Category Archives: Economics

democratic socialism

Democratic Socialism: A Disastrous Ideology

Democratic Socialism must be avoided

What is Democratic Socialism?

Bernie Sanders’ surprisingly resonant campaign introduced a new phrase into our political lexicon: Democratic Socialism.  The phrase seeks to rhetorically touch up “socialism,” an ideology rightly associated with death, despair, and disaster.  Democratic socialism, however, is a catastrophe wrapped in a seemingly innocent movement.  Tt should be avoided and shunned at all costs.

Democratic socialism strives to combine the forces of democracy with social ownership of enterprise — in other words, it hopes to establish a socialist system.  Preceding “socialism” with “democratic” doesn’t modify socialism.  Socialism’s goal is itself democratic in theory: Centralized ownership benefits the masses rather than those with capital (capitalists).  The phrase “democratic socialism” solely seeks to distinguish this vision from the Soviet Union’s Marxist-Leninism, not modify socialist goals.

Similarly, “social ownership of enterprise” amounts to no less than the nationalization of industry and the centralization of production.  Only by the government owning the means of production could enterprise ever achieve social — ie, democratic; ie, lay — ownership.

So democratic socialism offer socialism, but by a better name.

And socialism, of course, does not work, for it quickly descends into despotism while destroying economies.

bernie sanders democratic socialism

Descent to Tyranny

History proves that statement: All socialist experiments led to autocratic, repressive states that deprived their citizens of natural rights. Democracy itself tends towards self-destruction through demagogues who subvert constitutions and strive for self-serving authoritarianism.  Democratic socialism would remove the republican safeguards that prevent demagogic takeover while increasing the riches of office — subvert the constitution, establish unilateral government control, and enjoy the spoils of all nationalized industries.

In other words, the leader, or leading party, has every reason to bend the economy to their desires.  Tyranny of the minority ensues, with the beneficiaries of the centralized system fighting the majority of the population, necessarily involving coercive forces and a seizure of rights (and wholly destroying the democratic socialist vision).

Destruction of the Economy

Even in the idealized world in which the government remains true to democratic virtue and does not succumb to natural human desires to enrich oneself, socialism — and so democratic socialism — falls short of all stated goals.  It destroys the economy by ignoring human nature.

All socialist societies dream of eventual classlessness (which, combined with the abolition of private property, amounts to communism) with the centralized means of production that supposedly serves the (democratic) masses.  It ignores market forces in place of government-decided prices and output (it is impossible for the government to determine optimal quality and price; in attempting to do so, it will be surely be swayed by some minority — a further imposition of minority tyranny as a select few decide the availability of goods for general purchase).

Without incentives and with central planning, the economy quickly stagnates.  Human nature requires incentives to spur productivity and innovation.  Without the ability to reap rewards for hard work — with the government guaranteeing an outcome — worker productivity and the standard the living decline precipitously.  Output then declines, which either forces prices to rise (as they would in a market) or the government subsidizes consumers and producers to maintain a certain price level, straining government coffers and causing debt to spiral, or a government-enforced price (without supplying subsidies) quickly leads to scarcity when production halts as its cost quickly outstep income.  Either way, the economy tumbles and the standard of living plummets.

democratic socialism
The revolution thrust Cuba into abject poverty.

Conclusion

Democratic socialism is a wolf in sheep’s clothing.  The phrase itself does not modify its fundamental belief in a socialized economy.  Socialism always seeks to be democratic, but because of human nature — because of demagogues and the ease with which a corrupted socialist state can be used to enrich oneself — always descends to tyranny.

The economy similarly suffers.  Central planning ignores incentives, and thus human nature.  Historically and theoretically, socialism leads to dramatic declines in the standard of living.  Only pain and suffering increases.

And so democratic socialism must be avoided.  Democratic socialists must be spurned.  Those seeking to overhaul the economic system into one that has never once worked must never gain power.

Socialism Doesn’t Work

Learn from History

How soon we forget.  How quickly collective memory fades.  How poorly schooling covers recent history.

How shameful that the country’s youngest voters gravitate towards an economic theory that has never once worked.

Voters between 18 and 29 years of age view socialism – which has resulted in countless failed experiments that doomed countries and resulted in millions of death – more favorably than capitalism.

socialism doesn't work

This aligns well with the recent Democratic primary: Self-proclaimed “democratic socialist” Bernie Sanders dominated among young leftists whereas Hillary Clinton thrived with middle-aged and older liberal Democrats better versed in the fatal conceit of socialism.

What is socialism?

Socialism, which involves the government centralizing, nationalizing, and controlling the means of production, never works in practice.  The Soviet Union should be the most glaring example of socialism’s discontents.  While the USSR never implemented true communism – they settled for a derivation of Marxism, further perverted by despotic repression – it fully implemented collectivism.  And its economy utterly failed.

An initial postwar boom driven by massive fiscal investments in heavy industry – economic growth can be attained even in collectivist environments when enormous resources are thrust upon a given sector; however, that growth is neither efficient nor sustainable – led to epic economic stagnation that the Soviet Union tried to alleviate through market-based reforms.  In other words, the world’s greatest socialist experiment turned to capitalism to salvage its state (and, in the end, it still could not).  This also says nothing of the unfathomable human cost, both in terms of death, poverty, and suffering, that accompanied the failed endeavor.

Real-World Socialism

Incentives matter and under true socialism, with government owning property and the means of production, there are no productive incentives.  Individuals have no reason to innovate or search for profit – a quest that does create jobs and drives down costs while boosting the standard of living for a nation and all its inhabitants.  China, though ostensibly socialist, has realized the need for incentives and thus has implemented many market reforms.

