Nathan Sass

The Free Market ALWAYS Wins – Why Socialism Can Never Succeed

In Barack Obama, Economics, Politics, Tax Policy, Taxes on January 30, 2012 at 6:00 AM

Capitalism, with its reliance on the rules of a free market, has been under very public assault for the last 3 years. Recently, the President himself stated that economic models based on the rules of supply and demand have never worked. Occupy Wall Streeters echo this sentiment and call for a European Socialist economic model in the US.

As stunningly brazen as these statements are, they are just the most recent of their type. We have heard arguments against capitalism for over 100 years. Socialism, and its evil twin communism, have been advocated by egg headed academics since before the turn of the 20th century.

This thinking is rooted in the ever present desire of the left to ignore human nature entirely and advocate policies based on how they WISH people would behave. The truth is that socialism cannot work, because the laws of the free market say so.  Those laws are as immutable and irresistible as the law of gravity and will not be violated.

Denying the laws of the free market and advocating socialism is like jumping off a cliff expecting to float away in utopian bliss. Sure, you will be airborne for a while feeling weightless, but eventually you will realize, very painfully, that gravity was always there even when you didn’t “feel” it.

Similarly, socialism works for a while, and you feel as though you are floating away into a new utopian era of economic bliss. That is, until the end comes, suddenly and painfully. The laws of the free market always exist, and will always win, in everything, everywhere.

Everything humans do is based on the laws of the free market because these laws are a reflection of human nature itself.  Every decision is made, to one degree or another, on a cost/benefit calculation.  Most times, you don’t even realize you are doing it.

Allow me to use a very non-economic example to illustrate.  Suppose your significant other asks “Do you want to go to a movie tonight?”

If you are a “typical guy”, the calculations start running in your head in rapid succession: “Would I rather watch the game tonight? Do I really want to sit through another romantic comedy? If is say no, will she give me the silent treatment? Is watching that game and avoiding another Hugh Grant stinker worth getting the silent treatment?”

These are cost/benefit calculations based on the laws of the free market. Simply put, is choice A worth price B?  Human beings are like electricity and water.  We always seek the path of least resistance and seek the best benefit for the least cost.

It logically follows that in every single thing we do, even those that have no monetary cost, we use the laws of the free market.

The left has long engaged in denial of the laws of the free market and advocates a new socialist utopia. Oh, now they don’t actually call it socialism. They use words like “government investment” and “regulation” and “social justice”.

In advocating such policies, President Obama and his minions reveal themselves to be economic illiterates. Obama is now the leading member of the Economic Flat Earth Society, denying the undeniable.

Western Europe jumped off the cliff Obama is asking Americans to jump from decades ago. Post WWII Europe became a “democratic socialist utopia”, denying the laws of the free market. They are now in full panic mode because the weightless feeling they enjoyed is coming to an end as they rush toward the ground below.

All the bailouts and economic assistance plans are nothing more than the flapping arms of a doomed falling man about to learn how powerful and irresistible gravity is. It will not save them from a spectacular splat.

Socialism, as Europe is now proving, is itself subject to the laws of the free market. Specifically, when you make the price of something 0, demand becomes infinite.

They made healthcare “free” and now cannot control the demand for it without rationing.

They made the cost of unemployment 0, and now cannot get people to go back to work.

They made the cost of retirement 0, and now people “retire” (even after being unemployed for decades) in their 50’s.

When there is no incentive to work, and achievement (as represented by increased incomes) is taxed heavily, there is no economic growth, and thus no more wealth to redistribute.  The cost of achievement becomes more than it is worth, so people decide not to achieve.

This leaves entire nations with fewer and fewer “makers” paying into the system, while more and more become takers from the system.  The price of taking is 0, and the price of “making” approaches the infinite.

Worse yet, now they cannot reverse course and take away these benefits without riots and social upheaval.

The left refuses to grasp that the laws of supply and demand could care less about their altruistic intentions. These laws have no feelings or sympathy. They are ruthless, logical, analytical, and merciless. Ignoring or defying them will always result in disaster and suffering. Ask the leaders of Greece how painful such denial is.

You may disagree with these laws and their cold and rational views, but you absolutely cannot deny them. To do so courts destruction at their hands.

These laws do not care that you believe that “people have a right to free” fill-in-the-blank.  It cares nothing about how good it feels to advocate giving people free doctors, apartments, food, clothes or retirements.

The left loves to advocate such “feelings based” policies. Their policies ignore the laws of the free market simply because they do not like them.  These laws are “too cold and mean”.  So they pretend that these laws have no power over them, and create economic fantasies that doom entire societies to painful collapse, and pretend this makes them more caring than the right.

The right, on the other hand, generally accepts the rational laws of the free market, even if we do not always personally like the outcomes or the coldness by which they operate.

The right has no more desire for people to be impoverished than the left, but the right realizes that poverty cannot be wished away. It must be addressed USING the laws of a free market, not by ignoring them.

