Socialism in Indonesia and Pancasila

PANCASILA SOCIALISM

Indonesia, Pearl of The Equator, is the world’s fourth most populous country that has an estimate of 258 million populations. It consists of a diversified ethnic, linguistic and religious groups throughout its 34 provinces situated in its more than seventeen thousands islands spread from east to west which is almost as wide as Northern America. Indonesia has the worlds' largest Moslem population, which is about 88% of its total number. Indonesia also has the largest economy in Southeast Asia and is one of the emerging market economies of the world today.

Garuda Pancasila, The Coat of Arms

PANCASILA as illustrated by the picture above is the official philosophical foundation of the Indonesian Republic; Panca meaning Five and Sila meaning Principles. Pancasila comprises of five principles held to be inseparable and interrelated which are as follows:

1.      Belief in the One and only God.

2.      Just and civilized Humanity

3.      The Unity of Indonesia

4.    Democracy guided by the inner wisdom in the unanimity arising out of deliberations among  representatives.

5.      Social Justice for all the people of Indonesia.

Within the five, they all have to to be interrelated and inseparable. The Social Justice principle would have been always related to the other principles, such as Democracy and especially with the first principle that’s referencing God. That is in a stark contrast with Marxism whereby Karl Marx, the founder, was known with his belief that, “Religion is the opiate of masses.” Therefore, it would be difficult, if not impossible for this nation to slip to Totalitarianism and /or Communism.

Based on Pancasila, Socialism would be inherent in the foundation of Indonesian politics and governance. We should admit that it had not worked well in the past because Pancasila was not applied properly. From Nationalism, the nation was changing and leaning toward Communism in the first 20 years of the Republic and then to Semi-Totalitarianism filled with cronyism, nepotism and corruption under then President Suharto for 30 years. However, let us now look ahead and note what has recently happened with Indonesia. Representing Indonesia is Jakarta and herewith, let's take it as an example.

Jakarta is the capital city of the Republic of Indonesia that has a size of approximately 665 kilometer square. It represents the melting pot of the nation with 300 ethnic groups. It is relevant to be noted that although Socialism is one of the basic foundations of the country, Indonesia began a process of rapid government decentralization in 1999 from a formerly strong centralized government structure to regional autonomy. Jakarta is not merely a city but it has a status as an autonomous Special Region governed by a Governor. Jakarta is the country’s economic, cultural and political center with a population of 10,075,310 as of 2014. It is the 12^th largest city in the world; the Metropolitan area, called Jabodetabek (Jakarta, Bogor, Depok, Tanggerang and Bekasi), is the 6^th largest in the world. In 2009 it had an income per capita in excess of US $ 10,000.00.

After decentralization, economic growth began to increase; In Jakarta it was 5.88 percent in 2015. According to the Indonesian Central Bank (BIs) it showed a 6.48 percent increase in the fourth quarter of 2015 compared to 6.12 percent recorded in the same period of 2014. This was confirmed by the States Statistical Agency (BPS) data of the regional gross domestic product (GDP) on February 5, 2016. The Gross Regional Product Nominal (GRP) per ca-pita is projected to increase to 7.3% beginning 2017. GRP is one of the measures for economic growth in Indonesia.

In the year of 2012 under then Governor Jokowi (now the President of Indonesia) and Vice Governor Basuki Tjahaja Purnama (who is better known as Ahok), Jakarta created massive social programs in the areas of Housing, Health, Education and Transportation. 

On November 2012 the Jakarta Health Card (KJS/Kartu Jakarta Sehat) and Jakarta Smart Card (KJP/Kartu Jakarta Pintar) programs were launched. It provides free health insurance for the people who meet the criteria to be in the poor category. The cards guarantee 12 years of free education. They also provide for students’ tools and educational needs. The cards guarantee free Higher Educations for poor students who pass the entrance exams. Why are these social programs given in a form of cards instead of cash?  According to Mr.Basuki, the benefits are provided in the form of electronic-cards so their usage can be easily tracked, verified and controlled by the government. It would also ensure accountability to achieve the intended result as well as to avoid benefits misuse, waste and corruption. Jakarta has recently built 44 community hospitals in 44 districts across the capital region.

