The Rich Get Richer and Everyone Else Poorer Under Socialism
by Benedict D. LaRosa
When President Clinton unveiled his national health care plan in 1993, known as HillaryCare, Republicans opposed the details, but not the concept of a government controlled health care system. The same is true with the Obama health care plan of 2010. The Republican establishment promises to repeal ObamaCare and replace it with something else. Regardless of the details, the very concept of government imposed health care represents a giant step toward socialism.
But don’t wait for the President or members of Congress who favor such government intervention in the marketplace to refer to their philosophy of government as socialism, for that would alienate their targeted constituency. Norman Thomas, the head of the Socialist Party of the United States until his death, said:
The American people will never knowingly adopt Socialism, but under the name of Liberalism they will adopt every fragment of the Socialist program until one day America will be a Socialist nation without knowing how it happened.
The well known writer and Fabian socialist, H.G. Wells, predicted in his 1908 book New Worlds for Old:
Socialism would cease to be an open revolution, and would instead become a subtle plot. Functions were to be shifted from the elected representative, to the appointed official; . . . a scientific bureaucracy appointed by representative bodies which would have diminishing activity and importance. . . . The replacement of individual action by a public organization could achieve socialism without public support.
(The much maligned term liberal, when applied to socialists is a misnomer, for classical liberalism holds that the government which governs least governs best, and attempts to maximize freedom.)
Socialists argue that capitalism exacerbates the problems of poverty, environmental degradation, expensive health care, alienating work, racial inequality, inadequate housing, and a host of other ills. They are correct in that our present economic system fosters these ills. Where they go amiss is in calling this system free market capitalism. What we have developed in recent history is not free-market capitalism, but the socialism critics find so attractive.
Americans began flirting with socialism as early as the Civil War when both the U.S. and Confederate governments intervened in the economic lives of their respective citizens to a previously unheard of degree. Well-intended Americans advanced the socialist cause in a populist revolt against the monopolists and crony capitalists of the late 19th century known as Robber Barons. The pace quickened with the passage of the Federal Reserve Act and the income tax in 1913. With America’s entry into World War I in 1917 came increased regulation of commerce and industry. Franklin Roosevelt, who promised lower taxes and less government during the 1932 campaign, spent his four terms as President poking the heavy hand of government into everything he could. H.G. Wells was so impressed with Roosevelt’s policies that during his 1934 visit to the Soviet Union, he “tried to persuade Stalin that Roosevelt’s New Deal was the beginning in America of a movement toward socialism.” (H.G. Wells in Russia, Martin Gardner, THE FREEMAN, May 1995, p.287). The pace has quickened since then under both Democrat and Republican administrations.
There are two ways to obtain goods and services: through force (slavery and plunder) or free exchange (cooperation).
Free enterprise is an economic and political system based on the private ownership of property governed by the natural law of supply and demand. It allows no governmental interference with free traders contracting with each other in lawful activities. The form of government most compatible with free enterprise is a republic where government is charged, not with imposing the will of one segment of society on everyone, but with protecting everyone from aggression and theft.
It was free enterprise which broke the back of feudalism and mercantilism, and ushered in the industrial age with its expansion of wealth and the middle class. The civilizations which practiced it to a high degree, experienced the greatest economic and social development. The Islamic Empire is a good example.
At the collapse of the inflation riddled, heavily regulated and indebted Roman Empire in the late 5th century, the Mediterranean world was in economic chaos. Early in the 7th century, the Arab merchant, Mohammed, preached, among other virtues, a return to a natural economic order following purported encounters with the Archangel Gabriel. In short order, a nomadic people created the highest civilization of its day, made the desert bloom, built magnificent cities in the midst of desolation, and advanced medicine, architecture, mathematics, philosophy, and the sciences to new heights.
America has been the greatest beneficiary of a free economy in modern times, and perhaps all history. Influenced by such free market thinkers as Francis Bacon, John Locke, Algernon Sydney, David Hume, and later Adam Smith, colonists undertook the hazardous voyage to the New World to escape the controlled economies and oppressive political systems of the Old World. As European governments tried to re-impose control in the form of mercantilism, the colonists rebelled and founded a republic based on natural law and its principles of limited government, popular sovereignty, individual liberty, and free enterprise – one in which the individual gave power to the government, not the other way around. They understood that men are born free to go about their lives unmolested to the extent of not infringing on the right of others to be secure in their persons and property. They saw government’s role as protecting these rights by maintaining law and order, and the general conditions which encourage people to look after their own welfare through personal initiative and responsibility. Supply and demand, not government edicts, should determine the appearance of goods and services in the marketplace.
The free association of individuals in an unplanned, spontaneous fashion proved the most efficient means of organizing a society. Where there was a need, someone filled it to the benefit of all concerned. In fulfilling the needs of society, the individual filled his own needs, and contributed to an integrated economy and a coherent community. Competition held selfish drives in check while disciplining the quality of goods. The market was impartial rewarding those who provided quality goods and services efficiently and inexpensively, while punishing those who didn’t. As a result, by the time of the French and Indian War (1754-1763), Americans enjoyed a high standard of living, a very productive economy, a large middle class, and the greatest personal freedom on earth.
