Why Must Socialism Fail?

Some think the question “Why must socialism fail?” is hypothetical.  I suppose it is in some places.  Greece is no longer among them.  Greece is clear evidence that nature sides with the hidden flaw.

Greece can expect a very difficult time.  It will be very unpleasant for most of the people and the chaos will be upsetting for onlookers.  Adult accompaniment required.  They can survive but only with a major rethinking of what their society is about.

There may be conditions under which socialism can work.  I have thought of only one so far. 

There must be an all-powerful supreme being who can create wealth at will and can limit the avarice of the citizens.  None such in evidence.

Socialism, at its root, is altruistic and benevolent.  Everyone does well.  A worthy goal.  Why will it not work?

Socialism fails for several obvious reasons:

  1. Socialism assumes the resources will exist to provide the benefits to those who cannot or will not acquire them.  The supreme being who creates wealth at will would not care about that limit, but in our world, those who have worked, saved and risked to acquire the resources will not do so indefinitely.  When they stop, get old, die, or even reduce their effort, where does the resource come from?
  2. Socialism emphasizes the we/they dichotomy.  Those who want something for nothing must be at odds with those who fear getting nothing for something.  I recently saw a piece that claimed the most successful species co-operate.  Bees, ants, termites, people and dolphins.  Polarizing diminishes co-operation.  Reduced co-operation diminishes wealth.  Reduced wealth makes lavish promises undeliverable.
  3. Socialism absorbs risk and spreads it around.  If you cannot fail, or even suffer, what limits will there be on your behaviour.  If banks win when they are right and the people lose when they are wrong, what gut level limitations exist for banks.  Same for the people, although not to that scale.  Transfer of risk from the individual to society at large is a moral hazard.
  4. Socialized risk automatically means socialized success.  People will work for success and be innovative, risk taking and resourceful in so doing.  But, only if the success is useful to them.  The probability of innovation is closely tied to risk.  If the risk is high then people will try.  If it is low they will not, because the value of success will also be low.
  5. Socialism brings out the worst in people.  Delusional expectations being one.  Those who have less want more and refuse to contribute to get it.  Those who have more cheat (according to the rule makers) to avoid losing their resources.  Independent thought seems to disappear.  There is an ideology that dominates and passes for thought.  Dissent is shut down.  It appears that the more liberal is the person’s mindset, the less liberal are they in accepting any other viewpoint.  Shouting replaces evidence.  Justice in the sense of equitable solutions disappears.  Compliance with the rule of the month becomes paramount.
  6. Style and charisma replace character in politics.  Theatrics replace substance.  Bureaucrats and politicians and media people demand respect that is neither earned nor deserved.  Politics replaces governance.  Finer and finer rules create an impenetrable maze for the citizens.  The overhead of society becomes a burden.

There is no example of a socialist society that survived, never mind flourished, for a century.  Not one.  If we define insanity to continue to do some failing act with the expectation that it will be different this time, then governments are mostly insane.

Are they insane?  Really?  No.  If we adopt the idea that politicians are selfish and will offer to do things that enhance their prestige and power then they are not insane, they are perfectly rational in their vote buying from the uninformed or thoughtless.

We are the insane ones.  We continue to believe that political promises are real and that once elected, politicians will act in our interests.  There is little evidence to support that idea.

It is no longer reasonable to listen to the platforms and vote for who is best.  If we are concerned about the realistic needs of the people, then we must vote for the ones who will do the least harm.  Least awful is the best candidate.


Contact: don@moneyfyi.com  

Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

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