Sunday, February 14, 2016

Richard Rahn from Cato: Socialism Means Coercion


Do you know what socialism is? Hillary Clinton struggled to find an answer when recently asked. Socialism is a system in which the government owns or controls the means of production, and allocates resources and rewards.

Sen. Bernie Sanders proudly proclaims himself a “democratic socialist,” and many in the Democratic Party seem to have no problem with it and, in fact, are embracing him and his ideas. Listening to all of this, one gets the feeling that for a significant portion of the population, history began in the year 2000. Where have been the great socialist success stories? Much of the world’s population greatly suffered under various forms of socialism in the 20th century. Not one of the various socialist models proved to be a success.

There was the communist variety of socialism in the former Soviet Union, Eastern Europe, China and Cambodia, which resulted in tens of millions of deaths from starvation and from the gulags. There was the national socialist (Nazi) model in Germany and Italy, which, like the communist version, resulted in tens of millions of deaths. Somewhat more benign, but still coercive, versions of socialism were prevalent in India, many places in Africa and South America, and all resulted in economic stagnation — because productive effort was separated from reward. The two most socialist countries today are North Korea and Cuba — both being very poor and repressive. The average Cuban government worker has a monthly wage which is less than what the average American worker makes in an hour.

It is true that every country has some socialist enterprises at the federal, state or local levels. For instance, the U.S. government owns Amtrak, and the city of Flint, Mich., owns its water department. Arguably, both would do much better in private hands. France has many more government-owned enterprises than neighboring Switzerland. Even France is still basically a capitalistic free-market economy — but with far less freedom and prosperity than Switzerland.

Why does socialism always fail, and why will Bernie Sanders‘ schemes and, to a lesser extent, Hillary’s Obamacare version, also fail? Under a capitalist free-market system, the business person seeks to produce goods and services that the consumer wants at the lowest possible cost — which includes having the smallest and most productive work force possible — in order to maximize profits. Under the socialist model, the political leaders decide what the consumers should have (which is often very different from what they want or need). Productivity and innovation are given short shift, needless workers are hired and few are fired. In almost all cases, costs soon outrun revenues, and the losses are made up by ever higher taxes or more debt — eventually causing an economic collapse. As economic stagnation increases, the citizens become more restless and either throw off the yoke of government through the ballot box, as was done in 1979 in the United Kingdom with the election of Margaret Thatcher, or the protesters are imprisoned until often a bloody revolt occurs.

Now back to Bernie Sanders who has proposed “Medicare for all” as one of his many schemes. Professor Gerald Friedman of the University of Massachusetts has examined the Sanders plan (and has no political ax to grind), and he estimates it would cost $40.9 trillion between 2017 and 2026. Hospitals and doctors would be forced to take huge cuts, driving many out of the medical profession, and reducing innovation and standards in health care. Patients would be forced to wait in long queues. It would be like the present failed Veterans Administration health system for all.

Back in 2002, Joshua Muravchik wrote a classic book on the history of socialism, “Heaven on Earth: The Rise and Fall of Socialism.” Perhaps it is time for the political class, including the commentators, to go back and read it and realize again that the next time the socialists will not get it right, because the model is fatally flawed.

What is most disturbing is the idea that America — and its unique success as a nation — was built around individual liberty and opportunity, not collective coercion. All too many no longer understand what the American Founders were trying to, and largely did, achieve. The young people who support Mr. Sanders, and even Hillary, seem to be generally ignorant of why America worked. Many do not want the government to restrict unfettered abortions or their right to smoke pot, but seem to be oblivious that socialism and big government makes everyone into an economic slave. Many workers in the Soviet Union, as is true of North Korea and Cuba today, could not even choose their own profession, or what town or apartment block they lived in. Such restrictions are the logical and necessary outcomes of socialism, unless it is thrown off before it reaches that stage.

Those in the news media who have an opportunity to quiz the presidential candidates would do the citizens a great favor if they could discern what the candidates really know about the Constitution and the arguments made in the Federalist Papers.

Richard W. Rahn is a senior fellow at the Cato Institute and Chairman of the Institute for Global Economic Growth.

12 comments:

paul scott said...

No please don't sell Amtrak, I like it. You get on board these wide seats take a ride to Tuscon, and arrive 17 hours late. USA citizens hate it, so I have plenty of room to myself .

Barend Vlaardingerbroek said...

