13 Jul

Equality is bad for you

The so called agreement just announced between Greece and the EU will have a devastating impact on poor people in Greece. This agreement effectually confiscates Greek assets and imposes the most severe austerity on the Greek people. It was concluded in order to preserve the Euro – the instrument for ensuring the survival of the EU’s centrally-planned, one size fits all, European economy.

Socialists try to create a more equal society. They believe in levelling. Unfortunately, owing to the nature of socialism itself, that philosophy always ends up achieving the opposite of its aims. The other day, Alexander Boot put this in a nutshell in his persistently enlightening blog where he says we must not confuse the socialists’ slogans with their practical policies:

“All socialist economies (which is to say all modern economies) have the widest gap between the rich and the poor. And, the less developed the socialist economy, the greater the gap, the harder the poor are hit. For example, in the 19th century, the era of dog-eat-dog capitalism, the average ratio of income earned by US corporate directors and their employees was 28:1. Yet in 2005, when socialism had made heavy inroads into the post-New-Deal US economy, this ratio stood at 158:1.”

There are comparable figures for Britain

In other words, the less money there is around, the more of it will be grabbed by the rich and the poor will consequently get poorer.

This is the truth expressed by Friedrich Hayek in his classic The Road to Serfdom (1944)

In fact, all socialist roads lead to serfdom. When socialism is practised moderately, the poverty of those in the lower reaches of the social scale is quite moderate. Where socialism is practised more thoroughly, poverty consequentially becomes more severe. Where socialism is practised absolutely – one might say ideally – the poverty of the poorest is absolute too. Moreover, extreme socialism always ends up in dictatorship, the oppression of the people and, in the most notorious cases such as the USSR under Stalin and China under Mao, the socialist experiment culminates in gulags and mass slaughter: by Stalin at least twenty millions and by Mao around sixty millions.

But socialism sounds so promising, so nice, kind and humanitarian. So what goes wrong? It is always the same thing which goes wrong: the replacement of the free market by the planned economy.

The free market has raised more people out of poverty than any other economic system in the history of the world. So why are such notable humanitarians as the Pope and the Archbishop of Canterbury so down on it?

I described socialism as an experiment. Why do we keep on repeating an experiment which always fails?

As Einstein said, “To keep on doing the same thing while expecting different results is the first sign of madness.”