If Socialism Is So Good, Why Are People Moving Away?

The mainstream media is citing reports, with widely varying percentages, that many young Americans prefer socialism to capitalism – and are supporting socialist candidates. The media provides extended coverage to politicians touting socialist programs.

The New York Times trumpets, “Mayor de Blasio Says Wealth Is ‘in the Wrong Hands,’ Pledges to Redistribute It.”

“Here’s the truth, brothers and sisters, there’s plenty of money in the world. Plenty of money in this city,” the mayor said…. It’s just in the wrong hands!”

…. He cast himself as an aspiring Robin Hood – aiming to take from the rich and give to the poor….”

Politicos robbing and redistributing wealth; what could possibly go wrong?

Ask 100 people to define socialism, you would likely get 100 different answers. It reminds me of the story about blind people in a zoo touching an elephant for the first time. Each person has a different perception, depending on where they touch.

On one end you receive free food, healthcare, and daily treats. Who wouldn’t want free stuff? Those on the “bouquet” end, dealing with the mess, would have a different opinion.

If socialism is so good, one would think people would be migrating to the states offering the most free stuff.

The major moving companies issue annual reports regarding migration.

United Van Lines reports New Jersey at #1 (66.8% outbound) followed by Illinois, Connecticut, and New York (61.5%). Atlas Van Lines also ranked New York 4^th (61.0%). Do the outbound migrants feel they are at the bouquet end, and fed up with paying for the free stuff?

Taxes Matter

How Money Walks uses IRS data in their tax migration analysis. The red states have lost billions in wealth due to outbound migration. People are heading to states with lower taxes.

I received a letter from a reader asking me to stop promoting Prescott, AZ. His reason? They are inundated with CA refugees; driving real estate prices sky high. We see the same thing here in Phoenix.

New York lost $99.49 billion in annual Adjusted Gross Income from outbound migration between 1992-2016.

 

Arthur B. Laffer and Stephen Moore’s Wall Street Journal article, “So Long, California. Sayonara, New York” concludes:

“We estimate, based on the historical relationship between tax rates and migration patterns, that both California and New York will lose on net about 800,000 residents over the next three years-roughly twice the number that left from 2014-16.”

Both states welcome immigrants looking for free stuff with open arms. That does not bode well for the remaining taxpayers.

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Flaws?

I’m not debating the merits of socialism or capitalism, both have their flaws. In the early 1900s capitalists amassed fortunes and colluded to eliminate competition and create monopolies. The government broke up the monopolies and passed laws fostering competition. The extremes are what average working Americans should be concerned about.

In the 1960s two events changed America. The birth control pill was perfected while Lyndon Johnson’s “Great Society” included laws that ended up incentivizing out of wedlock birth.

The Washington Free Beacon references this 2017 study:

” …. Trends in marriage by economic classes have sharply diverged, a marked change from just 40 to 50 years ago.

While poor and working-class Americans are less likely to be married or otherwise involved, they also have more children on average than their middle- and upper-class peers. Poor women have approximately 2.4 children on average; working-class women, 1.8; and middle- and upper-class women, 1.7. Poor women not only have more children but also start childbearing earlier.”

The producing members of society are declining while the poor are reproducing at a rate almost 33% higher.

The government made things worse.

“Attempting to account for this divergence, (they) cite a series of interlocking economic, policy, civic, and cultural changes since the 1960s in America combined to create a perfect family storm for poor and working-class Americans.

The marriage gap in America is also a function of policy decisions …. and a substantially expanded welfare state, including programs which actively penalize marriage. One survey found that 31 percent of Americans personally know someone who chose not to marry so as not to lose a means-tested benefit.”

A liberal immigration policy adds to the challenge.

What happens when those getting free stuff can outvote those paying for it?

Politicians focus on those who can vote them into power. If those getting the free stuff are the majority, that’s where they go. Ruling forever is the goal of every political party.

Politicos, regardless of their party affiliation, have turned buying votes with tax dollars into an art form. While Mayor de Blasio may preach about the 1% getting richer, why are the big banks and federal reserve exempt?

Wealthy pioneers like Henry Ford, Sam Walton or Bill Gates amassed fortunes by changing America. They created things the public wanted, including thousands of jobs. I’ve never seen a book titled, “Good things bankers did for America!”

