Rick Kelo - Has Socialism Helped Europe?

Rick Kelo

Campaigning politicians, especially of the leftward bent, take it for granted that Socialism has created a utopia in Europe.  Senators like Bernie Sanders will go so far as to brag that the United States should become more like Sweden.  However, among those educated in economics like Rick Kelo, this matter is far from a settled question.

Rick Kelo points out that, "Europe has been in decline since adopting more and more socialist programs.  Sweden in 1970 was the 2nd richest nation on earth behind America; today it is the 17th richest.  A generation from now it will be insolvent."

Richard Kelo likes to specify "more socialistic programs" because he points out, "Sweden is not a Socialist economy.  They are heavily taxed and regulated, but they are a market economy just like America."  Sweden's high levels of taxation are necessary to maintain their generous social programs.  However, the effect of those programs on the country is telling.

"When you look at median incomes a totally different story emerges," Rick Kelo points out.  "Were Sweden to become a US state it would be the fourth poorest state in the country.  Even at that we're being too generous because - remember - that low income in Sweden is also subject to a tax burden more than double the American living in Mississippi and the few other equivalently poor states to Sweden."

The failure of socialism, and its extreme position of communism, is universal everywhere it has been implemented.  And those societies where it has not yet collapsed outright have suffered considerable decline once they become burdened with the inherent bureaucracy necessary to enforce (force compliance from the citizens by the bureaucrats) these programs.  Look at the rapid decline of once very prosperous nations in Europe after they became satellite nations of the Soviet Union.

Rick Kelo examines how Tax Rates Change Behavior

Rick A Kelo

The most basic tenet of economics is that people respond to incentives.  This is a universal law that has never been disproved.  If, for example, I offer you $10 to chop off one of your fingers and you refuse we haven't proved you don't respond to incentives.  All we've shown is that $10 isn't incentive enough for you to chop off one of your fingers.  However, members of the Japanese crime syndicate the Yakuza routinely chop off one of their own fingers as an offering to their crime boss.  The only matter at question is whether the incentive is incentive enough.

Knowing that people respond to incentives Rick Kelo wonders why we don't more frequently bear that in mind when discussing increasing tax rates.  Kelo has more than 10 years of experience as a Chicago tax recruiter at the prestigious TaxScout, Inc.  However, before that he studied economics and finance and worked in both fields.  On the topic of tax rates creating an incentive to change behavior he notes:

"We have seen in American history, that when marginal tax rates increased substantially business owners elected to retain earnings in corporations in anticipation of a lower taxed regime in the future.  Policies like the abusively hyper-progressive federal income tax rate of mid-1900s America created the "fringe" benefit system that existed until well into the 1970s."
~ Rick Kelo

So, as Richard Kelo points out, the question is what becomes incentive enough? If we raise the individual tax bracket to 70% or 90%, then we can certainly expect business owners to have their company purchase most of their needs in pre-tax dollars through "fringe benefits" rather than take that money as a wage and lose 70+% of it.

Rick Kelo Rebuts Marxian Surplus Value

Karl Marx was the last Classical Economist.  He logically carried to conclusion the thinking of the Classical Economists beginning with Adam Smith.  However, Marx shared the same economic short-coming as his classical predecessors because the theory of Marginal Utility had not yet been discovered.

When Marx published Das Kapital it was unheard of for almost 2 decades outside of the German speaking world.  Before it had even begun circulation in English Marx entire theory of Surplus Value had been demolished by another brilliant German economist named Eugen Böhm-Bawerk in his piece "Karl Marx and the close of his system."

Böhm-Bawerk, like Rick Kelo, pointed out that surplus value is an impossibility.  The reason is that in a capitalist economy every factor of production is bid up to its full marginal revenue product.  When a business sells something that sale generates some amount of profit.  That profit is, what economists call, "reverse imputed" backwards into the original factors of production that created it says Kelo.

