Category: Socialism

Red October – 100 Years of Communism

George Noga
A brief history of communism (and its socialist cousins) as it turns 100 this month
Red October – 100 Years of Communism
By: George Noga – October 1, 2017
         This month marks the 100 year anniversary of the communist takeover of Russia. Throughout this centenary month MLLG chronicles the century of communism and its close cousins – socialism, utopianism and collectivism – in our series: Red October.
      From time immemorial, quixotic romantics have dreamt of paradise: Utopia, Elysium, Valhalla, Xanadu, Eden, Nirvana. In the end, all they had to show for their fantasies and delusions was a sea of blood and millions of broken lives. Despite its grisly record, collectivism still exerts a powerful emotional appeal on progressives, who remain slaves to Utopia. Our Red October series documents communism’s century of mental poison and human misery to bestir those beguiled by its siren song.
         America’s first settlements began with Utopian dreams. When colonists arrived in Jamestown everything went into a common store, severing all links between work and benefit. Within 6 months most died from starvation. When another 500 settlers arrived, 440 more died. When the Pilgrims arrived at Plymouth, the socialistic Mayflower Compact governed them; soon they were eating rats and most died. Like socialism everywhere (Venezuela today), there was starvation in the midst of plenty. Only when they rejected socialism and embraced property rights did the colonists prosper.
         A hundred years of communism has produced death and destruction on a massive scale. Soviet communism killed 50 million, not counting tens of millions in Gulags. Not to be outdone, Mao and the Chicoms killed 70 million. Pol Pot killed 6 million in tiny Cambodia. Then there is Laos, Cuba and North Korea. The toll in death, torture, misery, destruction and suffering is unparalleled in human history. It must be noted that even the reviled Nazis were socialists as Nazi is shorthand for the National Socialist Party. Fear not, the unreconstructed commies will get it right the next time.
         The evils of collectivism are on full display today in oil rich Venezuela – once the wealthiest country in South America. After 18 years of Chavez/Maduro style socialism people are starving. Medical care is unavailable; operating rooms are filthy; and people die for lack of antibiotics. Infant mortality is higher than in war-ravaged Syria as incubators are broken and there no longer is any baby formula. Shortages, including toilet paper, are endemic. Inflation is nearly 800% and the economy has contracted by one-third. People are dying daily in the streets while others are desperately fleeing.
      The gulf between the words and deeds of communism and all forms of collectivism is an unbridgeable abyss. They speak of comradeship, equality, brotherly love, peace, prosperity, progress and freedom. Their deeds result in brutal dictatorships, Gulags, world wars, police states, totalitarianism, economic stagnation, shortages and a general sense of torpor and malaise. They promise Utopia but deliver Venezuela. They want to be judged by their lofty intentions but they are damned by their actions.
        Communism and its collectivist cousins always fail because they are diametrically and fundamentally opposed to human nature – which is deeply ingrained and cannot be overrode. From each according to his ability; to each according to his needs abrogates human nature. Even people as altruistic, homogenous and devout as the Pilgrims chose to starve rather than to modify their humanity to conform to that deadly mantra.
       Collectivism sometimes may work for a family, clan or tribe where familial bonds (a key part of our human nature) override economic incentives. However, throughout human history, there is no example extant where socialism has worked for a group of more than 25 people. Judge collectivists by their actions – not by their words!
Our Red October series continues next Sunday with “A Tale of Six Islands”.

Why Government Fails While Business Succeeds

George Noga

Government fails while business succeeds because of immutable human nature. At root, it is exactly the same reason socialism fails while capitalism succeeds.

By: George Noga – August 14, 2016

    Business succeeds because its risks, rewards and incentives are properly aligned with human nature. The need to make a profit focuses attention and demands great effort because success confers wealth and status while failure has immediate and unpleasant consequences. Thus, business attracts motivated, talented and hard working people. Why would anyone be a bureaucrat if he/she could succeed in business?

    All that is well understood; however, there are more compelling explanations for spectacular corporate successes like Apple, Walmart, Disney, Berkshire Hathaway, FedEx and Coca-Cola. Juxtapose these against abject government failures such as public schools, terrorism, Madoff, economic growth, jobs, disaster relief, health care, IRS, USPS and most major cities (Newark, Detroit, Chicago), states and nations.

    It all comes down to human nature which is unchanged since man walked on two feet. Humans are hard wired to further their self interest and to respond to incentives. This explains why socialism has never worked outside a small group like a family, clan or tribe. Socialist or Utopian schemes never have worked for more than 50 people – probably it is more like 25. We need look no further than Jamestown and Plymouth to see how socialism resulted in starvation and every form of privation; it was only when the settlers instituted private property that hunger and suffering were alleviated.

