November 29, 2018
Dear Family and Friends,
This is the introduction to segment 4 of the series on Socialism, entitled “The Fundamental Flaws of Socialism.”
My Takeaways:
The excerpts begin with a historical comparison of socialism involving three different countries, all in the same time period following World War II: China, where Mao Zedong’s hard-core socialism (communism) policy starved over 30 million people in his Great Leap Forward Plan; India, where its democratic socialism lost 77% of its share of the world trade market which took 50 years to recover; and Hong Kong, who grew its per capita GDP by 8,700% under unbridled capitalism.
The excerpts continue by delineating six historical flaws of socialism.
Next:
The next segment, “Socialism vs. Capitalism,” is devoted to the comparison of the two economic systems.
Happy Learning,
Harley
Dear Family and Friends,
This is the introduction to segment 4 of the series on Socialism, entitled “The Fundamental Flaws of Socialism.”
My Takeaways:
The excerpts begin with a historical comparison of socialism involving three different countries, all in the same time period following World War II: China, where Mao Zedong’s hard-core socialism (communism) policy starved over 30 million people in his Great Leap Forward Plan; India, where its democratic socialism lost 77% of its share of the world trade market which took 50 years to recover; and Hong Kong, who grew its per capita GDP by 8,700% under unbridled capitalism.
The excerpts continue by delineating six historical flaws of socialism.
- The Incentive Problem wherein productivity is very subpar because of a collectivism ideology (a pillar of Marx and Engels socialism theory)
- The Knowledge Problem: To illustrate the problem, think about the number of ordering and scheduling decisions that have to be made to get a roll of toilet paper into every household in the U.S. – from planting and harvesting trees, to installing the manufacturing process and keeping it in repair, to purchasing and receiving the packing materials, to producing the product, to shipping and distributing the product to stores, to you as the consumer making a purchase of your favorite brand. How does the central planning system of socialism make and transmit all those decisions to get that favorite brand to your house? It virtually impossible to do, yet it is done with relative ease in a free-market system because multiple people are doing the planning and making the decisions. So, a central planning system has a knowledge problem because they have such difficulty getting and acting on all the information required.
- The Economic Calculation Problem: According to socialist theory, items are supposed to be priced based on the amount of effort workers put into producing the product plus the products moral value to society. How does a central planner make that determination, and is it correct? Market based pricing occurs for almost all our goods and services based on the demand for the product as determined by the consumer and the supply of the product as determined by the producer. That is a basic difference.
- Human Equality versus Human Reality Problem: Each of us has a uniqueness as a human being – different physical and mental abilities, different interests and motivations, different aptitudes, different desires, etc. Socialism wants us to all be the same – no individuality and certainly no difference in our standard of living as “material equality” is a primary goal.
- Robbing the Treasury Problem: The socialist goal here is to minimize income inequality. The mechanism for doing so is to have the government redistribute individual’s income as they see fit, e.g. for welfare, for “free” health care, and/or for “free” college education. The mechanism in developed countries has primarily been threw taxation, but in some countries like Zimbabwe it was by confiscation and redistribution of farmland. We saw some of the consequences, if done in excess, in segment 3’s “Snap-Shot of Worldwide Socialism.”
- The Banner of Freedom Problem: The West, Europe and North America, struggled to rid itself of autocratic rule so as to attain freedom and individual rights. That lead to the Industrial Revolution and capitalism. The rest of the world did not go through that struggle (at least in the same time period) and their development stagnated for a long period of time and that stagnation still remains in much of the world. As a result, international inequality exists between countries and groups of people in terms of wealth, income, rights and liberties. Should the West give up much of what they struggled to attain for which thousands of people sacrificed their lives? The International socialists think so.
Next:
The next segment, “Socialism vs. Capitalism,” is devoted to the comparison of the two economic systems.
Happy Learning,
Harley
SOCIALISM – SEGMENT 4
FUNDAMENTAL FLAWS OF SOCIALISM – EXCERPTS
INDIA: A CASE STUDY IN SOCIALIST FAILURE: At the time of its winning independence in 1947, India was many years ahead of China, better off in almost every conceivable way. India had escaped the ravages of WWII, whereas China had been torn apart by civil war and a brutal Japanese invasion. In India, British colonial rule left behind well-developed economic institutions and infrastructure; highly disciplined civil service and independent courts.