Several high rises of Low Cost Public Apartment complexes were built recently to accommodate poor people who were removed and then relocated from their slum/makeshift dwellings along the banks of Jakarta's 13 main rivers. Many more are to come based on the current plan. Jakarta has built waste dumping sites in its almost all district neighborhoods. Dikes and two big Reservoirs have been restored and more are to come. The rivers become garbage free, cleaner, and deeper. The flooding problem Jakarta had to face every year is practically now gone. This achievement translates to a big saving for the region. Jakarta is also developing its Northern Coast line in reference to its Water and Flood Management program. A huge reclamation project building artificial islands and a Giant Sea Wall is under way.

Local market places were built and provided for the poor people near their apartments. They could either use it to open up their own businesses or conveniently use it as consumers. Free Community Parks and Sport Centers, in partnership with local businesses are also being built for the well-being of the community.

Free transportation for the poor is provided.  Public transportation such as busses is added and modernized. Mass transportation system such as the MRT (Mass Rapid Transportation system) and Light Train system are being built to alleviate chronic traffic jam problems.

However, it is interesting to note that Indonesia, including Jakarta has no formal social welfare program when it relates to unemployment. In a way it would discourage people for not wanting to work. During crisis this social protection has been largely based on informal arrangements, such as community involvement and faith-based donations. Indonesian is known with one of its cultural traits called “Gotong – Royong”, a spirit of team work in the context and frame of the first 3 elements of Pancasila namely, the belief in God, Humanity and Unity as referenced above.


The low-cost of health care, housing, free education and free transportation, have the effect on increasing people's residual income, living standard and therefore, ability to compete and participate in the open labor market; hence, resulting in the increase of productive population as well. Under Governor Basuki T.Purnama aka Ahok's social programs and policies, Jakarta has been transforming rapidly to a better city or region within the past 4 years.

How does Jakarta fund its Social Programs?

Jakarta has a stratification of taxation which consists of Income Tax, Local Tax (Pajak Daerah) and Central Government Tax. Income Tax employs a progressive rate commencing at 5% sliding to 30% per annum. Companies are taxed at a rate of 25% (less than the US corporate tax rate of 40%), for both domestic and international sourced income.

Land and Building Tax are calculated at a value calculated by the Regional government called NJOP or Nilai Jual Objek Pajak – which is less than real market worth. In Jakarta, land tax is 10% of the Government calculated value (NJOP). This tax is mainly applicable to those of middle class and upwards. There is an exemption when the land and building value is less than 1 miljar (approximately US $ 77,000.00) or less than 100 meter square, thus it's practically free or no tax for the poor.

To expand its economic growth, Indonesia has been very open and friendly to businesses, but not to say that the government has no control of it. Certain type or sector are owned and controlled by the Government. They are called BUMN, Badan Usaha Milik Negara or Indonesian State Owned Enterprises. Among the 168 lines of businesses, 120 are open for foreign and domestic investment, 48 for domestic investment only and 13% or 25 lines are close for public or private investments (source: Jakarta Investment and Promotion Board).

The current governor of Jakarta, Mr.Basuki T.Purnama (Ahok), an ex-businessman and politician himself, has a unique and smart way of involving business sectors to help funding his social programs. At the moment there is a huge project underway for the construction of a complete new City-District on its Northern Coast of Jakarta covering a total area of 450 hectares. This project includes reclamation of 160 hectares creating artificial islands off the coast of Jakarta and a big Giant Sea Wall. The master plan is geared toward the development of housing for the rapidly growing population of Jakarta and to protecting Jakarta from the rising sea-level consequences. This mega project is executed in joint venture with Boskalis/Van Ord. Unfortunately; it is temporarily on hold due to some political issues. However, governor Basuki would request 5 percent of the reclaimed land to be handover to the city administration, and 15 percent additional contributions for the developers to be granted principle and execution permits for their reclamation projects. Out of the 15 percent contribution, the administration requires developers to carry out flood prevention work in North Jakarta. Among the choices for the developers were: installing water pumps or creating pumps housing, dredging rivers, extending dikes, constructing inspection roads, and building low-cost apartments for the city. The figure of 15% was considered and arrived by taking into account the need for those businesses to make money and profit, thus worth their investments.

