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Posted: November 05, 2012

Like it or not, we’re all Socialists

And we're all in this together

David Sneed

There is a third side to the income tax debate, and you’ve probably never heard of it. That’s logical, because no one’s actually talked about it for 200 years. And to understand this alternate view of our system, you’ll want to remember why we have money in the first place.

Imagine a time before currency:

I have an apple tree, and you own a goat, so I trade one of my apples for a cup of your goat milk. Joe comes along with a hen and we all trade apples, and eggs and milk. Then Susie, Tom and Mike join our group and they each bring a product.

Eventually, the deals become too complicated so we invent the “dollar” to represent the value of an egg.  With the dollar, I don’t have to swap an apple for milk before I trade the milk for an egg. Now I can just trade the dollar for the egg.

Make sense? That’s why we have money – to make it easier to exchange goods. Well before creating money, we all had to agree that:

  1. We can have only one type of dollar,
  2. The number of dollars available is limited; just like eggs and apples are,
  3. Using the dollar means you agree to be part of the group,
  4. The group benefits when you use the dollar.
  5. The organization that makes the dollar is called “government,” (the voice of the group.)

It’s important to note that currency itself is not wealth. Products (including one’s labor) are. Currency is a tool used only to facilitate the exchange of wealth.

By the rules, you’re allowed to “earn” as many dollars as you’re capable of earning - as long as you trade them for something else. But you can’t keep them in a private pile - that’s bad for everyone. Fewer available dollars makes the exchange of apples for eggs harder, not easier.

So if you don’t trade them, the group should take them from you. We call that “taxes.” Some people call it redistribution of wealth, but dollars themselves aren’t wealth. Apples (and gold, and labor, and land) are wealth. 

A tax system should make you trade your dollars for a product. That’s the point of deductions. If you buy a house that’s good for the economy, so we don’t tax you on that. Some saving is also good, so if you put money in a retirement account we don’t tax you on that either.

Why else do we tax?  Back in the beginning, even before currency was invented, the group decided to have a pile for extra produce. This is great because if my tree doesn’t have apples this year, the extra we’ve all put aside will sustain me until next season.

 When my tree makes only one apple, I don’t have to put any in the community pile. When your goat makes extra milk, you put a lot of it in the pile. Next year it may be my tree that does well and your goat that doesn’t. You’ll be glad we stored some up for you.

But produce can’t be saved, so the group lets us put a percentage of our dollars in the pile instead.

That’s how our group works. We all save dollars to protect group members from bad times.

The group can then buy Solyndra, or yachts or welfare – it doesn’t really matter, as long as the currency is returned to the group. Some people think that using tax receipts for useless projects is a waste. But they’re missing the point. The group just wants the dollars spent – and it really doesn’t matter what they’re spent on. As long as the dollars go back into the “economy,” it’s good for the group from a macro point of view.

That is the original point of dollars, and taxes, and the socialism of human beings. We all benefit from working together and pooling our resources.

We are all part of the group whether we like it or not. In that original sense of the word, we are all Socialists.

And if you don’t like it, try to stop using dollars. Go back to trading whatever product you have for whatever you need. But I’d like to be there when you offer to exchange your MBA for a cup of coffee.

David Sneed is the owner of Alpine Fence Company,and the author of" Everyone Has A Boss– The Two Hour Guide to Being the Most Valuable Employee at Any Company." As a Marine, father, employee and boss, David has learned how to help others succeed. He teaches the benefits of a strong work ethic to entry and mid-level employees. Contact him at  David@EveryoneHasABoss.com

