Socialism’s Dirty Little Secret

It is not self-sustaining.

As Margaret Thatcher said “the problem with socialism is that you eventually run out of other people’s money.” Like cancer, socialism needs a host.

In a revealing article called “Cuba Could be Venezuela’s Biggest Loser” from NBC news, Silvana Ordonez says:

Without Venezuela and its oil and subsidies, “industrial production, trade, transport, agriculture, and the whole economy would be affected dramatically. Medieval nights of the ’90s would return, with blackouts of up to 14 hours in some areas…

In other words, as Venezuela becomes more like Cuba, it becomes unable to be the socialist island’s host, propping them up with subsidies previously produced by a more capitalist economy.

In the United States, the host is the US taxpayer. However, as Thatcher’s quote reminds us, there’s a point at which the host is used up. As with cancer, when enough of the healthy cells have been consumed, the body dies. Given that  70% of all US government spending is now wealth transfer payments, I fear we are getting close to that point.

The laws of economics continue to hold sway, ideology notwithstanding. Universal socialism is an impossibility. For once everyone is socialist, there’ll be no one left to pay the tab.

3 Replies to “Socialism’s Dirty Little Secret”

  1. — Agreed that complete state socialism would be very dire.

    I’m not of this opinion, but some may still support pervasive economic intervention on the basis that the profit motive (or pursuing one’s self-interest, in particular) is a moral stain that should be scrubbed. How would you respond that idea?

  2. Thanks for the comment, Justin. I’d say people who take that approach make a couple of bad assumptions. Firstly that socialism removes the pursuit of self-interest from the equation and secondly that such a pursuit is wrong or immoral always. The problem with the pursuit of self-interest comes when it is unchecked. Contrary to what many think, it is under centralized government control that pursuit of self-interest is most egregious – and often deadly. When you have a (truly) free market, the self interest of any individual is kept in check by that of thousands of other individuals also pursuing their self interest.

    As a simple example, I may want to charge $1,000 for something because that makes me the most money. However, if others, also pursuing their self interest, are only willing to pay $500, then that’s the most I can charge if I hope to make any sales. My pursuit of self interest is checked by theirs. However, when decisions about how much to charge, what wage rates should be, etc. are removed from the market and placed in the hands of bureaucrats all you do is change whose self interest is being pursued.

    Instead of thousands of individuals in the public, it is now perhaps a few hundred politicians – whose self interest is usually the maintenance or increase of personal power and wealth. This makes for a problematic situation. Because the power of government can be brought to bear to enforce the self interest of this small group of individuals there is really no check on them at all – except by others in government, in other words themselves. This is what’s happening in Venezuela right now and it’s what happens when congress passes laws and regulations from which they exempt themselves.

    As to pursuit of self interest, specifically profit, being immoral on its face, we’d do well to remember that it was the pursuit of profit that brought us electric lights, automobiles, airplanes, computers, iPads, etc., etc. making thousands of ordinary people’s lives much the better.

    I’m always amazed that the same people who claim businesses cannot be trusted with a free market because they will abuse it are willing to trust government to control the market. Both are run by human beings. There’s nothing magical about government “service” that turns a person into some kind of altruistic saint. History, in fact, would tell us that the more power governments have, the less saintly those holding that power act.

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