Friday, June 19, 2015

Socialism is a disaster: Bernie Sanders like little child who says i want this and that with no concept of how it will be paid for

Bernie Sanders is like most leftists, little babies who cry "I want i want i want" without any idea of how it will be paid for.

Obama campaigned vs Bush in 2007 saying Bush was unpatriotic for adding so much debt to USA and that Bush "took out a credit card from china" to pay for it and then Obama went nd DOUBLED all previous US debt accumulated from 43 past presidents. Sanders would be much worse,giving away free this and free that. Hillary will be as bad as Obama as she too keeps promising this and that

Socialism is the Big Lie of the twentieth century. While it promised prosperity, equality, and security, it delivered poverty, misery, and tyranny. Equality was achieved only in the sense that everyone was equal in his or her misery.
In the same way that a Ponzi scheme or chain letter initially succeeds but eventually collapses, socialism may show early signs of success. But any accomplishments quickly fade as the fundamental deficiencies of central planning emerge. It is the initial illusion of success that gives government intervention its pernicious, seductive appeal. In the long run, socialism has always proven to be a formula for tyranny and misery.
A pyramid scheme is ultimately unsustainable because it is based on faulty principles. Likewise, collectivism is unsustainable in the long run because it is a flawed theory. Socialism does not work because it is not consistent with fundamental principles of human behavior. The failure of socialism in countries around the world can be traced to one critical defect: it is a system that ignores incentives.
In a capitalist economy, incentives are of the utmost importance. Market prices, the profit-and-loss system of accounting, and private property rights provide an efficient, interrelated system of incentives to guide and direct economic behavior. Capitalism is based on the theory that incentives matter!
Under socialism, incentives either play a minimal role or are ignored totally. A centrally planned economy without market prices or profits, where property is owned by the state, is a system without an effective incentive mechanism to direct economic activity. By failing to emphasize incentives, socialism is a theory inconsistent with human nature and is therefore doomed to fail. Socialism is based on the theory that incentives don’t matter!
In a radio debate several months ago with a Marxist professor from the University of Minnesota, I pointed out the obvious failures of socialism around the world in Cuba, Eastern Europe, and China. At the time of our debate, Haitian refugees were risking their lives trying to get to Florida in homemade boats. Why was it, I asked him, that people were fleeing Haiti and traveling almost 500 miles by ocean to get to the “evil capitalist empire” when they were only 50 miles from the “workers’ paradise” of Cuba?
The Marxist admitted that many “socialist” countries around the world were failing. However, according to him, the reason for failure is not that socialism is deficient, but that the socialist economies are not practicing “pure” socialism. The perfect version of socialism would work; it is just the imperfect socialism that doesn’t work. Marxists like to compare a theoretically perfect version of socialism with practical, imperfect capitalism which allows them to claim that socialism is superior to capitalism.
If perfection really were an available option, the choice of economic and political systems would be irrelevant. In a world with perfect beings and infinite abundance, any economic or political system–socialism, capitalism, fascism, or communism–would work perfectly.
However, the choice of economic and political institutions is crucial in an imperfect universe with imperfect beings and limited resources. In a world of scarcity it is essential for an economic system to be based on a clear incentive structure to promote economic efficiency. The real choice we face is between imperfect capitalism and imperfect socialism. Given that choice, the evidence of history overwhelmingly favors capitalism as the greatest wealth-producing economic system available.
The strength of capitalism can be attributed to an incentive structure based upon the three Ps: (1) prices determined by market forces, (2) a profit-and-loss system of accounting and (3) private property rights. The failure of socialism can be traced to its neglect of these three incentive-enhancing components.
The price system in a market economy guides economic activity so flawlessly that most people don’t appreciate its importance. Market prices transmit information about relative scarcity and then efficiently coordinate economic activity. The economic content of prices provides incentives that promote economic efficiency.
For example, when the OPEC cartel restricted the supply of oil in the 1970s, oil prices rose dramatically. The higher prices for oil and gasoline transmitted valuable information to both buyers and sellers. Consumers received a strong, clear message about the scarcity of oil by the higher prices at the pump and were forced to change their behavior dramatically. People reacted to the scarcity by driving less, carpooling more, taking public transportation, and buying smaller cars. Producers reacted to the higher price by increasing their efforts at exploration for more oil. In addition, higher oil prices gave producers an incentive to explore and develop alternative fuel and energy sources.
The information transmitted by higher oil prices provided the appropriate incentive structure to both buyers and sellers. Buyers increased their effort to conserve a now more precious resource and sellers increased their effort to find more of this now scarcer resource.
The only alternative to a market price is a controlled or fixed price which always transmits misleading information about relative scarcity. Inappropriate behavior results from a controlled price because false information has been transmitted by an artificial, non-market price.
Look at what happened during the 1970s when U.S. gas prices were controlled. Long lines developed at service stations all over the country because the price for gasoline was kept artificially low by government fiat. The full impact of scarcity was not accurately conveyed. As Milton Friedman pointed out at the time, we could have eliminated the lines at the pump in one day by allowing the price to rise to clear the market.
From our experience with price controls on gasoline and the long lines at the pump and general inconvenience, we get an insight into what happens under socialism where every price in the economy is controlled. The collapse of socialism is due in part to the chaos and inefficiency that result from artificial prices. The information content of a controlled price is always distorted. This in turn distorts the incentives mechanism of prices under socialism. Administered prices are always either too high or too low, which then creates constant shortages and surpluses. Market prices are the only way to transmit information that will create the incentives to ensure economic efficiency.
