For a long time, it has baffled me how so many people in this
world can ignore evidence that is right in front of their eyes. It just shows the power of
propaganda. Specifically, I don’t
understand how so many people can advocate socialistic policies and not think
they will lead to bad results.
Economics can be tough in that it is hard to find evidence
based on real world events. While
some economists think you can use mathematical formulas to study economics, it
is really about reasoning and studying human action. But if you make specific economic claims, it is usually hard
to prove your point with an example.
For example, you could say that an increase in the minimum
wage will likely lead to higher unemployment. But you can’t test this in a vacuum. You can’t test any economic theories in
a vacuum because we don’t live in a vacuum.
The saying is “if all else stays the same.” An increase in the minimum wage will
likely lead to higher unemployment, if all else stays the same. The problem here is that everything
else does not stay the same.
Almost nothing stays the same.
When you have many variables contributing to a certain outcome, it
becomes hard to test those variables on their effect.
With that said, I think we can use real life examples in
demonstrating the horrible effects of socialistic policies. Let’s look around the world.
First, let’s take three examples of places in the world
where there is a relatively free market economy with low taxes, low government
regulations, and strong property rights.
Three places that always come to my mind are Hong Kong, Singapore, and
the United Arab Emirates.
These places are far from perfect. I don’t think any of them rank as high as the U.S. in terms
of social freedoms such as religious freedom and free speech. And even economically speaking, all of
these places have some central state planning involved. It is just that these three places are
economically free in comparison to most other places on the planet.
(As a side note, some people mistakenly believe that the
United Arab Emirates is a wealthy place because of oil. But oil actually makes up a fairly
small percentage of the overall economy.
The UAE, and in particular Dubai, has tourism and international business
as the main economic drivers.)
So while taxes and regulations are low in Hong Kong,
Singapore, and the UAE, we also see some of the richest places in the
world. These are really wealthy
countries and are quite attractive places to entrepreneurs and corporations. A place like the UAE is also desirable
for immigrants, as it is an opportunity for people from third-world countries
to make a living.
So even the poor people in these countries will find better
living conditions. And many
immigrants can work there and send money back to their families living in a
While there is certainly a great disparity in wealth and
income, I would much rather be a poor person living in Dubai than a poor person
living in India. Your living
conditions will be better in Dubai, and at least you have a chance to move up
in the world.
And even though property prices are high in Singapore and
Hong Kong, you will find a far higher standard of living in these places than
almost anywhere else, but especially the third-world countries.
Compare these wealthy countries to almost anywhere in Africa
and many places in Asia and South America. They are different worlds. Look at Venezuela and the horrible decline of that country
from the socialist policies. You
can even look at Greece, a massive welfare state, where many people are
struggling just to put a decent meal on the table.
The point here is that the countries that adopt free market
capitalism are wealthy and the people there generally have a high standard of
living. In countries that turn
away from free markets and resort to socialist policies and major central
planning, we see massive poverty and a generally low standard of living.
I don't understand why so many people can't see the obvious correlation. If free markets lead to a better life and socialist/ interventionist policies lead to poverty and suffering, why do so many people still allow the government to enact these socialist and interventionist policies?