Socialism: The Opiate of the Corrupt and Ignorant

socialism-venezuela-slums-povertyThe overarching message of “The Opportunity Cost of Socialism”—a study recently released by the President’s Council of Economic Advisers (CEA)—is that the advocacy of socialism cannot reasonably be based on policy preferences; its attraction has always been grounded in a combination of wishful thinking and ignorance. For example, the new CEA study shows that the socialist approach to “single payer” health care advocated by many on the left would cost much more and deliver much less, resulting in the significant worsening of mortality and morbidity, not just higher taxes and reduced economic growth.

One prominent opinion page editor described the CEA study’s conclusions to me as too obvious to warrant mention. That reaction reflects the problem the study seeks to remedy. Obvious facts about socialism are not discussed enough. Few people are willing to read 50-page studies like the CEA’s, and there has been very little media coverage of it—journalists or politicians who could summarize the CEA findings haven’t seen sufficient reason to do so (or may themselves be among the uninformed advocates of socialism). That is too bad because the ignorant advocacy of socialism is currently a significant threat to our democracy.

Socialism has existed in many forms which lie on a continuum, from the central planning nightmare of the USSR, to the Scandinavian democratic experiments of several decades ago. The idea that unites the various embodiments of socialism along that continuum is that economic freedom is counterproductive to the aspirations of humanity. It would be far better and fairer, socialists argue, for the state to distribute scarce resources rather than letting the market allocate goods and services by itself. Socialism seeks control of economic decisions, either through central planning or through expropriative taxation and regulation, in the interest of the common man.

The difference between market-based and socialist economies is not the presence of redistributive policies per se. For over a century, around the world, market-based economies have taxed and redistributed wealth, and provided a host of services such as public education and care for the poor, sick, and elderly. The difference is that in market-based systems taxation is regarded as an unfortunate burden, which is employed out of necessity to ensure that other priorities are achieved. In contrast, in socialist regimes, taxation is not regarded as an undesirable consequence, but as a means to prevent individuals from counterproductively controlling their collective economic destiny.

Socialism’s appeal has always been its false promise to create wealth better than capitalism can. Advocates of socialism promise great economic achievements, which they argue are worth the price of reduced individual economic liberty. It is worth remembering that Karl Marx regarded socialism as an economic necessity that would emerge out of the ashes of capitalism precisely because capitalism would fail to sustain wealth creation. Marx made many specific, and erroneous, predictions about capitalism, including its declining profitability and rising unemployment. His analysis did not consider permanent economic growth in a capitalist system to be a possibility. And his “historical materialist” view of political choice claimed the rich and powerful would never share power voluntarily with their economic lessers, or create social safety nets. Writing in the mid-19th century, Marx fundamentally failed to understand the huge changes in technology, political suffrage, or social safety net policies that were occurring around him.

Not only has socialist theory been wrong about the economic and political fruits of capitalism, it failed to see the problems that arise in socialist governments. Socialism’s record has been pain, not gain, especially for the poor. Socialism produced mass starvation in eastern Europe and China, as it undermined the ability of farmers to grow and market their crops. In less extreme incarnations, such as the UK in the decades after World War II and before Margaret Thatcher, it stunted growth. In most cases, socialism’s monopoly on economic control also fomented corruption by government officials, as was especially apparent in Latin American and African socialist regimes. The adverse economic consequences of socialism led the Scandinavian countries to dial back their versions of socialism in the past decades. If the United States had imitated Scandinavian-style socialism, the CEA study estimates that our GDP today would be 19% lower.

Socialism has been abandoned in virtually all of the developing world. Countries today do not seek to emulate the disasters of North Korea, Cuba, or Venezuela. They also avoid high taxation of the rich. That reflects the recognition that countries compete with each other for capital. Expropriating the rich tends to make them leave, and when they leave they take their wealth with them.

This philosophical shift in the developing world is a major change since the 1980s when socialism was still fashionable among some. The shift away from socialist thinking was grounded in the growing body of empirical evidence about the kinds of policies that produced growth and poverty alleviation—that is, policies that used markets as a lever of economic development. Now developing countries such as Mexico, Brazil, Colombia, Chile, India, China, South Africa, Vietnam, Thailand, and Indonesia are known as “emerging economies,” a description that recognizes their need to emerge from state control of their economies through privatization, free trade, and the creation of viable private financial intermediaries to promote growth and poverty alleviation. All around the developing world, socialism is understood as a false promise, an ideological opium that repressive elites use to retain and expand power. Capitalism, in contrast, is seen as the force that has lifted over a billion people out of poverty worldwide since 1990.

To historians, that was obvious long before the 1980s. Socialism has never conquered poverty. It has never competed with capitalism as a means of effectively allocating resources and promoting sustainable growth. Over the past half century, scores of economic historians have sought to explain the factors that produced the economic progress that Europe and some of its offshoots enjoyed in the 18th-20th centuries. This group of scholars, which includes Angus Maddison, Joel Mokyr, Eric Jones, David Landes, Deirdre McCloskey and Douglass North, tend to hold quite diverse political preferences, but they universally agree on the facts: Government policies that safeguard a combination of personal economic freedom, secure property rights, and the ability of individuals to gain personally by participating in markets have promoted the effort and innovation that conquered poverty and promoted growth through the ages.

