... is from Jeff Jacoby’s recent Boston Globe column “As socialism shattered Venezuela, the useful idiots applauded“:
“Socialism invariably kills and impoverishes. Gushing oil revenues amid a global energy boom could temporarily disguise the corrosion caused by a government takeover of market functions. But only temporarily. The Chavez/Maduro “Bolivarian revolution” has been economic poison, just like every other Marxist “revolution” from Lenin’s Russia to Kim Il Sung’s North Korea to the Castros’ Cuba. By shredding property rights, dictating prices, and trying to control supply and demand, socialist regimes eventually make everything worse and virtually everyone poorer. Conversely, when governments protect free markets and allow buyers and sellers to interact freely, prosperity expands.”
MP: As I’ve pointed out before on CD, the kind of epic economic collapse, hunger, food and medicine shortages, and general chaos, misery and desperation for the average person today in Venezuela, due to socialism and central planning, has never, and will never happen under free market capitalism (see photo above). With the events unfolding in Venezuela, which get worse by the day, we have a crystal clear example of what happens under extreme socialism, and it’s just the most recent example of thousands throughout history of economic collapse under stifling socialism. And yet, is there a single comparable counter-example from any time in history of a similar economic collapse and widespread hunger under any form of extreme free market capitalism? I think not.
And even though the economic failures of Venezuela’s form of extreme socialism are now significant, visible and obvious, those same economic failures, in less obvious, less visible, less extreme forms inevitably result from socialist policies in the US including price controls (minimum wage laws, rent control laws), farm subsidies, protectionist trade policies, and stifling and burdensome regulations of business. And one of the dangers of thinking that “just a little socialism in a country like the US isn’t so bad” is that it’s often the case that “just a little socialism” results in a “lot of socialism” in the long run. Reason? The guaranteed economic distortions and inefficiencies that result from central planning and government interference in the private sector breed and foster subsequent calls for more socialist policies and government intervention to try to fix the previous socialist distortions and misallocations. In other words, “just a little socialism” can really be “socialism on the installment plan,” and is why we should be forever skeptical and distrustful of government interventions. Also, “just a little socialism” often enables politicians and government bureaucrats to seek ever-expanding control over the private sector.
For example, if politicians and government bureaucrats can dictate a mandatory minimum wage for private businesses, then why shouldn’t those same politicians and government bureaucrats feel empowered to legislate an endless series of labor policies for private companies that include mandatory overtime pay policies, mandatory health care policies, mandatory maternity leave policies, mandatory sick leave, scheduling mandates, etc. etc.?
“With a growing perception that the Seattle City Council and mayor are hostile to businesses that are facing mandates that increase operating costs, some Seattle business owners including restaurateur Tom Douglas have begun publicly criticizing city leaders for biting the hand that feeds their city.”
Douglas, who employs 900 people, said it’s not simply that the city passed mandates such as $15-per-hour minimum wage, sick leave and secure scheduling among others; it’s that the council and the mayor appear to have no time or respect for local business owners who are good corporate citizens, who have set the example for a fair workplace standards and who have helped create good local jobs.
Bottom Line: As we learn first-hand in real-time from Venezuela about the inevitable economic collapse and human misery from extreme socialism, we should appreciate that free market capitalism, even in its most extreme form, would never deliver that misery, and in fact is guaranteed to deliver exactly the opposite – abundance, wealth, prosperity, including food abundance. And we should also resist the temptation to think that “just a little socialism” is acceptable and realize the long-term dangers that inevitably result from that acceptance.
Mark J. Perry
Aei scholar and professor of economics and finance, University of Michigan
NOTE: Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan's Flint campus. He is best known as the creator and editor of the popular economics blog Carpe Diem. At AEI, Perry writes about economic and financial issues for American.com and the AEIdeas blog.
Article published on AEI official website