In this weeks Free Enterprise Society video, economist Benjamin Powell discusses his book, “Socialism Sucks: Two Economists Drink Their Way Through the Unfree World.” In the lecture, Powell goes over countries that currently employ socialism, like Sweden, Cuba, and Venezuela, and how some of them have has their economies turn into shambles due to socialistic policies. Overall, Powell discusses the downfalls of socialism, clarifying what it actually means to have a socialistic economy, and some examples of what socialism has done for certain countries and their products.
When Powell first opens up his lecture, he starts by defining what exactly socialism is. He claims that it is not the common, highly advertised socialism that politicians currently claim it is to be, which they say it can be any form of income equality or increased welfare for poor citizens or all citizens. Powell says it is simply state-controlled property and factors of production. I found this part interesting due to what the public generally thinks about when they hear socialism. Before I heard this lecture, when I imagined Socialism, I would think of everyone owning the same size house making the same wage that everyone else does, with government control on all economic aspects of life. While in reality socialism isn’t as drastic as I thought it was to be in some countries, in other countries, it is even worse.
Venezuela, for example, has had the effects of socialism run them into the ground for the past few decades. Once a prosperous country reliant on exporting oil, the country struggles economically, socially, and politically. Nearly everything about the country is a problem, and it all stems back to the socialistic policies put into place by former president Hugo Chávez, and the retention of those policies by current president Nicolás Maduro. Policies like price control and expropriation laws have led unemployment to skyrocket and public wellbeing to fall. At one point, Venezuelans could make more money selling in game currency in a video game than salaried workers due to the inflation.
I found it very interesting when Powell went over the hotels in Cuba and the drastic difference in quality between the state ran hotel and the private owned room. Those are real life examples of how state run businesses have no incentive to provide a quality product or service. This is not exclusive to socialistic countries either, in fact, some examples of this can be found in the United States. The DMV for example is government run, and the employees have absolutely no incentive to work at a fast rate, leading to extremely long wait times that seem unnecessary. In the realm of price control, there are some examples that show it reduces quality, but looking back in history, it can actually improve quality as well. Before the Airline Deregulation Act of 1978, airlines could not compete with super low rates that attracted customers. They could really only compete on the quality of their flights, leading to better meals and more comfortable flying. This is one example of how price control is not always bad for quality.
In all, I found Powell’s discussion eyeopening to the effects of socialism in various countries, and how it can effect countries in many different ways, but most always ending up in the countries failing spectacularly. Complete socialism has proven it cannot work, and no matter how many times it is tried, it will not work in the future.
