Food for Thought

As the Olympics wind down, I am amazed at how things change every four years. Many Americans were glued to their televisions to watch the excitement from Beijing, and also heard announcers wax nostalgic with memories of times when the Soviet Union was the USA's biggest competitor for Olympic gold. There was a time when it was unthinkable that a government as powerful as that of the Soviet government was also its weakness, as no country, no economic system can remain strong under the crushing burden that is central planning.

Central Planning is sold to a hopeful people as a way to solve societal problems, to right wrongs, and bring about perfect justice and equality. Central Planning promises you everything you are entitled to. As a bonus, goods and services produced by others are added to the list of commodities that everyone has a "right" to. Suddenly everyone is entitled to healthcare, housing, education, food, et cetera. It might sound nice that the state will magically provide all these wonderful things, but these rosy promises mask a dehumanizing, ugly reality. The other side of these entitlements is that now the doctor, the builder, the teacher, the farmer are slaves to the all-powerful state. No longer do they serve patients, students, or customers. They work in complete obedience to the state, their only customer.

Central planning will tell you that you are entitled to many things. Liberty tells you that you are entitled to life, liberty and the pursuit of happiness; to whatever you earn, and nothing that you don't. While it may seem harsh to some, we must look to basic economic truths and to history to see which model is cruel and which model is kind.

The truth is that central planning cannot provide for economic success like freedom can. Central planning makes promises it cannot possibly keep. We live in a world of unlimited wants and limited resources. If you put a massive and powerful government in charge of distributing those resources, it is not a surprise that government and those in bed with government are first in line for those resources. The poor and the middle class – the most hopeful and trusting – are hurt the most, as the state always underestimates their needs and overestimates their ability to pay taxes and absorb inflation.

The Soviet Union's collapse is a dramatic example of the failure of central planning. Americans celebrated this collapse, not only because it meant less competition for Olympic gold, but it provided hope that with the end of the Cold War, our policy makers could drastically reduce overseas commitments and out of control military budgets. Most especially, we celebrated because with the collapse of Soviet communism it was apparent that liberty, not central planning, is stronger. Freedom empowers the individual. Central planning dehumanizes the masses. There may always be a struggle for power and government, but for this reason, freedom will always win out in the end. And as we celebrate the accomplishments of our individual athletes in Beijing this year, we must continue to go for the gold here at home, and keep the flames of liberty burning bright.

As the Olympics wind down, I am amazed at how things change every four years. Many Americans were glued to their televisions to watch the excitement from Beijing, and also heard announcers wax nostalgic with memories of times when the Soviet Union was the USA's biggest competitor for Olympic gold. There was a time when it was unthinkable that a government as powerful as that of the Soviet government was also its weakness, as no country, no economic system can remain strong under the crushing burden that is central planning.

Why Socialism Failed
By Mark J. Perry

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!

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