Economic Myths #1
by Dr. Doug Cardell
This article is the first in a series of articles debunking economic myths and misconceptions. These myths and misconceptions drive those who believe them to seek government intervention to address them. Sadly, many politicians are only too happy to oblige if it increases their chances of reelection, even though they know the myths are false. The only cure is to educate the public so that they will demand solutions based on facts, not myths. The topic of this first article is one I hear frequently, "Socialism is a working economic system employed successfully all over the world" or words to that effect. This statement is nonsense! As of today, in 2023, There is only one socialist country in the world, North Korea. Four others qualify as mainly socialist: China, Cuba, Vietnam, and Laos. A few more have nationalized a few significant sectors of the economy: Bangladesh, Eritrea, Guyana, India, Nepal, Nicaragua, Portugal, Sri Lanka, and Tanzania. If you are in doubt about what socialism is, it is a state in which the means of production are government-owned or nationalized. For more details, please see my article on Economic Systems. Also, the Nordic countries are absolutely not socialist; some have more free economies than the U.S. They are capitalist countries with substantially higher taxes and social services than the U.S. The leaders of those countries are adamant that they are social democracies, not democratic socialist states. For a more in-depth explanation, please see my article, Democratic Socialism. China, Cuba, Vietnam, and Laos have all retreated from their "pure" socialist roots and now have thriving free-market sectors, although some are heavily regulated. The others on the list above are majority free enterprise with some nationalization. India, for example, has about one and a half million registered private companies. That is not socialism; it is capitalism. There are a couple of dozen more states where representatives of the socialist party govern or claim to be socialist in their constitutions but have never adopted a socialist economy. Of 170 countries globally, only one is genuinely socialist, and calling it a working economic system is laughable. The people are starving and brutally repressed. The other four primarily socialist countries have been moving toward capitalism, except for China. China moved toward capitalism after Mao but has recently moved back toward socialism, causing many of the best and brightest to flee to the U.S. and other Western nations. The retreat from capitalism in China has also begun creating economic frictions that threaten to reverse decades of progress. Their real estate market is particularly hard hit. Many would argue that the aging population is causing the problem, not socialism. Still, the reality is that the free market more effectively and quickly solves problems of any kind than the government. Thus, the original statement, paraphrased by many, "socialism is a working economic system employed successfully all over the world," is false. Socialism is neither a working system nor is it used all over the world. Socialism is only fully implemented in one country, North Korea, and it is failing miserably except for the party elite, who live in luxury. People worldwide are not clamoring to get into North Korea or any of the primarily socialist countries. The migrants are all trying to get into the U.S. and Western Europe. They ask for refugee status based on the miserable conditions in their home countries. In addition, North Korea, as well as the primarily Socialist countries and many of the semi-socialist countries, have black markets in the goods controlled by the government. These black markets are undeniable evidence that the populace wants free markets and will risk their lives to have them. Yes, in North Korea and some others mentioned, participating in the black market is punishable by death or imprisonment in forced labor camps. In the American colonial period, socialism was tried and failed just as it has everywhere. Capitalism succeeds where socialism fails because while folks may 'bad mouth' capitalism, their actions indicate that it is the system they prefer. Those who suggest implementing socialism anywhere simply don't understand the system sufficiently to appreciate its deadly consequences. It also means that they probably don't wholly understand capitalism. Instead of that original statement, a more accurate statement would be: "Socialism has been tried and failed many times. It has never succeeded and has never lasted more than 80 years anywhere. There are no examples of places where the people have been made better off." By contrast, capitalism has lifted, and is lifting, more people out of poverty than any system ever employed.
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