Hong Kong, Taiwan, Singapore, and Korea are modern examples of free market successes. Closer to home, Big Water, Utah offers another example. In 1986, it became the first community in the U.S. to elect a libertarian town council and mayor. (Libertarians are the philosophical descendants of the classical liberals who founded this nation.) These officials abolished property taxes, reduced regulations, and went to user fees. It wasn’t long before property values skyrocketed, businesses began popping up like weeds, and Big Water had the highest economic development growth rate in Utah.
Socialism as a form of government is immoral and as an economic system unworkable. Like its sister forms of authoritarianism – democracy, fascism, communism, etc. – it is characterized by the unlawful taking of the property of some by force or the threat of force, and the giving of it to others to whom it does not belong. These forms of government elevate theft to a legal activity. (An honest thief doesn’t insult your intelligence by telling you that he is relieving you of your property for your own good.) Coercion is essential because it is an unnatural system in which few would participate of their own free will. These systems use government to enforce the collective will rather than defend natural rights. They promise freedom, but deliver bondage; the only freedom is from individual responsibility. Though they consume large portions of the national income, they leave people with empty promises of economic security. Socialism, with its principle of to each according to his need and from each according to his ability, reduces people to the lowest common denominator. It teaches that the way to get ahead is to lobby and demonstrate rather than work and create.
As an economic system, socialism is a failure. The Plymouth colonists tried it; starvation and death resulted. The survivors turned to free enterprise, and the rest is history. Just prior to World War II, the socialist governments of Italy and Germany raised the material standard of living for their citizens temporarily, but at what a price. There was no unemployment in the former Soviet Union – unless you were unlucky enough to be politically incorrect – and little to buy. Socialism converted naturally rich areas such as China, Russia, Eastern Europe, South America, and much of sub-Sahara Africa into economic basket cases, and is well on its way to doing the same everywhere it operates. Since the fall of the Soviet Union, those East European governments such as Poland, which have allowed the free market to operate, have experienced prosperity and a rapid increase in the standard of living. Even the Chinese Communist government has turned to free-market capitalism, albeit in a limited form, to grow itself out of the economic morass caused by decades of central planning, with much success. Before the fall of communism in Rumania, socialism caused such a shortage of home heating fuel that a popular joke warned apartment dwellers not to open their windows for fear the people on the street might catch cold!
Socialism doesn’t work because it is flawed. What belongs to everyone belongs to no one. It puts power over the lives of the many into the hands of the few, and, as Lord Acton observed, power corrupts and absolute power corrupts absolutely. No matter how well intended, the few cannot resist rewarding their friends and patrons at the expense of everyone else. Nor can they know the needs, aspirations, talents, drives, motivations, and circumstances of those they regulate, or how to satisfy them. Whereas free enterprise takes shortages and produces abundance, socialism takes abundance and produces shortages. In ignoring the Invisible Hand, it invites the Iron Fist.
Socialists disguise themselves as philanthropists, but philanthropists give away their own money, socialists that of others. Socialism is dressed in the language of charity, but it is merely a power game designed to acquire, concentrate, and retain power by the few over the many.
Despite what socialists say, people do not flock to the Workers’ Paradises of Cuba, North Korea, or any other controlled economy. Free emigration would empty these lands as it was emptying East Germany prior to its collapse. Cuba, for example, could not feed its own people or otherwise maintain a viable economy even when it enjoyed massive Soviet assistance. Those who look for a kinder, gentler socialism, have a long wait. Socialism has no heart. It is an impostor which leaves economic ruin and slavery in its wake. This is why England, Ireland, Sweden, Israel, Peru, New Zealand, Australia, Japan, Nigeria, Cambodia, China, India, and other countries are gradually turning away from this disastrous system.
The free market rewards efficiency and quality. It quickly punishes those who fail to meet the needs of the consumer. Businesses seek more customers, and produce more products or services. Under socialism, the tendency is to restrict consumption and service. Consumers are discouraged from using what are considered scarce resources and considered a bother. Under socialism, you get long lines, terrible service, price controls, rationing, little or no choice, and poor quality. The only thing universal is suffering. Socialism transforms modern, industrialized societies into backward, feudalistic ones.
So when you see the rich getting richer and everyone else poorer, you can be sure socialism, or some other form of authoritarian economic system, is afoot. Winston Churchill put it well when he said: “Some regard private enterprise as if it were a predatory tiger to be shot. Other look upon it as a cow that they can milk. Only a handful sees it for what it really is – the strong horse that pulls the whole cart.”
April 18, 2013
Benedict LaRosa [send him mail] is a historian and writer with undergraduate and graduate degrees in history from the U.S. Air Force Academy and Duke University, respectively. He is the author of Gun Control: An Historical Perspective and other works.
Copyright © 2013 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.