Image Source
Intro
This was a very fun watch with a lot of great content. Right out of the gate, I loved the idea that alcohol in different countries was a good metaphor for the various economic systems and health of the system in those countries. It provides an interesting insight into the freedom of a specific market because the more competitive a market is, the better the products are. So theoretically the more socialist a country is, the less variety and quality in its beer.
My main takeaway from this video was the importance of incentive. Entrepreneurial incentive differs drastically between capitalist countries with economic freedom and socialist countries with none. Throughout the stories Dr. Powell told, he underscored how businesses in socialist countries seemed to basically not care if they got customers or not because they had no incentive to increase their profits. Obviously, this leads to economic downturn because there is no surplus value being created, and nothing to encourage it.
Rise in Popularity
Another interesting topic was the increase in popularity that socialism has seen with young people today. I was shocked to see the numbers Dr. Powell presented on how many people said that they favored socialism in a poll. He pointed out that many people endorse socialism as a way to end oppression or promote equality, but that isn’t what socialism is. He also mentioned how some people point to Sweden as a good example for successful socialism. But they are just a capitalist country with high taxes and a welfare state. Rather, socialism is a system in which private ownership of resources and means of production is abolished and replaced with public, collective ownership. In fact, most socialist regimes are notorious for having the opposite effect on equality and social freedoms. Powell reference the statistic that the regimes combined have killed at least a hundred million civilians outside of wartime. Later in the video this idea is brought back up. Losing economic freedom always brings about a loss of democratic freedoms as well.
Central Plan
I found Dr. Powell’s description of socialism’s need for a central plan and capitalism’s lack of that need illuminating. With capitalism, we have millions of entrepreneurs each with their own plan, forced to take others’ plans into consideration to be successful and create value. Without all of the different ideas and variety of goods and services available, we would not be able to live the way we do today. We know nothing about how to produce most of what we use on a daily basis. With socialism, that variety is stripped away and you get one choice for everything. If you don’t like it, too bad. If there is a target market of people who would like a different variation, the potential value creation is wasted. That potential net positive on society and the economy is never realized. The only destination this road leads to is stagnation and decline.
Venezuela and Cuba
Venezuela and Cuba were the two countries that stood out to me the most as demonstrating the detriments of socialism. The story about how Venezuelans were selling their hair because they were so desperate to find something of value to trade for basic goods really blew my mind. Even in such a struggling, restricted economy, at the most basic level of entrepreneurial spirit it is as simple as supply and demand. It’s just sad that when the government controls all resources, the only way to have something that you own as an individual worth selling is your own hair. It was also striking that members of the middle and upper classes were forced to travel into Columbia in order to buy basic supplies and toiletries due to shortages. When only one entity is allowed to control resources and produce goods, there is no one to capitalize on a shortage and fill the gap. These opportunists would not only be serving themselves, but society as a whole by providing something that people need. This story reminds me of the load shedding that I learned about when I visited South Africa this summer. The nation goes through hours a day without electricity because the one entity responsible and allowed to produce and sell electricity to the country is not capable of providing enough to meet requirements. South Africa is not a socialist country, though I am unsure of where it sits on the scale that Powell’s coauthor creates, and such a flawed system still exists. It is frightening that such socialistic policies can be found in many “capitalist” nations.
Powell’s stories from Cuba are what really cemented the idea of the importance of incentive in my mind. The contrast between the state owned hotels and the privately owned “Airbnb” rented out by Cubans in Florida for their family members in Cuba was stark and humorous. It was wild that for nearly the same price you could have such a terrible hotel, or a much better flat. It is encouraging to know that there is still the entrepreneurial spirit alive in citizens who go to any means necessary to use resources like Airbnb. This scenario really highlighted how important incentive of profit is for customer experience. This example also held true to the restaurants and other businesses. Privately owned restaurants were better, even though their menu offerings couldn’t be too much different because they had to use the same ingredients. In quick shops, there was no variety with one version of everything. This fact seems particularly bleak to me, as I can’t imagine going into a store and seeing the lack of variety and quantity that was shown in Powell’s picture. His stories in this video reassured me that we have it better than we often think in America. Even with the valid issues that do need to be resolved in our nation, socialism is not the way to do it. Giving up economic freedom would set us back, and our civil liberties would be soon to follow.