Profits and Losses
Socialism also collapsed because of its failure to operate under a competitive, profit-and-loss system of accounting. A profit system is an effective monitoring mechanism which continually evaluates the economic performance of every business enterprise. The firms that are the most efficient and most successful at serving the public interest are rewarded with profits. Firms that operate inefficiently and fail to serve the public interest are penalized with losses.
By rewarding success and penalizing failure, the profit system provides a strong disciplinary mechanism which continually redirects resources away from weak, failing, and inefficient firms toward those firms which are the most efficient and successful at serving the public. A competitive profit system ensures a constant reoptimization of resources and moves the economy toward greater levels of efficiency. Unsuccessful firms cannot escape the strong discipline of the marketplace under a profit/loss system. Competition forces companies to serve the public interest or suffer the consequences.
Under central planning, there is no profit-and-loss system of accounting to accurately measure the success or failure of various programs. Without profits, there is no way to discipline firms that fail to serve the public interest and no way to reward firms that do. There is no efficient way to determine which programs should be expanded and which ones should be contracted or terminated.
Without competition, centrally planned economies do not have an effective incentive structure to coordinate economic activity. Without incentives the results are a spiraling cycle of poverty and misery. Instead of continually reallocating resources towards greater efficiency, socialism falls into a vortex of inefficiency and failure.
Private Property Rights
A third fatal defect of socialism is its blatant disregard for the role of private property rights in creating incentives that foster economic growth and development. The failure of socialism around the world is a “tragedy of commons” on a global scale.
The “tragedy of the commons” refers to the British experience of the sixteenth century when certain grazing lands were communally owned by villages and were made available for public use. The land was quickly overgrazed and eventually became worthless as villagers exploited the communally owned resource.
When assets are publicly owned, there are no incentives in place to encourage wise stewardship. While private property creates incentives for conservation and the responsible use of property, public property encourages irresponsibility and waste. If everyone owns an asset, people act as if no one owns it. And when no one owns it, no one really takes care of it. Public ownership encourages neglect and mismanagement.
Since socialism, by definition, is a system marked by the “common ownership of the means of production,” the failure of socialism is a “tragedy of the commons” on a national scale. Much of the economic stagnation of socialism can be traced to the failure to establish and promote private property rights.
As Peruvian economist Hernando de Soto remarked, you can travel in rural communities around the world and you will hear dogs barking, because even dogs understand property rights. It is only statist governments that have failed to understand property rights. Socialist countries are just now starting to recognize the importance of private property as they privatize assets and property in Eastern Europe.
Incentives Matter
Without the incentives of market prices, profit-and-loss accounting, and well-defined property rights, socialist economies stagnate and wither. The economic atrophy that occurs under socialism is a direct consequence of its neglect of economic incentives.
No bounty of natural resources can ever compensate a country for its lack of an efficient system of incentives. Russia, for example, is one of the world’s wealthiest countries in terms of natural resources; it has some of the world’s largest reserves of oil, natural gas, diamonds, and gold. Its valuable farm land, lakes, rivers, and streams stretch across a land area that encompasses 11 time zones. Yet Russia remains poor. Natural resources are helpful, but the ultimate resources of any country are the unlimited resources of its people–human resources.
By their failure to foster, promote, and nurture the potential of their people through incentive-enhancing institutions, centrally planned economies deprive the human spirit of full development. Socialism fails because it kills and destroys the human spirit–just ask the people leaving Cuba in homemade rafts and boats.
As the former centrally planned economies move toward free markets, capitalism, and democracy, they look to the United States for guidance and support during the transition. With an unparalleled 250-year tradition of open markets and limited government, the United States is uniquely qualified to be the guiding light in the worldwide transition to freedom and liberty.
We have an obligation to continue to provide a framework of free markets and democracy for the global transition to freedom. Our responsibility to the rest of the world is to continue to fight the seductiveness of statism around the world and here at home. The seductive nature of statism continues to tempt and lure us into the Barmecidal illusion that the government can create wealth.
The temptress of socialism is constantly luring us with the offer: “give up a little of your freedom and I will give you a little more security.” As the experience of this century has demonstrated, the bargain is tempting but never pays off. We end up losing both our freedom and our security.
Programs like socialized medicine, welfare, Social Security, and minimum wage laws will continue to entice us because on the surface they appear to be expedient and beneficial. Those programs, like all socialist programs, will fail in the long run regardless of initial appearances. These programs are part of the Big Lie of socialism because they ignore the important role of incentives.
Socialism will remain a constant temptation. We must be vigilant in our fight against socialism not only around the globe but also here in the United States.
The failure of socialism inspired a worldwide renaissance of freedom and liberty. For the first time in the history of the world, the day is coming very soon when a majority of the people in the world will live in free societies or societies rapidly moving toward freedom.
Capitalism will play a major role in the global revival of liberty and prosperity because it nurtures the human spirit, inspires human creativity, and promotes the spirit of enterprise. By providing a powerful system of incentives that promote thrift, hard work, and efficiency, capitalism creates wealth.
The main difference between capitalism and socialism is this: Capitalism works.

