Wednesday, February 12, 2020

Socialism (3) Success and Failure

I commonly see the following comment on blogs and Facebook, as if it solves everything.

Socialism always fails.
Unfortunately, this statement proves nothing.

Socialism often does fail. That is not surprising. Humans are fallen, fallible beings, living in a world where a spiritual battle is going on. So much of what we do fails.

But there have been enough socialistic successes to prove the comment above is wrong. NASA’s project to put a man on the moon was a successful socialist project. The US efforts to build ships, tanks and trucks during World War 2 was another socialist project that succeeded.
New Zealand has always been a fairly socialist country. I have observed many failures, but there are sufficient successes to prevent me from saying that socialism always fails. The socialistic health system that operates in the city where I live is an example of successful socialistic activity. I will write about it in a future post.

Another example is the socialist hydroelectricity system that was built in New Zealand during the last half of the last century. The Department of Works built a network of power stations on the large rivers in the South Island. This department was run by some clever engineers, who built an efficient system that still provides a significant share of our nation’s electricity needs. They built on international standard rowing course on the side.

The same applies to free-market activities. There have been plenty of free-market failures. The United States banking system failed numerous times throughout its history. It failed hugely during the 2008 GFC, and would have collapsed, were it not for an enormous socialistic rescue by the government.

Some churches, maybe under a Calvinistic influence, think that markets work all things for good. That is not true. Only God can do that.
Socialism fails most frequently due to misallocation of resources. People with political power are frequently tempted to build white elephant projects or vanity projects that fail. Free markets activities also fail due to misallocation of resources. If all the nations entrepreneurs are dull, they often sit on their property and use their capital unwisely, causing their nation to suffer.

Comparing companies does not prove much, because these days all countries operate under a mixture of socialism and free markets. There is far more socialism in the United States than most Christians realise. Americans appear happy enough with a wide range of socialist institutions in the United States, including public schools, defence forces, public parks, social security, public radio, unemployment insurance, public universities, Medicare, public libraries and space exploration.

And Corporatism is stronger in the United States than anywhere in the world, so the United States is not a free-market economy. In terms of numbers, there are a large number of self-employed people and small companies that have to operate on a free-market basis. But in terms of GDP, the US economy is dominated by a relatively few large corporates, which collude with the government to protect their privilege and position. Many of the large corporates get a big chunk of their revenue from the government, especially military equipment manufacturers.

The only argument in favour of free markets over socialism is the moral one. If John works hard for his income, other people do not have the right to take some of it from him and spend it. If Janet has started a business, and operates morally and legally, then other people do not have the right to take her profits for themselves. Nothing is changed, if it is governments that are taking the income or profit. It is still stealing something that belongs to someone else.

We should stick to the moral argument when arguing against socialism.

Of course, the morally superior option does not always give the best financial rewards. Sometimes people who do good suffer. Plenty of people operate a business that would benefit people, but due to the vagaries of the free market, they have failed. However, it is better to do what is right, than to become rich.

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