by wasoxygen

The Core Problem

The system rewards those who are behaving badly according to the values of the socialists themselves, and punishes those who are behaving rightly according to those same values.

Marx’s famous dictum is a fair summary of a core socialist ideal: “From each according to his ability, to each according to his needs.” I.e., people should contribute to society in proportion to their ability to produce value for society; and people should receive resources from society in proportion to how much they need.

This sounds nice. But it contains within it the problem described above. The problem is that people have some degree of control over their own abilities and needs—and, even more so, over the abilities and needs that they appear to others to have. The people who are behaving well according to the socialist ideal are the people who are contributing to society as best they can. They will be developing their productive capacities, and revealing those capacities through their actual contributions.

These people are not going to be rewarded under the socialist system. They will just be expected to keep contributing, which would not be expected if they hadn’t made the mistake of revealing their ability, and they won’t get any reward for that.

The people who are behaving badly are those who are creating greater needs for themselves, or making themselves appear to have greater needs. They are behaving badly since they are putting greater burdens on society. But they will be in effect rewarded for this by the system—more resources will go to them because they appear to need more.

College Loan Forgiveness

Actual proposal advanced by Elizabeth Warren while running for President (https://elizabethwarren.com/plans/student-loan-debt-day-one): We should cancel up to $50,000 of student loan debt per borrower, for almost all borrowers (in other words, the government should pay for it).

Not everyone who went to college has student loan debt. Some people worked extra hours, saved, and sacrificed to repay their debts. Others even worked their way through college without taking loans at all – again, at the cost of significant sacrifices. These people tried to be responsible, to carry their own weight and not burden others. These people would not get any “forgiveness” under the Warren plan – they would not get the $50,000 gift that Warren would give to those who took on $50,000 of debt and haven’t paid it back. Under Warren’s plan, the more you borrowed (up to $50k) and the less you’ve done to pay it back, the more you’ll be rewarded.

Unemployment Insurance

Every U.S. state provides unemployment benefits – basically, if you lose your job, the state starts paying you money, until you find another job. The requirements to qualify for this vary by state, but in all cases, you’ll stop receiving the money if you get another job. Can anyone see any problem with this?

Again, that is rewarding the people who don’t mind being a burden on society, while people who contribute to society by working get no such reward.

There are many other examples. Most, perhaps almost all, left-wing economic proposals create perverse incentives. The most charitable interpretation is that progressives can’t imagine that human beings are not all altruists already. Or perhaps they think it is only “capitalism” that creates selfishness – the inequality spurs people to try to compete with each other, rather than cooperating altruistically as would be their natural inclination.

The opposite is the case. Capitalism causes people to cooperate with each other, because it rewards people for benefitting others – more precisely, for giving others what they want and are willing to pay for. Socialism makes people more selfish and less cooperative, because it sets people’s interests against each other.