100 Years Since the Russian Revolution
Why Heavy-Tax Countries Are the Same as Socialist Countries

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The 7th of November marked the 100th anniversary of the Marxism-inspired Russian Revolution of 1917. This revolution gave birth to history’s first communist state, the Soviet Union.

A passage from Marx’s Communist Manifesto outlined the ‘free education policy’ that Japan’s Abe government is now pursuing. While Japan is not a communist state, their social welfare policies clearly include the same Marxist ideology: the ideology that invited large-scale purges and irreversible poverty.

This article will reassess the idea of social welfare policies in light of a debate that took place in October in the U.S.

 

The Free Enterprise System Brought Prosperity to the U.S.

The debate, hosted by CNN, was conducted between Senators Bernie Sanders (Democrat) and Ted Cruz (Republican) answering questions from taxpayers. Both men were presidential nominees, and Sanders calls himself a democratic socialist while Cruz’s parents come from socialist Cuba.

One of the highlights of the debate was when an American taxpayer and native of Denmark (the country with the world’s heaviest taxes) asked Sanders the question:

“You have at various times, including just now, expressed the . . . belief that the United States should look to Denmark and the Scandinavian countries for inspiration or the vision where the country is going . . . These are countries that heavily tax everybody, not just the rich people, middle classes. They have consumption taxes on everything of 20 per cent.”

Sanders sugar-coated his reply referring to Denmark’s over-generous social welfare such as free college education and medical treatment. He explained that social welfare was a human right for “all of our people”.

Cruz countered, “If you look at the greatest engine of prosperity the world has ever seen, it’s the American free enterprise system”.

“The United States per capita income . . .is over five times greater than the world average, and it’s 50 per cent greater than Europe,” he continued.

“That’s the reason millions of people risk their lives to come here . . . that’s the reason why my dad, coming out of prison and torture in Cuba, came here with a hundred bucks in his underwear, because, you know, you go to socialized countries and you don’t have the economic mobility. You’ve got rich people that live like kings, but you don’t have penniless immigrants who can go to start a small business and work towards the American dream.

“And your [Sanders'] answer is let’s make us like European socialism. I say let’s make us like American exceptionalism, free enterprise and opportunity for everybody.”

CNN’s Jake Tapper then questioned Sanders:

“Danish citizens pay the highest tax rate of all developed nations as a percentage of GDP, the United States on that list ranks 32nd [25.9%]; Denmark number one [49.6%]. Do you think Americans are ready to pay taxes like that?”

To which Sanders replied, “If we can have sensible discussions like this, yeah, I think they will be”.

 

Heavy Taxes Make Democracy and Autocracy the Same

Our chief question now is whether it is a good thing to raise taxes so high to nourish social welfare.

People living in democratic countries would indubitably find it repellent to consider living in an autocratic country like North Korea. What then if you were told that autocracy emerges out of heavy-tax states? Here Is why: heavy taxes mean a controlled economy, and a controlled economy means individual freedom is jeopardized.

Let’s take Denmark for instance. They have the highest tax rates in the world: income tax is 55%, consumption tax is 25%, and buying vehicles comes with a 280% tax. That means if you buy a car for US$30,000 you have to pay around US$90,000. This clearly inhibits the way people use their money and therefore the economy.

Austrian economist Friedrich von Hayek held that when the government takes direct control of over more than half the peoples’ income, they indirectly control the entire economy.

Individual freedom refers to when each person can act to his or her own will without having to obey someone’s orders. This requires the security of individual income and property rights, because ‘how each person chooses to spend their money not only affects the economy but also directly influences each person’s goals and ambitions.

If someone wants to become a film director someday, he or she may want to spend money to watch films. If they want to become a scholar, they may want to buy many books. We cannot have a perfunctory attitude towards money.

“All people are ensured the freedom to shape their own lives”. This is what it means to be a free country with low taxes. This freedom is human dignity. If politicians taper their policies for populist purposes and raises taxes to fit that selfish goal, the country will head towards socialism and invade the dignity of the people.

The general law with taxes is ‘the lower the better’, so regardless of income disparity, all people should demand lower taxes from the government.

 

Tax Raises Cause States to Decline

Countries with high taxes have to depend on other countries, and end up educating masses of people who are foreign to the spirit of self-help.

When French political scientist Alexis de Tocqueville visited the U.S., he praised the American spirit of self-help and the courage to stand up again after a failure. He prophetically declared that as long as the Americans continue conducting business with this spirit, it would become the most powerful country in the world and dominate the world like Rome once did.

This all came true in the 20th century. As Ted Cruz said in the CNN debate, “the greatest engine of prosperity the world has ever seen [is] the American free enterprise system”.

Before Cuba had its socialist revolution, it is said that the national spirit was one of self-help with an emphasis on the importance of education. Poor parents could still be passionate in educating their children, teaching them the importance of hard work. As a result, many of the successful U.S. immigrants are Cuban natives.

In the economic superpower, Japan, none of the famous millionaire businessmen were born into rich families, be they the founders of Softbank, UNIQLO or Rakuten. As management consultant Peter F. Drucker said, we live in an intelligent society: a successful life depends on self-development and learning.

American economist Tyler Cowen points that the reason why immigrants from particular countries are more successful is more due to the cultural values from their birth land than their starting capital.

The U.S. will immediately begin to decline if the people lose their spirit of ‘hard work to prosperity’, and social welfare will encourage that. It is worth noting that tax raises were a contributing factor to the fall of Rome.

Tax raises cause states to decline.

We must all take note of this imminent danger. (Hanako Cho)

 
100 Years Since the Russian Revolution
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