The facts about socialism and capitalism may shock the young people of America, many of whom lionize Bernie Sanders, an unapologetic socialist who honeymooned in the USSR, as the new conscience of our nation—and many of whom, 51% according to Gallup, now have a positive view of socialism. Only 45% have a positive view of capitalism. That represents a 12-point decline in young adults’ positive views about capitalism in just the past two years.  Many of these young people are thoughtful and intelligent—but they are also ignorant about the history and economics of the systems they favor or condemn. This is the main reason why they must read this important CEA study.

Reprinted with permission from Economics21 - by Charles W. Calomiris

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James Carter
3 years ago

Disarming citizens is necessary for implementing socialism, since socialism relies on lies, force and coercion to work.

Rebecca Drummond
3 years ago

Socialism/communism seems to always end up with dictatorship. Dictators seem to end up as murderers of their own citizenship. Those pushing for it all picture themselves as heading up the government from the ground floor; not having to face the lack of food and housing; enough “coal for the furnace;” the dacha in the country; controlling what the citizens are allowed to see, hear, read, and who to worship; have servants to care for their every need in their well-appointed home. You object? Well, then you can be eliminated by the lower echelons in place for that purpose.

How exciting for those with no say in anything to have the likes of Barack Obama, Hillary Clinton, George Soros, and their ilk strutting around telling the rest of us how it is and “shut up” and do what you’re told! We had a little bit of that from the senator from Hawaii during the Kavanaugh Supreme Court hearings when she told the men to shut up and do what she wanted done

The form of government left to us by the Pilgrims (after having tried socialism which failed) and by our forefathers who wrote the Constitution (giving us the vote ) made “we, the people” the ultimate say so in our Republic. Why would we want to jeopardize our freedom by falling for “free stuff?” The Bible even says “if a man won’t work, he won’t eat.” God help us all if the siren call for that “free stuff” wins out in the end.

Silas Longshot
3 years ago

Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.
Winston Churchill

David Campbell
3 years ago

“That is too bad because the ignorant advocacy of socialism is currently a significant threat to our democracy.”

Wrong. Our Republic. Socialism wins if everybody thinks we are a democracy.

Rexford O Ames
3 years ago

Excellent article. Issue: If you can’t read. The article will never been seen. High school teaches the requirement , for students to read , required reading only , in order to go to another level. In other words. Learn nothing.

3 years ago

Obama was all in for Socialism, not for the benefit of the people, but for himself and his cronies. Hillary would have keep us down the same path of destruction. Like Trump or not, he stopped it in it’s tracks. It’s true the media doesn’t have a clue, Hollywood and academia has always been socialist leaning as they benefit from it. If we are not careful these uninformed elitist will destroy the great USA that most of us have come to love.

3 years ago

The biggest problem with Socialism is that they eventually run out of other peoples’ money.

Burton Pauly
3 years ago

Sad to say that those who seek to get all they need or desire by the government giving to them is just asinine.The gov. can’t do anything that is good by subsidizing those who won’t earn their bread by the sweat of their brow. If this nation doesn’t get off it’s rear and run this Republic like it should there will be civil disorder like we’ve never seen before. Free loading is Passe. Go to work, and pay your cotton picking way through life.

Janice vanhorn
3 years ago
Reply to  Burton Pauly

How would or could all US workers simultaneously take a protest day off work. Would this result in government loosing tax dollars for that day. Do the math. show how much was lost. They need working people but if socialism takes over. working people might as well quit working watch the soap all day. compare socialism to that unwanted relative that has taken over your home. Especially the couch and tv. Ex democrat saw the light.
Now Republican

3 years ago

Great article. Not sure what errors PaulE is referring to except it must be from revisionist history. …There’s something in our humanity that needs to actually feel the pain first before letting go of a bad idea or habit. There doesn’t seem to be much interest in learning from other countries. So I’m very pessimistic about the future in the hands of our engineered children. Socialism is the most discredited economic system ever and yet we can’t get out of the way of capitalism. Great point in article about Marx’s inability to foretell the future and missing some obvious dynamics. One other important point that needs to be concisely framed is that you cannot judge capitalism by what we’re experiencing here in the US today. We have bastardized it with regulation beyond recognition. People really need to study “unintended consequences” of regulation. Every single regulation has unintended consequences and the challenge is to introduce a cost-benefit analysis to each. Right now we just load up the regulations to gain power over people while simultaneously chipping away at our freedoms and hence long-term enduring successes.

John P
3 years ago

Notice the (poor me), group of people wanting this. Note who would pay. They will riot and protest until they get it.

