The Problem with Socialism

Introduction

The Problem with Socialism is written by Thomas DiLorenzo is a grim reminder and analysis of why socialism doesn’t work and why it never worked, to begin with. I will summarize each chapter.

Chapter 1: The Problem with Socialism

Today’s American youth has proved to have a favorable and nostalgic view of socialism. Saying it can fix society with free healthcare, education, etc. When in reality history has proven time and time again that socialism doesn’t work. As it leads to downfalls of great Countries. Take (formerly) Soviet Russia. Over 70 years of seizing private properties and businesses led to massive inflation. And the Russian people rejoiced when their shackles were finally broken. Another famous example would be Juan Peron. The former president of Argentina. He closed all international trade, made wage controls, and printed massive amounts of money. While simultaneously spending said money.

Chapter 2: Why Socialism Is Always and Everywhere an Economic Disaster

Regardless of who ushers in an age of Socialism, it can never due to two fundamental problems with the entire idea. First, is the incentive problem. In a socialist society if everyone is paid the same and lives the same. What purpose does seeking a higher-end job do? What purpose does desiring a mansion have? You all live the same In a capitalist society, everybody lives differently. Some poor. Some rich. Most are in the middle. Second is the problem of knowledge. Take a loaf of bread. In order for it to exist, it must go through production. Someone has to farm the wheat. Someone has to knead the dough. Someone has to farm the eggs. The knowledge of needing a society where people have jobs that contribute to their lives is something no government can possess.

Chapter 3: Egalitarianism versus Human Reality

Ultimately it is unrealistic and childish to think that humanity is equal. Everybody has a different intelligence, upbringing, strength, weakness. Everything that makes somebody human. In a market society, everyone has some kind of talent that the can use in their job. Be it working at a simple fast food chain, to a complex biological analyst. Socialism wants a society where everybody is equal and nobody is different. Leading to economic stagnation and halting of production. What matters in a society is not equality, but the equality of opportunity. Everyone has a chance at something. Be it contributing to the masses as a farmer or doctor. Or filling a niche role by being a painter or writer.

Chapter 4: Islands of Socialism: The Follies of Government Enterprise

One of the greatest insults to an entrepreneur or businessman is calling them a bureaucrat. This still holds up. Bureaucrats are often associated with working for government agencies. And said agencies are responsible for major economic mistakes. Like offering services that are of far less quality compared to a private business. While this should create healthy competition for the two, the government react childishly and attempts to create a stalemate. On the subject of services, there is no such thing as “free” in an economy. Somebody has to pay for it. Be it a rich CEO or your average yard worker. These “free services” are paid by taxpayer dollars.

Chapter 5: Why “The Worst” Rise to the Top Under Socialism

While socialism preaches under the guise of being “for the people,” it ironically is only suitable for the rich and influential. Of course, those who live comfy will easily submit to the cruel collectivity of socialism. History has shown that those with too much money and power make the worst of socialism. Millions have died in the name of “true freedom.” Socialism hasn’t totally crept into the U.S., but if this supportive talk continues the U.S. will no longer be the last bastion of freedom.

Chapter 6: The Socialist Roots of Fascism

In essence, fascism is just a shorter word for socialism. And socialism is a shorter word for collectivism. During WWII, the Axis leaders were often described as fascists. On the surface this is true, but they had much darker intents than free healthcare. Benito Mussolini often quoted his disposition towards capitalism. Declaring it a “flaccid materialistic approach to happiness.” The motivation behind the Holocaust was a personification of Jewish people as greedy. When in reality Hitler was really mad at specific bankers that had influence.

Chapter 7: The Myth of Succesful Scandinavian Socialism 

Many people like to point out that Scandinavian countries thrive on socialism. Saying that they’re an example when socialism “works.” First of all, countries like Sweden have stayed prosperous for this long because they’ve avoided (for the most part) wars. And second, they were never socialist, to begin with. In fact, there were laws passed that deterred socialism from gaining influence. Basically, those countries are nice and safe. But expensive.

Chapter 8: How Welfare Harms the Poor

Welfare has always been declared by economists as a lazy alternative to a real job. Theorizing it would disincentivize working. Over the years, that theory has become true. With unemployment being very high, and the number of single parents increasing, it’s clear that welfare does more harm than good.

Chapter 9: How Socialized Medicine Kills the Patient and Robs the Taxpayer

When you make an important service “free.” There will be high demand. But the higher a demand is, the supply will run lower and lower. Healthcare is a good example. In countries like Canada where socialized medicine exists, many denizens will tell you that many die while just waiting for a prescription and even for a critical surgery. Many cases have reported that the death toll in these hospitals is as high as it was during the medieval ages. Many Canadians dub them “Soviet-style hospitals.” With the addition of deaths, taxpayers have to endlessly fork over money for a system that barely works.