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Readers Respond

Two words: Fire Department. We take (to pay for it) according to means, and give (services) according to need. That's the definition of Communism. And it's the only model we use. There is no "Capitalism" model for FD's. By David Sneed on 2012 11 06
200-300+ years ago the theory made sense and was effective, anyone over the age of 18 years old and even younger generations in this country had better start to understand what these two words mean "quantitative easing" and after that economic policy is crystallized in your mind go a look at QE3... we are far from the days of exchanging dollars evenly from goods, services, labor, etc... By JH on 2012 11 06
I'm glad you are sold on Socialism. I'm not! Thousands of men and women have died fighting Socialist/Marxist tyranny such as Hitler and Stalin. Karl Marx was a bum and a moocher who mooched from his buddy Engels. Stalin and Hitler were murderers. Intelectualize Socialism any way you want. It doesn't work! It creates th opposite of its intentions. Capitalism does work! Keep your fantasy and dream on if you like. I'll take freedom over Socialist tyranny any day. By David A. Brunn on 2012 11 06
God gives us free will to choose Him or not. But if you choose Him, you have to be a team player. We don't have free will to choose to have a fire department, but whether we pay or not they'll put out our house fire and give us CPR. The FD is paid by those who can (property tax) and given to those who need (even tourists.) That is 100% Socialism, maybe even Communism. Yet we all agree it's the only way a FD works. I think both sides are very close on this, it's just that 5% difference we argue about. And the words themselves. I still like you though. And I still like America, and Liberty, and Choice. By David Sneed on 2012 11 05
as to the question about a true free market economy or family. A family bargains a 100 different ways each day and capitalism? Because it is the cleanest dirty shirt in the pile. By Monte Schmidt on 2012 11 05
D: do you have a 13 year old anywhere? If you are lucky maybe it will take till 16 or 18. The family socialism model is just fine till you get there. Then all bets are off. Only the free association of like minded people model works after that. This may sound a little corny but i can do this since I am an old farm boy from Iowa. You can lead a horse to water but you can't make him drink. As with all cliches there is more. You gotta drink the cool-aid yourself. The Bible gives us all the laws God handed Down to Moses, Jesus gives us the Love of God and Eternal Life to validate and clarify the laws . In all this I must, with my free will, choose to believe and conduct my life through the teachings of the Bible. If God gives me free will to choose how can a government of men force me to do otherwise? I do not agree my freind. Time will have to teach us again, won't it. By Monte Schmidt on 2012 11 05
J and M: I get what you're saying. I do. How say you to my point that your family is Socialist, or even Communist? The members don't have a choice (if they want to remain.) Why isn't it a complete free-market Capitalist system? From there the debate goes to "Is society a family?" and can you opt-out? By David Sneed on 2012 11 05
"So my argument is that we all belong to the group whether we want to or not." Yes, your argument is primitive, tribal collectivism where the individual is to be sacrificed to the tribe - and the needs of the tribe are decided by whoever has the biggest gang. There are still many countries in the world that operate directly on this principle. You might do some research and see how successful they are, before advocating for the destruction of whatever residual individual liberty we have here in the United States. By Jawaid Bazyar on 2012 11 05
"Those outliers must be forced to cooperate. Unfortunately it comes down to that." The gun I'm referring to is the one held by government agents - tax collectors, police - who attempt to impose your view of the world on me, in replacement of my own judgement. And that's what this is all about - you don't like the fact that someone might *disagree* with you - and your solution is to use government to *force* them to do what you want anyway, through taxes, through laws, regulations and various other forms of compulsion. You are basically saying, "Do what I want or else." Again, not a novel view of human society. "People must be forced to cooperate" A better piece of Orwellian Newspeak I haven't seen in years. By Jawaid Bazyar on 2012 11 05
Vickie, I stand corrected. I have a very limited formal education in economics. I am an old country bumpkin from Iowa and just trying to get by day to day and have a little left when I retire in a few years. As you have utilized your education and feelings to draw your conclusions and defend socialism I have only this perspective. History has shown time after time that socialism always fails. The attempts at socialism have been brutal, dismal failures and this one when it happens will be also. The only thing left to decide is will it start now or the next time whenever that will be. Freedom is the key. How much of my freedom for future self determination will be demanded by the group? Once it starts what will be the limit and who will make that determination.? You? David? The biggest gang with the gun? A government of corruptible men? By Monte Schmidt on 2012 11 05
Tax revenue raised by government represents wealth taken from citizens. If you don't think it matters what it is spent on, then be sure to vote tomorrow and round up as many like minded folks as possible, lest the peoples ability to keep more of their wealth be elevated and those who would claim to know better what to spend other peoples money on run short of it. Thank God for the Caymans. By Matthew Lewis on 2012 11 05
And if I may add to that, your family is also a society. And it is Socialist if not completely Communist. Members contribute what they can while taking what they need. And you would have it no other way. The society we rely on is a big family, although, like I said, there are 20% who see a way to get something for nothing. Those outliers must be forced to cooperate. Unfortunately it comes down to that. When your son refuse to work, you kick him out unless he agrees to contribute. That's the "gun" you're talking about. By David Sneed on 2012 11 05