There are 4 original factors of production:

• Land
• Labor
• Capital
• Time / Entrepreneurship

Rick Kelo

The capitalist is paid for time.  Most people want to be paid immediately for their labor, every 2 weeks.  They don't want to wait 5 years until a final consumer good is produced, then sold.  So the capitalist does the waiting for them and gets paid accordingly.  It is this payment to the business-owner that Socialists object to because they believe it must be coming from a portion of money that was owed to the worker.

Not so says Rick Kelo.  "The wage rate paid to the worker is bid up to its full marginal revenue product, and in more technical economics is mostly determined by something we call the 'Marginal Product of Labor.'  It is impossible for workers as a large chunk of society to be systematically under-paid because another entrepreneur would merely open a business and recruit them all away."

Rick Kelo Looks At the Dislike of Capitalism

Famous 20th century Classic Liberal thinker Ludwig von Mises considered why so many people are envious of the wealthy:

What makes many feel unhappy under capitalism is the fact that capitalism grants to each the opportunity to attain the most desirable positions which, of course, can only be attained by a few. Whatever a man may have gained for himself, it is mostly a mere fraction of what his ambition has impelled him to win. There are always before his eyes people who have succeeded where he failed. There are fellows who have outstripped him and against whom he nurtures, in his subconsciousness, inferiority complexes.

Such is the attitude of the tramp against the man with a regular job, the factory hand against the foreman, the executive against the vice-president, the vice-president against the company’s president, the man who is worth three hundred thousand dollars against the millionaire and so on.

~ Ludwig von Mises, The Anti-Capitalist Mentality

Rick Kelo, an economist and social thinker who often follows in the Misesian tradition agrees.  To Kelo the topic is really about a basic economic condition: scarcity.

"Mankind is forever stuck in a mismatch," says Kelo.  "The power of our imaginations give us unlimited wants and desires, but we don't exist in our imaginations.  In the physical world around us resources are limited," he points out.  "If we use corn to make the corn syrup that goes into soda then we can't use it to make popcorn," Richard Kelo explains.

The irony is that Americans in the 21st century enjoy the highest standard of living of anyone in all of human history.  All of which has been achieved by the productive engine unleashed by capitalism.

Rick A Kelo

Richard Kelo Discusses John Locke

John Locke was a seminal thinker in human history.  His writing represents one of the first times a philosopher examined economic questions.  Locke looked at questions like property rights: who owns what and what represents legitimate ownership?

Rick Kelo

Even in 2018 a lot of modern political topics still center on the same questions Locke examined.  As Rick Kelo points out that the "1%" and wealth inequality are just one example.  Who owns what, and was the wealth of the 1% acquired by exploiting the 99%?  Is it a legitimate function of government to redistribute wealth in order to correct for this?

Rick Kelo points out that many of these questions are answered if we take the time to read Locke's analysis and apply it.  For example, in his Second Treatise on Government, John Locke examined property rights and ownership:

"The labour of his body and the work of his hands, we may say, are properly his. Whatsoever, then, he removes out of the state that Nature hath provided and left it in, he hath mixed his labour with it, and joined to it something that is his own, and thereby makes it his property." 

~ John Locke, Two Treatise, Book II, Chp 25, Sec 27

That statement forms the basis for original property rights, or what many philosophers call the "Homesteading Principle."  When a person combines his labor the product he owns.  The exception is when someone has entered into a contract to sell their labor for a fixed price.  Since most of the 1% are business owners, Rick Kelo mentions, their property is their own.  That includes if they improve it, and that includes if they enter into a contract and pay someone else a fixed sum of money to improve it.

Rick Kelo speaks on Freedom of Association

Every individual makes their own moral decisions about how they'll interact with other people, and how they'll live their life as an individual.  Since this is an intrinsic aspect of what it means to be human anything that is a fundamental aspect of moral agency is called a "basic human right" or a "fundamental right."

One such example is the ability to associate with whomever you choose.  Rick Kelo, like many Classic Liberal social thinkers before him, teaches that the Freedom of Association is a basic human right.  Anything that infringes on this right is, by definition, tyrannical and illegitimate.