Author Topic: Why Does Socialism Always Fail?  (Read 8969 times)


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    Why Does Socialism Always Fail?
    « on: April 14, 2014, 07:32:59 AM »
    "In the 20th century, the Soviet Union made the state’s role absolute. In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated.

    Nor should we turn a blind eye to the fact that the spirit of free enterprise, including the principle of personal responsibility of businesspeople, investors and shareholders for their decisions, is being eroded in the last few months. There is no reason to believe that we can achieve better results by shifting responsibility onto the state.

    And one more point: anti-crisis measures should not escalate into financial populism and a refusal to implement responsible macroeconomic policies. The unjustified swelling of the budgetary deficit and the accumulation of public debts are just as destructive as adventurous stock-jobbing."

    - Vladimir Putin, Prime Minister of Russia, February, 2009.

    Socialism is the 20th century's greatest tragedy. Although its evangelists promised equality, prosperity and security, it was only responsible for misery, poverty, and absolutely 100% of the time ended up in tyranny.

    Actually, it is interesting to note that socialism in the 20th century did achieve a form of equality after all, but only in the form that all people in socialist countries were equal in their misery and poverty. Having spent considerable amounts of time in actively socialist countries, I have seen the anguish of its proletariat with my own eyes... although I never thought that I would live to see the Kremlin lecture Washington on the dangers of socialism.

    Just like Madoff's Ponzi pyramid scheme initially showed staggering success but then collapsed like the house of cards that it was, socialism demonstrates signs of success in its early stages. The essential problem is that all of the gains, real or imagined, fade rapidly as the basic and inescapable deficiencies of the policy of central control of an economy emerge.

    I remember a gardener years ago discussing a particular way to over-fertilize a plant. That process would lead to a swift growth spurt and early blooming. Unfortunately, the plant would succumb to the excessive nutrients in the soil and would never bear fruit before it withered and died. That is an excellent metaphor for the life cycle of socialism.

    The promoters of this appalling and loathsome grim joke on humanity unanimously point to the initial stages of any socialistic system where progress is made on a wide range of social issues, including universal health care, affordable housing, and guaranteed welfare. However, they unfailingly begin to suffer from amnesia when the mid to late stages of socialism arrive: Collectivism is impossible to support over a term of more than a few years due to the fact that it is based on a theory which is completely and absolutely erroneous.

    Why does socialism always fail? Socialism is incompatible with the most basal and rudimentary principles of human behavior. Just like an animal has to be trained to perform a particular behavior through positive reinforcement, humans will generally not perform any act of labor unless there is acceptable incentivization. Incentives are central to a free market system: indeed the entire essence of the free market economy is to provide an elegantly interconnected infrastructure of incentives to drive and direct the socio-economic framework of the nation.

    These incentives are based upon the essential human drive to possess. Under the free market economic model, individuals are enabled and empowered to gain tangible value from the fruit of their labor, and be able to build lasting security through wealth. One of the major keystones of this security is to be seen in the right to privately hold property. Permanent shelter is a fundamental human desire, and many individuals in a free market system have stated that the happiest day of their lives, after their wedding or birth of their children, is the day they burned their mortgage and thus owned their homes free and clear.

    There are many other forms of value, whether it is the ability to possess entertainment, sports, leisure, professional, or convenience accessories, or to be able to invest wisely in order to ensure that children are secure while retirement comes early and is comfortable. The free market system is based this inalienable right to possess within a lattice of market-set pricing and profit-and-loss accounting. It is impossible to understate the importance of these incentives and their unparalleled power to shape the economy of a nation.

