EDDuvall.com

Mr. Zohran Mamdani is running for the office of mayor of New York City.  He won the Democratic party primary, advertising that his administration (if elected in November) would improve “affordability”, especially in housing and grocery prices.  He proudly describes himself as a “Democratic Socialist”.  That brings up two questions: a) what is the true nature of socialism; and b) is a socialist in New York beneficial, given that New York City is already beset by problems caused by other Democratic/socialist policies?

“Socialism”, or properly called “Marxism”, is a philosophy codified by Karl Marx in the 1850’s with his publication of his book “Das Capital”.  It described human history as the contest between the “oppressors” and the “oppressed”, and blames all oppression in free enterprise, or what he called “capitalism”. That claim alone is fraudulent; “free enterprise” a.k.a. “capitalism” did not become prevalent until the end of the Middle Ages (~1550).  How then could it have caused oppression before that?  But Marx’s theory contains a worse fatal flaw: the operation of his system is contrary to human nature.  He assumed that everyone will work just as hard for other people as they would for their own family.  That is patently false, as any fifth-grader can see.  That is why socialism is usually forced on societies. It is true that people have occasionally voted for a socialist regime but only out of ignorance of its true nature.  The truth is: a socialist regime, no matter how it acquired power, requires coercion and brute force to stay in power simply because it ruins the society that it governs. It does so by consuming the existing assets of the society for political advantage to the socialist ruling elite. The assets of a society is its “capital”; i.e., everything of value, including your checkbook.

Here is an excerpt from my book [1]:

“A socialist or “progressive” system will fail because the allocation of existing capital is based on politics and not economics.  Typically capital is wasted in a socialist nation because it is employed to meet some political or ideological objective rather than an increase in production and improvement in the standard of living for the population.  But it just not the socialist nations that waste capital; it can occur in free enterprise nations as well.  Capital can be wasted in many ways: a) on projects that are never completed (such as railroads, bridges, and tunnels); b) on projects that never turn a profit (high-speed rail); and c) on projects that are not necessary (some stadiums, convention centers, and airports in small towns).  Another type of wasted capital is in the form of projects that are done too early before they are needed.  For example, a 6-lane limited access highway through a town of 10,000 is not necessary to support the businesses there (in fact it may destroy those businesses).  Even if there is no effect on the local businesses, the unnecessary highway represents money that could have been better spent elsewhere.

Some may argue that the destruction of capital and reduction of production occurred in the Soviet Union only because it was the first practical test of socialism, and of course, “mistakes were made”.  They now claim to have corrected those errors, and are ready to usher in utopia.  Such an assertion ignores the history of later socialist regimes.  The socialists took over in Cuba 42 years after the Bolshevik Revolution in Russia, and capital was destroyed in Cuba just as quickly.  The socialists came to power in Venezuela in 1998, 81 years after the Bolsheviks, and capital was destroyed there in a few years.  What about China — doesn’t the prosperity of China prove that socialism can work?  No, China is giving the illusion of prosperity. China appears to be prospering only because it is being given capital and technology through the idiotic policies of the Western nations.  What isn’t given on a silver platter is stolen by the Chinese.  The destruction of capital in socialist nations is not the result of mistakes, or accidents, or by some magic sabotage by unseen and unheard enemies: the destruction of capital, the decline in production, and the lowering of living standards are all “features” of socialism.  It is worse than that: it also demoralizes labor.”

In the next essay, I will give concrete examples of the defects of socialist economics.

References:

1.  Edward D. Duvall, The Control and Manipulation of Money, 2nd edition, Queen Creek, AZ: Fremont Valley Books, 2022, p. 36

24 Jul 2025

Dear Readers:

Director of National Intelligence Tulsi Gabbard recently released documents showing a conspiracy by the Obama administration changed intelligence assessments regarding Russia’s role in the 2016 election. This occurred in a secret meeting 8 Dec 2016, in which apparently President Obama directed high-level officials in the administration to revise the intel to show that Russia stole the election from Hillary Clinton; thus Trump was a Russian agent. This the intelligence agencies did by releasing a report 17 Jan 2017, which was the basis for the years-long accusation that Trump was illegitimately elected. The basis for that assessment rested partly on the “Steele Dossier” on Trump, manufactured by Mr. Steele and paid for by the Hillary Clinton campaign.

