Sunday, December 27, 2009

Socialism explained

Here's one of the best articles I've read in a long time on the pitfalls of socialism. It is on Kitco's Commentator Corner.

To all those who long to implement socialism in this country: Be verrrry careful of what you wish for, because you just might get it.

Will Sovereign Debt Defaults Bring the End of Socialism?

by James Turk

Copyright © 2009 by James Turk. All rights reserved.

Socialism has come to mean many different things to many people, but regardless how it is defined, in the months immediately ahead it will be put to a rigorous test. The test will be visible to everyone as countries around the globe run out of money and confront overwhelming debts that cannot be repaid as well as other wide-ranging financial promises that can no longer be met. In short, the ideological bankruptcy of socialism will be laid bare by government insolvency.

It had to come sooner or later. The reasons are not hard to understand.

The ideological bankruptcy is neatly captured by British author and advocate for individual rights, Cecil Palmer: “Socialism is workable only in heaven where it isn’t needed, and in hell where they’ve got it”. And government insolvency is explained by famed economist Frederic Bastiat, who made this levelheaded observation nearly 150 years ago about the nascent modern socialism then emerging. “The State is that great fiction by which everyone tries to live at the expense of everyone else.” More recently, Margaret Thatcher, being a sensible politician, put it pragmatically: “The problem with socialism is that you eventually run out of other people's money.”

Take Greece for example. This past week yields on its 10-year bonds surged in the wake of downgrades by the bond rating agencies, which finally recognized that Greece does not have the financial resources needed to repay its debts, which now stand near junk levels. Not far behind are Latvia, Spain, Ireland, the United Kingdom and almost every other country in Europe, even though they may still flog paper rated as “investment grade.” The reality is that the rating agencies just have not yet come to grips with the breadth and depth of widespread government insolvency, or have willingly turned a blind-eye to it. And don’t forget Iceland which of course has already collapsed.

How did we sink to this state of affairs? Nobel Laureate Friedrich von Hayek provides the answer in his brilliantly insightful and prescient book, The Road to Serfdom, penned during the waning years of the Second World War.

Hayek’s central theme is that wars expand the power of the modern state because the national planning to fight the war continues even during times of peace. This perennial government planning then expands the social-welfare state over time, with harmful results. Most importantly, economic activity is impeded by the growing state as people and resources become less productive. In other words, because the government does not create consumable goods and services, it is an economic burden to the productive sector of the economy.

Then as the government grows, interest groups become increasingly numerous and powerful, leading to political corruption. More wars or even foreign policy tensions and economic crises can propel demagogues and dictatorial leaders to expand further state powers to the detriment of each and every one of us. In Hayek’s words: “Emergencies have always been the pretext on which the safeguards of individual liberty have eroded.”

Hayek noted that the subtle damage inflicted upon the productive economy and the visible growth of the state arising from socialism become evident only over time. We have now reached that stage.

More people depend on the state than those who provide it with the money the state needs to meet its promises. Most of Europe long ago passed the 50% threshold with more people depending on government than the private sector, but even in the United States – long reigning as the bastion of capitalism, free-markets and limited government – 58% of the population derives their income from government at some level.

Consequently, we are now approaching a fork in the road. One way leads to more socialism, more demagogues and eventually a dictator who promises that he will make socialism ‘work’. The other leads to the capitalist society that America used to be, with free-markets, limited government and the unconditional rule of law.

Hopefully, we will choose correctly. If we don’t, we know from Winston Churchill what awaits us: “The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”


  1. I am not sufficiently familiar with US politics to know exactly what aspects are worrying James Turk. If he has in mind the President's proposals for health care it is surely not "socialism" to help poor people with insurance payments. I would call it "charity".

  2. I regret that Mr. Nelson our democrat senator from NE has defaulted in his duty to the whole country and our constitutional ideals. I did all I could to change his mind as well as nearly 70% of my fellow Nebraskans. He would have NONE of it. Insanity rules the day! So on we go everyone, into the night.

