Rod Thomson

“The problem with socialism is that you eventually run out of other people’s money.” – Margaret Thatcher

In full deference to the Iron Lady, that’s not the only problem. That is a functional reality that dooms socialism in action. But at its core, socialism is a violation of elemental human nature that desires to build, innovate, expand and improve life — the same nature that drives parents to be always working towards a better future for their children.

Socialism denies that elemental nature and so not only dooms itself to eventual self-destruction, but creates enormous misery enroute. This has been demonstrated in every country where it has been substantially put in place, from the Soviet Union to Cuba to Vietnam to Venezuela.

Yet for many — from college campuses to Reddit to a recent major presidential candidate — socialism still holds a dreamy-eyed allure. They passionately to angrily believe the world would be dramatically better if socialism supplanted capitalism. This defies not only human nature, but also all historical experience. And yet it persists at amazing levels.

So let’s start with defining socialism, no small task really.

“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

 

Socialist ideology defined

Wikipedia has a fair if somewhat dry definition of socialism, summarized as being a range of economic and social systems characterised by social ownership and control of every aspect of production. Social ownership includes public, collective, or cooperative ownership.

Means of production is the key. The means of production is essentially anything that is not human that is part of an economy. In socialism, the means of producing everything are in the hands of the “everyone.” There are no individual property rights, there is no individual ownership. Everything is owned by the collective, the hive, an economic Star Trek Borg 100 percent antithetical to the founders and the Constitution.

Socialism grew out of pre-Marxist ideologies that saw the inherent problems with feudalism. But it’s popularity exploded with Karl Marx and others as the industrial revolution took hold in the 1800s and abuses of the low-end labor pool grew exponentially at the same time wealth did. Socialism was a response to that by upending the entire system.

People power. But not person power.

Merriam-Webster defines socialism as “any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods.” Google defines socialism as “a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.”

“Democracy and socialism have nothing in common but one word, equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.” Alexis de Tocqueville

 

What it looks like in reality

The Russian Revolution of 1917 led to the largest experiment in socialism. The doey-eyed utopianism of Trotsky led to the authoritarianism of Lenin which led to the brutal tyranny of Stalin and the soul-crushing Communist Soviet Union.

That story is pretty well known but also a well-worn path for every socialist experiment, albeit it was on maybe the largest scale.

Cuba was the people’s revolution heralding in a communistic state that was ruled with an iron fist by Fidel Castro, just as Stalin, Khrushchev and the rest did in the Soviet Union. That was a thriving little island economically, but it was not hugely free and it was not a democracy. The income disparities and relative poverty in large swaths fueled Castro’s form of socialism and people followed him.

Venezuela is the most recent example. Due to its oil wealth, Venezuela had the highest per capita GDP in South America in 2005. It had not been well run and was fairly corrupt and incompetent at the government level. But it was still the best and richest in South America — a continent known for corruption and incompetence in government.

In 2005, President Hugo Chavez took the country in a deep socialist direction. He began nationalizing industries such as oil companies and the media — natural steps for socialism — and started transferring large sums to the poor. The results are truly epic. Venezuela now has a totally collapsed economy with starvation and the lack of basic infrastructure becoming more common. A failure on an amazing level.

In an explanation of Venezuela’s collapse, Bloomberg noted: “The last years of Chavez — he died of cancer in 2013 — and the first under his handpicked successor Nicolas Maduro have been a time of unparalleled fiscal profligacy.”

But that is always the case in socialism. Massive government debt driven by a declining economy — a common side effect of socialism — and huge welfare spending generated hyper-inflation has made the country the poorest in South America. In eight years it went from the richest to the poorest by pivoting sharply to socialism.

“Socialism only works in two places: Heaven where they don’t need it and hell where they already have it.” Ronald Reagan

 

Capitalism’s inequality “problem”

Capitalism is duty-bound to create inequality in wealth. Some people are just great at making money. Some are great at making things. Some are clever and some are lucky. Those generally do very well in capitalism. Many others are simply hard workers and they often do well, though in more of a middle class sort of way.

Other people are bad at making money and worse at money management. Others are not clever and some are unlucky. Some are just lazy. These all do relatively poorly in capitalism.

Relatively.

The question is whether inequalities are bad if all or most boats are being lifted, just some lifted higher than others. In the United States, the poorest 10 percent of people are better off than the richest 10 percent in any third world or developing nation. But Forbes points out an Economist chart that shows that America’s poor are better off than most of Europe’s poor, including better off than in far more socialist countries such as Germany, France, Great Britain and Italy.

This is worth noting because those are considered social democratic nations, where they have heavy socialist programs but retained some capitalistic free markets, too. They are often heralded as examples for America to follow. Seems like the trade-off of inequality is worth it for the poor — unless envy trumps quality of life.

China is the largest socialist/communist country and struggled with universal poverty for decades after its revolution. But as it instituted capitalism’s free market reforms beginning in the 1980s — while retaining its authoritarianism, and socialist structure in name anyway — China’s economy began booming and is now second only to the United States. Capitalism did that. But it also created the inevitable inequalities.

Vietnam became socialist/communist after the Vietnam War. The country was already a disaster from the long war, but socialism provided no means for pulling it out. In recent years, the leadership has instituted more capitalist-based market reforms, a la China. That has begun creating more wealth for the country, but it is mostly flowing into a few hands — starting with those most connected to government leadership.

So capitalism works everywhere to generate more wealth. But it will always be unequal. Socialism equalizes, but does so by making everyone but those in charge poorer.

“Socialism in general has a record of failure so blatant that only an intellectual could ignore or evade it.” Thomas Sowell

 

What it might look like in America

What happened in Venezuela is instructive, because it is similar to Cuba and even the Soviet Union, although every situation will have its unique dynamics.

In a hint of what socialism would look like in the United States, Democratic presidential candidate Sen. Bernie Sanders, undoubtedly the most well-known American socialist, laid out his initial steps for making America more socialist. During the 2016 campaign, Sanders promised $15 trillion to pay for a Single-Payer Healthcare program, expand Social Security and make tuition free at all public universities.

To pay for it — and this is where Thatcher is just so right — Sanders would dramatically increase taxes by trillions of dollars. In fact, he expected tax increases to pay for all of the nationalized healthcare plan. That’s just taking other people’s money on a more massive scale.

Sanders’ proposals were only a small step toward full-blown utopian socialism. A totally predictable outcome would be that the high taxes would start slowing the economy, necessitating more tax increases, which would further slow the economy. You see the spiral.

The tax increases would never keep up with the expenses being run up in national healthcare, free college, expanded Social Security and the host of further steps that would ultimately be taken. The United States would not be immune to the immutable laws of economics and human nature. Eventually, we would succumb as has every other nation.

Socialism is a siren song to the idealistic, the frustrated and the naive. But it is a fool’s errand.

Socialism’s end is the proverbial pack of wolves and a sheep deciding what’s for dinner. There is a new sheep member each dinner until there are no more sheep, and the wolves starve.

And you have Venezuela. Or Cuba. Or Vietnam. Or the Soviet Union.

 

Long food lines in Venezuela.

COVER PHOTO: Empty grocery stores in Venezuela.

EXPLAINED: The Spectacular Failure of Socialism

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