As WWII came to a close, the Japanese withdrew from China, the civil war ended that left a mainland under the rule of the communist forces of Mao Zedong, and Hong Kong reverting to British rule. The final distribution of power and sovereignties produced one of the great experiments in world history, a fascinating case study – and a tragic one, resulting in the deaths of millions of Chinese and the impoverishment of generations of Indians. In mainland China, there was utter socialism under Mao, but the same Chinese people would soon find their way to nearly unbridled capitalism in Hong Kong. And while much lip service would be given to the self-rule and Gandhi’s philosophy, India would in fact look to the West, embracing a democratic form of Fabian socialism under the leadership of Jawaharial Nehru. Within a few decades, the world would have a vivid example illustrating the practical differences among totalitarian socialism in China, democratic socialism in India, and capitalism in Hong Kong.
Gandhi, like most socialists, was at heart a moral thinker, not an economic thinker. He advocated that a society must be built in which every village has to be self-sustaining and capable of managing its own affairs. He gave little thought to the economic consequences of his philosophy, concentrating instead on the moral aspects of the argument. Classical economic thinking holds that if we are really good at growing rice and our neighbors are really good at catching fish; the we specialize in rice, the they specialize in fish, and all enjoy a higher standard of living. But Gandhi was having none of it. He simply rejected the concept out of hand. He encouraged everybody to adopt precisely the same model of subsistence economics – a little bit of farming, a little bit of weaving homespun fabric. Gandhi argued that he was placing humanity and human interest at the center of his economics. Once challenged Gandhi retorted that no economics was worth anything unless it made moral sense in accord with the human spirit. Someone might have asked Gandhi, “What good is your concern for the poor if your philosophy leaves them poor and leaves them worse off than before?” Instead of looking to the capitalist mode of the U.S., Gandhi’s successor, Nehru looked to the managerial socialism that had been in vogue during his time as a student at Cambridge. Nehru would begin to build an industrial concrete-and-steel socialist state, enacting the Soviet-style “five-year plans” which set India on the road to serfdom, as the bureaucratization of central planning was accompanied by the inevitable centralization of power. One generation after embracing democratic socialism, India would slide into autocracy as Nehru’s daughter Indira Gandhi, installed herself as dictator. Economically and politically, socialism would prove a disaster for the emerging republic – one from which it would take nearly fifty years to begin to recover.
A Lesson Learned: While India’s socialism was politically different from the hardcore socialism of China, and while its economic regimentation was certainly less radical and more liberal, it was implemented through the same apparatus: the government plan, the government planner, and the government planning authority. Hong Kong’s per capita GDP grew 8,700% from 1961 to 1997 and the ascent was not just a rich man’s boom; the population became more economically equal as Hong Kong became richer. Competition – unlike central planning – improves productivity making more and better goods available at lower prices. Competition is the reason that Hong Kong got rich while India foundered until 1997, when it opened up its economy and began its remarkable transformation into a major world economic power. Competition is the antithesis to central planning.
Source: The Politically Incorrect Guide to Socialism by Kevin D. Williamson
THE FLAWS OF SOCIALISM:
1). An Incentive Problem: The Plymouth settlers were obligated to follow a certain business model that was the same old tired notion of collectivism. The experiment ran from 1620 to 1624. After two deadly years of starvation and suffering, the nightmare of collectivism was ejected in 1623. The more industrious among the settlers approached Gov. Bradford and asked that some land be given to them. Bradford recognized that private ownership was the answer to their problems. Those with an excuse not to work suddenly wanted to work. For example, he said, “The women now went willingly into the field, and took their little ones with them to set corn.”
Source: The Naked Socialist by Paul Skousen.
2). The Knowledge Problem: A reason for the inherent and inescapable failure of socialism as an economic system is known as the “Knowledge Problem.” The kind of knowledge that makes the economic world go around is not just scientific knowledge but the detailed “knowledge of the particular circumstances of time and place” that millions of people who make up the world economy possess and utilize to perform their unique jobs and live their lives. No government planner could possess, let along efficiently utilize, such vast knowledge.
