This is a big and controversial blog entry. But I want to keep it simple and straight to the point. I will also give hints, which countries and systems are better for investing than others.
Intro
I have never experienced to live in a society which has actively installed a real socialistic system. E.g. Europe has a social system with basic welfare. That is a different thing.
The question arises of how did Socialism become a major political idea? Well, I think, it was a lack of money of a big mass of people. They thought like “Where does money come from FOR ME?” and put a politican into power that talked about stuff like “everyone should have money”. I guess they were prevented from taking loans, had no business ideas and were just mad and/or didn’t understand the capitalistic system at all.
And well, well, everyone should have money of course by working or not working anything. When enough people have no money to even buy food then these political clowns can come into power. Then the whole country and monetary system gets a “socialism” switch.
Solcialism (/Communism)
How does socialism work?
The basic concept is that everything is planned for all people and there is no competition. People have a duty to work but get fulfillment of their needs from the governmental entity.
Basic socialism (the idea)
- Political: There can be only one party
- Products & Services: The government, consisting of only one party, plans every product and every service.
- Land: The government owns every building and land. Nobody else can own that.
- As a private person you cannot have freedom, because everything is planned.
It must be admitted that this kind of system has failed in the past. People get mad after a while within this system, because freedom to think and act is a basic need for personal and economic growth. So it does not work. End of story.
To check the consensus let’s switch to reality as we currently have a large economy based on another kind of socialism.
Chinese socialism:
- Political: There can be only one party.
- Products & Services: The government, consisting of only one party, plans a close framework that can be filled freely by people with investments and some freedom of choice, because the party cannot plan everything in detail and leaves this to the people.
- Land: The government owns (most) buildings and land.
- As a private person you cannot have (much) freedom, because many things are planned. If you do the wrong thing (even you don’t know), you are punished and forced to return to the parties correct thinking. That can be any behavior against the party or the parties philosophy.
My comment: Not friendly. Made by assholes. Investments are under strict rules.
Russian “socialism” / dictatorships:
- Political: There is only one person ruling everything together with his fellowship of people. He is the government.
- Products & Services: The government plans many things. New things mostly need a allowance by the government. If you just set up something which the government doesn’t like, you get punished. The free things are the things that have been overlooked.
- Land: The government owns (most) buildings and land. “Friends” of the government can own that, too. But if private people own something the government can come up and take it any time.
- As a private person you cannot have (much) freedom, because (almost) everything is prohibited until it’s allowed. If you do the wrong thing (even you don’t know), you are punished and you go to prison or even die. That can be any behavior. Your life is ruined from the beginning.
My comment: Stupid. This system has no future.
Capitalism
(Almost) free social market (Europe / Tiger States (Japan, S. Korea, Taiwan, Singapore))
- Political: There are many parties, you can vote who you like. It matters in the way of a framework design and way of growth
- Products & Services: The government plans things, but nobody needs to stick by these plans and anyone can set up a business creating custom products and services within a defined framework (environmental rules etc.). The framework is defended.
- Land: The government owns some land. Private people also own.
- As a private person you can have (much) freedom, because (almost) nothing is planned. Still people rely on the government, because the government is also a big investor in the markets. There can be a fellow investment strategy behind it for you: Follow government investment.
- There is social welfare, so nobody can favor any socialistic system over the current one (unless stupid people of course, and these are everywhere)
My comment: The best system for living in peace and quite safe in general for investing. Just too many rules could create a lack of business growth.
(Almost) free market (USA)
- Political: There are not many parties, you can vote who you like. But it doesn’t really matter. (Unless it’s a big idiot like Donald Trump…)
- Products & Services: The government plans some stuff (e.g. business setup rules) and anyone can set up a business creating custom products and services within a very wide framework. The framework is defended very stongly. But the rest is free.
- Land: The government owns land. Private people do, too.
- As a private person you can have (much) freedom, because (almost) nothing is planned.
- There is social welfare, but also a very relaxed loan / debt policy. You can fail until you make it, “The American dream”
My comment: Very strong system, so far the best for investing.
Totally Free market (parts of Mexico / South America)
- Political: There are some parties, you can vote who you like. But it doesn’t matter at all. The parties don’t rule. Private people rule. With guns.
- Products & Services: The government plans very little (e.g. business setup rules) and anyone can set up a business creating custom products and services within a very wide framework. The framework is not defended strongly.
- Land: The government owns almost no land. Private people do.
- As a private person you can have total freedom, because nothing is planned and the government is weak.
- There is not much social welfare and the monetary system cannot be administrated well. So the currency is a joke. It is the rule of the strongest private person and a real “wild west”.
My comment: Too much private power and a lack of the governmental strenght. Businesses need to fear heavy and literally “bloody” competition.
Important note
The world is a free market. That means any politically installed governments lie within a free market anyway. Socialism is a part of Capitalism. Socialistic governments act freely in the world markets with money, while everything within that country is planned and people are not free. I call this the behavior of complete assholes. Because, who is within the government of those countries? Who installed themselves within the ruling party? They can do everything and rule out everything for their fellow country people, while the common people cannot do much or even have to live in fear.
A message to my Chinese and Russian visitors
Bad news: Your “government” tricks you. I live in Europe and my government tricks me too, but the only thing I need to fear here e.g. with my website is the breach of a copyright. No government will come up and put me into prison, because I am mostly free to act and free to write. The only way you can publish anything or do free business in your country is in such a chaotic way that your government has problems to actually identify personally you as the origin.
An additional thought about companies
A company is somehow based more or less on socialism. Inside the company there is a slim framework for work, rules and salary and outside there is the free market with customers. There is one boss or a party of bosses. They make all the rules. But if the company is traded in the stock market, the shareholders own the company and are the bosses. And these shareholders can be anyone, who buy the shares.
-> If you want to be the boss, buy shares of companies at the stock market of a “free market” country!