Mr.Basuki also uses CSRs (Corporate Social Responsibility) funding for his social projects. CSR is a legally required monetary contribution from corporations to government social projects; which at the same time these corporations are rewarded by getting certain government facilities to create exposure & demand for their products and/or services which result in a win-win situation for both sides. This model requires companies to pay the government up to 3% of their net gain. The funding from CSR has been used by governor Basuki to maintain and improve the city public transportation, public parks, roads and other social projects.

CHALLENGES

Corruption

Indonesia is marred with rampant corruption. Some people even consider it as part of the “culture”. Indonesia ranks 34^th by the 2014 world Corruption Perception Index, even below some African countries such as Nigeria, Zambia and Trinidad; Compared that to Denmark which ranked number 1, as a nation with the lowest perception of corruption, Indonesia still has a long way to go. There is almost zero confidence among the public for the Indonesian government officials and law-makers.

Recently for the first time in history, under Governor Basuki Jakarta has seen a massive bureaucracy overhaul that includes corruption eradication and governance transparency. With no hesitation his administration removed 751 structural positions in agencies and replaced them with functional positions. There were thousands of city employees removed, or practically fired, to non-active positions with a dismal salary thus creating substantial savings for the city. To enhance transparency and thus minimize (if not totally eradicate) corruption, Governor Basuki insisted the implementation of an Electronic system for all government transactions, delivery of services, procurement and tax collection. On the other hand Mr.Basuki has also increased its civil servants’ salaries comparable to, or even higher than the private sectors’. He also increased allowances based on work output and attendance, hence the application of a Merit-Based system which was unheard before from any government sector.

Race and Religious Intolerance.

Mr.Basuki T.Purnama aka Ahok was the first Chinese ethnic and Christian leader holding such a high executive position as Governor in a predominantly Moslem population country. He assumed his position in November 2014 with lots of challenges and resistance, a month after Mr.Joko Widodo (then the governor) ascended to the presidency.

Historically, besides other minorities, the Chinese ethnic has been the most targeted group by discrimination practices in Indonesia. However, discrimination against race or ethnic background became unlawful under the administration of President Gus Dur in 1999. Therefore, institutional – discrimination has ended, however the residuals still exist and palpable among the minority. Jakarta governor Mr. Basuki, aka Ahok, because of his ethnicity and religion, has been receiving strong opposition and threats from radical Islamic organizations such as FPI (Islamic Defenders Front). Actually Indonesia had been noted for its relatively high level of religious tolerance, until recent years when many conflicts between Muslims and Christians have occurred. Sadly it occurred in the era when a real democracy got implemented after the fall of then President Suharto in 1998.

Fortunately, it now appears that this race and religious tensions have slowly dissipated; nevertheless, if it does not substantially minimize to the point where law and order can be established and safety can be guaranteed, it would be a serious challenge and danger for the development and growth of Indonesia.

Unemployment

Although unemployment rate in Jakarta has steadily declined from 12.15% in 2009 to 8.5% in 2014, it is still considered high by national standard. The national unemployment rate has declined to 5.5% in 2015. With its population of 258 million, the fourth most populous country in the world and with the growing young population entering the labor force each year, it will be a challenge for the government to stimulate job creations, should there be another global financial crisis or economy slow down. Therefore, it looks like that there will be a need to create a formal controlled, but limited unemployment program as part of its social welfare system.

Summary:

The difference between Pancasila Socialism and other type of Socialism:

Based on its founding principles in Pancasila and the many social programs funded by the government, Indonesia would qualify to be called a Socialistic Nation or Welfare State. The question is what kind or type of socialistic country is Indonesia?

