Overview
This week’s reading, or rather video, was a talk from Robert Powell about his book, “Socialism Sucks: Two Economists Drink their Way through the Unfree World”. Mr. Powell talks about his time traveling to a few “socialist countries” in the world and uses their beer as a metaphor or reflection of their socialism. He begins by explaining what socialism and capitalism is, as there has been a recent uptick of popularity for socialism amongst younger people in the USA. However, as we progress through the countries he has visited, it becomes clear that socialism looks very different amongst countries.
The Different Countries
The first country Mr. Powell talks about is Sweden, as they are often pointed to for their “socialist” economy. However, Sweden is not socialist, they have private means of major production, close to free trade, light regulation of business, etc. They do have high taxes and welfare controlled by the state. This combination of entrepreneurship and state controlled welfare affects their prices. Mr. Powell mentions that although the beer was good, the price was significantly higher than it would be in other places without the welfare state.
The other end of “socialism” is Venezuela. Once a strong and prosperous economy, Venezuela is now a starving country. Socialism “worked” for a brief moment, as prices of oil were high and used to purchase food and goods for the country, Mr. Powell says this happened shortly following the death of Cesar Chavez. They have now been left in crisis and were dependent on the small amount of entrepreneurship they would practice by crossing into Colombia to sell and trade. When Venezuela blocked trade on the bridge from Venezuela to Colombia, the government controlled all means of production and this left Venezuela without any access to more commodities and food. Mr. Robert Powell was unable to get beer here as they had run out.
With each example of “socialism”, Mr. Powell points out its flaws and how each system does not meet the standards of being a fully fledged socialist society. In Cuba, there are options to choose from when picking hotels, groceries, and restaurants. Yet, a common theme draws the options together, there is no incentive to sell. Since the land, production, or business is not private, there is no strive to make things better or have greater options. During his recount of his visit, Mr. Powell noted that, the hotels are run down, with broken elevators, holes in towels and broken toilets, the restaurants all have limited food options and everything tastes the same and grocery stores do not advertise themselves because there is no reason for competition. In Cuba, there are two beers to choose from, both are poor quality.
In China, according to Mr. Powell, they have moved far away from their socialist history and are now mostly capitalist. Many of their citizens work in the private sector, and many of their cities have blossomed with technology and business since they have moved from their traditional socialism model. Mr. Powell shows powerful images of Shanghai and the growth the city experienced from free enterprise to support his claims of “fake socialism”.
What does this mean for "Socialist" Economies?
To look through the lens of beer and what insight that can bring to an economy is a clever way to interpret and analyze economic models. I think Mr. Powell brings up strong points of why socialism fails its citizens and why these countries are not really socialist. Without incentives, there is no reason for an economy to grow. When looking at Sweden, it can be argued that their mix of welfare and free enterprise is a good mix but to the determinant of economic growth. They sacrifice economic growth for social welfare and can be argued that this model is either good or bad depending on what values you may hold.
However, after learning about the different “types” of socialism in these countries, I can say that I am against extremist socialism. I have never been a fan of socialism and the speech helped give me reasons as to why socialism does not work. When balancing free enterprise, entrepreneurship, capitalism vs concepts of socialism, it is important to realize the weakness of both systems. The weakness is people, people take advantage of the system. Socialism tends to place the power of people in the government and capitalism places the power into businesses. With good faith dealing, we would not have to worry about these weaknesses, but when pushed to a point these systems fail.
Mr. Powell’s speech helped me recognize the determinants of socialism in countries and why it is so hard for a country to be truly socialist. Capitalism is better at helping protect the people over those in power in the government. Just as Mr. Powell mentioned in his speech, the dictator of Venezuela won re-election because he controls the supply of food and resources. Centralizing production into one power is too much for a government to handle, centralizing healthcare drives up taxes, and makes people too dependent on the government.
In these societies, there is also very little incentive to strive for better things and a better way of life because they are prohibited from it. Centralizing these things slows the supply chain which causes scarcity, and without the opportunity for free trade or free enterprise there is nothing that citizens of the economy can do about it. Capitalism gives people the power of choice and the opportunity to live a better life.
Though Mr. Powell's thoughts on the topic focus on how the economies run, I think he does it in a way that masterfully helps the learner draw connections to the impacts on life and overall sociological consequences these societies have. Overall, socialism does suck and discourages any sort of independence - the independence to start a business, become a better business or look for different options.
Works Cited
Powell, Robert. “Socialism Sucks: Two Economists Drink their Way through the Unfree World”. The Institute for the Study of Free Enterprise. Oklahoma State University, Stillwater, OK. Lecture.