Timothy Lau

Social 30-1
April 11, 2014
1

Money is a heavy influence on most if not all of the decisions made on Earth. Decisions that
affect a nations policies and responses to politics, foreign affairs, and the environment are all
defined by a nations wealth. Coupled with the fact that money runs everything on Earth, and
because the world is so racially multifaceted, there are many different ideologies of economic
policies that are accepted. These ideologies can be arranged on a spectrum; on one side is the
extremist left-winged communism. In a communist state, the entirety of the economy is
controlled by the state, urging collectivism. There is no such thing as individualism nothing is
individually owned, and jobs and wages are given to each persons abilities. These traits of
communism encourage all acts to benefit the state for the equality of all rather than for the
benefit of an individual. On the other end of the spectrum is the right-winged capitalism.
Capitalists believe that all aspects of the economy should be run by private institutions, where
when one benefits, the society would benefit as well. They support individualism and
independence, striving for minimal to no government interference in the economy. In the
middle of this spectrum is liberalism. Both ideologies are intermixed, giving a balance between
collectivism through government intervention and individualism through independence. Many
nations today are not extremists, but each has their own leanings toward a side which supports
their ideologies. The source says that The welfare state arose out of a misguided desire to
achieve greater social equality. As a result, a culture of dependency on the state has emerged.
Only in a state that promotes individualism will such dependency be eliminated. The
perspective of this specific quote is of a capitalist. As it supports independence and criticizes the
welfare state a state with a lot of government involvement in the economy it is clear that
Timothy Lau
Social 30-1
April 11, 2014
2

ideologies from both classical liberalism and neo-conservatism are supported. This source is
also quite biased. It attacks the idea behind a welfare state, calling these societies misguided,
as well as wishing dependency be eliminated. From the quotes vehement opposition against
dependency, it shows their support for an economy with a lack of government intrusion
1
.
Opposing this quote are the left-winged economists, such as modern liberals, welfare
conservatives, and communists. They would argue that in order for a stable, efficient economy,
a government hand in the economy is needed, whereas capitalism incites greed, which in turn
would cause a wealth gap and resources to be wasted. Capitalists would argue that collectivist
states are flawed in that they are unsustainable. They would also argue that individualism
would create motivation, inciting hard work and creativity. This hard work would lead to a
higher productivity, which would stimulate growth economically. A growing economy would
lead to a higher standard of living. For these reasons, the right-winged capitalist perspective
present in the source should be embraced. The key to a successful society is not only its
prosperity, but how sustainable it is.

Even though a welfare state presents a high standard of living, these collective societies are
extremely expensive. For each service that a state provides, many people have to be hired to
provide and maintain these services. Without these social workers, the welfare provisions
would just crash and die. However, each of these workers presumably has a family to house
and feed meaning that they have to be paid. With the many services that a government

1
laissez-faire, or hands off economics; zero government interference with the economy, with a societys
economy based on individualism and competition.
Timothy Lau
Social 30-1
April 11, 2014
3

would have to provide for a high quality of life multiplied by the workers needed and the
upholding of the quality of the equipment needed for these services, the cost is exponentially
larger. Where would this money come from? A major example of this is Sweden
2
. Sweden is
probably most well-known for its welfare state policies and its welfare capitalistic ideals. With
these policies came the unending list of positive aspects any society would wish for: an amazing
education system, an exceptionally low crime rate, and more. With these aspects, Sweden had
one of the worlds highest living qualities. However, with these facets being Swedens shell,
many were blinded to the fact that these policies were not maintainable at all. Due its extensive
welfare, the people of Sweden had a large dependency on their government, from universal
social benefits such as health care and real estate lending. However, with the money being
spent left and right and the standard of living on the rise, they did not realize because the
money had a destination, the money would have a point of origin as well. In 1990, Sweden had
a sudden economic recession. The money that went to these state services were subsidized by
extremely high taxes
3
, which resulted in a huge deficit. The maximum income tax was 90%. By
1993, unemployment rose 10% and GDP dropped 5%. Sweden recovered this recession at a
cost: by lowering spending and taxes, its competitiveness improved, but the benefits that the
state provided were reduced substantially. With these new policies in place, the maximum
income tax has dropped to approximately 57%
4
, and Sweden was able to recuperate into a
strong and stable economic power. Sweden was only able to do this by lowering public
spending and opening itself up to capitalist ideologies. This reduced public dependence on the

2
Inside Job notes, Sweden wiki
3
Up to 50% of the countrys GDP
4
In 2012
Timothy Lau
Social 30-1
April 11, 2014
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state, increasing work incentive. Because the people had such a dependency on the welfare
that Sweden bestowed, its culture gradually lost the motivation for hard work and thus the
country could not thrive forever. The fundamentals behind a welfare state are flawed in that it
is not maintainable. In order for a sustainable high quality of life, individualism is needed
because it encourages hard work and creativity.

