Socialism is based on the assumption that “government knows best”. According to Merriam Webster, it's defined as:
- "any various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods;
- a system of society or group living in which there is no private property;
- a system or condition of society in which the means of production are owned and controlled by the state;
- a stage of society in Marxist theory transitional between capitalism and communism and distinguished by unequal distribution of goods and pay according to work done."
In other words, it assumes that government knows best, including its bureaucrats and powerful leaders.
Capitalism on the other hand, features free enterprise, aka “private citizens know best”. Merriam Webster again:
"An economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market."
History shows us that capitalism beats socialism every time. Quoting the April 2019 issue of Trends eMagazine:
“The consistent 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. In short, capitalism is based on the theory that having the right incentives matters.”
“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 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!”
Do incentives matter to you? Have you ever risked running out of gas by driving past a gas station with your gauge on “E” in the hope that you have enough fuel left to get to the station 10 miles away where you can save 5 cents per gallon? Have you ever shopped at Job Lot to save a few dollars? Do you buy goods on line, sight unseen, to save some money? Do you shop around for the best deal on a car or truck, or do you just say “OK” when the salesman tells you the price?
Put me down for a “yes” to all of the above – yes, incentives matter to me. But it’s not just about getting the lowest price. It’s about innovation, value, and efficiency. I work for two small businesses and own a portion of one of them. In our wood furniture manufacturing business not a day goes by without a discussion that explores how to better serve our customers. Like many small businesses, when the pandemic hit we had to adapt quickly. Within days we were able to design and begin producing free standing “sanitizer stands” to provide hand sanitizer to meet the needs of businesses and families that suddenly required sanitizer as a condition to entering their buildings. The following week we had designed and were shipping portable desks for families to use in the corner of their living rooms for their suddenly-homebound remote-learning students. in subsequent weeks we found ways to improve the designs, making them more attractive and less expensive. We had strong incentives to adapt. The survival of our business depended on it during those months when our furniture dealers were all forced to close.
I’m not saying that our government couldn’t have reacted as quickly and efficiently to the sudden change in things that citizens. Oh wait, scratch that – that’s exactly what I’m saying! It would have taken months to figure out and would have cost ten times as much.
A recent article by John Stossel reinforces my assertion. In his article titled “Private space venture exposes costly NASA monopoly” published 7/31/20 in the Union Leader, he explains that the successful Space X trip to the International Space Station “happened because government was not involved.” He continues, “An Obama administration committee had concluded that launching such a vehicle would take 12 years and cost $36 billion.”
“But this rocket was finished in half that time – for less than $1 billion (1/36th the predicted cost).”
“That’s because it was built by Elon Musk’s private company, Space X. He does things faster and cheaper because he spends his own money.” Exactly!
According to https://smallbiztrends.com/small-business-statistics, New Hampshire has 143,760 small businesses. That represents 99.0% of NH’s total number of businesses and small businesses employ 49.8% of NH’s workforce. In Croydon and Sunapee I think it’s safe to assume that well over 50% of us own or work for small businesses since there aren’t too many large companies nearby. Our citizens represent an amazing amount of flexible free-enterprise talent and energy. With all due respect, our politicians do not.
Better yet, free enterprise gives us exactly that: freedom! We are free to succeed or fail based on how hard and “smart” we work. Isn’t that why our license plates read, “Live free or die”?
Self-described socialist Bernie Sanders was leading in the delegate count for the democrat presidential nomination earlier this year. Joe Biden became the leader only when most of the remaining candidates lurched towards socialism to attract Bernie’s supporters and the less radical democrat candidates dropped out of the race. In November we will find out if voters wish to bet America’s future on socialism. Let’s hope not!