  3. To the premier commenter; "Charity" requires the money being spent to be volunteered, not forcibly removed from the donators

  4. In answer to Anonymous, I would say it is a democratically-elected government acting charitably on your behalf. The population of the US acted charitably en masse by voting in a government who had this particular policy. Don't you approve of democratic Government?

  5. Quedula is among the liberal set. There are consistent liberal characteristics inherent in his comments.
    They do not wish to see facts. They especially do not wish to see or recognize facts that contradict their predisposed views. If they are forced to look at actual facts, they will deny their validity at all costs.
    They propose solutions when the proposal makes them feel good. Damn the facts. Damn the lack of logic. Damn the results. And most of all, they never ever accept the blame for the damage they do by implementing their feel good proposals.
    Fact: No one in America is without access to health care. We spend a large fortune of private and tax dollars doing so.
    The so called health reform bill is a massive tax bill. It is not about providing insurance coverage. It is about creating a national health care system and collecting massive new taxes to finance it. Taxes, by the way, that must be collected in large part by the States.
    Under our much abused Constitution, the American government does not have the right to take my money and give it away to any charity. That is redistribution of wealth. That is socialism. That is communism. That is totalitarianism.
    The government also lacks the right to make me buy a product I do not wish to buy. Therefore, it cannot tax me to buy it. Therefore, it cannot jail me for not buying or paying that tax.
    Mr. Turk has beautifully detailed exactly what has happened as forecast by his sources. Liberals like Quedula are described concisely in the adage:
    There are none so blind as those who will not see.
    BTW: The current retort of the day among liberals is to change the subject and say, "I am just as patriotic as you." But they are not. They hate America and are patriotic to an idealistic socialism that is not America.

  6. Greetings,

    1) Government is force. It is given the power to punish the unlawful exertions of power by one man over the liberties of another man. Nothing else.

    2) Democracy is evil. So is Socialism. America was founded with neither. Democracy is the rule of the people, letting the mob dictate what the law should say. America was founded to be a Republic: a government of representives of the people bound by a law that is higher than themselves.

    3) Charity can only be voluntary. If it is not voluntary, it is theft. When a majority votes that money be taken from everyone, including the minority, to be given anywhere for anything, that is theft.

    With joy and peace in Christ,
    Sir Emeth Mimetes

  7. Reply to quedula-- I strongly disapprove of democracy, and so did America's Founding Fathers. America is a Constitutional republic, not a democracy. Democracy leads to mob rule. Mob rule leads to the mob forcibly confiscating private property/wealth from those who have it and redistributing it to their favored special interest groups. And you call that charity? You're wrong.

  8. If the government wanted to do something that was charitable for healthcare for the 10 to 15 million uninsured(not 47 million) then they could open up a public fund that any human on the earth could donate to, then people get on list and from that fund purchase them healthcare ins. I would think these so called compassionate liberals would line up to donate their money to help the less fortunate. But in reality this has never been about helping people, it has always been about stealing the wealth of those who earn it and putting the people under the control of a oppressive government. The dictators in Washington are always wanting more ways to steal our money and dictate to us what we can and cannot do and what they want to force us to do, and yet their suppose to work for us.

    We need a revolution where everyone in our great country stops paying taxes for two months, every business, every person and then we'd see how the dictators in Washington would respond. Take away the money they steal from us and they'd be crippled.

  9. No! Government "help" is not charity. It's not! I blogged about this recently, and apparently stepped on the toes of my friends, who usually comment on my posts. LOL. Guess they were just stunned with the totally unheard of idea that referring someone to government programs isn't quite the same thing as doing good works.

  10. Quedula makes the case for collective charity, by government. It does not make sense, because charity is between person and person, involving sentiment also. Assuming that the population of a state decides to provide charity to some of its constituents, it also has to make sure all participate to the common sacrifice. In contrast, when half of population votes that the other half of the population gets taxed to provide for charity, the result is not charity but organized theft (not to mention that the intermediary – the state bureaucracy– get most of the benefits). This seems to be the case in US, where about 50% of population pays little or no taxes.
    Government charity is the old socialist method to enslave productive society and the result is no charity but general poverty.