What motivates people to put forth all the effort and cooperate with each other to give us our “meat and bread” is not their selflessness or their love of their fellow man, but their concern for their own wellbeing. By pursuing their own self-interest in the free market, they coincidentally benefit the rest of society as well. As for socialism, it is worth repeating that no group of government planners with the most powerful computers could conceivably possess and utilize all the constantly changing information that is needed to produce even the most common and simple consumer goods, let alone sophisticated products like automobiles and computers. The free market pricing system is indispensable as a tool of any functioning economy. When a product becomes scarce the price rises and consumers look for alternatives, which is one engine of innovation. Without market prices, rational economic decision making is impossible. Government mandate prices, such as we have in socialist economies, produce nothing but economic chaos, poverty, and misery; which is another core reason for the failures of socialism.
Source: The Problem with Socialism by Thomas J. DiLorenzo.
3). The Economic Calculation Problem: The question of how we set prices and wages may seem a trivial one, but it is the cornerstone of socialism. Look at it this way: A top-flight surgeon earns a big salary because his services are highly valued by the people who want them. He may be a brain surgeon doing life-saving work, or he may be a cosmetic surgeon tweaking a nose in Beverly Hills. A surgeon’s work may be in some sense, more socially important than a professional basketball player’s or a pop star. It may be socially less important than a priest’s or a teacher. But the reason your average surgeon earns more than a priest or a teacher, but less than an NBA point guard or a pop princess, has nothing to do with any moral objective value of his work: boob-jobs pay just as well as treating kids for cancer. Socialism breaks with capitalism on precisely this issue. It seeks to infuse the fundamental, deep processes of the economy – the setting of prices – with moral meaning.
Source: The Politically Incorrect Guide to Socialism by Kevin D. Williamson.
In a capitalist economy, entrepreneurs have to meet consumer demand or go bankrupt. There is an enormously powerful incentive for private investors to invest their money in ways that will be rewarded by consumers. This incentive, however, is totally absent from a socialist economy, where it is not consumer demand, but government direction, that allocates economic resources, which is why socialism is deemed to be “impossible” as a viable economic system.
Source: The Problem with Socialism by Thomas J. DiLorenzo
4). The Human Equality versus Human Reality Problem: The pervasive rallying cry of socialist is “equality.” But they ignore the fact that all human beings are unique, and inequality is thus inevitable. The uniqueness of every human being – our differing physical abilities, mental abilities, and interests, different aptitudes, preferences mean that we naturally tend to specialize in something. In a market economy, this allows us to specialize in what we do best, and get paid for it, and then trade with other “specialists” for the goods and services we desire. An obvious consequence of this is that a capitalist economy creates an interconnected community that constantly strives to supply all of us with the best goods and services at the lowest price; it provides employment for people of all imaginable talents and abilities; it blows past subsistence economies (where one individual, family, or village has to do everything itself); it creates wealth; and it encourages international trade, because not only are human beings unique but so are their materials and geographic resources. The relentless socialist crusade for “equality” is a revolt against reality. Socialists are less concerned about equality before the law, or equal rights to liberty, than they are with material equality, which, of necessity, has to be forced upon society by the state. The essence of the socialist enterprise is to use the coercive powers of government to turn us all into identical bricks. The desire to turn unique beings into identical bricks explains why socialist regimes are often totalitarian – because it is the only way they make a serious attempt to achieve their aims.
The less successful (including the lazy of incompetent) often express “hate and enmity against all those who superseded them,” wrote Mises. Political demagogues take advantage of such people by promising them something for nothing (“free” health care! “free” education! “free” you name it!) in the name of egalitarianism. Some people face up to, deal with, and improve upon their inadequacies, while others search for scapegoats. Perhaps the most popular scapegoats are “greedy capitalists” by some nefarious, unscrupulous, or illegal means. There are of course some people like this.
