Economics 101

Socialism: Is it Making a Comeback in the US?

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Editor’s note: Dr. Anne Bradley was recently featured in an interview with Praxis Circle. Below are a few highlights of that conversation that center around love in celebration of Valentine’s Day. You can watch the interview in full here.

Is socialism making a comeback in the USA?

I’m not sure I can answer why socialism is experiencing a comeback because as somebody who thinks about economic systems a lot, it’s very bizarre to me from an efficacy standpoint. In other words, it doesn’t have a lot of capabilities. 

Here’s what I think. I have come to this conclusion: it sounds good on paper. I have a list of a lot of things, and I always say, “This sounds good on paper.” It sounds really good to say there are some people who are really rich. Bill Gates has a bunch of billions of dollars, right. We could take a billion from him and he would barely notice. That may be true—doesn’t mean it’s right—but it may be true that we could take a billion or two from him, George Soros, and all these rich guys, and give it to poor people. It sounds good on paper! But it’s not addressing the underlying issues of why people are poor.

Societies that have economic freedom liberate people, and liberate many people permanently. So that redistribution I just talked about, here’s all it’s doing: we’re taking money from one place and we’re moving it to another place. And then what happens when all of that’s gone? Well, then they need more. The poor stay poor and they just depend on the redistribution. 

So the fundamental root problem is that it’s kind of dealing with the symptom and not dealing with the cause of the disease. The cause of the disease is that people are poor because they’re excluded from market trade, they’re excluded from entrepreneurship. So that’s what we need to fix, and economic freedom does that—socialism does not. 

(Watch this part of the interview here.)

Are there empirical examples of socialism?

It’s very hard for me to understand when my students suggest that socialism is a good idea when I point to modern-day Venezuela. This is a society where every day you could do a Google search about Venezuela, and every day you get another story of how people are in line, there’s no bread at the grocery store, babies are dying in the hospital because they can’t get penicillin. 

In the United States, my pharmacy has a big sign on the drive-thru and it says “free antibiotics,” meaning no price. So why is it that we have tons of penicillin and people in Venezuela have zero? Again, we could think in terms of redistribution and say, “Well, we have a lot. They don’t have any. Let’s take a lot from us and give it to them.” That may solve their problem tomorrow, and it may be the case that we should engage in that charity, but that charity doesn’t solve the underlying problem of why the heck don’t they have penicillin? They don’t have it because there are no incentives for businesses or doctors to provide services. So it’s about a reform of the society which socialism cannot do. 

And, to add another layer of complexity, as the State takes over more control of the economy, which is what socialism is about—the public ownership of the means of production, then the State automatically becomes more totalitarian. 

(Watch this part of the interview here.)

What is the root problem of socialism?

There’s no profit and loss. There’s no learning. There’s no trial and error. So if the state gets it wrong, people are just in trouble. “Sorry, no penicillin for you because we couldn’t figure out how to make it work.” So when that happens, the threat of revolution escalates. Then what happens? The government becomes more and more totalitarian

So totalitarianism is a natural outgrowth of socialism. It is a feature, not a bug. And I think we absolutely have to educate young people about this today, because it’s this myth that it’s romantic and we’re just going to share, and kumbaya, and everybody is just going to take from the rich guys. It doesn’t work. If it worked I’d say let’s do it, but it doesn’t work. 

(Watch this part of the interview here.)

Would you say that the Scandinavian countries are socialist?

My short answer is no, and here’s why. They’re not socialist countries. Socialism again implies that the state makes production decisions, the state tells you, “You’re going to own this factory, and you’re going to make nails. And then we’re going to tell you how many pounds of nails to make.” This is the Soviet Union, this is where Venezuela is heading. 

In Denmark, people are free to open businesses. In fact, there’s a lot of entrepreneurship in Denmark. So when Bernie Sanders says, “We should be more like Denmark,” in some ways he’s absolutely right. We should stop the overregulation of business, which I think is one of the big threats in the United States today. It’s much easier to open a business in Denmark than in the United States. 

That said, what Bernie Sanders is really referring to is the redistribution. So there’s more redistribution of taking wealth through taxation and spreading it in an attempt to be equal (not perfectly equal, of course) over the broader population. 

Here’s the other thing I would say. Denmark probably has a population of around eight million—this is the size of Manhattan. So it’s easier in some ways to engage in this type of activity when you have a smaller population that is more homogeneous. The bigger your society is, the harder it is to be “socialism.” 

So I think this is kind of like a trick question from the Bernie Sanders of the world. They are not socialist. It’s not a socialist paradise. And they have improvements they can make as well, but if you look at their rankings in terms of economic freedom, Denmark and the United States are almost tied. So it’s not a socialist paradise. 

(Watch this part of the interview here.)

Further readings on Economics 101

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Why Does Socialism Fail?

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Editor’s note: Dr. Anne Bradley was recently featured in an interview with Praxis Circle. Below are a few highlights of…