The term 'socialism' is almost meaningless outside the context of the Marxist-Leninist economy. Americans seem to equate the term with what we in the civilised world would call 'welfarism'.
Medicine in the US is a business, an industry. It gobbles up twice the proportion of per capita GDP that it does in Western European welfarist societies. It is a lucrative business for those who get into it (usually on the back of Daddy's money) and moaning about how some of those vultures would leave the 'profession' if their profits were cut certainly doesn't elicit any hand-wringing from me.
The writer is also quite wrong about national socialism. He seems to forget that the global capitalist order was on its knees in the 1920s and that the Stalinist empire was set to take the spoils. National socialism presented a viable alternative to both which lifted Germany out of depression and saw social welfare indicators rocket up. Those 'tens of millions' who died were the result of a war that saw global Anglo-American capitalism throw in its lot with Stalinism to destroy the common threat to them both.

paul scott said...

ahha I knew I was using the terms socialist and socialism as throw away put down terms. Welfarism is more explicit, so I can use that. There is also an article written by Peter Cresswell, called " What's Socialism Bernie" ? // which deals with coercion within political belief ideology.

Anonymous said...

Hollywood is largely run by American Jews who, understandably, have a vested interest in keeping the Holocaust and the evils of Nazism before the public.

But by default, a penumbra of neglect has fallen over Nazism’s similarly evil twin, Communism. Much of this is attributable to the fact that Communism was an ideology celebrated by many of our intellectuals and opinion-shapers from inside free societies.

Nazism and Communism both grow out of the same poisoned soil and the fact that they are widely regarded as polar opposites is of enormous assistance to both of them.

For the benefit of those who assert that Nazism (National Socialism) was unmitigated evil, while Communism (International Socialism) was a noble experiment perverted by the evil Stalin, let's examine the evolution of Marxist-Leninist thinking:

"The bourgeoisie as a class must be made impossible" - Marx

"We'll ask the man where he stands on the question of revolution. If he's against it, we'll stand him up against a wall" - Lenin

"A single death is a tragedy. A million deaths are a statistic" and "You can't make an omelette without breaking eggs" - Stalin

Acting on these assumptions, Stalin was responsible, at a conservative estimate, for the mass murder of 30 million Russians.

Mao Tse-Tung’s death count through mass murder and indirectly via man-made famines has been conservatively estimated at 60 million Chinese.

Most would simply view these Communist dictators as insane and evil.

But within the narrow bounds of their Communist ideology and "scientific socialism," what Stalin did in the Soviet Union, Mao did in Red China, and Pol Pot and his minions did in Cambodia, was both rational and an act of profound humanity [sic].

This probably explains why former Green MP (and long-time Marxist-Leninist) Keith Locke penned a 1975 Socialist Action editorial entitled "Cambodia Liberated: A Victory For Humanity."

To understand why Communists feel entitled to murder entire groups and classes of people, we might apply the analogy of a farmer who discovers that his herd of cows is beginning to come down with foot-and-mouth disease.

Some animals are irremediably sick and must be exterminated to keep others from also falling ill (those who are too wedded to the institutions of a free society: private property, individual rights, freedom of speech, freedom of association, faith in a Creator, and refusal to worship the Total State).

Others are beginning to come down with the bug but if quarantined and given appropriate treatment are likely to recover (those who can get well with a "tenner" in a labour camp learning the value of working unselfishly for the collective good). But of course, if the quarantined animals prove resistant to “treatment” they must be killed directly or worked to death.

The vast majority of the herd simply need to kept apart from the infected animals for their own protection (the proletarian masses).

British novelist and historian, Dennis Wheatley said this: "Communists are swine. The vast majority Gadarene Swine who race headlong over a cliff to their destruction; the few your ordinary voracious swine who would eat you alive if you fell into their pen and couldn’t get out."

Socialism in both its Communist and Fascist variants appeals to four kinds of people: Those who imagine that under such a system they will be the leaders; those who welcome the freedom from life's cares and personal responsibilities that the wannabe leaders promise; those who like to mind other people’s business in small petty ways; and those who under such systems are the secret police and camp guards, with state-sanctioned licence to indulge the pathological impulses largely kept in check by a civilised society.

Anonymous said...

In 1949, when Korea was partitioned into the Communist North and the Capitalist South, Koreans shared a common heritage, culture, and educational levels.

Indeed, North Korea got a headstart, because most of Korea’s industrial plant and skilled labour ended up in the North.

By 2013, South Korea’s per capita GDP was $US33, 140, while North Korea’s was $US783, quite an advantage to say the least.

Put bluntly, North Korea’s economy is a basket case.

Communism promised a classless society but soon led to hierarchies of power and privilege that were far from classless.

The masses suffer while only those at the regime’s top table prosper.

Capitalism, on the other hand, is the greatest mechanism for the democratisation of wealth known to man.

The difference between life in North and South Korea conclusively proves it.

Anonymous said...

Just because something is taught at university doesn't validate it at all.

Western universities are full of Marxists who still believe that Communism, despite leading irrevocably to tyranny, mass murder, and economic privation for the masses, could somehow be made to work if only the right people were in charge.

With the fall of the Berlin Wall, one celebrated Marxist intellectual, Eric Hobbsbawn, wrote an article entitled “The Dream Is Dead: Long Live The Dream.”