The left argues for transfer of wealth to eliminate poverty. This is essentially just free money for the “less fortunate” (a horrible, dishonest term implying that those who have wealth are just lucky and did absolutely nothing to deserve it).

The right argues that the only way to eliminate poverty for as many people as possible is to embrace the free market laws of cost and benefits. If poverty is more painful than the alternatives, people will do the alternatives to avoid poverty.

They will do challenging things like educate themselves. They will do unpleasant things like menial jobs. They will do displeasing things like delaying the purchase of modern conveniences.  The right believes that it is our job as a society is to make certain that everyone has the ability to use these alternatives with as little restriction as possible.

We on the right realize that doing these things will not be pleasant in the short term. However, these things will also make the people that do them better in the long term. They will be better citizens, better parents, better human beings, and less likely to be in poverty for the rest of their lives.

For this, people on the right and advocates of the free market are labeled as unfeeling and unsympathetic by the left.  The truth is exactly the opposite.

Socialism is claimed to be a more humane and equal economic model by its advocates.  In reality it is the most inhumane and detestable thing man may have ever devised.

Socialism destroys the souls and humanity of all those it touches. It destroys the human spirit and removes the will to reach beyond what we already are. It trades the possibility for excellence for a guarantee of a crushing eternal mediocrity.  It replaces opportunity with stagnation.  Worse yet, it give a certain few unlimited power and wealth, and condemns the rest to eternal poverty.

This next election will go a long way to determining if we are going to follow Europe off that cliff of Democratic Socialism, or if we take a few steps back from the brink and realize that we are subject to the laws of the free market as much as we are the laws of gravity.

I hope for the sake of future generations we have the will to step back from the edge.  If we do not, and step off, our children will not be able to undo that decision later.  It is our children who will be the ones left to face the pain of the inevitable impact with the ground below.

  1. This is absolutely the most shallow description of capitalism that I’ve ever read. Is there no such thing as “crony capitalism” or “corrupt capitalism” or “free-for-all market” or “honest capitalism?” You’ve mentioned the term “laws of the free market” a dozen times, but never once described them. Is political payola to change the free market to a corrupt market okay?

    Is political corruption good, and how does that affect the free market? Or are campaign bribes considered free-market as well? Are all Lefties bad and all Righties good? Or is “blind partisanship” okay?

    Incidentally, I know you feel socialism is terrible, but socialized countries fall in the top (best) scale of the corruption index while the US is at #22. Oh well… nobody said we were perfect.

    And you’ll want to see this, though you’ll likely not be happy about it: For-Profit College Executives Make Much More Than Their Higher Education Counterparts

    • Oddly, you miss the entire point of the post itself.

      I do not defend crony-capitalism, nor a complete “hands off” wild west brand of capitalism. I don’t even mention them because they are not relevant to the point of the post. The point of the post is to, in essence, explain why the collapse of Greece was inevitable.

      In fact, “political payola” as you call it corrupts a free market INTO a quasi-socialist one where government (recipients of the “payola”) use their power to control the market and choose winners and losers. This is the essence of socialism. Government control over economic activity to achieve politically desirable ends.

      The post explains that the laws of capitalism, based as they are on human nature, dictate that socialism always inevitably fails, leaving wrecked nations and lives in its wake.

      As for the “corruption” present in your beloved socialist utopias, I would argue that socialism IS in and of itself a huge single corrupt entity. Government, and its agents, control markets and economic actors based only on their will. Socialist states ARE the corrupting influence, not the corruptible influence.

      It is impossible to measure the impact of corruption on an already corrupt entity. It’s like comparing corruption in the Mexican cartels themselves with the Mexican government. Once is by it’s nature corrupt, and therefore cannot be more corrupted. I suppose your friends would therefore rank the Mexican government as far more corrupt than the Mexican cartels.

      Socialism is the ULTIMATE form of “political payola”, not the antidote for it.

      In the US, though far from a “clean” free market, we still have less government control in relative terms. (Have you ever read the EU compact on what is and is not allowed to be produced where, and what is and is not allowed to be called?) This has changed for the worse in the last 4 years, starting with TARP through to GM and Solyndra et. al. The corruption in the US is only possible because there is still a free enough market to be corrupted.

      If you seek to eliminate this ability to be corrupted, the solution must be to remove the power from those who would be corrupted, not to eliminate the market economy that they seek to corrupt.

      How is it possible that you could ever even infer that this post is an endorsement for anything other than strictly limited government especially as it relates to the economy and an endorsement of properly structured free market capitalism?

      • So government’s ability to “choose winners and losers” is determined more by our “socialism” and not by corrupt politicians? What part of political bribes do you not understand? Money works or it wouldn’t be given! And yes, union money is as bad as Fat Cat money! Would you accept a system where NO bribery was allowed?

      • Absolutely I would support that, but such an entity is impossible in the real world.