The Marxist-Leninism style such as in North Korea, Cuba and Venezuela would certainly not be the case, because Indonesia has a decentralization of governance system, free and strong private sector and affinity to the first principle of Pancasila which relates to God. Communism uses Centralized Planning Economy where absolute power is required, whereas Indonesia has a decentralized system.  

The Scandinavian Democratic Socialism such as in Norway, Denmark and Swiss would also not be perfectly correct since Indonesian taxation system is not as high and as “punishable” to individuals; and in some ways it is actually more effective to businesses and corporations. Indonesian top marginal individual income tax rate of 39% (or range from 5% to 39%) is much lower compared to Denmark that has 60%. Indonesian corporate tax rate of 25% which is quite modest (only 6 points higher than Singapore which is also known as a “Socialist” country which rate at 19%) even in comparison with USA, which is known as a “Capitalistic” country, that has a much higher rate of 39.1%. Regardless of President Obama's popularity and perceived success, it has become a fact that US is now experiencing a very slow growth of 2.1% , the weakest since Post-World War II 1940. I hope this would be a reference and a lesson for the Indonesian government and policy makers. At the moment, after decentralization, Indonesian economic growth began to increase and it reached 5.18% in the second quarter of 2016.

Instead of simply taxing more, Governor Basuki provides beneficial mutual partnership with businesses. It's done either by imposing “contributions” (for the funding and development of his social programs) in exchange for benefits given to the businesses, and/or by collecting levies from corporate net gains in the form of CSR (Corporate Social Responsibility). Both, can be seen as levy systems, which are more directed and measured thus more effective to achieve its intended result, and more beneficial for the stakeholders. Sensibly you do not want to kill businesses merely in the name of “social justice”. It appears that they understand not to punish businesses or the “rich” (who potentially have the means of furthering investments and creating businesses) with ridiculous high taxes; to the point that there will be no social justice but instead social-injustice due to the impact of less growth, less jobs, smaller tax income base and therefore, less ability to fund the necessary social programs.

Another important thing is the handling of government incomes and their disbursement with strict transparency, free of corruption and accountability. So far, they have been done and must be done under the watch of Governor Basuki.

In addition, there is one interesting concept of Governor Basuki with regard to the understanding of Social Justice. He said, “ada perbedaan dasar antara bantuan - sosial dan keadilan - sosial”. What he meant was, according to him, that there is a profound difference between merely distributing handouts in the name of humanity or socialism, versus providing tools and creating opportunities to elevate the weak and the poor to an equal level of playing field. Mr.Basuki’s social policies are geared toward the latter which he said, is in line with the spirit of Pancasila. There is a profound philosophical differences between Governor Basuki's Social Programs and the Scandinavian Socialistic Countries Social Programs, including the US Social Programs.

Will Governor Basuki T.Purnama be successful with his Social Programs?

If governor Basuki can overcome all of the challenges listed above and there’s a safe and conducive political environment based on the five principles of Pancasila, I would say with great certainty that his Social programs shall work successfully when executed humanly but with great accountability and transparency in a corruption free environment. It then may also become a showcase of a successful model for the whole nation and perhaps the world to see.

From my two previous postings we now have learned that there are a Centralized Marxist Socialism and a Democratic Socialism. Shall we call this one in Indonesia, a Balanced Socialism or a Reasonable/Sensible Socialism or better yet, Pancasila Socialism? I think I like the last one the best!

For comparison with Democratic Socialism, please click the following link "Democratic Socialism and It's Challenges"

For having a perspective about Socialism itself and its potential drawbacks, please click the following link and read about "Is Socialism the Road to Totalitarianism or Communism?"

Democratic Socialism and It's Challenges

DEMOCRATIC SOCIALISM?

As indicated in my previous posting that in his US Presidential bid, Bernie Sanders has single-handedly brought the term “democratic socialism” into the contemporary American political lexicon and shaken its landscape by citing several Scandinavian countries, such as  Norway, Denmark, Finland as the “successful” model of a Democratic Socialism.

