Why Socialism Fails

Introduction

Socialism is the ultimate big lie. While it falsely promises prosperity, equality, and security, it delivers the exact opposite: poverty, misery, inequality, and tyranny. Equality is achieved under socialism only in the sense that everyone is equal in his or her misery.

In the same way that a Ponzi scheme initially succeeds but eventually collapses, socialism may show early signs of success when a country implements it. But any temporary accomplishments quickly fade as central planning’s fundamental deficiencies emerge. It is the initial illusion of success that gives socialism its pernicious, seductive appeal. But in the long run, it has an unbroken track record of tyranny, poverty, and misery.

The current situation in oil-rich Venezuela provides a perfect example of socialism’s initial successes followed by predictable and catastrophic long-term failures. There were some signs of economic prosperity under Hugo Chávez’s socialist regime in the early part of this century, but that prosperity was ephemeral and unsustainable. Chávez was able to distribute to his people some of the bounty from stolen property when he nationalized the country’s oil production in 2006 and 2007 by forcibly seizing the assets of America’s ExxonMobil, France’s Total, and Italy’s Eni. Oil prices of around $100 per barrel between 2008 and 2014 also artificially propped up the socialist regimes of both Chávez and his successor, Nicolás Maduro, in the short run. But the corrosive, demoralizing, and devastating effects of socialism have now been exposed, as that country has gone into an economic death spiral of poverty, misery, chaos, hyperinflation, starvation, and death.

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