    The same principle that dooms socialism also casts its pall on government – even in capitalist countries. Both are contrary to the most basic laws of human nature – self interest and incentives. Public sector economics explains the inner workings of government; it proves,inter alia, why government prefers debt over taxes, why taxes are opaque and why failed public programs continue to exist and even to expand.

    In  business, all it takes is one driven entrepreneur such as a Jobs, Gates, Buffet, Fred Smith, Sam Walton or Walt Disney to change the world. By its very nature government must appeal to the lowest common denominator (“LCD”) of the populace to win elections. Politicians behave rationally when they do whatever is necessary to win elections. That explains why they divide people by race, gender, age and income and pursue policies they know to be detrimental to those they represent.

    A great paradox lies at the heart of government and human nature. Some limited government is necessary but there is no practical way to make it respond to the people’s long term best interests. The only possible solution is to reduce the size and scope of government to the absolute minimum, i.e. more liberty and less government.

    Business structures its incentives to appeal to the best and brightest among us and, as a consequence, one talented and motivated business person can change the world and make life better for everyone. In contrast, government always descends to the LCD or to the level of the least of us. Socialism and government always fail because they are, at the most elemental level, diametrically opposed to abiding human nature.

Next: The timeless struggle between personal freedom and government power.

Is Scandinavian Success Due to Socialism?

George Noga
Hillary Clinton and Bernie Sanders claim the success of Scandinavian countries is due

to socialism and the US should emulate them. We explore the veracity of those claims.
By: George Noga – April 24, 2016

     To be more responsive to current events, this week’s posting takes on a topic that has dominated the news in recent weeks. As usual, none of the media has gotten the story right. Moreover, I had planned to address this issue anyway because there is a lack of awareness and understanding among most Americans about Scandinavia. The MLLG five-part series,Inequality in America, is now rescheduled to begin May 1st.

     For as long as I remember, whenever I have discussed politics or economics with liberal interlocutors, they invariably cite Scandinavian countries (usually Sweden) as veritable Utopias and as proof that socialism can work; recently, both Bernie Sanders and Hillary Clinton did the same. Let’s begin with a brief economic history of Sweden.

    Sweden was agrarian in the nineteenth century and so dirt poor it sent waves of immigrants to the USA. Beginning in the final quarter of that century, Sweden turned to free enterprise. Because of property rights, free markets and capitalism, Sweden grew rich. Circa 1970, Sweden took a hard left turn; taxes soared, welfare expanded and private enterprise was discouraged. The result was crime, drug addiction, massive bureaucracy, welfare dependency and emigration by successful Swedes.

     By the 1990s Swedes had come to view socialism as a colossal failure. They rolled back subsidies and taxes and again encouraged free markets. Leftist governments were replaced with right-leaning ones; they embraced free trade and economic freedom. The stories of Norway and Denmark are similar to that of Sweden. Today all three enjoy dynamic market economies, albeit with robust social insurance programs and concomitantly high middle class taxes. Politically, they continue to move rightward.

     Nordic countries are able to adopt vigorous social programs only because of highly successful capitalist, market economies that produce wealth, combined with their acceptance of high middle class taxes. Socialism never has created anywhere near the degree of wealth necessary for a Scandinavian level of social benefits. Sweden is not prosperous because of socialism; it is prosperous because it survived socialism!

     Scandinavian countries are considered economic successes; however, they don’t compare favorably with America. If Sweden were a US state, it would be among the very poorest alongside Mississippi. In terms of purchasing power, Sweden is 30% more expensive than America. In Denmark, the top 10% control 80% of the wealth, a higher percentage than in the USA and not exactly a socialist paradigm of equality.

     Following are the four principal truths we should take away from the economic experience of Scandinavian countries – Bernie and Hillary take note.

1. They are not prosperous because of socialism. They tried socialism; it proved to be a monumental failure economically and socially; the people, understanding this, thoroughly rejected and repudiated it and replaced it with a capitalist, market economy.

2. The only possible way to generate the wealth to afford extensive social programs as found in Sweden, Denmark and Norway is from a relatively unfettered capitalist, market economy. Socialism has never produced a successful economy.

3. The only way to pay for the social programs is through ultra high taxes on the middle class – 20 percentage points higher than in the USA. The taxes always must fall on the middle class because there never are enough rich people to pay for it all.

4. The Scandinavian model only works in small, homogeneous populations with deeply shared and ingrained values, social and cultural cohesion, and a middle class willing to accept extraordinarily high rates of taxation. It can’t be emulated in the USA.

The next MLLG post on May 1st begins our five-part series: Inequality in America