The genius of capitalism is that there is a link between effort and reward. In a genuine market economy (as opposed to cronyism), people can only make themselves rich by working harder and smarter to satisfy the needs and wants of others.
The blunder of statism is that the link between effort and reward is damaged. Punitive tax rates, for instance, punish people for producing. Redistribution programs, meanwhile, create incentives for dependency. And regulation throws lots of sand in the gears of the economy, while also creating big opportunities for corrupt cronyism.
I sometimes try to make this clear by citing the failure of communism. And by failure, I’m not talking about the brutality of Soviet-style dictatorships. Instead, I’m referring to the basic failure of state-controlled economies. Heck, places such as Cuba and Venezuelacan’t even produce enough toilet paper!
And North Korea is such a basket case that it reduced physical requirements for military service after pervasive famine led to a stunted generation.
But I don’t want anyone to accuse me of red-baiting, so let’s pretend communism never existed and look at an unfortunate episode from American history.
When the colonists created the Plymouth Colony, they used a socialist model. This video from Reason TV explains how that system foundered.
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