Capitalism vs. Socialism
Decades after capitalism seemed to have triumphed over socialism, politicians are once again arguing about the merits and drawbacks of these opposing economic systems. Why are we still having this debate? Andy Puzder, former CEO of the parent company of Hardee's and Carl's Jr., explains the misconceptions that keep the debate alive.
In the free market, who has the ultimate power?
The governmentThe consumerThe elitePoliticiansIn a socialist economy, who has the ultimate power?
The governmentThe consumerThe elitePoliticiansCapitalism is based on human greed. Socialism is based on human need.
TrueFalseHow many socialist countries are there in Western Europe?
12910When you point to Denmark as a paragon of socialism, _______________________.
you’re really singing the praises of socialismyou’re really singing the praises of capitalismyou’re really singing the praises of communismAll of the above.
- The free market encourages people to improve their lives by satisfying the needs of others.
Capitalism harnesses self-interest to make things or provide services for others.
View sourceIn capitalist economies, companies spend millions trying to find out what their customers want.
View sourceCapitalism and democracy are inherently linked, both placing the power of the country in the hands of its citizens.
View sourceRelated reading: “The Capitalist Comeback: The Trump Boom and the Left's Plot to Stop It” – Andy Puzder
View source- In a socialist economy, the government has the ultimate power—the customer is a powerless peasant. In capitalism, the customer is king.
In capitalism, the customer is free to make choices about what they purchase, thus directing and shaping the economy. In socialism, the customer is powerless, under the control of the government.
View sourceLate-stage socialist failures, such as Venezuela, eventually run out of essential items, leaving the citizenry in desperate conditions.
View sourceSocialism’s proponents often try to distinguish “democratic socialism” from socialism, but the results are the same.
View sourceIn socialist societies, self-interest is not eliminated but is instead focused on gaining political power.
View sourceWATCH: Andy Puzder on “the capitalist comeback” and the Left’s attempts to thwart it.
View source- Socialist economies decide what citizens should have and how much they should pay for it—and, like Venezuela’s, inevitably collapse.
Venezuela, once, the richest country in South America, is the most recent example of socialism destroying a formerly prosperous country.
View sourceAll socialist governments requires violent control over the population, Venezuela is no different.
View sourceLeftist activists, including Sean Penn and Oliver Stone, once celebrated Venezuela as a success story for socialism.
View sourceWATCH: “How’s Socialism Doing in Venezuela?” – Debbie D’Souza
View source- Contrary to popular belief, there are no socialist countries in Western Europe.
Most allegedly “socialist” countries in Europe are just as capitalist as the United States; the key distinctions are they have larger welfare programs and higher tax rates than the US.
View sourceSupposedly “socialist” Scandinavian countries have free markets, strong educational programs, low crime rates, and business-friendly labor unions which all promote a productive economy.
View sourceIn a 2015 speech at Harvard, Denmark’s prime minister said, “I know that some people in the U.S. associate the Nordic model with some form of socialism. Therefore I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy.”
View sourceWATCH: “Stossel: Sweden is Not a Socialist Success”
View sourceRelated reading: “Debunking Utopia: Exposing The Myth of Nordic Socialism” – Nima Sanandaji
View source- Supporters of socialism are not only working against their own interest, they’re working against the interest of the less fortunate.
The more capitalism, the less “socialism” you need. In America since 2017, a policy of lower taxes and less government regulation has led to a robust economic expansion.
View sourceUnemployment, notably among minority groups, is at generational lows. Economic expansion gets people off welfare and into work.
View sourceAt the end of 2018, the unemployment rate was at a 40 year low for all workers; the unemployment rate for black workers was 6.8 percent, the lowest rate in 45 years.
View sourceSocialism works against its proponents’ own interest, yet it’s gaining popularity with younger Americans. In a 2015 Gallup poll, a larger percentage of respondents under 30 favored socialism over capitalism.
View sourceRelated reading: “Job Creation: How It Really Works and Why Government Doesn't Understand It (Job Creation USA, Volume 1)” – Andy Puzder
View source- Capitalism leads to economic democracy. Socialism always leads to the economic dictatorship of the elite.
