Shansberg: ‘Socialism’

November 26, 2019

by Eric Schansberg, Ph.D.

Economists Robert Lawson and Benjamin Powell have written “Socialism Sucks: Two Economists Drink Their Way Through the Unfree World” — a breezy book on a stale and lousy economic system. Its casual tone is rooted in their use of beer as a metaphor and a key prop to describe socialism in various countries.

Their punchline: Many people advocate socialism without knowing what it is. Socialism is when government owns all of the means of production rather than individuals. But few people really want that, including most self-styled socialists. Instead, most of them imagine “socialism” as a dog’s breakfast of Leftist and Liberal policy proposals. They see it as a vague call to increase government activism, justice, fairness and, ironically, democracy.

So, if you’re worried that so many people are advocating (real) socialism today, you can rest easy. They’re not advocating the abolition of private property and political oppression. (Not many people understand capitalism either, but that’s another story.) Their policy prescriptions might be troubling but thankfully few folks are really embracing socialism.

Lawson and Powell visit eight countries to describe various types of socialism. They start with Sweden as “Not Socialism.” Contrary to popular opinion, the authors cite data from the “Freedom Index” to note that Sweden has a relatively free economy. They note its high taxes and expansive welfare state (with the resulting problems), but that doesn’t make it a socialist economy.

Next is “Starving Socialism” in Venezuela. The authors note that American Leftists were praising this country a decade ago. Now, however, the country is a nightmare, with plummeting incomes and rampant inflation. While Venezuela might be a poster child for socialism, it’s also Exhibit A for why socialism is inhumane.

Cuba is labeled “Subsistence Socialism.” It’s better than Venezuela. But the food is bland with so few available spices. Government hotels are run-down; private Airbnb-style housing is much better. Havana is famous for its 1950s American cars but that’s not nearly as glamorous as it sounds, with outrageous car prices and run-down rides. And there are no storefront signs. Even poor market economies have advertising, but in Cuba, there’s little incentive to sell, since the state owns everything.

North Korea is “Dark Socialism” — named for the famous satellite photos that show how little light they have. Lawson and Powell have the same experience on the ground, as they look across the river from their hotel in China — into the utter darkness of a large North Korean city at night. We’ve seen a natural economic experiment over the 60 years in North and South Korea. If socialism is the experimental treatment, one can only recommend living in the control group.

China is “Fake Socialism” — with its big increases in capitalism and income over the past few decades. Russia and Ukraine are depicted as “Hungover Socialism” — better off since the fall of the USSR but still stuck with heavy doses of crony capitalism and statism. And Georgia is their example of the “New Capitalism” — a Soviet-bloc country that has many disadvantages but has embraced market reforms and is growing.

Throughout the book, the authors underline the importance of the “rule of law” for economic incentives and performance. They mention the history of mass murderers in Russian and Chinese 20th century socialist history. But they also bring repeated attention to the devastating correlations between reduced economic freedom, diminished civil liberties and social repression by government.

I was fortunate to visit Berlin with a friend before the Wall came down. East Berlin was the most impressive city in the Eastern Bloc. But compared to West Berlin, East Berlin was drab with little variety and a far-lower standard of living. We were walking around and my friend said, “This isn’t so bad.” I replied, “All you need to know is that they built a wall to keep these people in.”

While socialism could work in theory, the data indicate that people will be worse off — economically and socially — with socialism. It can be hoped that Lawson and Powell’s book will convince people to reject an economic system that has caused so much devastation and forgo government solutions that look promising but usually fail.

D. Eric Schansberg is Professor of Economics at Indiana University Southeast, adjunct scholar for the Indiana Policy Review Foundation and author of “Turn Neither to the Right not Left: A Thinking Christian’s Guide to Politics and Public Policy.”


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