Socialism in general has the following noble characteristics:

Guaranteed Housing

Universal Health Care

Free Education

Access to free Transportation.

Guaranteed Employment, and

Fighting Climate Change, as aspired by Mr.Sanders.

To achieve all of the above is not that easy and simple.  How could that be done?  The easiest way would be through a Central Planning like in North Korea, which is the Communist/Marxist model, which create power that in essence force the idea of “from each according to their ability, to each according, not to their contribution, but to their need”. However, we all know how that has turned out. Then, how could we achieve those noble ideas without having to resort to the peril of Communism? Is Democratic Socialism the answer?

According to the Wikipedia, “Democratic Socialism is a political ideology that advocates political democracy alongside social ownership of the means of production, often with an emphasis on democratic management of enterprises within a socialist economic system.”

Let us examine about those Scandinavian countries.

For the purpose of discussion, let us take Denmark as a reference since this country was mentioned several times in the recent American Presidential Political debates. Moreover, Denmark represents the Nordic model for the other Scandinavian countries.

Denmark has a Universal Health Care coverage. Denmark has high degree of Social Security which provides entitlement to benefits when you lose your job, get sick or are disabled. Denmark also subsidize early childhood education and offers a free higher education; students receive educational grants for studying at higher education and university. Another name for their system is called the Nordic model. From this perspective, Denmark and the other Scandinavian countries are considered Welfare State.  

How do they fund their welfare programs?

They have abundance Natural Resources, for example Petroleum, Natural Gas, Gravel, Sand, Limestone in Denmark and Timber, Mining and Fishing in Norway.   

Denmark’s top marginal income tax rate is 60%, sales tax 25%, corporate tax rate 23.5% and a whopping 180% for cars. According to the Organization for Economic Co-operation and Development (OECD), about half or 50% of their total National Revenue come from taxation, compared that to 25.4% in the US. 

Based on the democratic element of socialism, the means of production in Denmark are primarily owned by individuals, not the community or the government. Resources are allocated to their respective uses by the market. Measured by the number of government regulations/restrictions Denmark has a high economic freedom rated at 76.3 which is almost the same as in the  US at 76.2. This is reflected in the invention and creation of big businesses, such as Skype, Spotify, Ikea, Nokia, H&M, Angry Birds, etc. Danish Prime Minister Lars L.Rasmussen, who last year spoke at the Harvard’s Kennedy School of Government, said, “…….Denmark is far from a socialist planned economy. Denmark is a market economy”. Companies in Denmark can easily hire and fire allowing the allocation and re-allocation of resources causing it more effective and efficient in its operation . Denmark is also known as the least corrupt country in the world. There seems to be a balance between a Welfare State and a Free Market Economy. If we look at it, it would be a misnomer to call Denmark a Socialist country from the perspective of a centralized and planned system. I think, that is why the system was called Democratic Socialism.

Denmark was the World's Happiest Country as reported by the World Global Happiness Index in 2015. It had a GDP per ca-pita of $58,207.90 which is one of the highest in the world. Another Scandinavian country, Norway had $ 66,937.00

However, let's go back to Bernie Sanders' aspiration to transform the United States from Capitalism to Democratic Socialism. Is this Democratic Socialism really better than US "Capitalism"? Let's examine together.

Challenges for Denmark and the Nordic model:

Apparently Denmark and the other Nordic members are having great challenges caused by some factors namely, high taxation, and recently globalization and immigration. This is shown in the increase of Income or Wealth Disparities which ironically is the one, upon which a Socialist like Bernie Sanders would strongly object and despise. 