Source: The Problem with Socialism by Thomas DiLorenzo
5). Robbing the Treasury Problem: Just as soon as the ruling powers discover how to rob from the national treasury, they impose the forces of regulation to support thievery. The New Deal era in the U.S. accelerated America’s problems as massive government bailouts were used to create a welfare class numbering in the many millions. To support the handout, the government had to chip away at the property rights of others (higher taxes) to fulfill their political promises. Whenever the seven pillars of socialism are applied to basic welfare needs, an amazing breakdown of judgment overwhelms common sense.
First, welfare cultivates a sense of entitlement. Recipients become addicted to the regular and timely handouts and adopt conclusions that society owes them everything – food, clothing, medicine, shelter, employment retirement, etc. – the eventually demand it as a right.
Second, welfare is circular. As the payouts grow, the tax burden on everyone else also grows. With shrinking profits, businesses suffer and cut back, laying off workers. The unemployed are then let loose into a community with no income source, so they go to the government offices and apply for welfare. Increased welfare rolls require more funding, so, taxes must rise, and that makes more unemployed, and it repeats – it’s a snake eating its tail.
Third, state welfare shifts the weight of personal responsibility and corrupts the innate sense of compassion from individuals. This puts the chore of caring for the needy right on the doorstep of that innocuous, faceless and soulless entity called government.
Fourth, state welfare leaves the poor with little incentive to improve their situation because their basic needs are being met. A free ride through life doesn’t help people in the long run. That’s what Benjamin Franklin discovered during his difficult years in Europe. Franklin said the poor are not led out of their problems by giving them easy handouts. The goal must be to help them help themselves until they are on their own feet. Too much help achieves precisely the opposite. “I am for doing good to the poor,” Franklin said, “but I differ in opinion of the means. I think the best way of doing good to the poor is not making them easy in poverty, but leading or driving them out of it. I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves.”
Source: The Naked Socialist by Paul B. Skousen
The welfare state has removed the stigma of “illegitimacy” when so many millions of women give birth out of wedlock and receive child support not from the father but from taxpayers. Children born to single parents are three times more likely to suffer behavioral or emotional problems; girls are twice as likely to have children out of wedlock themselves; and boys are twice as likely to become involved in crime. In other words, welfare dependency has a “domino effect” that not only harms society but also destroys lives. Taking the advice of socialist politicians to vastly increase the size of the welfare state is bound to increase poverty; increase the incidence of child pathologies; increase the number of children who get involved in crime; increase human misery; and discourage effective, private, voluntary efforts to help the poor. No one, not even the bureaucrat benefits when socialism deconstructs society. In its human cost, socialism makes us all losers.
Source: The Problem with Socialism by Thomas J. DiLorenzo.
6). The Banner of Freedom Problem: The problems and controversies that agitated the West remained unknown to the East. In Europe there was commotion; in the East there was stagnation, indolence and indifference. The reason is obvious. The East lacked the primordial thing, the idea of freedom from the state. The East never raised the banner of freedom, it never tried to stress the rights of the individual against the power of the rulers. It never called into question the arbitrariness of the despots. Consequently, it never established the legal framework that would protect the private citizens’ wealth against confiscation on the part of the tyrants. On the contrary, deluded by the idea that the wealth of the rich is the cause of the poverty of the poor, all people approved of the practice of the governors expropriating successful businessmen. Thus big-scale accumulation was prevented, and the nations had to miss all those improvements that require considerable investment of capital. Western society was a community of individuals who could compete to for the highest prizes. Eastern society was an agglomeration of subjects entirely dependent on the good graces of the sovereigns. The alert youth of the West looks upon the world as a field of action in which he can win fame, eminence, honors and wealth; nothing appears too difficult for his ambition. The meek progeny of Eastern parents knew of nothing else than to follow the routine of their environment.
Source: The Anti-Capitalistic Mentality by Ludwig von Mises
THE WORST RISE TO THE TOP UNDER SOCIALISM: Perhaps the defining characteristic of socialism is the governmental imposition of one plan for all of society. Socialism is nothing if it is not “planning.” Socialism is the forceful substitution of government plans for individual plans. Hence, it does not really matter if it is imposed on a society by a majority-rule democracy of a totalitarian dictatorship. In either case everyone in society is subjected to the coercive forces of the state in enforcing its plans for the whole society. Once the governmental plans are in place and begin to fail, then “the democratic statesman who sets out to plan economic life will soon be confronted with the alternative of either assuming dictatorial powers or abandoning his plans and admitting failure.” He would “soon have to choose between disregard of ordinary morals and failure. It is for this reason that the unscrupulous and uninhibited are likely to be more successful” in a socialist society seeking to impose government planning.