John P
3 years ago

REDUCE PROPERTY TAX. These past 80 years, I have yet to hear a politician say, they will reduce property taxes on a continuing schedule. Why should I be penalized because I realized my American Dream and bought a house. Politicians are paid too much to search for new ways to spend money, instead they need to discover ways to reduce spending. REDUCE PROPERTY TAX ON A CONTINUING SCHEDULE.
Catonsville Maryland

Charlene Kimmel
3 years ago
Reply to  John P

John, unfortunately you live in an ultra-liberal state. Your property taxes will never be reduced unless you change your politicians to someone who is conservative. Or, you could move to TN – which has long been conservative most especially in our local politics. Typically on a $350,000 house our taxes are about $2000 annual. And we are not in a “backwater”- I live about 15 miles south of Nashville. I feel for you, my sister also lives in Maryland.

Sam Campano
3 years ago

They are all failed systems. Capitalism may seem to be successful but it’s rotting from the inside and requires that we buy into the idea that scarcity is a fact. Truth is there is enough of everything for everyone. The few truly wealthy at the top need us to buy into the idea of scarcity to maintain control and ownership of most of the wealth on this planet. Take energy for example. There is a way to provide free electricity (energy) to everyone anywhere in the world. It would empower all people. Providing free energy to everyone everywhere is socialistic in concept and implementation. Once implemented, the rewards offered to society by the more enterprising, hardworking and innovative people would be rewarded with a greater proportion of the added value provided. Same thing with health care. Instead of the present system that takes 80-90 cents of each dollar for administration, physical assets, salaries, insurance, etc., we should socialize the distribution of health care by putting in place a system that puts 80-90 cents of each dollar into actual health care with 10-20 cents of each dollar used for administrating the distribution of health care to all. All health care should be provided equally to all people not matter what their station in life. Again a socialistic distribution of “wellness” with the more enterprising, hardworking and innovative people receiving a larger proportion of the savings and wealth created by such a system. This is all going to happen one day anyway. It has to. We cannot survive the current way of running the planet for much longer. All we have has a people is the choice to “pull the trigger” now and take the hit to replace the current system.

3 years ago
Reply to  Sam Campano

That single belief “Scarcity is a fact” is the reason that people are cowed into believing that any government can make decisions on distribution of a good or service. Slowly the restraints on the market place are being lifted and only the wealthy that are so greedy to want the masses controlled, )Soros, Gates, Buffett, Bloomberg, et al), that they are pushing the idea of government control of that market place.
All of the wealthy have been made so under our capitalist system and only the envy of their wealth has given socialism a place to nurture in the younger generations.
There is no right to a job or guaranteed income. There is no right to health or wealth. There is a right to life, liberty and pusuit of happiness but the only guarantee of those rights are the guarantee that the individual is willing to place against the government.
All of the left leaning folks have lost sight of striving for improvement of the individual as the main contributer to happiness. Not necessarily the acheivement but the journey to the goal is the source of self worth and happiness.

3 years ago
Reply to  Sam Campano

While I dislike the whole idea of socialism, I must admit you have a good point in saying we should socialize health care. I believe that every soul deserves the best possible healthcare available at any time. However, how to pay for it is the big poser. And also. when you consider that a great deal of the current poor health is caused not by bad luck, or somebody’s “germs”, but by the results of the fat cat companies such as Monsanto-Bayer,Big Ag, Big Pharma ,Big Oil, etc. etc. It may well be that they owe something to the innocent little ones dying by the hundreds of asthma, plastics poisoning and food borne diseases.

3 years ago

Socialation would be the downfall of the greatest nation earth. American people do not have to look very far to see what results would be. Many have tried it Go to Canada and ask why their comming to USA for health issues

Army Vet
3 years ago

Socialism/Communism in any form is the political form of cancer: government that keeps growing uncontrollably with the cells at its center being corrupted until they poison and kill the whole living organism, or country by stifling every life sustaining function.

3 years ago
Reply to  Army Vet

You are so right, Bravo!!!

Herb Lieberman
3 years ago

excellent, Excellent, EXCELENT ARTICLE…..This MUST be taught in our Halls of “Education” by “Educators” and not Socialistic Brainwashers…Thank you…

3 years ago
Reply to  Herb Lieberman

Fat chance that will ever happen

3 years ago
Reply to  Herb Lieberman

From your lips to God’s ears.

3 years ago
Reply to  Herb Lieberman

Therein lies the problem…..history and econ. are not taught in HS nor is government. I had all 3 in my HS and loved these courses.

3 years ago

The first sentence in the article is the most accurate description of the appeal of socialism. After that, the rest of the article contains a number of obvious errors related to a most of the countries mentioned. Which is a shame, since the underlying comparison between capitalism and socialism and their much different outcomes for both the individual and society as a whole is so important for our young people to understand.

Herb Lieberman
3 years ago
Reply to  PaulE

Join the discussion…When and if a PERFECT WORLD was to ever exist, maybe, Maybe, MAYBE Socialism would be in order…But that has yet to happen and I sincerely doubt that it ever will…CAPITALISM has worked and worked very well, UNTIL Govt felt it knew better how to operate and regulate business and industry better than those that built those businesses and industries….Get Govt out of the way of business and let the market place based on supply and demand DO ITS JOB….

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