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Socialism's Losing Bet

Humans are at their very basic nature, capitalists. We buy and we sell, and when we do that we try to sell at the highest price and buy at the lowest price. Underlying every economic system, from laissez faire capitalism to communism is the reality that the underlying human nature of the people within that system will not change,they will only adapt those same tactics to function within that system. Economic systems may come and go, but people do not change.

When socialism is applied, it does not transform human nature, it is overlaid over human nature. When a socialist system attempts to artificially control the price of a commodity or access to a resource, a black market in that commodity or resource is created. With medical care it can take the form of Canada's illegal health care clinics at one end of the spectrum or the "bribe economy" that is common throughout Communist countries in which people are expected to bribe doctors, nurses and just about everyone within the system to receive even basics such as a change of sheets. In Israel it can take the form of doctors who work in both the public system and see patients privately, doing their best to push patients into paying to see them privately. There are numerous examples throughout the world, but what matters is that all of them represent profiteering behaviors that have adapted to a government health care system. Because once again, people don't change.

The Soviet Union took away land and private businesses. It drastically limited employee salaries and collective workers' access to produce. It drastically centralized the economy and removed individual freedom. What it created as a result was a "Black" economic system in which most of the production and even office resources such as pens and paper, were stolen and sold or bartered on the black market. Soviet diplomats and Olympic athletes returned home with massive amounts of items bought in the West, to be resold on the black market. Decades of executions and gulags, campaigns that worked to convince schoolchildren to inform on their parents, made no dent at all in the problem. Everyone stole, and the reason they stole was that it was the only form of individual economic initiative that was available to them.

Communism is the most extreme example of government nationalization and centralization, and yet it could not control the free market operating within itself. Having made legitimate economic transactions illegal, its entire economy became illegal. The promoters of Communism boasted that it would insure that everyone would have equal access to the same goods and services. Instead goods and services still went to those who could pay for them, through bribes and black market activities, only those activities were no longer taxable. What happens to a government whose economy that is mostly illegal and untaxable? Within two generations the Soviet Union had become dependent on imports for everything down to food and clothing. By contrast China revised Communist dogma to legalize profit seeking behavior, resulting in a massive economic boom.

Socialism is commonly implemented with promises that it will be fairer and make resources available to more people. Yet the two-fold problem with socialism, is that socialist systems actually consume resources inefficiently, thereby limiting the resources that are available, and that government controls actually drive spending into an untaxable and uncontrollable black market.

Setting a price ceiling results in shortages, as numerous socialist systems have demonstrated for us, most recently Chavez's Venezuela. Price controls decrease production incentive and push more goods into the black market, while sharply decreasing the quality of goods available on the legal market.

Attempting to cut costs routinely bypasses the actual "fat" within the system, namely unions, bureaucrats and over regulation, all of which are key parts of a socialist machine, instead targeting producers and consumers. Targeting producers reduces quality and availability. Targeting consumers results in rationing. Either way the end results lead to shortages of vital goods and services.

Socialist solutions promise to extend services, but they can only do so at the cost of cutting quality and creating shortages. Rather than addressing the reality of this, they instead trot out propaganda blaming producers for the high cost of services, resulting in crackdowns that worsen shortages and the quality of the services being provided. The follow-up "Soak the Rich" arguments push for higher taxes, but government spending on social problems will sooner or later outpace even the most aggressive punitive tax revenues, because unlike legitimate income, government spending has natural stopping point except absolute insolvency, and because raising taxes drives out the very people and businesses who are supposed to pay for the programs, killing the golden goose of capitalism, only to find that its socialist parasite can't live without it.

And at the bottom of the whole pile of problems, is the question of who actually needs socialism. Its proponents are usually upper class or upper middle class, who want it to be available for the poor. They want public housing they wouldn't live in. They want health programs they wouldn't use themselves. Public schools they don't want to send their own kids to. And free food they wouldn't eat themselves. Naturally they don't want to pay for the whole thing either. They want the "other rich" people to do it. The bad rich who don't care about poor people, the way they themselves do.

For the upper classes, economic or ecological morality hold the same role that sexual morality does for hypocritical clergy, it's very well and good, and they're happy to sign on to it... for other people. So you'll find the same entertainers demanding higher taxes to feed the poor and clothe the hungry, have their money tied up in complex ways overseas and out of reach. Because they mean for someone else's money to do all those things. Not their own wealth. This makes them hypocrites, but it's also a reminder that human nature doesn't change. Scratch the long-haired musician calling for everyone to give up their money for Africa, and you'll still find a capitalist inside.

On the other hand what the people socialism is meant to serve want is a social safety net, but without compromising social mobility. Because while the upper classes may toss down a few crumbs, what most people on the lower part of the ladder want is to climb up. Because after all they're capitalists too. They want their children to be better off than they were, not simply through social safety nets, but through hard work and effort. And those who don't want to climb up, have been severely damaged by living under a socialist system, to the point that the only thing they want is to live in a box and be taken care of by the government, generating a self-perpetuating social problem for government bureaucracies to gleefully cackle over.

The more government centralization there is, the less opportunities for social mobility remain. Climbing the ladder only has meaning, if there is a ladder. The more small businesses become unfeasible, the less room for social mobility there is. The sons and daughters of hardworking fathers and mothers are instead directed to take exams and climb into the echoing steel womb of the government bureaucracy, where they can look forward to pushing paper around a desk for most of their lives, and possibly earn a little extra on the side, if the situation has become extreme enough for a bribe economy to develop.

