During my virtual “tour” for the release of my book, The Socialist Temptation, certain questions came up regularly. I have already set out my answers to a few of them. Here are answers to a set of questions centered on the question of socialism and poverty.
Why is socialism a topic of conversation again?
Ronald Reagan observed in the late 1970s that freedom is only ever one generation away from extinction. He, Margaret Thatcher, and John Paul II won their battle a generation ago. It’s our turn now. There are many reasons why socialism is routinely appealing to us, such as how we evolved to be cooperative in small groups, but the main one, I think, is that socialism appeals to us at the levels of our values, which underpin our politics.
We know that America isn’t perfect and we want changes. We want America to be a fairer place, and socialism says it can do that. We want America to be a place where community is valued, and socialism says it can do that, too. Even when we say we want more freedom in America, socialism says it can free us from oppressive overlords who exploit us. I believe that those of us who support free enterprise have forgotten how to communicate at the values level.
Why is socialism incompatible with a functioning society?
Let me offer an anecdote from my youth. Britain had achieved state control of the means of production and distribution in many industries. So, if you wanted a new gas heating system, for example, you couldn’t just order one from your local heating specialist; you had to book an appointment at a Gas Board showroom to be shown a limited number of options (which may have been the most boring experience of my life), and then wait for months until your turn came up to be serviced.
Similarly, the only choice you had in phones was color, and they were hardwired. There was little innovation and services were provided for the benefit of the producer, not the consumer. We had plenty of food, thankfully, but that was because we still had free enterprise in agriculture, as well as free trade with other free enterprise agricultural countries. Compared with the free enterprise system, socialism provides for our needs far less well, which means socialist societies function less well.
Fundamentally, free enterprise allows us to learn from each other. Socialism stops or delays that process from happening.
Is free enterprise less respectful of people than socialism?
Free enterprise is based on trust, while socialism is based on suspicion. In a free market, you expect your local baker or butcher to provide you with good items. If they don’t, you have recourse to the law. Under socialism, the presumption is that someone will exploit this exchange unfairly in some way, and therefore you need guardians to protect you.
Those guardians impose a tax in some form, whether in time, money, or quality—often all three—to pay for their services, which rarely add, and often detract value, as the bread lines of the Soviet bloc showed. Moreover, because of the implicit presumption, trust in your fellow man is destroyed. It is especially ironic that this happens in a system that is supposed to be based on the brotherhood of man.
How has free enterprise treated the global poor?
Rates of extreme poverty have plummeted in recent years. We have seen this happen because a) many developing countries have implemented pro-market reforms and b) successive rounds of global negotiations under the General Agreement on Tariffs and Trade and then the World Trade Organization (WTO) have lowered barriers to international trade.
Combine those with the principle of comparative advantage and you have the recipe for a dramatic reduction in poverty across the world. The only places that haven’t benefited are socialist holdouts—North Korea, Venezuela, Zimbabwe, Cuba—and other countries where the ruling class has obstructed reforms.
It is especially unfortunate that a combination of resurgent socialism and nationalism has led to the slowing down of these reforms. The WTO’s Doha round of trade talks, aimed at liberalizing trade in agriculture, services, and intellectual property, has been stalled for 15 years.
Bjorn Lomborg’s Copenhagen Consensus project estimated the benefit/cost ratio of completing the Doha round at over 2,000 to one—and 3,400 to one for developing countries. In a world where public policy benefit/cost ratios are rarely over two to one, that’s astounding. Thankfully, some regional trade agreements like the Trans-Pacific Partnership are providing some of those benefits, but to my mind it is criminal that we are not completing the Doha round.
Is there anything morally wrong with making a profit?
I don’t think anyone who has read the parable of the talents could think otherwise. Yes, it’s a parable, but the idea behind it is that making a profit is admirable. There are, of course, evil ways to make a profit, and evil ways to use that profit, but making a profit in and of itself is not a bad thing.
What socialists forget in their presumption of ill will is that free enterprise is at heart a cooperative system. The principles of the division of labor, specialization, and exchange allow for each of us to be fulfilled by our profession and for all to benefit by that fulfillment. Indeed, when Adam Smith says, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest,” he is saying, as the late great Walter Williams pointed out, that even sins like greed can be turned to good ends.
Does socialism attempt to raise up the poor or simply bring down the rich?
I think it attempts to raise up the poor. I think it generally fails. Take high minimum wages, for example. Some people will certainly benefit from those higher minimum wages, but others will lose in-kind benefits like meals or parking spaces that may actually be more valuable to them than cash, while many others will not get a job at all as a result of employers facing increased labor costs.
Are the poor better off? Many socialists will say yes despite these tradeoffs. However, socialism inherently targets the rich as part of this attempt. The language of “haves” and “have nots” is pretty universal among socialists, as is the presumption that the haves have what they have as a result of exploiting the have nots. This leads socialism to make bringing down the rich a central part of its mission. That is a fundamental flaw of socialism. As Margaret Thatcher pointed out in her farewell speech as Prime Minister of the UK, that means that socialists will ignore how poor people do better if the rich also do better and would rather the poor do worse than the rich do better.