Friday, April 15, 2005

Government Lesson No. 4: Why Socialism's Aims Are Unrealistic

Let me make it clear that I don't criticize socialism's goal of fiscal equality. I think it's admirable and evidences our empathy for others.

However, I remember a discussion with my Dad when I was 19. (See more about Edward C. Harwood at this website, and in my previous posts, most notably this archive.) I told him that it all sounded so good, to each according to his needs, from each according to his capacity. He replied that although it may sound wonderful, socialism's formulae have been tried over and over and over, and they fail every time, turning our empathy and frustration into something much more lethal than wishful thinking: fertile ground for anarchy or fascism. I've come to realize how right he was.*

So, even if all of us were to agree that equal effort deserves an equal amount (or at least a greater part) of the wealth it produces, there are three problems with this. First, we have to be careful which assumptions we make about human nature. Second, we must be precise in defining "equal effort." Third, there just is no viable, ideal, centralized top-down redistribution system that will spread the revenue of the wealthiest to the more modest without disturbing a delicate natural equilibrium, and without starting a nation's economy down a long backward sliding slope that will end up making everyone even poorer, except the very rich. [sic - I know, it doesn't make sense at first.]

This is my observation of one of Nature's pertinent laws:

IF YOU REDUCE PEOPLE'S REWARD BELOW A DEFINABLE LEVEL (and that level is quite high for very productive people), THEY WILL EITHER ATTEMPT TO DIVERT THEIR REWARD AWAY FROM YOUR JURISDICTION OR REDUCE THEIR EFFORTS TOWARDS THE POINT WHERE THEY PRODUCE ONLY THE SAME AMOUNT AS THE LEAST PRODUCTIVE PERSON.



I could almost end my story here, at human nature. It's simply the way we're built, and we're not about to change, or to change ourselves - at least not before thousands of years, in spite of the inviting promise of evolution. No amount of guilt tripping, government legislation, persuasion, haranguing, harassment, preaching or policing will help. In fact, it just makes it worse. (And who wants to live in a police state anyway?)

This aspect of human nature is just a fact, and has been observed many times, and in many places, most notably in the USSR before the fall of the Berlin Wall. It is axiomatic that some kind of unusual carrot is necessary for a high producer to take risk, to produce to his ultimate capacity, and to create the companies that employ the rest of us and sell us the products and services that increase our health, wealth and general well-being.

Here is another law of human nature that we forget: People are not equal, no matter how much we hate the idea. Admittedly, most people of good will have many characteristics in common, such as arms and legs, cyclical 24 hour life cycles, sleep requirements somewhere between 4 and 10 hours a day, a need for food, shelter and social community, and an equal right to life, liberty, property protection and pursuit of happiness. Beyond that, every one of us is unique. Some of us are competitive and energetic. Some are lackadaisical, or whimsical. Some love the corporate challenge; some love the security of a daily 9 to 5 routine. Some like to spend money; others save. Some will work no matter what the reward, for the sheer joy of activity. Others want privileges without having to put out any effort for them; in fact, resistance to effort is a pretty common trait, and will blossom with little encouragement.

Some are leaders; some are followers. There are the organizers, the thinkers, the physically strong, the mentally brilliant. Some people's joy comes from material possessions, others' from nature. Each one of us has a different vision of what we want out of life, and what rewards are necessary for our happiness. The range of human qualities and faults is mind-boggling. Likewise is the variance in what people can do with an "equal effort," as is the amount and quality of effort of which each is capable. So if it were possible to increase everyone's well-being by allowing the most productive (read creative, energetic, courageous, risk-taking) to have what they want - which may just be a lot of goodies that we are envious of - then why not let them have it? Remember, we are ALL better off. As they say, life used to be treacherous, brutal and short. If it no longer is, we must give thanks where thanks are due.

Now to the third problem. Adam Smith described the free market as an Invisible Hand, a complex, naturally organized balancing phenomenon that economists have said is something no human genius could ever have invented, and that has raised the standard of living of almost everyone on this earth, especially when it has been left alone. (See Economics Lesson No. 2 for the basics.) In fact, we are forced to observe that the less interference there is, the more quickly the free market can ameliorate people's lives - and I mean everyone, and relatively equitably. There is some kind of universal equilibrium that just doesn't lend itself to human interference.

We must conclude, according to all the evidence, that it is impossible to give everyone a more equal amount of the wealth produced in this world without reducing the benefits we have collectively acquired, in spite of some honest attempts to create a system to do so. It is as though the Invisible Hand's enemy intervenes, and our efforts are destroyed. Our ideal society implodes. The enemy is us, with our damn fool good intentions.

* I highly recommend a book called The Road to Serfdom by F.A. Hayek, for all who are interested in pursuing this connection in more depth. There exists a very readable and downloadable excerpt called the Reader's Digest Condensed Version of The Road to Serfdom, at this website.

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