Those with the least qualms about depriving their fellow citizens of their civil liberties, or even brutalizing and abusing them, will rise to the top of such a society. This was in fact the history of the 20th century socialism all around the world. Socialism led to the suppression of democratic institutions and the movement toward a more dictatorial or totalitarian government. Democratic socialism is, then, a non-sequitur. Socialists might be elected democratically, but their entire government program relies on government displacing the authority of individuals or families or private institutions.
How remarkable it is that to this day, self-proclaimed socialists in academia claim to occupy the moral high ground. The ideology that is associated with the worst crimes, the greatest mass slaughters, the most totalitarian regimes ever, is allegedly more compassionate than the free market capitalism that has lifted more people from poverty, created more wealth, provided more opportunities for human development, and supported human freedom more than any other economic system in the history of the world.
Socialism has not yet reached a critical stage in the U.S., but the more a society moves in the direction of socialism, the more it relies on the coercive powers of the state. As such, coercion become justified, it tends to expand at the expense of individual freedom and individual conscience. Government plans replace individual plans; the government claims a greater share of private wealth to distribute money as it sees fit; ideological propaganda becomes more pervasive from government institutions, especially in the schools; and the economy becomes progressively more lethargic, increasingly strangled by government edicts, regulations and bureaucrats. Government becomes more and more a government of the worst, by the worst, and for the worst. That’s what socialism drives.
Source: The Problem with Socialism by Thomas J. DiLorenzo.
The unabbreviated version of the above can be found in the pdf document below.
FUNDAMENTAL FLAWS OF SOCIALISM – EXCERPTS
INDIA: A CASE STUDY IN SOCIALIST FAILURE: At the time of its winning independence in 1947, India was many years ahead of China, better off in almost every conceivable way. India had escaped the ravages of WWII, whereas China had been torn apart by civil war and a brutal Japanese invasion. In India, British colonial rule left behind well-developed economic institutions and infrastructure; highly disciplined civil service and independent courts.
As WWII came to a close, the Japanese withdrew from China, the civil war ended that left a mainland under the rule of the communist forces of Mao Zedong, and Hong Kong reverting to British rule. The final distribution of power and sovereignties produced one of the great experiments in world history, a fascinating case study – and a tragic one, resulting in the deaths of millions of Chinese and the impoverishment of generations of Indians. In mainland China, there was utter socialism under Mao, but the same Chinese people would soon find their way to nearly unbridled capitalism in Hong Kong. And while much lip service would be given to the self-rule and Gandhi’s philosophy, India would in fact look to the West, embracing a democratic form of Fabian socialism under the leadership of Jawaharial Nehru. Within a few decades, the world would have a vivid example illustrating the practical differences among totalitarian socialism in China, democratic socialism in India, and capitalism in Hong Kong.
Gandhi, like most socialists, was at heart a moral thinker, not an economic thinker. He advocated that a society must be built in which every village has to be self-sustaining and capable of managing its own affairs. He gave little thought to the economic consequences of his philosophy, concentrating instead on the moral aspects of the argument. Classical economic thinking holds that if we are really good at growing rice and our neighbors are really good at catching fish; the we specialize in rice, the they specialize in fish, and all enjoy a higher standard of living. But Gandhi was having none of it. He simply rejected the concept out of hand. He encouraged everybody to adopt precisely the same model of subsistence economics – a little bit of farming, a little bit of weaving homespun fabric. Gandhi argued that he was placing humanity and human interest at the center of his economics. Once challenged Gandhi retorted that no economics was worth anything unless it made moral sense in accord with the human spirit. Someone might have asked Gandhi, “What good is your concern for the poor if your philosophy leaves them poor and leaves them worse off than before?” Instead of looking to the capitalist mode of the U.S., Gandhi’s successor, Nehru looked to the managerial socialism that had been in vogue during his time as a student at Cambridge. Nehru would begin to build an industrial concrete-and-steel socialist state, enacting the Soviet-style “five-year plans” which set India on the road to serfdom, as the bureaucratization of central planning was accompanied by the inevitable centralization of power. One generation after embracing democratic socialism, India would slide into autocracy as Nehru’s daughter Indira Gandhi, installed herself as dictator. Economically and politically, socialism would prove a disaster for the emerging republic – one from which it would take nearly fifty years to begin to recover.