This staggering piece of self-delusion theorised that now the debris of Maoism and Stalinism had been cleared away, a “true” and “human” socialism could come into being.

Communism is such a proven failure everywhere it has been tried that only an idiot or an academic could believe such horse shit.

Communism promised a classless society, but soon led to hierarchies of power and privilege that were far from classless.

Here comes the new boss, same as the old boss …

It leads to mass murder because Communists feel obliged to exterminate whole groups and classes lest they contaminate others with their reactionary thinking and inhibit the development of the “New Socialist Man” Communists mean to create.

Communists believe that there’s no such thing as human nature and that people are the product of their class environment.

So change society, change man.

If you won’t change, you’re not wanted anymore.

Stalin murdered at a conservative estimate some 30 million Russians in the service of this objective.

Mao-Tse Tung exterminated some 60 million Chinese.

Pol Pot, in 7 years, offed around 35% of Cambodias’ pre-revolutionary population.

Urban dwellers were forcibly deported to the countryside and forced to work collectively in agricultural communes to learn the value of unselfish labour for the common good.

People were shot for possession of a pair of spectacles, since weak eyes identified them a “reactionary” holdover from the previous regime’s intellectual class.

Others were sent to the killing fields for expressing a desire for their own toothbrush, rather than one shared with 50 others.

Communism also leads to economic privation because central planners cannot possess the perfect knowledge to allocate resources efficiently, whereas Adam Smith’s “Invisible Hand” harmonises the millions of individual economic decisions made in a free market economy rather nicely.

Anonymous said...


Communism promised a classless society but soon led to hierarchies of power and privilege that were far from classless.

The masses suffer while only those at the regime’s top table prosper.

Capitalism, on the other hand, is the greatest mechanism for the democratisation of wealth known to man.

The difference between life in North and South Korea conclusively proves it.

A command economy will always lead to resource misallocation, since no bureaucrat can possess the perfect knowledge required to replace Adam Smith’s “Invisible Hand.”

For example, one Soviet Five Year Plan decreed that agriculture must be mechanised, so the USSR’s entire steel production over that period went into building tractors.

In the absence of market signals, nobody gave any thought to who would operate and maintain the tractors that streamed out of Soviet factories.

There were insufficient trained tractor drivers and mechanics to service them, so in a short time the tractors sat in the fields and rusted, while crops continued to be planted and harvested by horse and hand in the traditional manner.

The misallocation of the entire steel output for the next five years meant that little or none was unavailable for other purposes.

Since structural steel framing members are required for high rise buildings, no new apartment blocks got erected for many years after the disastrous tractor-building mania evaporated.

Meanwhile, the population increased rapidly, so even when steel was once again available for building purposes, many urban dweller lived for years cheek-by-jowl in a four bedroom unit with three other families, one family to a room, and sharing toilet, washing and cooking facilities.

Collectivising farming in the USSR required that an entire class of people, the kulaks or landed peasants, be wiped out in their millions for their resistance to collectivisation by way of summary executions and death from exposure when forced to walk thousands of kilometres into Siberian exile in the middle of winter.

Collectivisation of Soviet agriculture removed the incentive to work hard, because it didn’t matter whether you were lazy or industrious, you still got to eat. So the lazy continued to coast through life, and the hardworking reduced their output to the bare minimum.

The Soviet Union went from being “the Breadbasket of Europe” under the Czars to having to import millions of tonnes of grain annually from the US to keep its people fed.

To prevent the people from starving, the Politburo was also obliged to allow farmers small private plots on which to grow food which they were permitted to sell at informal farmers’ markets in the larger cities and towns, just as long as they continued to work almost full time on the balance of the land allotted to the collective farming operation.

These small hobby plots, amounting to around 7% of the available arable land, ended up producing 90% of the USSR’s food output.

After the fall of the Soviet Union, people queued for hours outside the brand new Moscow McDonalds outlet to buy a Happy Meal at the cost of three months wages, just so that they could say they’d tasted “freedom.”

In any Western country, the cost of a Happy Meal is less than half an hour’s labour at minimum wage.

Go figure.

Peter Judd said...

I find it interesting in "capitalist" America that they had no problem in socialising Wall Street's obscene losses!

John Galt (2) said...

[Quote:]"What is most disturbing is the idea that America — and its unique success as a nation — was built around individual liberty and opportunity, not collective coercion."
NO - this is NOT simply an idea - it is an indusputable FACT!

Peter Caulton said...

So unbridled capitalism is the answer for the US with the middle class on their knees and America 20 trillion in debt.The politics of greed. Any sane person should conclude that a mix of ideologies is the answer. How do you achieve that? Vote in independent candidates and take away the lobbyists and minority view´s power base in political parties.

Anonymous said...

Under that you refer to as "unbridled capitalism" America underwent one of the most sustained period of economic growth of any country in history.

