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Tuesday, December 15, 2009

Pointed questions for socialists

A few pointed questions for the last die-hards who think socialism can work out ok.

1. This one is from Ludwig von Mises, because it has never been answered: How do you solve the price discovery problem? If everything is command and controlled from above, how do you determine how much to make or what to charge? This has never been solved academically or in reality. The lack of an answer results in ridiculous inefficiencies like high unemployment, low wages, shortages or excess inventory, etc.

2. This one is also from von Mises and arises from the first one. It is the central planning problem. How does anyone ever have enough information in a central location to know everything about supply and demand, since all of these things have to be decided by bureaucrats in a little room somewhere instead of letting all of the individuals and businesses decide for themselves and collect the information they need?

3. The free rider problem has always been one of the biggest for socialist economies. Even the countries in Europe that function the best (by piggybacking socialist programs on the efficiencies of capitalism) have a huge free rider problem, with up to 40 or 50% of their populations free riding on others. They brought in millions of immigrants they didn't really want in order to solve the problem and ended up with more free riders. How can you solve this?

4. The nature of government is another huge problem. The more money and power is centralized in a few hands, the more corrupt it tends to be. As Plato predicted over two thousand years ago, if huge government programs are combined with democratic elections the natural result is that more and more is promised until the country is bankrupt. How do you avoid this escalation of costs?

5. How can you avoid the inevitable results of the disincentives forced on people to beat them all down to the same level? Why would anyone under that system ever excel and create when any incentives will be stripped from them to try to make things more "fair?" If no one excels or creates, how can the result be anything other than lack of productivity and prosperity for all?

6. What is the basis for optimism about socialism's future? What we know is that socialist/ Marxist governments have murdered 275 million of their own people. We also know that hundreds of millions have lived in grinding poverty until they shook off socialism. The only ones who have come close to making it work are western Europeans. Even they called the results they were getting under socialism "Eurosclerosis." Starting in 1978 they spent billions of dollars and millions of hours shaking off most of their socialism. Based on the historical record, even last year during the recession, 131 countries became more capitalist and less socialist. Normally, when a country escapes socialism and starts getting stellar results with capitalism we call it the “________ miracle.” (as in the Chinese miracle, Chilean miracle, etc.) How many times will we have to see this before it stops being seen as a miracle? What is the excuse for thinking socialism is worth trying just one more time?

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