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We can’t get enough votes in Congress to audit the Fed, much less break up their cartel. Why? The smart 1% make the right political donations and buy protection.

In the Lincoln-Douglas debates, Honest Abe nailed it:

“They are the two principles that have stood face to face from the beginning of time; and will ever continue to struggle. The one is the common right of humanity, and the other the divine right of kings. It is the same principle in whatever shape it develops itself. It is the same spirit that says, “You toil and work and earn bread, and I’ll eat it.”

The ruling class consumes the bread produced by others. After taking their massive cut, they feed their armies to protect them and sprinkle the remainder to the masses to maintain their power.

Richard Maybury’s January U.S & World Early Warning Report shares a mind-boggling personal experience:

“…. In 1988 I met a college professor widely regarded as a dean of socialism in America. This economist wrote books and traveled the country giving speeches about the alleged need for ever larger government and more taxes and regulations. When the news media wanted the official socialist view on an issue, he was one of the first they’d call.

One day I found myself alone with him for several hours. Our confidential conversation drifted into a debate of socialism vs. laissez-faire capitalism.

Finally, I asked…. “Apart from the economic fallacies on which socialism is based, there’s the fact that a government’s decisions are backed by guns and prisons. …. How can you trust any government with so much power?”

There was a quiet pause, and then speaking softly so that no one could overhear, the old man looked at the floor and answered, “I’m not stupid. I know socialism is a crock. But being its spokesman is profitable, and I have no other marketable skill.”

Guns and prisons?

Fox News reports, “De Blasio pitches plan to seize private property of problem landlords, opponents cry ‘communism’.” How does one determine “problem landlords”? How long before political contributions factor into the decision?

In 2012, Chicago mayor Rahm Emmanuel withdrew support for Wrigley Field improvements. He discovered the owner’s father (in Nebraska) was “thinking” about donating to a political action committee the mayor did not like. Richard Maybury’s question about giving the government all that power is spot on!

Politicos pander to their base offering free stuff that will be paid for by others. Working class citizens no longer buy the 1% hogwash. They know every new social program ends up costing the working class a lot of money. If they cannot win at the ballot box, many are voting with their feet. Let someone else support the politician’s agenda!

What does this mean for baby boomers and retirees?

The first step in retirement planning is “running the numbers” to see if your money will last. While the numbers may work in the present, what about the future? When those receiving free stuff can outvote those paying for it, the game changes; wealth is confiscated by all possible means.

In 2010 Money Morning reported:

“According to widespread media reports, (the government is) planning to stage a public-comment period before implementing regulations that would require U.S. savers to invest portions of their 401(k) savings plans and Individual Retirement Accounts (IRAs) into annuities or other “steady” payment streams backed by U.S. government bonds.”

While this didn’t come to fruition, don’t be surprised to see this again soon. Expect to see social security benefits means tested and 100% taxable in your lifetime.

The United Van Lines study looks at why people moved. Here is their analysis for NY:

Baby boomers are moving away from high tax states in droves – 51.7% of the outbound moves were age 55 and older. Almost 30% of the inbound moves are under 34 years old. The numbers for IL and CA are similar.

Don’t ignore the warning signs! On top of the federal government, individual states will be piling on, looking for money wherever they can. Running the numbers is only part of retirement planning. Protecting your wealth is an equally important consideration. Holding real (tangible) assets and residing in low tax locations must be considered.

Moving yourself and your money to a safer place might be the most important retirement decision you will ever make!

On The Lighter Side

We are delighted to see friends Tom and Joan G. arrive for their annual escape from the cold Chicago winter. The Chicago temperature was well below zero when they left. Tom and I go back to second grade. His dad was my scoutmaster. We all went to high school together.

We see our first Cub game in less than three weeks. I try to visit Mesa and watch them practice before the spring training games start. They have several practice fields. Much like a high school field, there are some small benches for fans to sit.

It’s fun to watch stars, rookies and some future Hall of Famers interact and practice. I shot this photo of Hall of Famer (HOF) Ryne Sandberg working with kids at the minor league camp.

How cool is that? What a thrill it must be having a HOF’er as an instructor.

And finally…

This week let’s look at some wisdom found on Facebook.

And my favorite:

Until next time….