Capitalism leads to economic democracy, empowering citizens to direct and shape the economy. Socialism inevitably leads to the economic dictatorship of the elite, who makes decisions about what they think citizens want and how much they should pay for it
View sourceBoth capitalism and democracy empower citizens, rather than the governmental elite, to direct the country and thus share an inherent link.
View sourceWATCH: “How Socialism Ruined My Country” – Felipe Moura Brasil
View sourceRelated reading: “Venezuela Reaches the End of the Road to Serfdom” – Kevin Williamson, National Review
View source
Capitalism versus socialism. We can sum up each economic system in one line:
Capitalism is based on human greed. Socialism is based on human need.
Right?
No. Wrong.
So wrong, it's exactly backwards. And I'll prove it to you.
Been on Amazon lately? Each of the thousands of products Amazon offers represents the work of people who believe they have something you want or need. If they're right, they prosper. If they're wrong, they don't.
That's how the free market works. It encourages people to improve their lives by satisfying the needs of others. No one starts a business making a thing or providing a service for themselves. They start a business to make things or provide services for others.
I speak from personal experience.
When I was the CEO of the company that owns Carl's Jr. and Hardee's restaurant chains, we spent millions of dollars every year trying to determine what customers wanted. If our customers didn't like something, we changed it--and fast, because if we didn't, our competitors would (pun intended) eat us for lunch.
The consumer--that's you--has the ultimate power. In effect, you vote with every dollar you spend.
In a socialist economy, the government has the ultimate power. It decides what you get from a limited supply it decides should exist.
Instead of millions of people making millions of decisions about what they want, a few people--government elites--decide what people should have and how much they should pay for it. Not surprisingly, they always get it wrong. Have you ever noticed that late-stage socialist failures always run out of essential items like toilet paper?
Of course, this isn't a problem for those who have the right connections with the right people. Those chosen few get whatever they want. But everyone else is out of luck.
Venezuela, once the richest country in South America, is the most recent example of socialism driving a prosperous country into an economic ditch. Maybe you think it's an unfair example. I'm not sure why, but okay. We'll ignore the fact that leftist activists celebrated it as a great socialist success--right up until it wasn't.
But what about Western European countries? Don't they have socialist economies? People seem pretty happy there. Why can't we have what they have--free health care, free college, stronger unions?
Good question. And the answer may surprise you.
There are no socialist countries in Western Europe. Most are just as capitalist as the United States. The only difference--and it's a big one--is that they offer more government benefits than the U.S. does.
We can argue about the costs of these benefits and the point at which they reduce individual initiative, thus doing more harm than good. Scandinavians have been debating those questions for years. But only a free-market capitalist economy can produce the wealth necessary to sustain all of the supposedly "free stuff" Europeans enjoy. To get the "free stuff," after all, you have to create enough wealth to generate enough tax revenue to pay for everything the government gives away.
Without capitalism, you're Venezuela.
In a 2015 speech at Harvard, Denmark's prime minister took great pains to make this point: "I know that some people in the U.S. associate the Nordic model with... socialism, therefore I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy."
So when you point to Denmark as a paragon of socialism, you're really singing the praises of capitalism.
The more capitalism, the less "socialism" you need. Look at America since 2017. A policy of lower taxes and less government regulation (that's more capitalism) has led to a robust economic expansion, something thought impossible just a few years earlier. Unemployment, notably among minority groups typically most at risk for poverty, is at a generational low. Economic expansion gets people off welfare and into work (that's less "socialism").
None of this requires a degree in economics. Common sense is all you need. That's why it's so frustrating to see young people praising socialism and criticizing capitalism. It's bad enough that they're working against their own interest--better job prospects, better wages, personal freedom--but they are also working against the interest of the less fortunate.
Capitalism leads to economic democracy. Socialism leads to the economic dictatorship of the elite. Always. And everywhere.
So beware what you ask for. You just might get it.
I'm Andy Puzder, author of The Capitalist Comeback, for Prager University.
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