High taxation has caused labor and capital flight to other places that offers lower rates. We could see now the slowing down of its growth.  Denmark GDP growth of 6.4% in the 4th quarter of 1994 came down afterwards to an average of 1.47% up to 2016. GDP Annual Growth Rate in Denmark is reported by the Statistics of Denmark. Norway averaged 2.6% from 1979 to 2016, down from its all-time high of 10.2% in the first quarter of 1980. There is a correlation between high taxation or the size of Government and the wealth of a nation as shown by the following OECD graph below:

What the above graph shows is: the higher tax a country impose, the bigger the size of the government will become, thus the less growth it would produce.

Globalization, Immigration and Refugees.

With the low salaries and high skills in India, China, and other part of the globe, labor and capitalization are moving out. This has been a big challenge for Denmark and other Industrial Nations to compete.

There has been an influx of foreigners coming into the Nordic countries, as well as recently refugees from the Middle East. Denmark has seen a steady increase in immigration over the past 20 years, most coming from non-Western countries. As of 2014, more than 8% of its population consists of immigrants. The population of immigrants has reached 476,059 excluding the recent influx of refugees from Syria, Afghanistan and Iraq. This shift in demographics has posed several problems such as, cultural differences, employment gaps, the need of education of immigrants and their descendants, spatial segregation, crimes rate and language abilities. Immigrants’ labor market participation rate was only around 50% versus 80% of the native Danes. This has caused a substantial burden on their social programs. Prime Minister Rasmussen believed that the government high social benefits and welfare program had acted not only as an attraction for people to come, but also as a disincentive for labor participation among the low skilled immigrants. Therefore, he was for reforms on public policies such as capping Social Benefits for those immigrants and lowering taxes on the lower labor income.

Income/ Wealth Inequality.

According to Credit Suisse's weighty Global Wealth Report of 2014, contrary to the common believe, apparently the Scandinavian countries were found to have a rather high wealth disparity. The Denmark ECLM (Economic Council of the Labor Movement) has also reported a decrease of 10% income for the poorest while the top richest 10% had their income increased by 30%. In 2014, the top 10% of wealth holders in the Nordic countries hold 69% of the total region wealth, which is almost the same with the US where the top 20% owned 85% of the nation wealth. It has been argued that while the top groups continue to accumulate for business and investment purpose, the middle and lower classes have no pressing needs or incentive for personal savings due to the strong public security programs, generous public pensions, free education, unemployment and free health care.

Mr. Rasmussen has proposed the following steps to be taken by his administration:

Increasing efficiency via technology. Removing red tapes and lowering taxes for business to create more jobs in the private sector. Reforms on Public policies such as capping Social benefits; improving education to improve labor quality and productivity; lowering taxes on the lower income labor. Promoting integration of immigrants was also one of his efforts, since he feels that contribution and participation besides the reforms, are crucial elements to sustain a welfare system.

Conclusion

The Nordic countries have abundant resources; however, Socialism with high Taxes funding, unfettered spending of benefits without measurable, controllable and clear objectives, and reduced distributions, would not work. In the beginning it appears to be successful because of a somewhat homogeneous population, but it has changed due to the impact of globalization and the influx of refugees and immigration. When the pie is large enough for everybody, it would be easier to collectively bear the burden thus easier to maintain satisfaction.

The above example shows decreasing growth, decreasing income and decreasing productivity, but increasing wealth disparity.  Those things would certainly not be a testimony of a great success as thought by Bernie Sanders.

As evidence by the situation in Denmark and the other Scandinavian countries, socialism alone is not a system that would generate a successful outcome. It is not a system that could satisfactorily replace Capitalism like Bernie Sanders think and aspire. It appears that a relative Capitalism such as in US, despite its imperfectness, has more successes than a pure Socialistic country. Moreover, Denmark is not a true Socialist Country as neither is the US a true Capitalist Country. We all know that US has also its own socialistic elements as reflected by its huge funding for their Social Security, Medicare and lately Obamacare. The difference is that US taxes and Government Size is not as big as Denmark, yet.

The socialistic system needs a constant review and reforms in line with the changing nature of the world. Also, a question ought to be asked to every socialist, including Mr.Sanders: How do you obtain and manage the funds for your Social Programs?