Rick Kelo

Consider the example of same sex marriage.

As Rick Kelo explains any law that prohibits voluntary association is illegitimate.  The various prohibitions on same sex marriage in many states is one example.  Many states hide behind pretending to promote what they consider "moral goodness" by banning same sex marriages.  However, as Rick Kelo and those who believe like him note, it isn't a legitimate function of government to dictate what types of people can associate with what other types.

The only morally consistent viewpoint is that people be left free to choose for themselves with whom they associate.

Rick Kelo - Did Mankind Start as Socialists?

Richard A Kelo

Rick Kelo, a prominent Classic Liberal thinker, weighs in on a common claim by advocates of government control of society.  Socialists often claim that the human race begin in Socialism as its natural state.  Socialists imply that because small tribes began as socialist that mankind should return to our natural, preferred method of organizing ourselves.

Surprisingly, Rick A Kelo agrees with the Socialists on this point: their claim is truthful.  "Humans began as what economists call autistic economies, which is a term that refers to an economy where only 1 will governs.  The tribal economy is an example, and so are the Crusoean economy, the slave economy & the household economy.  They are all proto-command economies," says Kelo.

However, Rick Kelo notes that there is one crucial difference between the tribal economy and the Socialist economies of the 20th & 21st centuries: no division of labor.  In a division of labor economy there are only two types of command economies that can exist:

1) Socialism: state control of production in a division of labor by state ownership of all producer / capital goods.
2) Fascism: state control of production in a division of labor by state regulation of all producer / capital goods

Richard Kelo goes on to point out that if we want to be technically specific Socialists are actually conflating communalism with communism, but the different is nuanced.  Kelo briefly addressed the structure from tribal economy forward to advanced division of labor economy and this exact point in this article: Human Freedom: The Untold Cause of It All.

Rick Kelo speaks on What Capitalism Requires

Rick Kelo, tax recruiter and West Point alumni

There is no single concept university academics have devoted more energy to destroying over the last 130 years as that of Capitalism.  Rick Kelo, however, has been at the forefront of advocating the peaceful, voluntary society created by Capitalism throughout the 21st century.

Rick Kelo points out that all capitalism requires you to do is not violate someone else's rights.  If you do that then you're a criminal and there's a police force and court system to deal with you.

What's the objection to this?  "But there's crime in capitalist countries like America too!"  Crime, as compared to what, Rick Kelo asks?  If you think there's crime in capitalist America imagine what life is like walking the streets of socialist Syria or Venezuela for a day.  Even America's worst example, the south side of Chicago (a city of 3 million) had 700 murders in 2016.  Compare that to the murder rate in Caracas, the capital of Venezuela, which was 120 per 100,000!

Rick Kelo Speaks on When Democracies are Tyrannical

Rick Kelo

There is no word more often associated with freedom than Democracy.  However, as Rick Kelo points out, there's nothing inherently free about Democracy.

Liberalism, and it's economic off-spring laissez-faire, sets the individual as the basic moral unit of society and serves her at her level according to her preferences.  As a political example in a liberal government the state exists to protect the rights of the individual so that the 50.1% who are dog owners cannot outlaw the ownership of cats as a pet.  As an economic example there need not be a 50.1% majority interested in collecting stamps in order for someone in a capitalist economy to serve stamp collectors.

Rick Kelo is concerned though that a popular vote of 50.1% can be used to justify immorality.  If 50.1% of people favor "Safe Spaces" then does that over-ride the right to free speech, or freedom of religion for people entering those areas?

As a staunch defender of human freedom to Rick Kelo it does not.  "If a Muslim happens to be crossing a 'safe space' at a time when they're supposed to pray it's illegitimate and tyrannical to deny them their freedom of religion just because every other person in that space is a Christian," he points out using a contrarian example.

Rick Kelo - Property from the Ground Up

Have you ever considered how you come to own something?  How do we decide who owns what?  Property is such an integral part of who we are.  Even a little kid playing with another in a woods full of sticks will reply, "Hey, that's mine!" if the other child takes the stick he's using.