A Lesson Learned: While India’s socialism was politically different from the hardcore socialism of China, and while its economic regimentation was certainly less radical and more liberal, it was implemented through the same apparatus: the government plan, the government planner, and the government planning authority. Hong Kong’s per capita GDP grew 8,700% from 1961 to 1997 and the ascent was not just a rich man’s boom; the population became more economically equal as Hong Kong became richer. Competition – unlike central planning – improves productivity making more and better goods available at lower prices. Competition is the reason that Hong Kong got rich while India foundered until 1997, when it opened up its economy and began its remarkable transformation into a major world economic power. Competition is the antithesis to central planning.
Source: The Politically Incorrect Guide to Socialism by Kevin D. Williamson
THE FLAWS OF SOCIALISM:
1). An Incentive Problem: The Plymouth settlers were obligated to follow a certain business model that was the same old tired notion of collectivism. The experiment ran from 1620 to 1624. After two deadly years of starvation and suffering, the nightmare of collectivism was ejected in 1623. The more industrious among the settlers approached Gov. Bradford and asked that some land be given to them. Bradford recognized that private ownership was the answer to their problems. Those with an excuse not to work suddenly wanted to work. For example, he said, “The women now went willingly into the field, and took their little ones with them to set corn.”
Source: The Naked Socialist by Paul Skousen.
2). The Knowledge Problem: A reason for the inherent and inescapable failure of socialism as an economic system is known as the “Knowledge Problem.” The kind of knowledge that makes the economic world go around is not just scientific knowledge but the detailed “knowledge of the particular circumstances of time and place” that millions of people who make up the world economy possess and utilize to perform their unique jobs and live their lives. No government planner could possess, let along efficiently utilize, such vast knowledge.
What motivates people to put forth all the effort and cooperate with each other to give us our “meat and bread” is not their selflessness or their love of their fellow man, but their concern for their own wellbeing. By pursuing their own self-interest in the free market, they coincidentally benefit the rest of society as well. As for socialism, it is worth repeating that no group of government planners with the most powerful computers could conceivably possess and utilize all the constantly changing information that is needed to produce even the most common and simple consumer goods, let alone sophisticated products like automobiles and computers. The free market pricing system is indispensable as a tool of any functioning economy. When a product becomes scarce the price rises and consumers look for alternatives, which is one engine of innovation. Without market prices, rational economic decision making is impossible. Government mandate prices, such as we have in socialist economies, produce nothing but economic chaos, poverty, and misery; which is another core reason for the failures of socialism.
Source: The Problem with Socialism by Thomas J. DiLorenzo.
3). The Economic Calculation Problem: The question of how we set prices and wages may seem a trivial one, but it is the cornerstone of socialism. Look at it this way: A top-flight surgeon earns a big salary because his services are highly valued by the people who want them. He may be a brain surgeon doing life-saving work, or he may be a cosmetic surgeon tweaking a nose in Beverly Hills. A surgeon’s work may be in some sense, more socially important than a professional basketball player’s or a pop star. It may be socially less important than a priest’s or a teacher. But the reason your average surgeon earns more than a priest or a teacher, but less than an NBA point guard or a pop princess, has nothing to do with any moral objective value of his work: boob-jobs pay just as well as treating kids for cancer. Socialism breaks with capitalism on precisely this issue. It seeks to infuse the fundamental, deep processes of the economy – the setting of prices – with moral meaning.
Source: The Politically Incorrect Guide to Socialism by Kevin D. Williamson.