Because human nature does not change. Even within a system that bars people from pursuing their own goals, people will find ways to pursue those goals. If the system does not provide legal and socially positive ways to pursue those goals, they will pursue those goals, illegally and with socially negative consequences. Every attempt to control how people behave, creates an equal and opposite reaction. Each step toward greater government control creates a culture of greater illegality opposing it. Not out of some rebellious political statement, but as an inevitable human consequence.

Philosophers and courtiers have spent a long time dreaming of the perfect state, only to generally conclude that it cannot exist. Because people are not perfect. The great socialist dream of a state that will care for everyone and do everything only functions on paper. When it is implemented in real life, the realities of running a large system ripe with bribery, corruption and inefficiency quickly make a mockery of all the paper plans. And the more the system squeezes people, the more it begins working against the people, putting in motion the very social and economic forces that will finally destroy it. There are few inevitable things in life, but human nature is one of them. And if you bet against human nature, you will lose. And socialism, which insists on betting against human nature, will continue to lose.


  1. Wow. Your article are always exceptional but the past couple of weeks you've been hitting them out of the ball park!

    Regarding Socialism--you're right they do promise to care for everyone but quality is sacrificed. Socialism isn't the answer. Self-sufficiency is. And for those at risk of falling through the cracks, religious people and organizations can and should help.

  2. thank you, they do though that now is becoming more difficult

  3. I would bet the majority of people have two general impressions about Socialism/Communism: there is indeed a general sense that everyone is taken care of, my brother's keeper attitude, communal living something along the lines of kibbutzim or even a monestary where monks or nuns make a living by producing bread. Maybe even 1970s commune and communing with G-d and nature. Very hazy but warm and fuzzy feelings of brotherhood.

    That is the impression Socialists try to instill; that general feeling of safety for all and goodwill.

    But communal living is still private, and not run by the state, and has private enterprise when it comes to the economy. There is capitalism on communes.

    The other general impression people have of Socialism/Communism is well, the opposite--a nightmare like Jones Town.

    My general impression is that Socialism/Communism is that of a state-run "Jones Town" or in Russia, Siberia.

    Sounds crazy but that's the impression I have. In my mind's eye that's what I see when I think of Socialism and where Obama wants to take the country.

  4. Anonymous1/9/09

    As a child I grew up in a communist country and I can tell you, even then I understood the system. You are absolutely 100% right, the only ones who can succeed are the ones close to the plate (governement) and it doesn't matter if it is the city government, regional or federal. This is the only way to make a living, all the "little people" pay for anything they want to achieve (meaning normal living), as you wrote--bribes are the currency. This system is good only for the party members (democrats) who receive favors and give favors, it's such a corrupt system that Madoff looks like a babe in the woods in comparison. I'm amazed how ignorant people in the West are, even the most intelligent ones, how they can't imagine the evil that communism was, same way they can't imagine the evil Islamism has brought out. So I don't know who will take over first, Islamism or communism, but I don't believe Obama will succeed short of martial law, then it might be Islamism. Anywhich way I look it doesn't bode well.

  5. Anonymous,

    And those closest to the plate control the bribe economy because they are in a position to dispense via the government monopoly on products and services.

  6. K.A.

    To understand Communism, think of the worst vision of the DMV on the worst day ever and then imagine an entire country like that. Long lines, lots of bureaucracy, no services and nervous silence as people try to avoid calling attention to themselves.

    That's pretty much Communism. Everyone is equal in the line, except the people behind the glass.

  7. In a society like that one of two things would happen--my soul would be crushed utterly or I'd sell my soul to the devil/government and resign myself to living a corrupt existence. Neither option pleasant.

    Third option, assuming I had a shred of strength left would be revolt.

  8. Do you think the Russia of today still has bread lines and lack of staples as during the USSR days?

  9. As the bible says in the future everyman shall sit under his own trees. That is private property, private ownership,etc.
    So even G-d does not endorse socialism.
    By it's nature it is anti-G-d.

  10. Mr. Greenfield, congratulations on this crisp dissertation on the innate nature of capitalism and the sources of the woes of socialism. I’m sure that Mr. Smith, were he able to read it, would smile and freely admit that he couldn’t have said it better.
    It is literally impossible for Leftists to write an equally compelling argument in support of socialism.
    Very well done sir.
    Gerry Porter

  11. K.A.

    Russia today has much greater choice of food, because they import. But the bribe economy is just as bad, it's just "privatized" with the old Commparty system replaced with oligarchs allied to Putin, functioning like a Mafia. So you don't need to pay bribes to eat well, on the other hand you need to pay bribes throughout most other areas.

  12. Gerry,

    thank you. The general arguments in support of socialism is that they promise to be fairer than the free market, and those arguments collapse the moment you point to the implementations of socialism that are not at all fair, and deprive people of alternatives in the bargain

  13. I love that response Lemon!

  14. Anonymous1/9/09

    Old Soviet joke:
    -Is socialism an art or a science?
    -If it were a science they would first experiment on the rats.

  15. Very good. The only thing I disagree with is "And if you bet against human nature, you will lose" because the Almighty God can do whatever He wants to do.

    But other than that, this article really clears things up. Thanks!


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