Socialism: 10 Reasons It Fails

Craig Huey Economics, Free Markets and Socialism, Government, Congress, and Politics, Uncategorized Leave a Comment

“The inherent virtue of socialism is the equal sharing of miseries.”

Winston Churchill knew that the “inherent virtue” of socialism is that it stints growth and productivity.

But according to a recent survey by the American Culture & Faith Institute, four out of ten Americans today prefer socialism to capitalism.

Researcher George Barna says, “That is a large minority – and it includes a majority of the liberals – who will be pushing for a completely different economic model to dominate our nation.”

Politicians and people of influence like senators Bernie Sanders, Elizabeth Warren, Kamala Harris, and Joe Biden, and governors such as Jerry Brown and Andrew Cuomo advocate different forms of socialism, including an increase in government, federal programs, and controls that take away choices.

What people may not be aware of is that socialism by its very nature creates poverty, stagnation, and oppression.

Here are ten ways that socialism will hurt you and your family:

1. Socialism creates a strong—unresponsive—federal government.

This is contrary to liberty and free enterprise, which focuses on the private sector, local control, and finally, state governments. In the United States Constitution, and throughout American History, the federal government has been assigned a limited role which focuses on national defense and enforcement of the law.

2. Socialism creates an inefficient and ineffective bureaucracy.

Bureaucracies are unaccountable entities that constantly want to grow and expand, but are always inefficient and ineffective.

Here are a few examples:

  • The United States Post Office: the U.S. Postal Service faces a crushing $102 billion debt and benefit liability, with ongoing discussions about reducing days of service to five—even three days.
  • Veterans Administration Hospitals: patients have died on secret waiting lists. Administrators have not only not been held accountable for this, but have even gotten raises and promotions while people do not receive the care they need on their watch.
  • Department of Education: states are required to comply with overbearing mandates and regulations in order to receive federal funding, creating more red tape and challenges to educating the next generation. 

3. Socialism crushes economic growth.

Economic growth means new jobs are created, incomes go up and new economic and entrepreneurial opportunities boom. But socialism destroys economic growth. Socialism creates redistribution of wealth rather than creating more wealth, innovation and jobs. Socialists think of the economy as a pie, and central planners have to divide up what already exists. In a free economy, the pie gets larger, so that even the poorest become richer.

4. Socialism kills innovation and progress.

Socialism stifles innovation. It retards progress. For example, there’s a new cancer drug that would never have come out if not for free enterprise and the profit motive. Investors and scientists will see as much as $10 billion in sales of this drug. It will make some people rich, and save many lives. These innovations in technology, drugs, and inventions require a free people, not shackled by bureaucracy. Can you imagine a bureaucrat—the DMV, for example—inventing anything? They take, but they don’t create. Socialism doesn’t reward risk and productivity.

5. Socialism discourages entrepreneurship.

While capitalism gives people equal opportunity to thrive and prosper, socialism simply ensures equal results. That means people are robbed of their motivation to start new businesses. Not only that- it potentially robs people of their freedom. As economist and philosopher F.A. Hayek once said, “A claim for equality of material position can be met only by a government with totalitarian powers.”

6. Socialism wastes resources and money.

In a capitalist society, there are harsher penalties for a business that fails- it will run out of resources. But in a socialist society, the government may allocate an incredible amount of resources to a government program that is performing poorly, meaning money, time, and resources are wasted.

As economist Milton Friedman once said, “Nobody spends somebody else’s money as carefully as he spends his own. Nobody uses somebody else’s resources as carefully as he uses his own.”

7. Socialism relies on a federal top-down approach that can’t match the free market.

A free economy is self-correcting because it acts out of self-interest, not a top-down approach. For example, stimulus dollars just create billions of dollars of waste, a massive government failure.

8. Socialism means everyone is equally poor, except for an elite few.

Socialism can degenerate into political corruption, causing the ruling elite to become extremely wealthy while the rest of the country suffers. People may be struggling to put dinner on the table in a suffering economy, while the government freely hands out benefits and resources to the politically connected.

Take the example of Venezuela- right now, 87% of people who live in this “socialist utopia” say they don’t have enough money to buy food. A country with the largest oil reserves in the world should be extremely prosperous, but because the corrupt government controls the oil industry, the vast majority of Venezuelans cannot benefit from the existence of this rich resource. The government does, however, make sure an elite few are well-off.

In fact, today, Hugo Chavez’s daughter is the richest woman in the country, with $4.2 billion- although her own father once declared that “being rich is bad.” In a country like Venezuela- which used to be the richest country in Latin America- socialism has induced tragic poverty and extreme political corruption.

9. Socialism encourages centralized power.

Socialism has a history of failure: Nazism (National Socialism) in Germany; Fascism in Italy; Communism in Russia. As Lord Acton said, “Power corrupts, and absolute power corrupts absolutely.” The genius of the United States Constitution prevents the creation of centralized power that will result in coercion and dictatorship. Nowhere in recorded history does democratic socialism not lead to political and economic distortions and oppression.

  • Consider the economic chaos in Greece: massive layoffs, high unemployment, failed pension systems, bank freezes, and rioting in the streets.
  • Consider Venezuela, as discussed above, where socialist policies have led to rationing of food and water, rationing of toiletries and other basic necessities, devaluation of the nation’s currency, massive closures of small businesses, and the flight of investment and capital out of the country.

Zika mosquitoes are socialism’s gift to the world, because Venezuela was so bankrupt, that the country could not pay its doctors or provide a necessary infrastructure to preserve and protect the health of the country’s inhabitants.

10. Socialism works against human nature.

People will work harder to support themselves and their families than they will to make money for the government. Likewise, they will also take care of their own resources more carefully than they will take care of someone else’s.

This was the early lesson of the Pilgrims, who came to America to escape persecution from the English government. In order to fund their new colony, they arranged a contract with companies called “adventures” that would provide them what they needed, evenly divided among all colonists. At the end of seven years, all profits from their colony’s enterprise would be evenly divided among the Pilgrims and adventurers.

The problem was this—everyone was required to work for everyone else, and given the same amount of food, regardless of individual need. The system bred deep resentment among the new colonists. After the colony grew sicker, weaker and hungrier after more than two years of work, the Pilgrims abandoned their socialist experiment. In their new system, in which every family was responsible for itself, the Pilgrims became extremely industrious: They planted more crops and eventually reaped a great harvest.

Given the lesson learned four centuries ago by those who founded this nation, it should be obvious that the socialist experiment does not result in prosperity. But there are still those who advocate socialist tenets.

Politicians like Bernie Sanders and Elizabeth Warren want to expand the government. They ignore the intellectual, economic and moral bankruptcy of socialism, and instead want to find all their solutions in the federal government.

In fact, their god has become the government. It becomes the perfect answer for any problem. The state is worshiped. The individual is sacrificed to the collective. Freedom and liberty disappear.

Sanders even admits that he does not understand why consumers have choice. “Why have so many different sodas? Let’s have one. Why have some kinds of shoes? Let’s have one.”

As you can see, socialism sets everyone back economically, reduces freedom of choice and individual liberty. It results in failure and stints growth, innovation, and productivity.

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