In a capitalist economy, entrepreneurs have to meet consumer demand or go bankrupt. There is an enormously powerful incentive for private investors to invest their money in ways that will be rewarded by consumers. This incentive, however, is totally absent from a socialist economy, where it is not consumer demand, but government direction, that allocates economic resources, which is why socialism is deemed to be “impossible” as a viable economic system.
Source: The Problem with Socialism by Thomas J. DiLorenzo
4). The Human Equality versus Human Reality Problem: The pervasive rallying cry of socialist is “equality.” But they ignore the fact that all human beings are unique, and inequality is thus inevitable. The uniqueness of every human being – our differing physical abilities, mental abilities, and interests, different aptitudes, preferences mean that we naturally tend to specialize in something. In a market economy, this allows us to specialize in what we do best, and get paid for it, and then trade with other “specialists” for the goods and services we desire. An obvious consequence of this is that a capitalist economy creates an interconnected community that constantly strives to supply all of us with the best goods and services at the lowest price; it provides employment for people of all imaginable talents and abilities; it blows past subsistence economies (where one individual, family, or village has to do everything itself); it creates wealth; and it encourages international trade, because not only are human beings unique but so are their materials and geographic resources. The relentless socialist crusade for “equality” is a revolt against reality. Socialists are less concerned about equality before the law, or equal rights to liberty, than they are with material equality, which, of necessity, has to be forced upon society by the state. The essence of the socialist enterprise is to use the coercive powers of government to turn us all into identical bricks. The desire to turn unique beings into identical bricks explains why socialist regimes are often totalitarian – because it is the only way they make a serious attempt to achieve their aims.
The less successful (including the lazy of incompetent) often express “hate and enmity against all those who superseded them,” wrote Mises. Political demagogues take advantage of such people by promising them something for nothing (“free” health care! “free” education! “free” you name it!) in the name of egalitarianism. Some people face up to, deal with, and improve upon their inadequacies, while others search for scapegoats. Perhaps the most popular scapegoats are “greedy capitalists” by some nefarious, unscrupulous, or illegal means. There are of course some people like this.
Source: The Problem with Socialism by Thomas DiLorenzo
5). Robbing the Treasury Problem: Just as soon as the ruling powers discover how to rob from the national treasury, they impose the forces of regulation to support thievery. The New Deal era in the U.S. accelerated America’s problems as massive government bailouts were used to create a welfare class numbering in the many millions. To support the handout, the government had to chip away at the property rights of others (higher taxes) to fulfill their political promises. Whenever the seven pillars of socialism are applied to basic welfare needs, an amazing breakdown of judgment overwhelms common sense.
First, welfare cultivates a sense of entitlement. Recipients become addicted to the regular and timely handouts and adopt conclusions that society owes them everything – food, clothing, medicine, shelter, employment retirement, etc. – the eventually demand it as a right.
Second, welfare is circular. As the payouts grow, the tax burden on everyone else also grows. With shrinking profits, businesses suffer and cut back, laying off workers. The unemployed are then let loose into a community with no income source, so they go to the government offices and apply for welfare. Increased welfare rolls require more funding, so, taxes must rise, and that makes more unemployed, and it repeats – it’s a snake eating its tail.
Third, state welfare shifts the weight of personal responsibility and corrupts the innate sense of compassion from individuals. This puts the chore of caring for the needy right on the doorstep of that innocuous, faceless and soulless entity called government.
Fourth, state welfare leaves the poor with little incentive to improve their situation because their basic needs are being met. A free ride through life doesn’t help people in the long run. That’s what Benjamin Franklin discovered during his difficult years in Europe. Franklin said the poor are not led out of their problems by giving them easy handouts. The goal must be to help them help themselves until they are on their own feet. Too much help achieves precisely the opposite. “I am for doing good to the poor,” Franklin said, “but I differ in opinion of the means. I think the best way of doing good to the poor is not making them easy in poverty, but leading or driving them out of it. I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves.”