Since socialism has in fact several noble virtues, it would be great to see it work. Let us take a look about socialism at another country; and that country is Indonesia. Please visit my next posting by clicking the link below:

Indonesian Socialism

Is Socialism the road to Communism and Totalitarianism?

"We are afraid to sing, say, wear or think what we want. .....There is no love story, there is no Romeo and Juliet. Every story was propaganda to brain wash us about the Kim's dictators.....When I was 4 yeas old, I was ordered by my mother to not even whisper because the birds and mice could hear me. I thought the dictator could read my mind......" - Yeonmi Park.

This is a story of Yeonmi Park, a girl who had escaped from the brutal regime of Communist North Korea. It was a story of misery and human rights abuse at best. It is a heart wrenching story which depicts the brutality of Communism; But, how did it happen?

Some people believe that it started with Socialism which is a precursor to Communism.

What is Socialism? Socialism is when a population COLLECTIVELY owned and CONTROLS the means of production and DISTRIBUTES the end result "equally". Socialism means, or often used, to describe the ideals of Social Justice, Greater Equality, and Security. These are powerful slogans effectively used by those who are championing the rejection of private profits, labor alienation, inequalities of wealth, and discrimination based on race and sex.

"The idea of Socialism is at once grandiose and simple... We may say, in fact, that it is one of the most ambitious creations of human spirit,... so magnificent, so daring, that it has rightly aroused the greatest admiration", said Ludwig von Mises.

The fighting and striving for these noble values could understandably cause one, not only to feel good, but also to feel humanly and intellectually superior than others; Hence, a powerful and addictive concept, especially to those, the more idealist younger generation or millennial.

If it's so noble, why would socialism have the possibility to develop into totalitarianism such as in North Korea?

We all know that Society consist of individuals with a myriad of different needs, different wants and different aspirations. In order to achieve those noble ideals of Socialism, not only one needs a Plan, but also a Mechanism or System with Power that, amid those differences, controls the desired outcome. Aristotle believed that "order among men could extend only so far as the voice of a herald could reach, and that a state numbering a hundred thousand people was thus impossible." Therefore, a centralized economic plan and governance with iron hand would be necessary to realize the given socialistic distributive deals. "Central Economic Planning and Control lies in the heart of Socialism", said F.A Hayek in his book, The Fatal Conceit.

In order for it be effective, Power is required; And, when it becomes centralized and too big, it would ultimately lead, or at least create a slippery slope, to Totalitarianism, which we find in either Fascism or Communism. The propensity of Socialist ideas moving toward Totalitarianism has been interestingly analyzed and discussed by an Austrian Economist and Philosopher, Frederick A,Hayek, a Nobel Prize Laureate in Economics in 1974. His books worth to read are: "The Road To Serfdom" and "The Fatal Conceit - The Errors Of Socialism".

Based on his analysis, Centralized Socialism could lead to Totalitarianism and Communism which would cause all kind of human misery as we see happening now in North Korea. We saw this misery in the form of physical and mental abuse as well as economic failures. It happened in North Korea, old North Vietnam, Cambodia under Khmer Rouge, former Soviet Union, former Red China, Cuba, Venezuela and Eastern European countries. This appears to validate the argument that Communism didn't work, has failed, and will always fail. Therefore, the question would be: why should we go for Socialism if it leads to a totalitarian system, such as Communism? This is something worth to ponder and to be viewed with care.

Apparently, there are several type and level of Socialism; one of which is known and called "Democratic Socialism", which was recently brought to the forefront of the political debate by a Democratic US Presidential candidate, Bernie Sanders. Mr. Sanders cited the Scandinavian countries, such as Denmark, Finland, Sweden, as the successful models of Democratic Socialism. This is the type of Socialism that does not have the totalitarianism effect as discussed above and therefore, is a much better system than Capitalism, according to Mr.Sanders.

Is Mr. Sanders correct in this matter? For further information about the other types of Socialism, please click the following link and read my next article which is titled "Democratic Socialism and It's Challenges"