Let's examine the underlying ethos on which America was built as expressed by the good guys:

"If we can prevent the government from wasting the labours of the people, under the pretence of taking care of them, they must become happy." -- Thomas Jefferson

"That is not a just government ... where the property a man has in his personal safety and personal liberty, is violated by arbitrary seizure by one group of citizens for the service of the rest." -- James Madison

"The utopian schemes of levelling [wealth redistribution] and a community of goods, are as visionary and impractical as those that vest all property in the crowm. These ideas are arbitrary, despotic, and in our government, unconstitutional" -- Samuel Adams

"Property is desirable as the fruit of labout. Property is desirable, as a positive good in the world. That some should be rich shows that others can become rich, and hence is an encouragement to industry and enterprise." -- Abraham Lincoln

"let not him who is houseless pull down the house of another; but let him labour diligently and build one for himself, thus by example ensuring that his own shall be safe from violence once built." -- Abraham Lincoln

"Though the people support the government; the government should not support the people." -- Grover Cleveland

"A rising tide lifts all boats." -- John F. Kennedy

"Since when do we in America believe that our society is made up of two diametrically opposed classes - one rich and one poor - both in a permanent state of conflict, and neither able to get ahead except at the expense of the other?" -- Ronald Reagan

"Since when do we in America accept this alien and discredited theory of social and class warfare? Since when do we in America endorse the politics of envy and division?" -- Ronald Reagan

The US Constitution guaranteed Americans an equal opportunity, not an equal outcome. The notion that Americans have the right to prosper and to keep the fruits of their labours was central to the Founding Fathers' vision for their country.

Things began to unravel when Roosevelt's New Deal tax and spend proposals were several times vetoed by the Supreme Court. His response was to expand the Court from five members to nine, by appointing four new judges, all leftist redistributionists like him.

Suddenly the Court decided that "providing for the General Welfare" really meant "providing welfare generally."

That was the point of entry for socialism into America's political discourse, and successive governments have borrowed and borrowed ever since to fund an every-burgeoning welfare state.

State-sponsored theft, in other words. And of course anyone promising to rob Peter to pay Paul can always count on Paul's vote.

Anonymous said...

Socialism is in fact mankind's first heresy. In the words that the Serpent whispered into the ears of Adam and Eve in the Garden of Eden: "Ye shall be as Gods."

Whether you believe this story to be absolute revealed truth or simply apocryphal, the pupose of having a transcental source of morality is to place certain propositions off limits for human review.

By dethroning God and replacing Him with human reason, socialists believe they can usher in Heaven on Earth. As the bloody history of all socialist regimes proves beyond a shadow of a doubt, Hell of Earth is in fact the inevitable result. This is because morality becomes whatever existing powerful groups who control the State say it is. Anti-morality, in other words.

The socialist impulse in Western political discourse dates back to around 350 BC, when the Greek philosopher, Plato, wrote "The Republic" setting out his vision of an ideal society. According to Plato, mankind was essentially stupid and wicked. Left to its own devices, it would invariably destroy everything.

Fortunately, there are a few individuals who happen to be better, wiser, and kinder than everyone else. These individuals have a right, and indeed a duty, to ascend to power and nobly order everyone else around for their own good.

This is the mindset of all socialists ever since.

As the great French political philosopher, Frederic Bastiat reminds us of these know-betters:

"They would be the shepherds over us, their sheep. Certainly such an arrangement presupposes that they are naturally superior to the rest of us. And certainly we are fully justified in demanding from the legislators and organizers proof of this natural superiority."

and

“If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of a finer clay than the rest of mankind?”

Exactly!

One grubby little 20th Century socialist said the following:

"I want everyone to keep the property that he has acquired for himself according to the principle:benefit to the community precedes benefit to the individual. But the state should retain supervision and each property owner should consider himself appointed by the state. It is his duty not to use his property against the interests of others among his own people. This is the crucial matter. The [state] will always retain its right to control the owners of property."

Other than the identity of the aforementioned grubby little socialist, I can't begin to imagine any supporter of ballot box socialism having a single problem with the sentiments expressed. That means any left-leaning party in any Western country.

Can you guess the name of the grubby little socialist?

Unaltered quote below to assist:

"I want everyone to keep the property that he has acquired for himself according to the principle:benefit to the community precedes benefit to the individual. But the state should retain supervision and each property owner should consider himself appointed by the state. It is his duty not to use his property against the interests of others among his own people. This is the crucial matter. The Third Reich will always retain its right to control the owners of property."

As Friedrich Hayek reminds us: "Fascism is the state reached once Communisn has proved an illusion."

Fascism aka National Socialism aka crony capitalism is a state in which Big Business is in bed with Big Government for government preferment, and everyone else is a serf on the Big Government/Big Business Planation.

Sound familiar?