Is Socialism Better Than Capitalism?

The liberty principle for this Freedom Friday concerns socialism versus capitalism. When New York City voters elected Zohran Mamdani, they elected a socialist and joined other people who believe what John Stossel calls “absurd myths” about socialism. He wrote, “College students prefer socialism to capitalism … Because they believe absurd myths -- like the claim that the Soviet Union wasn’t real socialism.” 

Why do they believe such myths? Because professors are feeding them myths instead of teaching them knowledge. Socialism guru Noam Chomsky “says the Soviet Union ‘was about as remote from socialism as you could imagine.’” Well, the Soviet Union did the same thing that Mamdani is threatening to do in New York City: make “private business illegal.” Stossel continued his article:

“Socialism means abolishing private property and … replacing it with some form of collective ownership,” explains economist Ben Powell. “The Soviet Union had an abundance of that.”

Socialism always fails. Look at Venezuela, the richest country in Latin America about 40 years ago. Now people there face food shortages, poverty, misery and election outcomes the regime ignores.

But Al Jazeera claims Venezuela’s failure has “little to do with socialism, and a lot to do with poor governance … economic policies have failed to adjust to reality.”

“That’s the nature of socialism!” exclaims Powell. “Economic policies fail to adjust to reality. Economic reality evolves every day. Millions of decentralized entrepreneurs and consumers make fine tuning adjustments.”

Another myth fed to the gullible is that socialism works in the Scandinavian countries. Stossel quoted “Mad Money’s” Jim Cramer as calling Norway “as socialist as they come!”

I know for myself that this is not true because I visited Norway, and the tour guide said that it is not socialist. He added that the government does what it does for its citizens because Norway has a lot of oil that they use for the benefit of the citizenry. He also said that Norway taxes its citizens at 50% to pay for the “free” college. Stossel debunked this myth also.

“Sweden isn’t socialist,” says Powell. “Volvo is a private company. Restaurants, hotels, they’re privately owned.”

Norway, Denmark and Sweden are all free market economies.

Denmark’s former prime minister was so annoyed with economically ignorant Americans like Bernie Sanders calling Scandinavia “socialist,” he came to America to tell Harvard students that his country “is far from a socialist planned economy. Denmark is a market economy.”

Powell says young people “hear the preaching of socialism, about equality, but they don’t look on what it actually delivers: poverty, starvation, early death.”

For thousands of years, the world had almost no wealth creation. Then, some countries tried capitalism. That changed everything.

“In the last 20 years, we’ve seen more humans escape extreme poverty than any other time in human history, and that’s because of markets,” says Powell.

Capitalism makes poor people richer.

Still another myth being taught to gullible people is that there is a “fixed amount” of wealth in the world. They think that “when someone gets rich, others” get poorer. That is not true. “In a free market, the only way entrepreneurs can get rich is by creating new wealth.”

[Wealth is not like a pie: If someone gets a bigger slice, other people get smaller slices. Creating wealth is like making a bigger pie and giving a bigger slice to everyone.]

Yes, Steve Jobs pocketed billions, but by creating Apple, he gave the rest of us even more. He invented technology that makes all of us better off.

“I hope that we get 100 new super billionaires,” says economist Dan Mitchell, “because that means 100 new people figured out ways to make the rest of our lives better off.” …

… under capitalism, the poor and middle class get richer, too.

“The economic pie grows,” says Mitchell. “We are much richer than our grandparents.”

When the media says the “middle class is in decline,” they’re technically right, but they don’t understand why it’s shrinking.

“It’s shrinking because more and more people are moving into upper income quintiles,” says Mitchell. “The rich get richer in a capitalist society. But guess what? The rest of us get richer as well.”