I thought it appropriate at this time to republish my summary of the Durham report that investigated the entire Steele Dossier episode. My version lays out the event in strict chronological order, instead of by category as Mr. Durham did. I believe this method provides a clearer understanding of hoe the scandal developed and how the FBI was derelict in its duties to uncover the facts in a timely manner. The attached pdf summarizing the Durham Report is 37 pages, well worth your while. The original was published exactly 2 years ago today; the enclosed file is identical except for a few minor grammar corrections.

Thanks for reading,

EDD

Dear Readers:

This essay discusses the benefits of long-term investing, using the Dow Jones Industrials and S&P 500 as examples. It is available only as a pdf owing to the use of equations not supported by WordPress.

Thanks,

EDD

The House of Representatives passed the “Big Beautiful Bill”, containing most of President Trump’s agenda (which is good), but it fails to do one important thing that Mr. Trump wanted: it fails to control federal spending.  Many members of Congress have been going around bragging that the bill “cuts spending by 1.5 trillion”.  The problem, as always, is that the 1.5 trillion is spread over ten years, and as usual, by that time some future Congress will figure out how to restore the “spending cuts”.  So it’s the same old thing in Washington: make a big deal out of nothing. 

I’ve enclosed a short excerpt from my book The Control and Manipulation of Money (available for free pdf download at https://fremontvalleybooks.com) that describes the basic problem.  This is from Chapter 24, where I discuss the four main problems of debt and inflation, one of which being federal spending.

“…. Congress cannot control its spending impulses, nor will it raise taxes to pay for what it spends, and therefore debt increases and the depreciation of the dollar continues.  The debt and depreciation can only be reduced if Congress cuts spending and generates surpluses to pay off the existing debt.  Here is a small example of this problem.  The National Endowment for the Arts is a federal agency that partly finances artists and performers and promotes various entertainments.  Every year, Congress allocates more money for the Endowment (its budget for 2020 was $162.5 M). Admittedly, that is not even pocket change when considering the total federal budget.  That said, if Congress cannot cut small things, it cannot cut the large ones.  Consider the following thought experiment.  Suppose all 535 members of Congress were lined up, put under oath, and asked under penalty of perjury if they would go so far as to reduce the rate of increase in the funding of the Endowment.  About 5% would go further: they would abolish it altogether.  Another 5% would agree to abolish it over a period of ten years.  Another 5% would agree to fix the funding at the current dollar level.  But the other 85% would poop their lace dainties and assert their Fifth Amendment rights.  Congress is a now a political prisoner of its own largesse (actually the taxpayer’s largesse) and cannot cut funding for anything.  Its favorite option is to raise hidden taxes on the middle class without cutting spending, which will eventually drive the middle class into poverty.

Why can’t Congress cut spending?  There are two reasons: first, it is the easy path to buying votes, and secondly, they’ll be long gone when the bill comes due.  Typically the members of Congress find it easy to go along to get along.  Faction A supports faction B’s spending priorities in return for faction B supporting faction A’s spending priorities, and all of them get most of what they need to buy the votes necessary to get re-elected.  Remember that it is perfectly legal for one member of Congress to bribe another member of Congress with your money; it is only illegal when you try to bribe a member of Congress with your money.  See the difference/trick?  This is how irresponsibility of Congress has caused the U. S. to degenerate into a fiat monetary system based on debt.” 

So don’t be expecting any big reduction in the deficit or any decrease in the rate of acceleration of the national debt due to the Big Beautiful Bill.  The only positive possibility is that the bill causes the economy grows at such a fast rate that the government takes in additional revenue to cover the spending that Congress won’t reduce.  It could happen, but even that won’t solve the long-term spending problem.