All of the choices we make about what we're going to do rest ultimately on who owns something.  When we say you have freedom of speech, for example, that really means freedom to speak at a place you own.  You can't go to the front of a movie theater and start giving a speech during a movie, but if you rent a conference room at a hotel you can do so.  Why?  Because you first acquired an ownership right (through a contract, a form of property) to use the hotel conference room, but not the movie theater.

Rick Kelo

Rick Kelo is a well-educated, hard-working businessman, but also a noted Classic Liberal thinker.  He describes the system of laws that would constitutes a property right in a free market economy by considering first that all private property rests upon a legal pattern of ownership follows:

Labor: self-owned
Land: owned by homesteading
Goods: owned by producing
Labor, land, goods: owned by contract (as in the case of employment)
Gift: owned by unilateral transfer
Exchange: owned by bilateral transfer

Rick Kelo - Pricing in Fascist Economies

Fascism is one of the two forms of Command Economy (the other being Socialism).  In his studies of economics Rick Kelo noticed that the price of consumer goods - the individual items that you and I buy at the store - are usually not controlled by the State.

Rick Kelo, a Chicago Tax Recruiter

"There have been a great many command economies where the State did not set the price of consumption goods.  Nazi Germany is one example as is the USSR through the majority of it's history, ignoring several lesser periods of price controls," Kelo remarks.

The price of consumption goods does not matter.  Not economically in any event.  In any command economy, whether socialist or fascist, there can never be rational pricing for consumer goods.  In Fascist economies State officials often tell the business owners what to produce.  Some times they do it directly by an order, and other times indirectly by a regulation that sets a production quota not to be exceeded.  However, business owners in a fascist economy can still look to other market economies for guides on pricing.  But, they can never actually know the proper price for consumer goods because they have no pricing for the capital goods that were used to make those consumer items.

It is because of the absence of a rational pricing mechanism, Richard Kelo feels, that we frequently see state-mandated prices for consumer goods in command economies.

Rick Kelo Explains the Command Economies

There are two forms of command economies: fascism & socialism.  Command economy shouldn't imply socialist economy necessarily.  All socialist economies are command economies, but not that all command economies are socialist.  The presence of a Command Economy is irrelevant to the form of political organization as well, it by definition refers only to the form of economic organization.

The main point of confusion for some occurs in separating political systems from economic ones.  A country can have a totalitarian political system and a free market economy.  It's not terribly common but there's nothing about having a free market economy that requires political freedom.  However, in reverse it is necessary to have economic freedom in order to have political freedom.  Rick Kelo teaches that a country cannot have a command economy and have political freedom because the very imposition of a command economy requires an absence of political freedom in order to impose.

For example how can their be freedom of the press when the government owns the presses?

Richard Kelo

Rick Kelo - Labor Unions & Yellow Dog Laws

A lot of people wonder whether labor unions are inconsistent with a free market.  Does a free market economy mean there can't be unions?  Rick Kelo is a labor specialist who works as the head of talent acquisition at a tax recruiting firm in Chicago.  When asked about his view of unions Rick noted, "I am not anti-union.  I am opposed only to unions in so much as they rely on grants of monopoly privilege in order to extract economic rents.  For example, in America today union dues are almost always a sign of monopoly power at work."

Nothing about the presence of labor unions is inconsistent with capitalism.

Rick Kelo - expert in tax talent acquisition

In a totally free market employers are free to purchase labor from their employees in any arrangement they prefer.  Labor is a competitive resource that must be bid away from competition (including every alternate possible use).  So even in a totally free market some employers would prefer to rely on union membership to help them attract talent.  Others will find it preferable to use a non-union method of organization.

Unions themselves aren't incompatible with a free society or a free market.  The thing that is incompatible with a free society, and a free market, is dictating that only certain forms of employment are allowed or dictating that certain forms are not allowed.  Rick Kelo finds it equally as immoral to outlaw unions as to make them mandatory.

