I am a lucky dude. Not only was I born and raised in the great United States, I was lucky enough to do so back in the very late 1950s. I was too young to consider the Viet Nam conflict (I was 16 when it ended in 1975), so I only had to deal with the Cold War—which was more of a concept to a youngster like me. When I became ‘college age’, school was a fraction of current costs. So, I put my self thru school, utilizing Basic Grants, Supplemental Grants, and working as a garbageman during any non-school breaks. And, I got fortunate to enter a career field in its infancy (Data Processing), so I’ve stayed gainfully employed during the 4 decades since graduating. But most of all, the only economic system I’ve ever lived under is the pseudo-Capitalism in place in the US. It’s not pure Capitalism (Singapore comes to mind), with government created or blessed monopolies (utilities, drug companies, some insurance companies, etc.), and some political sway gets favors for companies, individuals, and entire industries that simply are unearned–but it is reasonably close to Capitalism for the little guy. I never had my jobs or careers decided for me: I could apply myself to whatever the limits of my work ethic and skills took me. I was not stuck in the lower to lower-middle class I was raised in. In this vein, I only see Socialism from a distance, or from a very theoretical view. I’ve never lived abroad, where such systems are in full force. I’ve never had a government dictate how much or what was produced, nor have I lived in a government-mandated price structure. I write all of this as a prelude to viewing Socialism from a strictly Capitalistic viewpoint (as close as the US economy allows). I see Socialism as anti-human nature. Let’s dig.
Socialism is basically government-run economy, either via direct price and production levels, planned centrally, or indirectly via regulations. The end result is the same: very few people receive what they truly earn. Many productive folks get a fraction of what they would get paid in a Capitalistic system, mainly because they fund the non-productive or low-productive. The attractiveness of Socialism is supposedly for the lower rungs of society, where they are ‘granted’ an income and a living due to governmental edict, rather than any measurable performance. This is the first departure from human nature. By incentivizing minimum effort, and not rewarding exceptional effort, the system tends to get the former and lack the latter. Why work harder, smarter, or innovate, if the pay is the same as the minimal production? What is the incentive to over-achieve, if the achiever simply isn’t rewarded for such behavior? I see this in microcosm with union labor here in the US, where pay is based upon seniority, not production. In fact, overproducing is even frowned upon by union members, as it re-establishes higher quotas, which is considered a bad thing for everyone else. Another huge drawback to Socialism is the favoritism of the central planners. One can get better assignments and better pay just by belonging to the right group or family. If you are related to one of the central planners, you may have an inside track to success that is wholly unearned. Now, in the US, we have our own flavor of such nepotism, but it is those belonging to wealthy or political families. But eventually, untalented offspring have a tendency to squander family wealth thru various methods. And political families are limited here to those that can get elected (for the most part). Either way, the number of folks that have true, great unearned assets is a very small group here. For the most part, in Capitalism, one has to earn one’s way; in Socialism, who you know may be vastly more important than what you can do or what you may know.
Why do wealthy and famous folks (along with some college professors) champion Socialism over Capitalism? In one sense, it is the folks that have extreme income, via artistic talents, that seem to be economically sheltered from the real world, now that they have achieved stardom and wealth. They seem to have forgotten how they got there, or feel a bit guilty that they are there. And educators sometimes feel dramatically underpaid for their academic credentials. That there are thousands of qualified applicants to their position (without tenure), seems to escape them.
Another sense is the product of decades of the US education system. The modern method taught is that Capitalism is somehow unfair and immoral, since there are failures to go with the successes. Somehow, Socialism is taught to lift all folks, not just the productive. How it is more moral for the earner to get less than his labor, and GIVE a portion of that labor to someone that did nothing to earn it, is beyond my understanding. We have a mini-version of that theory here in the US: the Welfare system. Some folks, able or not to work, are GIVEN funds for no productivity. Note that I draw a severe distinction from those that can work and do not, vs those that cannot work (handicapped, children, elderly, etc.—although some of those folks will bitterly argue that definition). Again, human nature rears its unyielding effect here: those that are on Welfare too long forget necessary skills and attitudes to even find or keep a job. They, over time, unlearn the social skills to even attempt labor—just send the check (and they will complain that said check isn’t enough—even though they did absolutely nothing to earn said check).
There are also those that champion Socialism as a way to succeed without effort, talent, planning, risk taking, or education. These are the folks that are envious of what successful people have and their attendant lifestyles—they just don’t want to do what it takes to earn those perks. They over-value their efforts, always complaining about the unfairness of the current system, yet they somehow think their current effort level will grant them great rewards under Socialism. I haven’t determined how they arrive at that premise, as low-effort folks have a true tendency to be at the bottom of any economic system. Note that these people are willing to admit that they simply cannot or will not compete against others in a way that Capitalism rewards. Those that will compete likely already succeed here.
A side note: especially in Capitalism, personal finance is just that—personal. There are successful and unsuccessful people at nearly every income level. Spending habits relative to income can be as poorly handled for those at higher income levels than those at more modest means. Debt levels can overcome nearly any income. And many folks are at low income levels for only a relatively short period of time. Many folks in the beginning of their working lives have meager resources, and are in the acquisition phase of life: furniture, autos, apartments, appliances, clothing, etc. are often inversely proportional, need vs income. As they acquire work experience, promotions, and such, their incomes rise; and many of the assets acquired early are still valuable. Some folks have true, unplanned economic hardships happen to them: medical bills, legal bills, auto wrecks, you name it. So, until those things are resolved, they can be a short-term burden on nearly any income. To be fair, in many Socialistic countries, many of these expenses are covered via taxes, so they are not the onerous burden they are in Capitalism. Score one for Socialism, although one has to pay the higher taxes whether they encounter those expenses or not. A similar comparison: US highways vs toll roads. Toll roads are paid for by those actually using them, where all taxpayers pay for the highways. I favor those using paying for things, but that may just be me.
In summary, Socialism seems to depress innovation, planning, and hard work, as a kind of lowest-common-denominator system (supporting the political overhead that is always present). Capitalism appears to be more effort and planning positive, with built-in incentives to self-improve. Yes, Capitalism is wrought with successes and failures—but human nature would want to avoid repetition of mistakes to avoid those failures. I think rewarding the productive with as much of their earned income as possible, is a preferable system (the ‘taxation is theft’ folks have a bone to pick with me on this). I also think that our society, as a whole, has little problem assisting, if not supporting, those that cannot do for themselves, either via taxes or charitable organizations (funded by the productive in both cases). Again, I feel quite lucky to live my entire life in this system, warts and all.
Thank you for taking the time to read my article! Feel free to add comments (good or bad) in the box below. In addition, there is a link at the bottom of the article to view other items I’ve written at Global Liberty Media. Enjoy!
[…] The Logical Failure of Socialism […]