Communist Cuba has entirely failed, resulting in unspeakable poverty and a continuing flood of refugees escaping the villainous regime.

Venezuelan socialism has destroyed the once-vibrant Latin American country.

Scandinavian countries, often touted as socialist successes, are not, in fact, socialist.  Sweden and Finland are among the world’s most competitive countries.  Socialism spurs no competition (and competition drives employment and high standards of living).  Denmark, which Bernie Sanders esteems as the dream socialist state, takes offense at such a label and prides its market economy.  Another tidbit: the public services provided by Denmark are not exemplary, Denmark has privatized many infrastructural elements, and there’s much doubt about the welfare state’s sustainability.  Denmark’s welfare state doesn’t replace the (labor) market – it furthers it.

Socialism vs. Social Welfare

Perhaps favorable views of socialism stem from ignorance

Socialism is not a robust welfare program, but rather the centralization and state-ownership of the means of production.  Government controls capital and industry; the economy is planned centrally with no regard to individual desires, profit incentives, or human capital.

Welfare is not socialism.  A social safety net through services such as Social Security, Medicare and Medicaid, and the Earned Income Tax Credit provide for seniors and the poor, helping the latter compete – and hopefully thrive – in a robust labor market.  Welfare is not about stripping from individuals the means of production but rather by helping labor market entrants and ensuring an equal starting (but not finishing) ground for all.

The younger generations who favorably view socialism may well confound the two concepts.  Couple this with fading collective memories of the Soviet Union’s economic failure, massive human toll, and ultimate dissolution, and today’s youth may yearn for a theoretically appealing – but in reality appalling – economic program.  The Great Recession and general income stagnation makes many lust for change of any sort.  Unfortunately, critical thought rarely accompanies such lust.

Capitalism is imperfect, no doubt.  But capitalism – and capitalism only – has led to remarkable economic growth and a breath-taking rise in our standard of living.  It’s produced wealth unimaginable just 200 years ago and product creation in so rapid a pace that the size of a computer dropped 99 percent in just four decades, while simultaneously becoming many orders of magnitude more powerful.

Embracing an economic ideology that has always failed over markets and competition is simply foolish.  Today’s left must not ever embrace socialism.

trump tariffs

Trump, Tariffs, and How to Actually Revitalize the Economy

Trump knows nothing about the economy.

Donald Trump’s deep-seated idiocy and shocking ignorance prevent the altogether foolish man from understanding economic reality.  His willing stupidity has led His Accidency to routinely promise a return to industrial greatness, all premised on turning America’s back on globalization – the force that has led to unprecedented worldwide standard of living increases and 70 years without a major conflict – and returning to an economic policy that failed in 17th Century.

The president hopes to improve American manufacturing by levying tariffs on our trading partners, those whose goods contribute to a global supply chain that leads to affordable goods.  His solution will hurt workers, consumers, and the economy.  If he were intellectually curious – a big ask for a man who assumes he knows more about ISIS than do the generals – he would quickly realize that revitalize the American economy, we need significant investments in education, not a return to pathological protectionist plight.

Our perfidious president fails to understand that automation guts manufacturing’s demand for labor.  The computer – not China, not Mexico, not immigrants – takes jobs.  And there’s no rolling back such progress.  Technology’s relentless forward march will inevitably displace former industrial workers (capitalism: creative destruction).  Tariffs do not vanquish computers; angry 3am tweets don’t kill robots; all the campaign promises and bluster will make Luddism successful for history’s first time.

Tariffs Don’t Work

In fact, Trump’s desired tariffs and other reworkings of trade pacts will hurt the economy, including (especially) the very workers from whose cultish trust Trump thrives.  Tariffs disrupt the global supply chain.  Trump wants, for instance, to slap a tariff on Chinese steel imports.  That raises the price of steel for all manufacturers that create products with steel, such as cars.  Such companies, paying more for supplies, stay profitable by laying off or refusing to hire new workers (to save labor costs) and increasing costs for consumers.

Suddenly, factory workers aren’t working because companies can’t afford to pay salaries.  Consumers slow their buying habits because of price increases – this further hurts workers because demand for goods creates demand for labor.  Fewer workers = less income; less income and more expensive goods = less buying; less buying = less demand for labor; less demand for labor = fewer workers.  It’s a vicious cycle, kicked into gear by ill-advised tariffs.

So tariffs don’t work.  (And there is no economic evidence or accepted/logical/rational theory that believes tariffs magically bring production back to America’s shores, so there’s skirting tariffs’ negative externalities.)  Manufacturing jobs will increasingly be lost to automation and disrupting trade can’t change that.  What, then, can help displaced workers?

Education

In an economy that increasingly relies on new technology, we need a workforce prepared for new and innovative industries.  We can create that fairly easily.  Displaced workers should have a robust safety net and easy access to job retraining and continuing education programs.  The former, ideally, would work with local employers to train directly for demanded needs; the latter would help workers continually improve their skillset so that they can fluidly transition to new industries.  Future generations of workers can be prepared for the new economy by expanding coding and other STEM classes and middle and high school.  No more pottery or cooking – instead, let’s teach Python and biotechnology and 3D manufacturing.  This requires fiscal policy dedicated cultivating America’s human capital.  What could be a better use of money?

Rather than idiotically come up with moronic solutions meant to preserve outdated industries, our leaders need to look to the future.  Unfortunately, Donald Trump seems utterly incapable of grasping our modern economy.  He looks back to bygone days on which the sun has forever set.  Trump makes impossible promises and condescends to voters; for their part, voters must realize that only a charlatan promises a return to the past.  Instead, they too must look ahead and realize that the economy’s dynamic nature is its greatest asset.