    Incentives under socialism are virtually non existent. When you have a nation where all property is owned by the government there is no way for the common person to build security in any way. Individuals soon recognize that they are serfs of the state, and since they are subject to the whims of the politburo of the day, have no possibility for self determination. The only way to pull yourself out of the mire is to attempt to become one of the handful of Party authorities, who are able to live in the luxurious decadence of the top capitalists.

    I know an Eastern European family whose 19th century ancestors built a lovely stone villa in a magnificent panoramic location overlooking the sea. It served as their ancestral home for over a century until the new socialist rulers of the nation served them an order to vacate. Their entire family of eleven was to be relocated to a two bedroom apartment in a Stalinist concrete block building next to a toxic chemical plant, as the villa had now been allocated to a high ranking local Party member.

    This family not only received no form of compensation whatsoever, but was escorted from their ancestral home at gunpoint, to spend the rest of the century in that squallid, cramped, crumbling apartment in the core of a smog-laden, grimy city. It was only after the Fall of the Berlin Wall that they were able to engage in an expensive and draining five year long court action to restore their rightful property rights and regain the deed to their villa, which by now had fallen virtually into ruin as fifty years had elapsed.

    Socialist centrally planned economies invariably fail due to their inherent and integral failure to encourage, develop, and nurture the essential potential of its people by lack of incentivization. Socialism is a failure because it suppresses the human spirit. Why else have so many thousands of people lost their lives in attempts to clandestinely escape their socialistic bondage and reach nations which embrace free market economies? In comparison, how many people have willingly left free market economies to move to socialist countries?

    By its inability to foster, promote and develop the potential of people through incentives, centrally planned economies deprive the human spirit of ambition, aspiration, enterprise, determination and industry. What happens to the aspiration of a human being when there is essentially no reason to do anything? Nothing gets done.

    Thus lies the core flaw of collectivist economies: When you inform a laborer that it is essentially irrelevant whether they produce one wicket a day or a hundred, and that it is also irrelevant whether those wickets are quality crafted or thrown together, as they will live in the same government owned apartment, shop at the same meagre stores, and be stuck in the same droning, monotonous job for the rest of their lives... their productivity falls steadily until almost nothing is produced. Multiply that effect by virtually every laborer in the nation, and you soon see why socialist economies are marked by long queues outside stores when the word gets out that they have soap, or bread, or eggs that day. Nobody is producing anything, thus nobody sells anything, thus there is nothing to buy.

    At a time when the fault lines of capitalism are becoming exposed through the recent financial seismic shocks, it is a knee jerk reaction for the closet socialists to come out of the closet, dust off their tired rhetoric, and give it one more shot to convince the world to sing "L'Internationale" in unison. The reason why each proponent of this deficient ideology, from Vladimir Lenin, to Mao Zedong, to John Lennon has failed is due to the barren wasteland which exists within the seductive allure of socialism to the poverty-stricken masses of the world. The chimera of being able to "share the wealth of the state" is extremely tempting to those who toil in drudgery while the upper classes are whizzed by in their chauffeured limousines.

    What they don't understand is that the state cannot create wealth, it can only administer it. Thus, the essence of socialism is one of universal impoverishment where even the hope that the lower classes can escape their poverty vaporizes along with the rest of the the nation's productivity.

    We in the free market world are currently undergoing a severe economic adjustment. It would be fallacious to lay the blame for this convulsion on free market ideology or capitalistic structures. The current upheavals are due to the failure to enforce existing financial regulations thus letting blind greed and rampant megalomania run wild. That is not what a free market economy is all about. Just like a state cannot exist without just laws, a capitalistic system cannot function without adherence to fair and reasonable regulation. This recession was triggered by a myopic and incompetent gaggle of politicians, not by any inherent fault of the free market system.

    The genius of capitalism, and the basic reason why it succeeds where socialism fails, is contained within its core tenet that the free and unfettered market determines profit and loss. Every citizen is empowered to design and market a better mousetrap, provide a better service, or implement a better idea, and let the free choice of the consumer decide to reward them. The potential success of the individual is limited only by their ambition, drive, and intellect, not by slavish adherence to a collectivist Five Year Plan.

    It is at a time like this that we cannot afford to be hypnotized by the siren song of socialism, and the deleterious, titanic evils of nationalization, central planning, and government control through financing of private corporations. It is a time when we must refresh and renew our free market structures, allowing individuals the freedom and liberty to create wealth so that the rising tide will raise all boats once again. Some well known, salt of the earth companies and brand names will disappear forever, but they will be replaced and refreshed by unforeseen, startling new entities which will bring the nation new economic vitality and vigor. The United States of America is a land where ingenuity, innovation, and imagination are literally imbued in the lifeblood of the nation and its people. It has only ever existed as a framework in order to Let Freedom Ring, and none of its citizens must ever be enslaved to any degree of socialistic peonage, no matter how limited, or coated in an illusion of necessity.




    By Hal Licino

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