Chapter 10: How Socialism Causes Pollution

Capitalism and governments are often blamed for neglecting the environment. There are even taxes for milling companies and factories just for doing their job. All of this based on a study by socialist Arthur Pigou who especially pointed fingers at capitalism for environmental degradation. On the contrary, socialism isn’t a solution either. The perfect example is the Soviet Union and most of Europe. The nationalization of oiling and logging companies without allowing private ownership of land led to actual neglect. Because these businesses are focused on profit, they couldn’t care less about the environment. Forests, lakes, and seas were mostly affected. But one case of air pollution in Katowice, Poland led to the harm of the denizens. Underground hospitals had to be built for those with chronic lung disease. It is up to those who privately won land to protect it against pollution.

Chapter 11: Karl Marx’s “Progressive” Income Tax

While the inherent idea of taxes is neither fair nor warranted, income tax is an example of how one can abuse the system. It is common knowledge that your money is not your money. It’s the governments. Some of your earnings you get to keep, some you have taken away. A graph made by the IRS stated that the top 1% pay 38.1% of income tax. While the top 50% pay 97.2 of the tax. And the bottom 50% pay 2.8%. The disparity between percentiles shows that the common man gets punished while the rich stay comfy.  In 2007, the state of Maryland created a “Millionaire’s Tax.” In an attempt to reduce this disparity. 30,000 of its high-income residents left the state and over 18$ billion in revenue was generated. The tax was dropped after.

Chapter 12: Minimum Wage, Maximum Folly

While I don’t like the idea of people being paid $3 an hour, having a “minimum wage” often destroys companies. The current minimum in the U.S. is $7. But some states have attempted to raise it to $15. Like Seattle and New york. Companies don’t like raised wages as it means less profit for them. Smaller companies might end up losing more than they gain. Businesses should be able to set their wage and make it public upfront. And if a future employee doesn’t like their rate, they can find a different business to work for.

Chapter 13: How Socialist Regulation Makes Monopolies

Stagnation can in certain markets more profitable as they never have to think about one-upping anybody else. A classic example would be Thomas Edison vs Nikola Tesla. Both brilliant in their own rights but had a feud. Nikola always dreamed of cheaper and reusable energy. If Tesla could get funding for his ideas electric companies could go out of business. It would also threaten Edison’s integrity. So Edison claimed that Tesla was a quack and made staged tests to “prove” Tesla wrong. Funny enough, gas companies didn’t like Edison as he would eliminate almost all use for gas. Companies will always compete with each other, but some will cheat their way and try killing their competitor.

Chapter 14: Destroying Capitalism by Socializing Capital

Since the creation of The Federal Reserve Board in 1913, America’s economy has changed for the worse. 90% of the U.S. Dollar’s value has been lost. With groups like the Federal Trade Commission or The Small Business Administration regulating financial markets. Having the ability to print literally as much money as they want. Thus creating mass inflation. And finally making loans a safe bet rather than a risky choice by creating a system allowing the government to pay for the loan.

Chapter 15: Is Socialism Really The Best Way to Organize Schools

One of ten tenants of The Communist Manifesto is “Free education for all children.” The Nazi’s had a 25 point creed which had a similar quote. “The conception of the State of Idea must be instilled from the very start.” Socialism wants a uniform and “fair” idea of education to instill the drone-like thought in its citizens. That’s variety when choosing schools is important. But of course, The State attempts to cease competition and make everyone attend the same school with the same subjects and exercises. Common core is an example of uniformity in education. Kids that are homeschooled or in a private school are a reminder to the government that the parents are the owners of their children. Not the other way around.

Chapter 16: Socialist Myths and Superstitions About Capitalism

Socialists claim that capitalism is for “Profit not people.” When ironically, it’s the reverse. Capitalism has benefited the world since its creation and is more pro-consumer than any socialist system. The market is controlled by individuals. Not by government. But these individuals, are demonized and dubbed “Robber Barons” by socialists. J.D. Rockefeller is an excellent example of one individual changing an industry. His competitive oil prices made him the most successful American oiler to date. These businessmen and CEO’s are also accused of treating their employees like dirt. Rockefeller, Hill, Vanderbilt, Ford, are examples of people who firmly believed in satisfying their workforce. Capitalism is also commonly blamed for war. But capitalism is what keeps wars from starting. International trade makes for good relationships with other countries. Creating and selling products solely from your country is not a good idea. Nazi Germany was the only country to purely make goods domestically. And it didn’t end well for them.