Thursday, May 11, 2017

Socialism's Fail: A Hypothetical and a Live Example

Imagine you are a student in my Management class. Suppose I announce on the first day that whatever your accomplishments in the course - your test scores or papers - all will receive a grade of "Pass" or C. In other words, socialism.

Be honest, how hard will you study? Especially if the course is required and the subject matter isn't intrinsically fascinating to you. Answer: not much.

Don't ignore the demotivating effect of seeing others who do little or nothing receiving the same rewards as yourself. After several years I completely stopped assigning group projects. My best students hated them because they'd end up doing all the work and sharing the group's grade with slacker free-riders.


In any population some members are more productive than others, some make better decisions than others, some are luckier than others, and some begin life with additional advantages. Left alone to function as an economy, the result will be an uneven distribution of resources, and this may increase over time.

Socialism is driven by the notion that those who have less are not less deserving but merely disadvantaged. So the state steps in to level the economic playing field.

Unfortunately for enthusiasts like Venezuela's Hugo Chavez, socialism always levels the playing field down so that everyone is poor. Whereas in an unequal society only the least productive, least able will remain poor.

This is what Chavez did to once-wealthy Venezuela. The result, as Yahoo News and others have reported, is chaos and near-universal poverty. Low oil prices didn't help. As Margaret Thatcher wisecracked, they have run out of other people's money.

Venezuela has basically committed suicide, done in the pursuit of equal outcomes.