Skip to comments.7 Reasons Socialism Will Make You Poorer Than Capitalism
Posted on 12/04/2012 4:26:17 AM PST by Kaslin
Given what we know in 2012, saying that capitalism will make a society richer than socialism should be about as controversial as saying the earth is round, not flat. Yet, a recent Gallup poll shows that more liberals have a positive view of socialism than capitalism. This is only possible because there are so many perverse incentives that drive the promotion of socialism. If you're a politician, socialism puts power in your hands while capitalism takes it away. If you want to use the government to control people's lives, socialism is a wonderful vehicle to do just that while capitalism robs you of that opportunity. If you would rather live off the dole than to work or alternately, prefer to make money off "who you know" instead of "how good a service you provide," again socialism works better for you. Now take into account the fact that there are no pure socialist or capitalist economies left and it becomes very easy to muddy the water and keep people from realizing the obvious economic superiority of capitalism.
1) Socialism benefits the few at the expense of the many: Socialism is superior to capitalism in one primary way: It offers more security. It's almost like an extremely expensive insurance policy that dramatically cuts into your quality of life, but insures that if worse comes to worse, you won't drop below a very minimal lifestyle. For the vast majority of people, this would be a terrible deal. On the other hand, if you're lazy, completely incompetent or alternately, just have a streak of very bad luck, the meager benefits provided by socialism may be very appealing. So a socialist society forces the many to suffer in order to make it easier for the few. It's just as Winston Churchill once noted, "The inherent virtue of socialism is the equal sharing of miseries."
2) Capitalism encourages entrepreneurship while socialism discourages it: A government in a capitalist economy can quite easily give everyone equality of opportunity with a few basic laws and regulations, but socialism strives to create equality of results. This should frighten people who value their freedom because ultimately, as F.A. Hayek has noted, "A claim for equality of material position can be met only by a government with totalitarian powers." You can see this happening in America as our efforts to reduce "inequality" have led to an ever expanding government and a vast regulatory tangle that is almost unexplainable despite the fact that it is certainly enforceable. Capitalism encourages people to start a business and build a better life for themselves while socialism lays in wait with IRS agents, nooses made of red tape and meddling bureaucrats looking for businesses to control and loot.
3) Capitalism leads to innovation: Coming up with new products is often time consuming, expensive and hit or miss. Nine ideas may fail before that tenth one takes off. The less the creative people behind these ideas are allowed to benefit, the less time, money and effort they'll put into developing new concepts and inventions. Put another way, the bigger the risk, the bigger the reward has to be to convince people to take it. Capitalism offers big rewards for productive people while socialism offers makers only a parade of bureaucratic leeches who want to take advantage of their "good fortune."
4) Capitalism produces more economic growth: Capitalism produces considerably more economic growth than socialism and as John Kennedy said, "A rising tide lifts all boats." A fast growing economy produces more jobs, more wealth and helps everyone. Many people assume that capitalism isn't working if there are still poor people, but that misses the point. In many parts of the world, poverty means living in a hut with a dirt floor while in America, most poor Americans have TVs, refrigerators and cell phones. The rich may take home a larger share of the pie in capitalism, but the poor also benefit tremendously from living in a growing, thriving economy.
5) Socialism is too slow to adapt: Capitalism is extremely good at allocating capital to where it's most valued. It has to be. Either you give people what they are willing to pay for or someone else will. On the other hand, socialism is slow and stupid for a variety of reasons. Because the government is spending someone else's money, it doesnt get particularly concerned about losing money. Political concerns about appearances often trump the effectiveness of a program. Moreover, even if politicians and bureaucrats are intelligent and competent, which are big "ifs," they're simply not going to have the specific knowledge needed to make decisions that may impact thousands of different industries. This is why capitalism may have its share of troubles, but when there are really colossal economic screw-ups, you'll always find the government neck deep in the whole mess.
6) Socialism is inherently wasteful: Milton Friedman once said, "Nobody spends somebody elses money as carefully as he spends his own. Nobody uses somebody elses resources as carefully as he uses his own." This is very true and it means that the more capital that is taken out of the economy and distributed, the more of it that will be wasted. The market does a considerably better job of allocating resources than the government because there are harsh penalties for failure. A company that makes products no one wants will go out of business. A poorly performing government program that wastes a hundred times more money will probably receive a bigger budget the next year.
7) Capitalism works in concert with human nature while socialism works against it: Ayn Rand said it well, "Americas abundance was created not by public sacrifices to the common good, but by the productive genius of free men who pursued their own personal interests and the making of their own private fortunes. They did not starve the people to pay for Americas industrialization. They gave the people better jobs, higher wages and cheaper goods with every new machine they invented, with every scientific discovery or technological advanceand thus the whole country was moving forward and profiting, not suffering, every step of the way," but Adam Smith said it better, It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. A man will work much harder to take care of himself, his family and his friends than he will to make money for the state, which will then waste most of it before redistributing it to people who aren't working as hard as the man who earned it in the first place.
The funny thing is that crony capitalism works just like socialism with the same results.
Adam Smith said it better, It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.
FORGET the facts and just give me my Obamaphone, my free abortion and my Viagara. The rest of you just keep on working.
That’s not uprising because crony capitalism = socialism, and has nothing whatever to do with actual capitalism.
The Government choosing winners and losers in the marketplace? That’s Socialism.
The total failure of Socialism was clearly understood and written about by Frederic Bastiat prior to 1874.
“Essays on Political Economy”
...and that's why "Crony Socialism" is the more correct term.
“Share the wealth” schemes end up sharing the poverty and eliminating the wealth.
That this has to be written is indicative of the terrible state we’re in today.
There’s one basic reason, and it should be taught in elementary school. Economic calculation is impossible under socialism. For economic infornation comes in the form of prices, and without some level of freedom to raise and lower price according to supply and demand there is no information. When prices are set by wild guesses or whimsy or political correctness, no one knows what’s going on.
“Crony Capitalism” is a terrible moniker to apply to what Obama’s buddies are engaged in because it gives Capitalism a bad name.
I was refering to the crony capitalism that the GOPe types support. Obama only uses it to finance his long term marxist goals. Republicans pursue as the end goal.
GOPe, Dems, doesn’t matter to me, they’re two sides of the same coin. I wish people would stop calling it “capitalism” because it’s not. If my statement was in error is was because I failed to point out the GOPe is no better than the Dems. Arguably, worse.
5a) Socialism is too ignorant to adapt.
In my experience people under 30 are totally ambivalent on this issue. I think they’d have no problem chucking Capitalism and giving some other economic system a try.
There was even a TV show in my listings titled “Democracy: The Cure for Capitalism”.
Capitalism without a modicum of Christian type morality can become as corrupted and oppressive as socialism.
Offers, yes, but ultimately fails on delivery.
It is interesting that the people who quote Adam Smith never bother to refer to the rest of his writings, such as ‘Theory of Moral Sentiments’. Smith was well aware that there would be those who could not function well in a capitalist system and said things about the poor that would make some of the acolytes of Rand rather uneasy. His book “THeory of Moral Sentiments” is not quoted as much as Wealth Of Nations...
“This disposition to admire, and almost to worship, the rich and powerful, and to despise or, at least, neglect persons of poor and mean conditions, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments.”
-Theory of Moral Sentiments.
Much more in that book that is far from the partial quotes, so often taken out of context, that make Smith appear to something other than the moral philosopher he really was.