Socialism Sucks: Two Economists Drink Their Way Through the Unfree World
Introduction
Socialism is rising in popularity across America, specifically among young adults. Young people tend to associate socialism with fairness and capitalism with selfishness. Young adults in America also tend to associate socialism with its goals rather than its effects when in practice. These young adults also focus on the real issues in the United States like racial and gender inequality, police brutality, political division, and more and believe socialism will solve these issues. Although they fail to realize the effects of socialism in practice and its consequences. Socialism is defined as collective ownership or control of the means of production. In practice, this looks like the elimination of entrepreneurs, state ownership, and a central, guiding plan.This economic practice eliminates the desire to innovate to gain profit because there is no economic gain from doing more thereby slowing down economic growth. In short, I will reflect on examples of countries in varying places on the socialism scale to examine the differences in quality of life.
Not Socialism- Sweden
Sweden is often incorrectly assumed to be a socialist country because of its high taxation and its high level of a welfare system. The scale between socialism and capitalism is a spectrum and while Sweden has strong programs specifically in welfare, it is still a capitalist country. Sweden’s economic system may be more regulated than the United States, but its economy is still driven by a desire for innovation and profits. Although, the high amount of taxation in Sweden does lead to goods, like beer, being much more expensive than other nearby countries. Sweden does not practice socialism, but they have adopted a few practices like their high level of welfare that does resemble socialism.
Starving Socialism- Venezuela
Before Venezuela adopted socialism, the country’s per capita was greater than Spain’s and they were one of the richest countries in South America. When the country initially adopted socialism, for over a decade this system worked moderately well. However, this was not the result of the economic systems in place but rather because of the large oil reserves located within Venezuela and once oil prices began to lower and production began to lower the economic system broke down. It was revealed that production on goods like food was lowered, so the government had been using the money gained from oil foreign exports to then import food and other goods to take care of their people. Once oil production began to decline the people began to starve. It led to the development of necessity entrepreneurs and once middle-class families having to sell goods like their hair to gain money to enter Columbia and buy resources from across the border. While many properties remained privately owned on paper, the government controlled the economic system wholly meaning the government could use food and resources to ensure the ‘correct’ political party remained in power. Essentially, Venezuela is a prime example of how losing your economic freedom can lead to losing your political power as a citizen.
Subsistence Socialism- Cuba
The country of Cuba has operated under a socialist system for a long period of time therefore it has become normal. As an island, Cuba could potentially have huge economic trajectory in hospitality and tourism. However, the socialist system has eliminated the need for motivation to gain wealth, leaving tourists feeling unwelcomed and the infrastructure in disrepair. For example, the hotel industry is mostly operated and controlled by the government. The lecturer had difficulty placing and proving a reservation, the room he was placed in was in widespread disrepair, and the elevators were broken leading him to have to climb 8 flights of stairs with his bags. Since there was no economic or social motivation to do more than the bare minimum at your job, the hotel was left with shattered glass, missing tiles, broken elevators, no air conditioning, and tourists received no help. This would not attract a typical tourist to return to this destination and this is not the only industry we see this issue located in. The streets had a lack of signage, so it was difficult to find restaurants and shopping. After staying in Cuba, they quickly realized that nearly every restaurant offered the same 12-18 menu items and a low quality of execution. Without the economic motivation to do their absolute best, the people stopped trying leading to an economic decline with no hope of growth.
Dark Socialism- North Korea
The image, taken by Nasa referenced by Bloomberg magazine, represents the state of North Korea’s economy due to socialism in relation the countries surrounding it. North Korea is highly secretive about its economic development. However, if the country lacks this much light at night, then it is not developing well economically and it is likely severely struggling. The country also showed a lack of development. The North Korean shoreline had dilapidated, outdated infrastructure while the Chinese infrastructure was well maintained and showed signs of development. The real difference is also between North and South Korea. South Korea has economically skyrocketed since adopting capitalism. The standard of living and the per capita of each household has increased, but North Korea’s has declined and stagnated demonstrating the different success stories of each economic system.
Fake Socialism- China
China is now more of a system of capitalism rather than a socialism system. More industries have become privatized, and this reform has majorly improved the quality of life for those in poverty. However, the government highly regulates all industries and maintains a high level of authority. For example, a group that pushed for marketization was shut down because of what their beliefs represented. China is influenced by entrepreneurs who want to make more capital, but this group of people is highly regulated by the government limiting growth and freedoms.
New Capitalism- Georgia
Georgia was apart of the Soviet Union and therefore initially had a lot of Russian influence. However, in 2004, Georgia chose to become a free market, create a flat tax rate of 13%, beginning a transparent privatization to the highest bidder, and massively reducing the size of the government. This new free-market system is radically different but is slowly transforming the country. Economic transfers of power are now more transparent and government corruption is slowly declining. Georgia’s production has been steadily increasing and the country is developing at a much more rapid pace under the economic system of capitalism than it was under socialism.
Conclusion
The economic practice of socialism and its consequences are often misunderstood. Government privatization eliminates the need for innovation and the desire to do your best leading to economic decline and the loss of political freedom for the people. This can lead to greater poverty, infrastructure disrepair, and ultimately corruption in many cases. However, there is a spectrum between capitalism and socialism, and while I believe it is acceptable to adopt policies more socialist leaning if these policies are supported by the people. In this case, only specific industries are being highly regulated, and the consequences of the decision are understood. Overall, many countries that practice socialism economically struggle because the system does not drive the market and therefore leads to poverty and a decrease in the quality of life for the people living there.