.

As much as folks like to hyperventilate that we're doomed, in short, we're not. We tend to swing back and forth on the capitalism scale. Industries get more heavily regulated, then we go through a deregulation spurt. Taxes rise, taxes get cut. We rattle our protectionist sabers, then we think better of it. But (sorry to disappoint Sean Penn) true Venezuela-style socialism just isn't likely without some kind of unopposed armed insurrection. My guess is the US Marines have bigger guns.

But even a French-style social democracy is highly unlikely, at least for several decades, if ever. Here's how you know. I can practically guarantee America will never declare vacationing a fundamental human right. The EU, however, has decided the unemployed, adults under the age of 25, and "families facing difficult social, financial or personal circumstances," among others, deserve a taxpayer-subsidized trip to Mallorca. It will instill cultural pride in Europeans!

The right to life? Yes. Liberty? Heck yes. The pursuit of happiness? Yes—but I imagine the framers were thinking more along the lines of being free to choose one's own career path.  Or that you can pick and choose where you want to live, whom to marry, and how to conduct yourself so long as you don't endanger others or engage in piracy. I'm guessing Thomas Jefferson didn't think "happiness" was predicated on a government-provided holiday. (Had he suggested it, George Mason would have slapped that notion right out of him.) But I just can't imagine any US politician with a prayer of being taken seriously would suggest vacationing is a fundamental human right. Even Ralph Nader would say, "Vacationing a human right? Come on. This isn't Spain. People have to work."

Our politicians mostly don't understand this, but every normal American does—the profit motive is innate . . . and powerful. And places with more opportunity to pursue greater profits tend to be overall better places. But the more obstacles governments put between citizenry and profits, the more you get things like a lackluster economy, low growth prospects, brie, civil unrest, and an increased risk of violent coup d‘etat . And because we get a shot to throw the bums out every two years, we have a low risk of government subsidized trips to the Sandals in Turks and Caicos. No offense to Turks and Caicos. A lovely place.

*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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