One of the great debates of our times is about free markets. A lot of people think they are broken. “You hear capitalism is broken.” “Free markets are broken.” Things like this. Bernie Sanders and people like him with very similar socialistic political views have captured the fancy of at least 30% of the Democratic party if not more.
I watched a documentary on The Weatherman the other day. They were a domestic terrorist group in the US that formed in the 1960’s. They wanted a violent overthrow of the US government and the capitalistic system. Unfortunately, liberal enclaves like Chicago coddled and turned them into icons. Bill Ayers and Bernadine Dorhn are examples of this. Interestingly, the language that they used then to legitimize what they wanted to do is very similar to the language being used today.
Let put it to you as bluntly as I can, Socialism sucks. It is a dead-end. As I learned at an Economic Club of Chicago dinner on the topic, socialism is a more evolved form of communism. There is little difference between the two. There is a meme going around the internet that you can vote your way into Socialism but you have to shoot your way out. The states that are endorsing using the popular vote instead of the Electoral College are also making it easier to pave the way to enable socialism. There is no debate about this. There is no looking at an alternative view, or a compromise when it comes to socialistic policy. It is high time to refuse to be “nice” about it. I am glad that people have stopped being nice about it. When you are blunt, you tend to tear down the facade covering up reality. The only way to enforce the rules of a socialistic society is at the tip of a spear.
Socialism has ruined billions of lives and killed millions of people over the past century or more. I am not exaggerating. It’s not that it has been implemented incorrectly.
A little socialism doesn’t work either. If I made a pan of brownies and put just a little bit of cyanide in them would it be okay?
Entrepreneurship doesn’t flourish under socialism. Innovation dies. Standards of living go down. The rule of law doesn’t exist. Cronyism is the only way forward and your life’s outcome doesn’t depend on merit but on who you know. If you think it’s bad now, wait until you get full-blown socialism.
This morning, I saw this article on The Why and How of Market Driven Healthcare which combined with some other things that are happening piqued my interest. I think the points in the article are compelling.
However, there is a broader point that I think has gone unsaid when it comes to free markets. Free markets are not closed ecosystems. Socialistic policies are. The beauty of a free market is that you can enter and leave a market. I saw this first hand in trading pits.
I remember one day a huge trader said he was retiring. The day after he was gone, I wondered if there would be a hole in the market. Would the market be as tight on the bid/ask spread? Would it be as liquid?
There was no blip. No comeuppance. The market was as deep, tight and liquid as it ever was and it never missed that huge market maker. Free markets are agile and can absorb shocks to systems much better than closed centrally planned socialistic systems.
Do you think the Chinese/North Korean/Venezeulan/Cuban system could absorb illegal immigrants or even the volume of immigrants the US absorbs on a yearly basis? There is no chance. Not that anyone would want to emigrate there. I notice Meghan Markle didn’t choose one of those countries to establish her “financial independence”.
In the Venn Diagram of US political leanings, my gut tells me big fans of open borders also favor things like single payer healthcare, universal basic income, and a lot of the other programs that Democratic candidates espouse these days.
Their logic is terribly misguided border line dangerous.