Wednesday, March 14, 2012

The Politically Incorrect Guide to Socialism with Kevin Williamson

I have just completed reading the book The Politically Incorrect Guide to Socialism by Kevin D. Williamson and must recommend it heartily.  It certainly has allowed myself to bring greater clarity to the subject in terms of my own thinking in regard to political institutions and the more general problem of ordering a civil society to support stable economic performance.

Wonderfully, the examples are recent and not just the usual taxing of historical examples.

I do disagree with his taking his objections somewhat too far and perhaps unnecessarily so.

Yet one thing is resolved in my mind.  Socialism in its various flavors fails for one explicit reason.  It consistently adopts an economic model that is mediated through top down command and control.  That failed in the military and was replaced by empowering and properly training small units.

The take home is to understand that a healthy economy demands distributing economic power down to every individual as much as possible and if you want a general outcome, then simply provide targeted incentives, good bad and indifferent.   What ever you do, do not establish a top down mega enterprise unless it is absolutely necessary and once it is on its feet, go forth and sell it.

Curiously, that is what most modern states today actually do.

We are seeing this emerge in the rise of public banking in the US as a sensible response to the depredations of risk taking private banks.  A new bank of Your State can be mandated to hold state government deposits and to originate local mortgages and can in time be partially made public while retaining those mandates.

Also recall that income redistribution is hardly socialism as a sound method of originating consumer dollars in the first instance.  It is far more useful that transferring coin to pay out interest for the loans for economically useless projects.  As I have posted in the past, government first creates cash and also capital in the form of transferable title. It then dispenses that cash and title and then proceeds to tax it all back through either direct tax or the indirect tax of inflation.  That is the proper order that has never been understood by anyone that I am able to determine.

The Politically Incorrect Guide to Socialism

By Kevin D. Williamson • Reviewed by: 
Published by: Regnery • Year: 2011 • Price: $19.95 • Pages: 272 • Buy
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What do the following have in common: hungry Venezuelans, starving North Koreans, ecological devastation in the former Soviet Union, and functionally illiterate students in Washington, D.C., high schools? Give up? They are all consequences of socialism.
In his book The Politically Incorrect Guide to Socialism, economics professor and National Review editor Kevin Williamson gives the reader an easily understood yet highly informative disquisition on the nature of socialism, its inherent flaws, and the reasons it continues to spread. In connection with that last point, two of Williamson’s chapters cover the political infatuation with “energy independence,” which he argues is socialist in essence, and the push to saddle Americans with the politicized medical care system known as Obamacare.
Williamson’s arguments are sharp and his examples illuminating. His book is like a wrecking ball going to work on the already feeble edifice of socialism.
“Hold on a minute,” some will say. “You can’t compare the bad things that happen in a totalitarian state like North Korea with our well-intended and generally popular public school system in America.” Williamson shows, however, that the crucial element of socialism is present in both, namely governmental control over the provision of goods and services that would otherwise be done by private enterprise. That invariably leads to waste and inefficiency—or even worse.
Williamson does a first-rate job of explaining why those arrangements stifle productivity, depress quality, and hinder innovation. It is because government officials (and the type of government is immaterial) do not know what consumers want. That information only comes from the market’s price system, which socialism prevents from working. It is also because government officials have no incentive to satisfy consumer wants since their money is not given by buyers but taken from taxpayers. Starving peasants in Korea and illiterate students in the United States—the roots are the same.
The poverty of India has been compared to the remarkable wealth enjoyed by the people of Hong Kong and Singapore before, most famously by Milton Friedman, but that is no reason not to emphasize it again. Following World War II, Williamson observes, India was seemingly poised for great economic expansion, having suffered little from the war and benefiting from infrastructure built by the British. India’s economy, however, remained stagnant due to the naive socialism of Nehru, the first prime minister, who admired Soviet central planning. Grinding poverty gripped most of the country.
Singapore and Hong Kong, in contrast, had suffered considerable war damage. Nevertheless both enjoyed rapidly rising incomes for all income classes. The fact that prosperity was widespread is important in heading off the common objection that capitalism only helps a few. Those two city-states were able to escape from poverty by rejecting socialism and adopting laissez faire: prices were free, investors could seek profitable opportunities without government interference and keep their earnings (or swallow their losses) and taxes and regulations were minimal.
Williamson also points out that in recent years India has begun rapid economic development, but only because new leaders have lightened the heavy yoke of socialism.
Defenders of socialism almost always point to Sweden and say that its experience proves that socialism can work. Williamson’s chapter “Why Sweden Stinks” refutes that notion. Sweden seemed to have the best of all possible worlds—a high standard of living combined with an expansive “safety net” and generous government benefits. The trouble is that socialism is unsustainable because it erodes the human qualities that built up the wealth that the socialist state consumes. Williamson writes that Sweden “is rapidly transforming itself into the sort of society that will not be able to support the relatively successful welfare-state arrangements that characterized it throughout most of the twentieth century.” As Hayek observed, socialism changes the character of the people gradually, undermining habits of work, thrift, and self-reliance. We are seeing that in Sweden.
Speaking of Hayek, another of his famous insights regarding socialism was that under it, the worst people usually rise to the top. I wish that Williamson had included a chapter on that point. We hear so often from socialism’s advocates that their system would work beautifully if it were controlled by good people rather than murderous dictators like Stalin. It would have been worth several pages to attack the idea that there is some magic formula to keep vicious, power-mad people from scheming their way to the top of a system that gives them what they crave.
Finally, although I applaud Williamson’s effort, he has bundled together under the label “socialism” several policies better labeled “corporatist” or “collectivist” since they don’t entail government ownership or abolition of the market economy—only interventions that hamper it. Ethanol subsidies are bad, but we don’t have a federally owned energy sector and “public education” doesn’t prevent (though it surely hampers) home and private schooling. Such distinctions are important.

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