Socialism is an economic failure. International socialism didn’t work in the Soviet Union. National socialism didn’t work in Germany. And democratic socialism, while avoiding the horrors of its communist and Nazi cousins, also has been a flop.
Socialism fails because it attempts to replace market-determined prices with various forms of central planning based on government-dictated prices.
Moreover, socialism channels self interest in a destructive direction. In a free market, people get income and improve their lot in life by satisfying and fulfilling the needs of other people. In a socialist system, by contrast, people squabble over the re-slicing of a shrinking pie.
There’s a famous Winston Churchill quote that basically says that the ostensible problem with capitalism is that people aren’t equally rich, whereas the supposed attractiveness of socialism is that people get to be equally poor.
The Princess of the Levant sent me a visual version of Churchill’s quote, and it’s definitely worth sharing.
Both the Churchill quote and the above image are very entertaining. And they effectively make the point that statism is very bad for ordinary people.
That being said, they’re not actually accurate.
Sure, the masses are equally impoverished by socialist systems, but a handful of people escape this fate. You probably won’t be surprised to learn that the government elites have very comfortable lives. And that may be the understatement of the century, as indicated by this report in the U.K.-based Daily Mail. Here are some very relevant passages.
The daughter of Hugo Chavez, the former president who once declared ‘being rich is bad,’ may be the wealthiest woman in Venezuela, according to evidence reportedly in the hands of Venezuelan media outlets. Maria Gabriela Chavez, 35,…holds assets in American and Andorran banks totaling almost $4.2billion… Others close to Chavez managed to build up great personal wealth that was kept outside the petrostate. Alejandro Andrade, who served as Venezuela’s treasury minister from 2007 to 2010 and was reportedly a close associate of Chavez, was discovered to have $11.2billion in his name… During his lifetime, Hugo Chavez denounced wealthy individuals, once railing against the rich for being ‘lazy.’ ‘The rich don’t work, they’re lazy,’ he railed in a speech in 2010. ‘Every day they go drinking whiskey – almost every day – and drugs, cocaine, they travel.’
What a bunch of hypocrites. They denounce successful people who presumably earn money honestly, yet they amass huge fortunes by pilfering their nation.
And what’s been happening in Venezuela is no different, I’m sure, than what happened in the past in Nazi Germany, the Soviet Union, and other socialist regimes.
And I’m sure it’s still happening today in other socialist hell holes such as North Korea and Cuba. The elite enjoy undeserved and unearned wealth while ordinary people live wretched lives of deprivation.
Everyone’s equal, but some are more equal than others.
Let’s close by citing some wise words about the impact of socialism on ordinary people from Kevin Williamson of National Review.
The United Socialist party’s disastrous economic policies have led to acute shortages of everything: rice, beans, flour, oil, eggs, soap, even toilet paper. Venezuela is full of state-run stores that are there to provide the poor with life’s necessities at subsidized prices, but the shelves are empty. …While Venezuela has endured food riots for years, the capital recently has been the scene of protests related to medical care. Venezuela has free universal health care — and a constitutional guarantee of access to it. That means exactly nothing in a country without enough doctors, medicine, or facilities. Chemotherapy is available in only three cities, with patients often traveling hours from the hinterlands to receive treatment. But the treatment has stopped.
Now ask yourself whether you think the party bosses are suffering like other citizens because of a lack of food and health care (or toilet paper!).
And that giant gap between the treatment of the elite vs. the peasantry tells you everything you need to know about socialism, whether it’s the brutal kind practiced in places such as Venezuela or the kinder, gentler (but equally hypocritical) versions found elsewhere.
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[…] in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] J. Mitchell) Back in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] J. Mitchell) Back in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] J. Mitchell) Back in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] J. Mitchell) Back in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] J. Mitchell) Back in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] J. Mitchell) Back in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] J. Mitchell) Back in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] J. Mitchell) Back in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] J. Mitchell) Back in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] J. Mitchell) Back in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] J. Mitchell) Back in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] J. Mitchell) Back in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
[…] in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet […]
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Socialism never works and never will.
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Daniel,
Please include Brazil in The socialist countries. Although we are not in this situation yet, Brazil is the source of founding of all communist/socialism movement of South America, main through the Foro de Sao Paulo association.
The more pragmatic problem is that the consequences of low growth (it’s actually not a shrinking pie, just one that cannot keep up with the rest of the wonderful progress of humanity – and exponents compound and diverge quickly) take a while to compound. But once they do compound you get locked into a low-growth vicious cycle whereby voters try to compensate for the low growth malaise through ever more redistribution. The system becomes deadlocked, there is no return.
Faced with this short-long term tradeoff, the voter-lemming will always choose the short term benefit of redistribution over the longer term perpetually compounding growth of free markets.
“What do I care if the economy grows one two three percent less a year when I can get an additional 10% in redistribution?” True, initially the impact is small. Until it compounds into an unsurmountable juggernaut and causes you to vote for ever more redistribution. It is a myopic, by rational calculation. Because, problem is, the redistribution is fixed (geometric, multiplier, coefficient, …whatever you want to call it) while the growth motivation of free markets is exponential and virtually unlimited in the longer term.
So the the crux of prosperity lies in voters making a rational choice between short and long term. And you know how difficult that is…
Countries that escape that natural fate are the few whose voters serendipitously (following the law of probabilities) escape this fate.
Hence, the best approach is to stay mobile, wait and see which countries make the right choices, and move there. In the long term, these are going to be countries that are rather lean on welfare, so they are more likely to be more receptive to immigrants, especially those immigrants that are competent. This is the future of successful people in a world that is becoming irreversibly ever more mobile by the day.
That is the path to exponential progress into a wonderful and unimaginable yet to us future. Or you can wait to see if people like Bernie Sanders makes you one of his favorite political groups and finds some finite funds to throw in your direction from an ever more unmotivated population.
Practical advice:
Stay competent, stay mobile, and be an economic mercenary. Don’t lock your destiny (and that of your family) with the fate of a particular set of voter-lemmings.
As your once top of the prosperity chain country descends the world prosperity rankings on the world stage, your wonderful new government welfare programs become the mediocre programs of a middle income country. And you are perpetually locked into a trajectory of relative decline, as you can only muster one quarter the growth of the rest of the planet. That is the compromise for the less well of. Becoming the middle class, but now in middle income country, deadlocked into a path of decline.
In socialism, the raw motivation to productivity is suppressed. Everyone becomes poorer. Even the elite, on aggregate, have less than the better off citizens of freer market nations. Except that in socialism, the elite are also corrupt, not entrepreneurs that discovered and implemented a new way to better the lives of many millions. Yes, that new way also includes the better allocation of capital that financiers perform in a free market economy. But as we become more political, more socialist, cronyism and political means increasingly become wealth enhancers. In a suicidal move, voter-lemmings will react by attempting to put an ever larger proportion of the economy under collective political control, so that “they can clean things up”.
They are well on their way to decline.
Animal Farm should be required reading for all, but I’m sure the piggish Teacher’s Union doesn’t agree.
[…] By Dan Mitchell […]