This document discusses socialism and why it often fails to achieve results. It defines socialism as a system where the government generates revenue primarily through taxation and funds social programs like education, healthcare, and welfare through tax revenue. However, socialism faces issues like low productivity as people lack motivation, and deterred foreign investment as governments over-intervene in markets. Examples from Cuba show its low human rights ratings and lack of foreign investment. Venezuela's oil industry has also declined sharply with unmaintained rigs as its socialist government has seized foreign businesses like GM's plant. Overall, the document argues socialism struggles because it does not emphasize efficient use of taxpayer funds or operate competitively like the private sector.

1. What is Socialism and why does it fail to
achieve results
By: PaulYoung, CPA, CGA
Date:April 21, 2017

2. Disclaimer
 This presentation is one view of socialism.

3. PaulYoung - Bio
• CPA, CGA
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• Former Lecturer – CGA Ontario – Public
Finance, Advance Accounting, Finance and
Advance Information Systems
Contact information:
Paul_Young_CGA@Hotmail.com

4. Agenda
 What is socialism
 What are social programs
 What is income re-distribution
 Private Sector
 Issues
 Example/Cuba
 Example/Venezuela

5. Socialism

6. How does revenue flow for government?
 Government gets money via taxation
 DirectTaxation (Corporate / PersonalTaxation)
 IndirectTaxation (PropertyTaxation, SalesTaxation, Excise/DutiesTaxation
 Income from Crown Corporation
 User Fees
 Other taxation

7. Social Programs
 Education
 Healthcare
 Retirement
 Child Care
 Welfare

8. How are social programs funded?
 Taxation
 Equalization
 CST/HST
 Direct funding

9. Why is business investment important?
 Business Investment
 Capital is required to develop and produce products for both domestic and international
exports (FDI and Domestic Capital)
 Business requires inputs like labor and material to produce goods for re-sale. Consumer
spending drives 2/3 of the economy

10. Issues with Socialism
 Productivity
 People are not motivated to succeed in life
 Too much government intervention deters FDI
 Companies will invest where they can get a return on investment
 No emphasis of efficient and effective uses of taxpayers dollars
 Value for money
 Government does not operate in a competitive environment

11. Examples / Cuba
 Human Rights ranking low – Source - https://www.hrw.org/world-report/2016/country-
chapters/cuba or https://freedomhouse.org/report/freedom-world/2016/cuba
 FDI – “Fixed capital investment in Cuba represents just 10% of GDP, which is half the
regional average.This likely won’t change until the embargo is lifted, as that would
facilitate the arrival of significant new foreign capital.Cuba currently requires billions
of dollars in investment in communication infrastructure, an update to its dilapidated
transportation network, and significant capital inflows into key productive sectors”. –
source - http://cubajournal.co/investing-in-cuba-the-approval-process/ or
https://hbr.org/2016/03/the-potential-and-pitfalls-of-doing-business-in-cuba

12. Example/Venezuela
 In the oil fields that dot the country’s eastern savanna, pump jacks sit idle because of
parts shortages, abandoned oil barges rust onshore and drillers earning $9 a week
often skip shifts.Overall, the number of working oil rigs inVenezuela declined by a
quarter in the 12 months to September, according to Houston-based oil-field-service
company Baker Hughes Inc.There are now more rigs drilling in Oman, where proven
reserves are just 1.7% ofVenezuela’s. “I don’t think this government will be able to
stabilize production even if the oil prices start to rise,” said Luisa Palacios, Medley’s
Venezuela analyst.
 Source - http://www.wsj.com/articles/venezuelan-oil-is-largely-staying-in-ground-or-going-
up-in-smoke-1477238401

13. Business Investment Lost
 http://www.industryweek.com/companies-executives/gm-ceases-venezuela-operations-after-government-seizes-
plant?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+IWNews+%28IndustryWeek+Most+Recent+News%29&sfvc4enews=42&cl=article_1&NL=IW-07
General Motors Co. (IW 500/3) shut operations inVenezuela after authorities
seized the automaker’s plant and took its vehicles in the first nationalization
of a major company’s facilities in the country in more than two years.
GM’s factory was “unexpectedly taken by the public authorities, preventing
normal operations,” according to an emailed statement.The Detroit-based
automaker said it “strongly rejects the arbitrary measures taken by the
authorities and will vigorously take all legal actions, within and outside of
Venezuela, to defend its rights.”
IndustryWeek – April 20, 2017