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Why socialism always puts bad people in charge

In Monday night’s Venezuela post, our wise commenters said:

socialism doesn’t work because it is an unjust economic system. the people in power take things from people that work…

The wrong people will ALWAYS be in charge, because for socialism to work you have to have completely altruistic people in charge…

Yes. Except, it’s even worse than that 😉 The biggest problems with socialism are:

  1. It wrecks the Price Mechanism. Even if you had truly altruistic people in charge, such an economy still can’t function.
  2. Only bad-or-stupid people want a wrecked price mechanism. Thus, only bad-or-stupid people advocate socialism. And the bad people know how to shepherd the stupid people; thus, the bad people always end up in charge.

By Price Mechanism, I mean free markets discovering and signalling the prices of things. To review how that works:

  • All goods and services must be rationed, by one means or another.
    • because human needs are infinite
    • whereas human time (used to produce goods and services) is not
  • Markets ration things by having people pay a market price for the available supply.
    • If something is in short supply, those who have the highest “score” in terms of being both able and willing to pay, will get it.
    • “Willing” as in, free will / the person’s choice.
  • The market price moves up and down, accomplishing two big things as it does so.
    1. It coordinates people’s consumption activities. (Those who are unwilling or unable to pay for a thing at its current price, look for substitutes.)
    2. It coordinates people’s production activities. (As a thing’s price moves higher, it induces people to produce more of it.)
  • The coordination is spontaneous and responsive to changing conditions, because it is voluntary.
  • If you interfere with the price mechanism, you interfere with (or even block) that coordination.

OK, so the price mechanism is objectively great. It induces voluntary coordination among vast numbers of people – thus enabling the Division of Labor. Who would want to mess with that?

The answer is: People who gain by interactions that are not voluntary. People such as moochers, thieves, thugs, politicians and bureaucrats. People who lack the ability or willingness to produce. People who hope to live by altering or preventing market outcomes. People who think they can plan and control others better than those others can. People who are willing to gain by keeping others down.

In short: People who gain by dictatorship. Arrogant people who enjoy using force on others to prevent the peaceful activities and outcomes that people would otherwise create on their own.

That’s the nature of socialism. It’s not a noble ideal. It’s a curse, an evil. Like the Mafia, it’s always led by bad people because it *is* bad, in its nature. It can never be desired by people who are both good-hearted and knowledgeable. Therefore, it can never be led by them. And, even if it were somehow, it still wouldn’t function – because of the wrecked price mechanism.

This feeds into how the term “socialism” is defined.

  • An old, strict definition is: public ownership of the means of production.
  • But people today use the word with a much broader meaning: Any system where a governing authority intervenes in markets, preventing the market price mechanism from operating.

The socialist planners always proclaim their good intentions. And they always make things worse. And it’s not an accident or a failure to apply socialism; it’s inherent in socialism.

Wrecking the price mechanism kills spontaneous, voluntary coordination; and that’s the point of the thing. It’s why stupid-or-bad people love socialism. They WANT to control others and prevent market outcomes. It’s not a proverbial “unforeseen consequence”; it’s the point.


P.S. In the comments, someone is sure to say “But sometimes markets fail.” Nuh-uh. Show me an alleged market failure, analyze it with me and sooner or later, I will be able to show you the government intervention(s) that wrecked the price mechanism and/or the production chain, causing the failure. Every. Time.

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7 Comments »

  1. The wrong people will ALWAYS be in charge, because for socialism to work you have to have completely altruistic people in charge…

    Ah baloney. If you took the 100 smartest, altruistic, selfless people, and had them run everything it would be a disaster. The reason is that no one is smart enough to do this. There are hundreds of millions of people in the U.S. each with their own desires, different from their neighbors. Rising and falling prices and freedom are the only way to reach a state that comes closest to meeting everyone’s wants.

    But the 100 best people wouldn’t be interested in what people want, anyway. They would be interested in justice. This is such a vague notion that justice would boil down to what the 100 best like viscerally. Dictatorship.

    Comment by John — May 17, 2017 @ 10:04 am - May 17, 2017

  2. In defense of my assertion, it is contained in the simple maxim, “In a society composed of perfect people any system of government will work.”

    I also use the “10 planks of Socialism” as laid out by Marx in the Communist Manifesto. If you believe in the 10 planks, you are a Socialist. It’s how I am able to pin down those who claim that so-and-so isn’t a Socialist, by simply having them point out the plank that they disagree with.

    BTW, ILC, can I quote you? This is beautifully laid out.

    Comment by Craig Smith — May 17, 2017 @ 10:15 am - May 17, 2017

  3. Any time! 🙂

    “In a society composed of perfect people any system of government will work.”

    And I’m disageeing. Some systems, by their nature, cannot work. If you graft them onto a society of perfect people, you will get a society of bad people sooner or later.

    Comment by ILoveCapitalism — May 17, 2017 @ 10:27 am - May 17, 2017

  4. I keep hearing people claim that the financial crisis of 2008 would have destroyed the country if the government had not intervened: NOPE on the contrary – government intervention made it worse.

    Before the government intervention, investors in distressed debt bought it for a fraction of its value, renegotiated with the debtors to reduce the debt to a slightly larger fraction, and made (or lost) money on the difference. Once the government announced it was stepping in, holders of distressed debt stopped negotiating significant discounts and held out for close to face value.
    By stepping and supporting failing companies, the government took on responsibility for private losses, so now investor feel free to make riskier moves than they would on their own since they are confident the government will cover their losses.

    Comment by Jonathan — May 17, 2017 @ 10:35 am - May 17, 2017

  5. Education is the US is a prime example of “altruism gone bad”. It’s for the children(tm) and who can argue with that?

    Government either runs it or its run by moochers with a pipeline into the treasury. Its “customers” have been brainwashed (by gov’t) that they must have all this edumication and, yes, it’s expensive but that’s what student loans are for (and the continuing screwing of the taxpayers).

    Based on what I’ve see from college campuses these days, there are way too many people enrolled – many of whom, in the real world, would be challenged by the training given to starting employees at McDonald’s.

    And then there is medicine… except that in the US we manage to combine the worst of socialized medicine with the worst of private-sector medicine.

    Comment by KCRob — May 17, 2017 @ 11:20 am - May 17, 2017

  6. Jonathan, in addition, the crash of 2008 was brought about by a real estate bubble brought on by government policies which required banks to make risky loans. Republicans attempted to rein in those policies, but Democrats, primarily Barney Frank, stood in the way of reforms because racism. When Democrats took over congress completely, they continued the policies, and then in 2008, there was a crisis. Barney Frank assured people a few weeks later that the crisis was averted. Then it collapsed again.

    In a famous exchange between Barney Frank and Bill O’Reilly, O’Reilly correctly pointed out that Frank had assured people that Fannie Mae and Freddie Mac were just fine, only to have them collapse. Frank denied ever having said that, despite tape that showed that he did.

    This is what made me very angry and upset in 2008. Democrats were primarily responsible for the collapse and then used the collapse to ride Barack Obama into power. His policies turned what should have been a short recession into eight years of stagnation.

    Comment by Craig Smith — May 17, 2017 @ 11:42 am - May 17, 2017

  7. it doesn’t matter if truly altruistic people are in charge. socialism’s rewards and punishments are backassward. socialism punishes people that work, socialism rewards people that don’t work. eventually you end up with a society where there is no incentive to work. i.e todays Europe, our inner cities.
    the left, liberals, claim they take from the people that work to give to people that don’t work for altruistic reasons. that is a bunch of bunk. they do it get power. socialism’s goal is to concentrate all wealth in the hands of the few. the exact opposite of what they claim. if you put all the economic power into the hands of the people that have all the political power you get a dictatorship. every dictatorship in history has had some form of socialist government. every dictator has had an a priori claim on the fruits of the workers labor. once the socialists get their dictatorship they no longer have to give anything to the poor. see any communist country.
    the only economic system that spreads wealth is capitalism. capitalism created the middle class not socialism. socialism creates a two class system, the rulers and everyone else. in a capitalist economic system if you want more you can work longer, you can work harder, you can work better. it a socialist system if you want more you make yourself worse off. again see inner-city America. this is the famous socialist, communist dictum of “sharing according to your needs.” that is what the left calls a humane economic system. that has to be the most evil idea in the history of mankind.
    the reason the left wants socialism is because they are totalitarians. they want the power to control everyone, to force everyone to do what they want. socialism is legal in the united states, anyone one that wants to practice it is free to do so. there have been communes in this country since it founding. the socialist doesn’t want the freedom to practice socialism, they want the power to force everyone else to do what the want. that is why they want to ban capitalism, not because it is evil, but so they can have the economic power to tyrannize everyone. socialism gives them that power. that fact that it brings, dictatorship, misery and suffering to the people, well that’s the price you have to pay for dictatorship.

    Comment by salg — May 17, 2017 @ 2:02 pm - May 17, 2017

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