Tuesday, August 16, 2016

Socialism - only for the dummies

Here is an article by Jeffrey Tucker on socialism.  He gets it right, and is funny, to boot.
Amnesty International has finally had enough of the goings-on in Venezuela. With a population starving, the government issued a forced-labor edict. Amnesty said: “Trying to tackle Venezuela's severe food shortages by forcing people to work the fields is like trying to fix a broken leg with a band aid.”

Actually it’s more like fixing a broken leg with a bullet to the head.

Forced labor is indeed a human-rights abuse. Maybe you notice a pattern here. Wherever socialism is tried, people suffer. Each case is different because no tyrannical regime behaves exactly like any other. But the root of the problem is the refusal to allow people to own, accumulate, trade, and associate.

Surely that is the core of the problem in Venezuela.

Here We Go Again

No, say the socialists. “The problems plaguing the Venezuelan economy are not due to some inherent fault in socialism.”

Socialism seems to be the most persistent non-falsifiable ideology on planet earth. The socialists are like people who swear that gravity doesn’t exist and keep hopping around on two feet, expecting to rise into the clouds at any moment. It never happens, but the faith that there is no gravity remains unshaken.

What, in any case, is socialism? No matter how one describes it, no matter how many failed cases you point to, no matter how often all its central ideas are refuted, the socialist refuses responsibility.

So let’s just take at least someone’s word for it. The Socialist Party of Britain gives this shorthand description of what socialism is: “free access to all goods and services.”

Interesting idea. I think I’ll take a Bentley, a vacation to Europe, a custom-made suit, and a lifetime of haircuts. For free. Thank you very much.

Fundamental Misunderstanding

This claim seems to confirm everything I’ve ever suspected about socialism. It’s rooted in a very simple error, one so fundamental that it denies a fundamental feature of the world. It denies the existence and the persistence of scarcity itself. That is to say, it denies that producing and allocating is even a problem. If you deny that, it’s hardly surprising that you have no regard for economics as a discipline of the social sciences.

To be sure, economists use the term “scarcity” in a particular way. It does not mean a shortage, though the possibility of shortages are a feature of scarcity. But a good or service can still be scarce even if it exists in abundance.

So, for example, just because the stores overflow with groceries, or because Internet startups are begging you to download applications, it doesn’t mean that we live in a post-scarcity age. There is no such thing as post-scarcity in this life.

So long as there is a contest for control over something, it is a scarce good. Let’s say you are sharing a pizza with friends. Every time you take a slice, another appears in its place. The pizza is magically reproducing itself. At some point, once having noticed this phenomenon, your behavior begins to change. There is no more rivalry over slices. Your control over a slice does not forbid another’s control. In this case, pizza has indeed become non-scarce.

Scarcity is baked into the nature of a good. If you can imagine people in some sort of argument about who gets to control or consume it, it is scarce. And fighting over “intellectual property” doesn’t count, because what that really involves is fighting over whether someone can use their scarce resources (computer drives, guitar strings, etc) to reproduce patterns (software, songs, etc). More on this below.

Even copious goods can be scarce. Think of an Easter egg hunt with 100,000 eggs on a lawn. The kids will still run and struggle to collect them. They still have the features of scarcity.

No Collective Ownership of Scarce Goods

Here’s the key point. So long as anything is scarce, there cannot be free, unlimited, collective access to it. Whatever it is will be over-utilized, depleted, and finally vanish following the final fight for the last scrap – sort of like what is happening in Venezuela today.

That is to say, you can’t have socialism in a scarce good or service. Instead, it has to be allocated. Things can be allocated by arbitrary decision backed by force, or they can be allocated through agreement, trading, and gifting. The forceful way is what socialism has always become. This is for a reason: socialism does not deal with reality.

What doesn’t have the feature of scarcity? Think of any good or service over which there is no contest to control and consume. You can consume it and so can everyone else, unto infinity. The last word is key. For a good to be non-scarce, there can be no limits to its reproducibility.

Does air qualify? Not always, as you know if you have ever been stuck between floors on a crowded elevator. What about water? No, there is a reason why the bottled water market is so huge. These are like all things in the physical word: subject to limits and hence must be allocated.

On the other hand, let’s say you hear a catchy song like “Happy”; you can take the tune, sing it all day, and share it with your friends. Doing this takes nothing away from the original. In the same way, you can stare at an image, remember it, and reproduce it. And so it is with the ideas in this article. You can take them. I can’t stop you unless I attack or threaten your scarce body, or someone else (like the government) does so on my behalf. The idea portion of all these goods is non-scarce, so they do not need to be priced or owned.

How is it that you still end up paying for downloading books and purchasing music? The reason isn’t entirely due to copyright; it’s also because what you are paying for is not a good as such but a scarce service: all that is associated with accessing servers. Here is the scarce, and hence priced, service.

All this aside, socialists often don’t seem to get the very first point: there is no imagined heaven on earth of unlimited plenty. All we can do is struggle to make more of everything available to as many people as possible, and encourage trading to take advantage of the division of labor. This is called a market, and it is based on the notion of private ownership in all scarce things (including capital goods) – the very thing that socialists want to end.

Then they look at Venezuela and think: my goodness, something seems to be going wrong! Whatever it is, it can’t be socialism!

But you know what? Socialism is indeed the problem. It truly makes no sense.

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