To the Capitalist, monetary rewards are the natural consequence of hard work. I go to work, punch the clock, add value to my company and earn my paycheck. If I work more hours, then I have added more value and will get compensated thus. If I take the effort to save and invest my money, I should be entitled to the rewards which come with that. From that point of view, taxes and regulations are evil, a tool of The State to legally take things which are morally rightfully mine.
The Socialist (or Communist) sees things differently. Monetary rewards aren't the result of my hard work, they are the result of my situation in life. I was born to wealthy parents (not really, but it helps for illustration). My family taught me to read at an early age. They forced/encouraged me to do well in school. My family sent me to college and paid for a portion of it. Even my natural above average intelligence is a result of genes passed onto me, and thus is nothing that I should personally benefit from. Instead The State must make sure that all people benefit from the work of my ancestors and from my genetic gifts. My productivity for a company is not the result of hard work, but rather good breeding and education. Since The State cannot force good breeding (eugenics) it must instead enforce good education. The only way to do that is to appropriate what rightfully belongs to it. Since The State is the representation of The People it has every right to take from one Person to give to many. Thus, taxing me is the duty of The State so that it can provide for those who were not gifted with good breeding a better education.
Thus, we come to a dilemma. In a capitalist economy The Capitalist sees that if he works he will earn more. However, The Socialist determines that no matter how hard he works he can never do as well as The Capitalist because he was not as naturally gifted. Alternatively, The Socialist who does well in a capitalist economy sees this as a result not of his work, but of his natural gifts. Naturally he must give a portion of his work equal to that of his natural gifts to those who were not as blessed. But this is not fair to The Socialist. Everyone should have to give to those who aren't gifted. Hence, we have a welfare state.
Another outcome is what we are seeing today. Twenty years ago The Socialist decided that everyone needed a house. It's what Americans deserved. So, they used the capitalistic economy to make owning a house easy. It doesn't matter if you can pay for it, The State will make sure nothing goes wrong. The State encourages the banks to make bad loans through bad laws and bad reassurances. The Socialist manipulates the capitalistic market so that even those who are bad with finances can own a home. Eventually The Capitalist realizes that there is a trillion dollars in made up money out there and runs screaming. The Socialist then arrives and says "Look what happens when we gave the free market a chance! Look what they've done to us!" Then, instead of letting the bubble pop, and kick millions of The People (who really couldn't afford their houses in the first place) to the curb, we end up with a $700 Billion Robin Hood job on The Capitalist.
The alternative to this is a socialist state. In this state The Capitalist sees that no matter how hard he works and how many widgets he makes, at the end of the day he gets the same paycheck as the person next to him who made only half as many widgets. Hence, The Capitalist begins doing the minimum amount of work. The Socialist sees this drop and widget output and demands that The Capitalist work to his fullest extent. It is his duty, after all, to work for the good of The People. But why should The Capitalist work? He has no incentive, no reason to work harder. At this point one of two things happen, possibly both.
1) The Capitalist stops working. The economy stagnates, and the empire falls. See USSR.
2) The Socialist demands that The Capitalist WILL work, and there WILL be motivation. Historically this has taken the form of a gun to the head. Work WILL be done, prices WILL be low, you WILL sell the widget for half what it costs to make, because that's what The State has priced it at. Production halts because staple items are sold at a loss and hyper inflation ensues. See Cuba, Zimbabwe, Germany circa 1921.
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Socialism is an attempt to circumvent inborn ability. The socialist cannot admit that some people are born better able to scrub toilets and some to build rockets. All men must be equal. Thus, the socialist demands that all men be reduced to the lowest common denominator. This is done through taxes, through wage caps, through decimating our educational system so that even someone with an IQ of 80 (and don't argue over biased IQ tests. Some people's brains just don't work that well) can pass with flying colors. When the socialist attempts to deny that humans are different and, that just as we have different ability, so will we end up in different places in our lives, they deny our humanity. They usually end up destroying economies/lives as well.
