"The trouble with Socialism is that eventually, you run out of other people's money"
Business Leaders Urge Mayor de Blasio to Stop New York City’s Decline
"The trouble with Socialism is that eventually, you run out of other people's money," is a famous quote from Margaret Thatcher. It is close to what she actually said, but the full statement was, "Socialist governments traditionally do make a financial mess. They always run out of other people's money. It's quite a characteristic of them. They then start to nationalize everything, and people do not like more and more nationalization, and they're now trying to control everything by other means. They're progressively reducing the choice available to ordinary people."
After reading an article this morning in the Wall Street Journal about New York City business leaders, I thought about her quote. In a letter sent Thursday, more than 160 business leaders claimed the pandemic had devastated New York's economy. They wrote of New York City's deteriorating condition and the lack of business activity, which has subsequently caused high unemployment levels. The leaders of major players like Nasdaq, Citigroup, Mastercard, Staten Island Chamber of Commerce, and Bank of America urged Mayor de Blasio to restore essential services that have been cut from the budget that he and the New York City Council recently approved.
They claim there is growing anxiety over public safety, cleanliness, and other quality-of-life issues in New York, contributing to deteriorating conditions in commercial districts and neighborhoods across the five boroughs.
In the letter, they said, "We need to send a strong, consistent message that our employees, customers, clients, and visitors will be coming back to a safe and healthy work environment." "People will be slow to return unless their concerns about security and the livability of our communities are addressed quickly and with respect and fairness for our city's diverse populations."
The mayor responded by saying how he was grateful for the city's business community but suggested New York state lawmakers must approve borrowing authority for the city to close a budget gap and restore services.
He said, "Let's be clear: To restore city services and save jobs, we need long term borrowing and a federal stimulus—we need these leaders to join the fight to move the city forward."
Since May, Mr. de Blasio has asked for the borrowing power, but the state Legislature so far hasn't acted on his request.
That's an interesting response from someone in government. The business community is, in effect, asking the government to do its job and protect its citizens so that people don't have to live in fear. These business leaders see the value in the city they live in and conduct business. They prefer a safe place for the vast majority of its residents. When people feel safe, communities reap the benefit of increased commerce, tax revenue generation, and increased social services.
Mayor Bill de Blasio and the city council are looking to solve the city's fiscal problems by borrowing $5 billion to avoid layoffs. He wants to continue to borrow money to support public spending at current levels. This is unrealistic and unsustainable. He plans to push austerity on to the next mayor and council. The governor and the state legislature haven't taken too kindly to this request.
The decision-makers who took control back in 1975 to revitalize the city did so under very similar circumstances. They made the best and most responsible decisions, and in doing so, they set the stage for four decades of economic growth. We saw slow and steady improvements in public services and quality of life for most New Yorkers until 2020.
The road to recovery lies in the hard work of budget balancing and reviving economic growth. Resurrecting a vital economy stems from restoring essential services as a necessary precursor for solving the city's longer-term, complex, financial challenges. I'm sure the reason they wrote the letter is to make the city safe to conduct business. I'm surprised no one from the Broadway League was part of this discussion. Don't they want a safe Times Square District to bring tourists back? Why does it feel like the rhetoric we hear from Cuomo and de Blasio is geared towards frightening people? Shouldn't part of their job be making the city exciting enough to entice the general public to do business in what some call "the greatest city in the world"?
There is an easy solution to this problem: OPEN EVERYTHING! The tax revenue generated from an abundance of commerce will reverse this downward spiral. It's unsustainable to keep borrowing. There is an easy solution. Every city and state inevitably has to resume all social activities. If people feel our state and city government will be able to perpetually borrow our way out of the financial crisis we see in New York at the moment, they are fooling themselves.
Sooner or later, other people's money will run out. People in government know this, but for some strange reason, New York Governor Cuomo and NYC Mayor de Blasio think asking for loans will rectify New York’s problems. It's almost a socialism experiment gone wrong in warp speed.
Socialism breeds central planning and control. The allocation of public resources is concentrated among managers and becomes the definition of a zero-sum game. As such, almost like oscillations of increasing magnitude, each round of planning further distorts the supply and demand cycle, feeding resources into product, plant, and process misaligned with demand. That's why socialist states all get enormous steel mills but run out of toilet paper. Erasing the feedback loop of the billions of individual choices not only destroys liberty, but it's also inefficient. Human nature responds to these distortions through graft, corruption, workarounds, and disengagement.
Adam Smith made it quite clear, and the 20th century has proven him correct—self-interest is the engine of economic growth. Humans will not exert themselves in the interest of the amorphous other to the degree to which they will serve their own family.
Socialism is fashionable among the beneficiaries of capitalism. It is incredibly trendy among those who have never had to live under it. You get two basic objections from the holders of bien-pensant opinion regarding socialism.
‘It has never really been tried.’ Pointing to the horrors inflicted on the millions devastated by the various "social democratic republics" of the 20th-century is irrelevant to socialism's defenders.
The second confuses various public monopolies like the police, roads, and the military with socialism.
I may write a more extended essay about the failures of socialism in the future, but my main point here is this; socialism fails because it runs counter to observable human nature and stifles innovation. As the economy's productivity declines and the sources of expropriated wealth accumulations dissipate, you indeed, "run out of other people's money." This is happening in New York City right now. The solution is easy, but it will be painful for some. It's very similar to a doctor telling a patient they must eat a healthy diet and exercise. It's not easy to do, but it is the best and most effective long term solution to this current crisis.
New York needs to open up all aspects of society. Read my thoughts on that in my June 25th essay - A "Progressive" Approach To Handling The Coronavirus - OPEN EVERYTHING!
I'd love to hear your thoughts. Leave a comment HERE:
Clayton Craddock is an independent thinker, father of two beautiful children in New York City. He is the drummer of the hit broadway musical Ain't Too Proud. He earned a Bachelor of Business Administration from Howard University's School of Business and is a 25 year veteran of the fast-paced New York City music scene. He has played drums in several hit broadway and off-broadway musicals, including "Tick, tick…BOOM!, Altar Boyz, Memphis The Musical and Lady Day At Emerson's Bar and Grill. Also, Clayton has worked on: Footloose, Motown, The Color Purple, Rent, Little Shop of Horrors, Evita, Cats, and Avenue Q.
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OPEN EVERYTHING! Yes!!! If it’s ok to open “some” things for “some” reasons then it’s absolutely time to open everything for the reasons you have listed in this article. Well laid out. Let the people and businesses keep themselves safe while making money and keeping the city running.
Clayton, I believe you are SPOT ON! Thanks for sharing.