Socialism is (Still) Bad for Business—And Everybody Else

Four years ago this month in this column I suggested that then presidential candidate Joe Biden and the socialist economic policies he was espousing would be bad for the U.S. economy. Three major spending bills passed by Congress and signed by Biden injected over five trillion dollars into the economy over the past three plus years. These led to the highest level of inflation in over 40 years. Overall, prices are up about 20 percent in the past three plus years. In January of 2021 when Biden took office, inflation was 1.4 precent. Sixteen months later inflation peaked at over 9 percent. Since then increases in interest rates by the Federal Reserve reduced inflation to under 3 percent, still above the 2 percent goal. Inflation is one of the major issues voters care about in the current presidential election campaign. The stock market and unemployment have done well under the current economic regime. Critics argue that the job recovery is a function of people going back to work after Covid more than anything to do with all that government spending. Socialism has attracted a large following in recent years. Polls suggest that a significant number of Americans, many of them younger, think it is a dandy idea to have some faceless "rich" people pay for their healthcare, student loans and other expenses. Anyone who studies history knows socialist economics has been tried and is still being tried—quite unsuccessfully. The idea of penalizing success has never made much sense to me. Why should those who earn more be expected to contribute larger percentages of their income than the rest of us? America's greatness has been built on the opportunities people have to be successful. As an example of how socialism works, I have asked students in my class if they are willing to participate in socialism when it comes to their grade. If so, everyone in the class gets a grade of C. The students who excelled and are earning As will now get Cs. The students who have done no work and are earning Fs now get Cs. Suddenly, socialism does not seem to be such a great idea…at least not for the better students. I have been fortunate enough to spend time in China, Cuba, Vietnam, Russia, and several Eastern European countries. As much as I have enjoyed visiting these places, I never saw anything about more government control that would make me want that form of political and economic system in the US. As I mentioned in past columns, students in Romania and other parts of Eastern Europe through the years have asked me "We (Romanians and other Eastern Europeans) have spent the last 30 or more years trying to recover from Communism. Why would the US want to move in that direction?" Nobody argues that capitalism does not have flaws. Clearly there are huge gaps between the highest and lowest earners that create problems. All systems are created by human beings and all human beings are fallible. Supporters of capitalism often modify what Winston Churchill said about democracy by saying capitalism is the worst economic system ever except for every other economic systems that has ever been tried. As I said four years ago, this comes down to a pretty simple choice. Either you want government bureaucrats in Washington or Columbus or wherever to make decisions about the economy. Or you want individuals to make choices about how resources are used and distributed based on consumers' needs or wants. This is still any easy choice for me. Dr. Perry Haan is Professor of Marketing at Tiffin University. He can be reached at haanpc@tiffin.edu.