        Bribes are subject to these same rules of the market I speak of. They are the “price” charged by politicians for favorable treatment. If you remove the power of the politicians to provide favorable treatment (i.e. guaranteed loans to “green” companies, bailouts to major corporations, tax law provisions for individual entities, etc.), they cannot charge a “price” for them. No power to manage the market means no price for access to that power. Period. Supply and demand at work.

        Corrupt politicians are only “corrupt” if you accept the premise that government should not be choosing winners and losers. I accept that premise, and would like to remove their power and therefore make buying their patronage a worthless endeavor.

        If you think that it is right and proper to allow government such power, they are not so much corrupt as rational actors. They are doing what they should be doing in such an arrangement.

        We have allowed politicians to amass enough power to choose winners and losers. We have allowed them to provide “guaranteed loans” (a.k.a. free money for the select few approved companies/industries). We have allowed the use of the Interstate Commerce clause to be perverted to the point that almost anything is defined as interstate commerce and therefore can be regulated and/or controlled to any extent the government (and those who run it) feel is appropriate.

        We did this. We have ourselves to blame in large measure. Too many of us believed the big lie of socialism and big government. That seductive lie that tells us that government, if only given the power to do so, can provide you with everything your heart desires at no cost to you. That lie that government is there to protect us from ANY bad thing that happens, even bad economic things that are really our own fault (i.e. buying a house you couldn’t afford in the first place).

        Your issue is not with “moneyed politicians”, as your name implies. “Moneyed politicians” are only being rational actors in a “market” WE allowed them to create in our desire to be cared for by them from birth to death and never worry about anything. You must change the latter to rid us of the former, not the other way around.

        You will never get rid of “moneyed politicians” as long as the people will vote for them and their false promises of eternal comfort based on their guidance.

      • Yes, it’s called public funding of campaigns, and at $5 per taxpayer per year it would be a bargain. Right now it is costing us $3-5,000 per taxpayer per year in government giveaways.(through the back door).

        And “remove the power of the politicians to provide favorable treatment?” You mean, remove their power to legislate? Like pipelines and etc? I love it, but then, why do we need “congress?”

        Politicians, incidentally, always pick the guy who writes the biggest check. I suppose you call him the “winner” and the rest of us “losers.”

        Look, we need a “board of directors,” but we don’t need or want them taking cash bribes from our competitors (the Fat Cats).

      • Public funding is a pipe dream. Furthermore, your plan is 100% unconstitutional. All people have a right to free political speech, including ads supporting or opposing a candidate. It would be a better use of your time to advocate for the Easter Bunny to be named President for life.

        And when did I say “remove their power to legislate”?

        I said that they should be required to legislate within the confines of the constitution. No more EPA rulings (bought and paid for by the environmental left) to open or close a plant or pipeline. Only ENFORCEMENT of existing environmental regs. Enforcement cannot and would not prevent the building of the pipeline, and only covers it proper opperation. The fact that we allow the EPA to have veto power over a privatly funded effort is exactly the problem.

        The government should not be engaged in proactive policing. What the EPA is doing is exactly that. Trans Canada has been convicted of “envoronmental thought crimes” that would make Orwell proud. How about we restrict the power of government to enforcing laws only AFTER they are broken?

        To apply the EPA analogy to the individual level, it is like having to request approval of a government agency before having a child. You must be able to prove that you are a good parent, have gobs of money and will never make a mistake with your child.

        Or how about this: Requesting and getting approval to have a beer before you actually are allowed to do so. We must prevent disasters like drunk driving, so the Federal Bureau of Alcohol Consumption must approve your intended plans on Saturday night to make certain you do not get behind the wheel after drinking. Until they approve your plans, you are required to stay home and drink water.

        Oh, how American this all is. Government power (and the sale of that power to the highest bidder) is the problem. Why is this hard to grasp?

      • Not unconstitutional at all, or they would have passed it and had it shot down long ago. Because those who want it volunteer, and those who don’t keep taking cash (at their peril). That’s free speech, don’cha know.

        Ah, within the confines of the constitution. Corporations are nowhere in the constitution. They won’t like that a bit.

        No more EPA rulings? I love it. A total free-for-all. That’s what we need. Only ENFORCEMENT of existing environmental regs. Like, even those illegally passed before, or do we go back to the signing of the constitution. And, uh, who defines “proper operation? Do you have kids living near the pipeline?

    • Seriously? I think you missed the point of the post. The post implicitly rejects “crony capitalism.” I’m not sure what you mean by free-for-all market. Laws regarding theft and fraud must certainly be uniformly enforced. But willing buyers and sellers should be free to enter into enforceable contracts without interference by Big Brother. When it comes to corruption, there are no more corrupt regimes than the old Soviet Union, China under Mao, all of the Marxist satraps of southeast Asia, and the wretched mess in certain South American nations. The only difference is that those “lefties” are totalitarian regimes and are able to hide the evidence… usually under the corpses of their opponents.

      Michael Darr

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: