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Why socialism always puts bad people in charge

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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.

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Hey Liz: Here’s why you are a socialist

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Picking this up from V’s post of a week or two ago, Elizabeth Warren does not understand why people think she’s a socialist.

(Please, I need a moment to stop giggling. It’s as if President Obama were to say he does not understand why people think he’s a liar. Air gasp. OK, I think I can go on.) – Warren said:

I just don’t know where [people] get that [idea of her being a socialist]. You know, look at the issues. I mean really, let’s take a look at minimum wage — I just believe nobody should work full time and live in poverty…Student loans: I don’t think the U.S. government should be making tens of billions of dollars in profits off the backs of our students, which is what the current student loan system is doing…

Never mind that Warren proposes the U.S. government to *lose* tens of billions of dollars on student loans. Let’s go straight to Kevin Williamson, defining socialism:

The current Random House Dictionary definition of “socialism” is serviceable but dated: “a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.”…

[Dated, because] It should read “ownership -or- control” rather than “ownership -and- control.” As we have seen in the cases of enterprises such as Fannie Mae and Freddie Mac, it is entirely possible for government economic planners to intervene deeply (and, in this familiar case, catastrophically) in the economy while maintaining private economic forms…

A more complete definition of socialism incorporates two criteria: The first is that socialism entails the public provision of non-public goods. The second is the use of central planning to implement that policy.

And that, Liz, is why you are a socialist.

  1. You want the public purse to pay for *private* goods (goods that benefit the individual primarily, if not exclusively). For just one example, you want government to fund special young people on a costly, but often low-benefit, multi-year jaunt that we politely call “college”.
  2. And you believe in a planned economy. For just one example, you want government to dictate the minimum wage at which a worker may offer her work (or else you will not permit any employer to give her work).

For the record: I don’t and I don’t. So, I’m not.