Hard work and creativity are crucial for success in a society where individualism is promoted.
With the few economic regulations that the government imposes, and the competition that
ensues, the only way to be successful is to be better. The only way to be better than a
competitor is hard work. If a government has too heavy a hand in its economy, a dependency
arises as suggested in the source, which would smother work incentive, leading to a reduction
in creativity. With innovation, which comes hand in hand with creativity, advances in
technology can be made, continuing a societys [growth in] prosperity and thus quality of life.
An example of this is Google. Google is an American corporation founded by Larry Page and
Sergey Brin. In 1996, they developed a search engine that allowed for faster and more efficient
searches. This resulted in a massive success such that the market capital was over $250B USD
5

and was listed as one of Forbes most innovative companies. With this creativity, Google is now
one of the leading pioneers for technology. Google is used all over the world, and is arguable
the best search engine there is. All these achievements that allowed prosperity and
advancement in technology was because of the setting that these two Stanford University

5
US Dollar
Timothy Lau
Social 30-1
April 11, 2014
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students found themselves in. Because America is one of the most capitalist countries in the
world, Americans encourage such creativity and innovation in its entrepreneurs with its
minimal government interference in the economy. With high standard of living as a result of the
ingenuity and hard work encouraged in individualistic states, the source should be embraced.
The opposite of a capitalistic state is the communist state. In these collectivist societies, these
modernizations rarely happen, if not nonexistent at all. The ideals behind From each according
to his ability, to each according to his need do not incite hard work or creativity, as the reality
that this communist ideology turns into take as much as you can, work as little as you can.
The environment that these states present do not encourage hard work nor creativity because
there is no need to. Incentives for these aspects are created by competitiveness, but the nature
of competition is created in reward. If wages were equal no matter how hard one worked, what
was the point of trying to be better than the next person? An example of this communist state
was mid-20th century China
6
. This was during the crisis of the Great Leap Forward movement
led by Chairman Mao Zedong. Ironically, the Great Leap Forward resulted in a backwards
progress with millions of deaths. During this movement, communism was implemented in
China. Communal agriculture was implemented on top of private plots. Subsequently, farmers
could not support themselves financially as they could not use their lands as loan insurance. 30-
40% of private property was destroyed in order to create room for roads, farmland and other
government property. The chairman also made a movement to change agricultural China into

6
It can be argued that there was a large time discrepancy between these two examples. However, the point is that
China failed in its endeavors with its communist ideologies with tens of millions of deaths whereas American
corporations have provided services that have benefitted people around the world hypothetically (and again,
arguably), there would be a lot less suffering in the world if these corporations were not overly greedy, but thats
another point to argue outside of this essay; China/Mao Zedong wiki
Timothy Lau
Social 30-1
April 11, 2014
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an industrial one, but did so too rapidly. The consequence of these events was a famine that
killed over forty million people. This shows that collectivist societies result in a lowering of
quality of life. As such, the source should be embraced due to the fact that individualist states
encourage hard work and creativity, allowing for a higher quality of life.

As a result of these incentives for hard work and creativity, the standard of living in capitalist
societies is commonly higher than those using the more left-winged systems. The economy of a
society is intertwined with the state. With an economic system that encourages individualism,
there is often incentive to work hard and think outside the box. This normally means higher
prosperity, better technology, and more importantly, more freedom for the individual, whereas
in a more public state, one would be in a position of bettering the state with less a lot less
freedoms in life. The standard of living can be shown by the Human Development Index
7
. This
hypothetical statistic takes in stats such as life expectancy, education, and income. It is shown
that societies with private, capitalist economies have a generally higher HDI. For example,
nations such as Japan, Canada, and America have an HDI of 0.912
8
, 0.911
9
, and 0.937
10

respectively. However, communist societies have a much lower HDI, as shown by Laos and
Vietnam, with their HDIs being 0.543
11
and 0.617
12
respectively. There are two examples that
show why countries that accept private enterprises in their economies do much better. The first

7
HDI for short, all stats present are taken in 2012; HDI wiki
8
10
th

9
11
th

10
3
rd

11
138
th

12
127
th

Timothy Lau
Social 30-1
April 11, 2014
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example is China. Ever since Mao Zedong, the Chinese have been moving from the far left
communist ideologies to more right-winged politics and economics. With the elimination of
communal agriculture, there has been a general rising of emphasis on increasing income and
consumption individually. As such, work incentive grew again, boosting production of products
such as cotton, fruit harvest, grain, sugarcane, and tobacco from 30% increases to 200%
increases. The GDP of China rose from $216B USD in 1978 to $8.2T USD in 2012. Even though
its HDI is still nearly as low as countries such as Vietnam due to China still being very left-
winged, its gradual change in its policies are parallel to how its HDI is also constantly rising as
well
13
. The second example was the United Kingdoms Margaret Thatcher. She was a Prime
Minister influenced by economists such as Milton Friedman. Thatcher was able to raise Britains
GDP manifold through lowering taxes and dropping public spending on things such as public
services. Not only did the GDP rise, the UK economy was strong and stable with low inflation
when she left office. Because there is a lack of dependence on the state in a individualistic
society, the government is able to spend less money on public services, allowing the state to be
less burdened by its people, reducing the risk of deficits. The hard work and creativity that this
kind of state encourages makes up for this dependence and even allows for an increase in
prosperity. This is why we should embrace the source.

Individualism, with its shadow capitalism, promotes people to work hard and innovate. Such
aspects allow for a society to not only prosper and have a high quality of life, but also allow the

13
Chinas HDI rose to 0.699 in 2012
Timothy Lau
Social 30-1
April 11, 2014
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economic state of a nation to be sustainable. A dependence on the society would burden the
state, causing prosperity for all to nearly disappear, slowing down advances, and even risk
putting the nation into deficit. The source, which states that The welfare state arose out of a
misguided desire to achieve greater social equality. As a result a cuture of dependency on the
state has emerged. Only in a state that promotes individualism will such dependency be
eliminated. is a classical liberal perspective. With all the reasons stated in mind, this source
should be embraced.