Jawaid - So my argument is that we all belong to the group whether we want to or not. And by birth we joined. And the rules were set up 1000 years ago: specifically that currency is beneficial and that you can't hoard it. To that end we have a system that prevents that while at the same time using the proceeds to benefit whatever part of the group needs it. Imagine NOT being part of the group: you'd be living in a cave. About your labor: I answer that in the last line - feel free to trade your labor for food without using money. Go to the barter system if you'd like, and avoid paying taxes altogether. Until then, put a % of your "proceeds" in the group pile like people have done since the 1st Egyptians stored surplus wheat in a grainery. Yes, that excess will feed the poor. That's how we do as humans. By David Sneed on 2012 11 05
"Jawaid - I understand what you're saying. The only problem is that there are always the 10% of people who, when given the opportunity to voluntarily help the group they belong to, don't." Maybe I think I have a damn good reason for not "helping". Maybe in many cases "helping" actually is worse than the disease? The moral code you are espousing here is that just because someone is born and walks the earth, they have a right to the product of my labor, and that this gives you the right to *force* me to "help" these others. I strenuously disagree with these premises. Once you introduce force into the structure of society, it *always* devolves down to who has the bigger gang, which is what you see in our politics today - warring pressure groups arguing over who gets to hold the gun. I reject this - utterly, and completely. It is no rational basis for a society. By Jawaid Bazyar on 2012 11 05
Monte, why would you assume that I haven't read Friedman? I still have my copy of Money Mischief: Episodes in Monetary History. While taking Economics in college, my professor frequently cited his work. So - tag, you're it! P.S., another excellent book, and fun to read is Greenback: The Almighty Dollar and the Invention of America by Jason Goodwin. By Vicki Felmlee on 2012 11 05
Vickie I will read Mr. Lind if you will read and seriously consider the writing of Milton Friedman. OH my there is a wealth of viewpoints here isn't there. if the article is written about just currency why is "socialist" in the title? By Monte Schmidt on 2012 11 05
Jawaid - I understand what you're saying. The only problem is that there are always the 10% of people who, when given the opportunity to voluntarily help the group they belong to, don't. They see a chance to get something for nothing. This happens at both ends. The problem is that 80% of us see the benefit and are willing to work toward a worthy mutually beneficial goal - so we have to force the 20% to contribute. They are part of the group, they just don't want to contribute. Are you the 80% or the 20%? By David Sneed on 2012 11 05
The author ignores the difference between human beings working together *voluntarily*, with some humans *coercing* others to do what others want. Voluntary associations are mutually beneficial. Involuntary associations are not. Socialism, and this author's repugnant defense of Socialism, is a political creed that says it's ok for some to force me to labor for someone else's benefit. It is slavery. Force is physical force, violence, or the threat thereof. Societies organized around physical force are not novel - they are common throughout human history, and they result in death and destruction. Remember that every shabby dictator or tyrant always has *some* rationalization for why they get to control others. The shabby rationalization in this article, that "we have a right to force you to spend your money", is particularly absurd - but still quite as deadly, in the long run. By Jawaid Bazyar on 2012 11 05
David, Your comment to Monte was that you are not suggesting we pay higher taxes, but that we understand why we pay them. You ended this with saying, "and it's more than to just fund wars." I would add that it is more than to just pay social services programs too. Although I do agree that we need to stop spending money on wars that get us nothing in return and simply bring back our troops to protect our own at home. By Ed on 2012 11 05
From what I can tell, the article is about currency, and WHY we tax – not about spending or what we spend it on. That would be a different article. David is right as far as the article goes – namely that only currency that changes hands is beneficial. By Holly on 2012 11 05
This is wrong on so many levels, it blows the mind. Anybody with any knowledge of US History can cite lots of examples that totally invalidate his assumptions. Also, he makes no discussion of the gold standard and how it rates to wealth (which is what the dollar used to be based upon). The good news is that with folks like this in charge, the dollar will soon be worth zero. Stick to building fences and leave economics to someone else. By GonzoTim on 2012 11 05
click on the link, the chart shows thru 2011. I don't think David (or anybody else for that matter) is cheerleading the idea that higher tax rates are a cure-all; rather, they are part of a Big Pie. You asked me to "show the tax rates and results for the period from Kennedy on and the positive results of reduced tax rates on the economy each and every time it was employed" - read Lind's book, it's all there in 400 pages or so. By Vicki Felmlee on 2012 11 05
This is so crazy, I can't believe it was published. This is the same metatlity that thinks the Waldo Canyon Fire is good for the economy because it creates construction jobs. It's the oppootunity costs that this author does not mention. And the opportunity costs for Solyndra and welfare are extremely high. It's time to go take an Econ 101 class. If investing in useless activity is good for the economy, then our economy should be booming under this current administration. By Mike Everson on 2012 11 05
