analyticsbox | Sep 01, 2021
History Tells Us All We Need to Know
Socialism Does Not Work
Many young people and students seem to be fascinated with Socialism, with many believing it would be a better alternative than a free enterprise/market economy. The first thing people need to understand is what socialism actually is. Socialism is all about government ownership of the factors of production and a centrally planned economy.
A look back at history will tell you all you need to know. Never, not once, has this system worked for the betterment of the people. It has always ended in failure, and misery, with shortages of even the basic necessities. Just look at the Soviet Union, Venezuela, and North Korea, to name a few.
So, why is this the case? At the risk of oversimplifying, it is because there are no incentives. People are not rewarded for their efforts, the government dictates what is produced and at what price and who gets it. Workers receive ‘according to their needs’.
It just doesn't work, never has, and never will.
Perhaps the infatuation is with the ‘Nordic’ system of socialism. The big problem here? These countries are NOT socialistic, they have very free enterprise/market economies, similar to what we have historically had in the U.S. They do have more welfare and support programs, but the entire population is taxed very heavily to pay for this, not just the rich.
See PowerPoint #9 on our website to understand how taxes actually work, you will be surprised!
An interesting study in socialism vs. market economy is the formerly Communist country of Georgia. Georgia evolved from communism/socialism to a free market economy after the collapse of the Soviet Union. It went from poverty to a country with freedom and minimal government and growth of 10%/year. When the government got more involved and controlling, growth slowed to 5%. This excellent short video by Stossel TV explains this all really well.
Another interesting analysis is the country of Botswana in Southern Africa. Botswana transformed from poverty to middle income in short order with sound economic policy. You can read about this here.
THE BOTTOM LINE
Be careful what you wish for. History tells us all we need to know about what economic systems work best. A free enterprise/market economy with limited government and limited regulation is the top performer, hands down. Bigger government and more regulations, just slows the growth. Growing the economic pie faster means more opportunities, higher incomes, and a better standard of living for everyone.