Rick Kelo – Paul Simon

One of Rick Kelo’s favorite musicians, Paul Simon has most definitely stood the test of time. Paul Frederic Simon was born in Newark, New Jersey on October 13, 1941. His parents were Hungarian Jews.  The family moved to the New York City suburb of Queens when Simon was four years old. Looking back on his childhood, he stated, "I was a ballplayer. I'd go on my bike, and I'd hustle kids in stickball…I used to listen to [baseball] games with my father. He was a nice guy. Fun. Funny. Smart. He didn't play with me as much as I played with my kids. He was at work until late at night...Sometimes [until] two in the morning."

In sixth grade, at the age of eleven, Paul Simon met another young boy, Art Garfunkel. Two years later, the duo began to sing together. They idolized the Everly Brothers and Woody Guthrie. At college, Garfunkel majored in mathematics and Simon in English.

Originally, Simon and Garfunkel performed together as “Tom & Jerry”, releasing a few singles. Simon wrote the songs (more than thirty between 1957 and 1964). Finally, in 1964, the two were given an audition at Columbia Records, which promptly signed them to a contract. Their previous moniker lapsed into obscurity, and they recorded and played under their real names. Their first album was release that same year; it was titled Wednesday Morning, 3 A.M.

Simon then spent some time in the UK, playing gigs at small venues and writing songs that would become classics. One such song was “Homeward Bound”. He also recorded a solo album.

One of the tracks from Wednesday Morning, 3 A.M. started to receive increasing airplay. This was “The Sound of Silence”. The song gained in popularity until it reached Number 1 on the pop charts. Simon returned to the United States, recorded more albums with Garfunkel, and provided the soundtrack to the seminal ‘60s film The Graduate.

With on-and-off battles with Garfunkel, Simon pursued a largely solo career after the early 1970s. His 1986 album Graceland was a smash hit, and the video to the track “You Can Call Me Al” featured comedian Chevy Chase lip-synching to the song while Simon looked on.

In 2015, Simon toured Europe with Sting. Now seventy-five years old, not having performed with Garfunkel in years, Simon has stated that his most recent tour will be his last.

Rick Kelo – What TaxScout Can Do for You

For small businesses, and large businesses for that matter, there are few things more important that correctly managing finances. When just starting out, the scale of a business’ financial structure is typically such that the average individual can handle the organization and filing on their own. As the business grows, however, it becomes increasingly important to bring in a professional. This is for two reasons. The first reason is the sheer volume of tasks that must be handle as they relate to a company’s finances. This is not something that one single person has the time to do on his or her own. Second, as a company grows and becomes more complicated, so too do the taxes and other financial matters for that company. The consequences of incorrectly filing your taxes or making a mistake in the record keeping for your company can result in fines or even jail time. That is why for any business that has its feet underneath it and is starting to develop serious revenue and a serious client base, it is important to find an expert who can help you manage your assets.

Experts such as Richard Arthur Kelo exist for just that person. Richard Kelo is a tax specialist, economist, and Executive Recruiter for TaxScout, the largest tax professional placement service in the country. What TaxScout does is bring together the highest quality financial experts and places them with companies in need. They consider many aspects of both ends of such agreements and works hard to make sure that each company is given an expert with the necessary experience and possibility to fit in with the preexisting company’s culture.

Richard Kelo is an example of one such professional who is in charge of these placements. After graduating from the United States Military Academy at West Point with a degree in General Engineering, he continued his studies at the University of Illinois at Chicago where he received his MBA in Finance, graduating Magna Cum Laude. Ever since receiving his MBA, Rick Kelo has been using his expertise and experience to help bring companies in need together with tax professionals. Experts such as Rick Kelo are the reason that TaxScout has one of the highest retention rates of placements (70%), nearly double that of other firms.

Rick Kelo’s blog shows his passion for the United States economy and finances. On his personal blog, as well as on many other blogs, he writes articles related to the United States tax codes, economy, and political structure. If you feel that you or your business are in need of professional financial advice, call on Rick Kelo and TaxScout today.