Thank you Vicki for the information. the period you show for taxes is the Great Depression. There are those that argue the rates you show in the chart caused the great depression to be significantly prolonged. If indeed these rates caused the worsening of the great depression what will they do now? Why don't you show the tax rates and results for the period from Kennedy on and the positive results of reduced tax rates on the economy each and every time it was employed. Also how many of those years even up to present has the country been facing a deficit of twice the nations GDP. Revenue for dealing with the deficit will come from a more robust economy, not higher tax rates. That is also verifiable in the same location as the records you have provided. By Monte Schmidt on 2012 11 05
Guys like you think I am too stupid or bad hearted to manage my own affairs therefor you must take more and more from me and “do the right thing”. Well you know what? Me and my association friends give away more money than you and yours. The guy I support gave away almost a third of his apples and milk. Much more than you would have given away had you been his conscience. There are times when we must share a conscience. When innocents are hurt or when we spend our money and strap future milk and goat people with crushing debt and a weak association. Vote your conscience not your/my pocket book and you will get it right. By Doug on 2012 11 05
We are not taxed because we save; we are taxed because we egg, milk, and apple guys decide to chip in and build a road to get to each other or to hire some guys to protect said road from the thieves along the way. The milk guy knows if he gets another goat or the apple guy plants more trees and maybe some other folks join this association their share may change. We are not socialists we are a democratic republic. All of us in this association, who by now have asked some guys to go to the association meetings and be our voice because we need to milk our goats and pick apples, get together and decide that on the first Tuesday in November we will vote and get guys who understand us better and want to represent us better. That is someone who spent billions on Solyndra is misrepresenting us or at least stupid enough to waste the money I entrusted him with. By Doug on 2012 11 05
Hi Monte. I don't support greater taxation, and I don't necessarily like all the ones I pay now. I'm advocating that we understand the reasons we pay them though; and it's more than just to fund wars. Thank you for the comment. By David on 2012 11 05
chart didn't work too well, here's the link - go to History of Tax Rates: http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#History_of_top_rates By Vicki Felmlee on 2012 11 05
However, to Monte's point, this country's tax rates have been much higher in other periods - and the country has always chugged along... hope this chart copies ok: History of income tax rates adjusted for inflation (1913-2010)[39] Number of First Bracket Top Bracket Year Brackets Rate Rate Income Adj. 2011 Comment 1913 7 1% 7% $500,000 $11.3M First permanent income tax 1917 21 2% 67% $2,000,000 $35M World War I financing 1925 23 1.5% 25% $100,000 $1.28M Post war reductions 1932 55 4% 63% $1,000,000 $16.4M Depression era 1936 31 4% 79% $5,000,000 $80.7M 1941 32 10% 81% $5,000,000 $76.3M World War II 1942 24 19% 88% $200,000 $2.75M Revenue Act of 1942 1944 24 23% 94% $200,000 $2.54M Individual Income Tax Act of 1944 1946 24 20% 91% $200,000 $2.30M By Vicki Felmlee on 2012 11 05
I believe and I am sure the record shows there are social institutions in groups throughout history and the history of America. There is a distinct difference between social institutions and socialism. Socialism, by nature and human nature, destroys the initiative to ever have a surplus of apples for the next natural shortage thereby creating the constant shortage of all goods and services. Money was created to facilitate the capitalistic exchange to better balance the higher value of the wealth to properly compensate that goat grower for his higher level of expertise and knowledge gained and greater value of his product, compared to other abundant and lower value products, shortage or no shortage. I am very surprised to see this defense of greater taxation. It's too bad so many think this way and that you would defend it because it will eventually kill this country. By Monte Schmidt on 2012 11 05
I am so glad David isn't afraid of either the frying pan or the fire.. I would really encourage all of you to read Land of Promise: An Economic History of the United States by Michael Lind. It's not an easy read, but it should be a must for any business owner or anybody thinking of starting a business. Lind's research - that means facts - are indisputable. One thing I got from the book: Our country is strengthened and made better by our mistakes as much as our successes. And it's amazing how many businesses have directly benefited from (gasp!) government help. Silicon Valley, anybody? By Vicki Felmlee on 2012 11 05
This type of writing is not helpful to me as a business person. It does not make me want to "work harder" and put more apples away for the "group'. I agree that there needs to be money for our infrastructure and for our schools. But Solyndra?? Good example of why people are not sharing apples right now. I want a healthy goat for my apples, not a sterile goat that has no milk. It matters a great deal how my tax dollars are spent. By Brandie Chenoweth on 2012 11 05
"...from a macro point of view," and "...as long as the currency is returned to the group." By D on 2012 11 05
"The group can then buy Solyndra, or yachts or welfare – it doesn’t really matter, as long as the currency is returned to the group." Seriously?!? Poorly conceived, tax payer backed boondoggles, rich kid toys and multi-generational welfare families are not acceptable "purchases" when using tax payer dollars. Education, police and fire protection, roads and infrastructure are what taxes are about and what tax dollars should be spent on. It most certainly does matter what is "bought." By K. C. Cook on 2012 11 05
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