Source: The Naked Socialist by Paul B. Skousen
The welfare state has removed the stigma of “illegitimacy” when so many millions of women give birth out of wedlock and receive child support not from the father but from taxpayers. Children born to single parents are three times more likely to suffer behavioral or emotional problems; girls are twice as likely to have children out of wedlock themselves; and boys are twice as likely to become involved in crime. In other words, welfare dependency has a “domino effect” that not only harms society but also destroys lives. Taking the advice of socialist politicians to vastly increase the size of the welfare state is bound to increase poverty; increase the incidence of child pathologies; increase the number of children who get involved in crime; increase human misery; and discourage effective, private, voluntary efforts to help the poor. No one, not even the bureaucrat benefits when socialism deconstructs society. In its human cost, socialism makes us all losers.
Source: The Problem with Socialism by Thomas J. DiLorenzo.
6). The Banner of Freedom Problem: The problems and controversies that agitated the West remained unknown to the East. In Europe there was commotion; in the East there was stagnation, indolence and indifference. The reason is obvious. The East lacked the primordial thing, the idea of freedom from the state. The East never raised the banner of freedom, it never tried to stress the rights of the individual against the power of the rulers. It never called into question the arbitrariness of the despots. Consequently, it never established the legal framework that would protect the private citizens’ wealth against confiscation on the part of the tyrants. On the contrary, deluded by the idea that the wealth of the rich is the cause of the poverty of the poor, all people approved of the practice of the governors expropriating successful businessmen. Thus big-scale accumulation was prevented, and the nations had to miss all those improvements that require considerable investment of capital. Western society was a community of individuals who could compete to for the highest prizes. Eastern society was an agglomeration of subjects entirely dependent on the good graces of the sovereigns. The alert youth of the West looks upon the world as a field of action in which he can win fame, eminence, honors and wealth; nothing appears too difficult for his ambition. The meek progeny of Eastern parents knew of nothing else than to follow the routine of their environment.
Source: The Anti-Capitalistic Mentality by Ludwig von Mises
THE WORST RISE TO THE TOP UNDER SOCIALISM: Perhaps the defining characteristic of socialism is the governmental imposition of one plan for all of society. Socialism is nothing if it is not “planning.” Socialism is the forceful substitution of government plans for individual plans. Hence, it does not really matter if it is imposed on a society by a majority-rule democracy of a totalitarian dictatorship. In either case everyone in society is subjected to the coercive forces of the state in enforcing its plans for the whole society. Once the governmental plans are in place and begin to fail, then “the democratic statesman who sets out to plan economic life will soon be confronted with the alternative of either assuming dictatorial powers or abandoning his plans and admitting failure.” He would “soon have to choose between disregard of ordinary morals and failure. It is for this reason that the unscrupulous and uninhibited are likely to be more successful” in a socialist society seeking to impose government planning.
Those with the least qualms about depriving their fellow citizens of their civil liberties, or even brutalizing and abusing them, will rise to the top of such a society. This was in fact the history of the 20th century socialism all around the world. Socialism led to the suppression of democratic institutions and the movement toward a more dictatorial or totalitarian government. Democratic socialism is, then, a non-sequitur. Socialists might be elected democratically, but their entire government program relies on government displacing the authority of individuals or families or private institutions.
How remarkable it is that to this day, self-proclaimed socialists in academia claim to occupy the moral high ground. The ideology that is associated with the worst crimes, the greatest mass slaughters, the most totalitarian regimes ever, is allegedly more compassionate than the free market capitalism that has lifted more people from poverty, created more wealth, provided more opportunities for human development, and supported human freedom more than any other economic system in the history of the world.
Socialism has not yet reached a critical stage in the U.S., but the more a society moves in the direction of socialism, the more it relies on the coercive powers of the state. As such, coercion become justified, it tends to expand at the expense of individual freedom and individual conscience. Government plans replace individual plans; the government claims a greater share of private wealth to distribute money as it sees fit; ideological propaganda becomes more pervasive from government institutions, especially in the schools; and the economy becomes progressively more lethargic, increasingly strangled by government edicts, regulations and bureaucrats. Government becomes more and more a government of the worst, by the worst, and for the worst. That’s what socialism drives.
Source: The Problem with Socialism by Thomas J. DiLorenzo.
The unabbreviated version of the above can be found in the pdf document below.
| 4_soc_fundamental_flaws.pdf |