Thomas DiLorenzo - The Problem with Socialism

I am delighted today to be joined by Tom DiLorenzo what a thrill to be able to feature a conversation with Tom on his brand-new book the problem with socialism Tom of course as you know is the author of many books most notoriously perhaps the real Lincoln also Lincoln unmasked how capitalism saved America and Hamilton's curse among many others Tom of course also is a professor of economics at Loyola University in Maryland Tom welcome back to the show please be with your Tom why a book on socialism now in 2016 well there was an opinion poll that I read about this said that 69 percent of the millennial generation that was polled thought that'd be a good idea to have a socialist as president and of course there's the Bernie Sanders phenomenon where hundreds of thousands of mostly young people became infatuated with his promises of socialism and so I got to thinking that you know the younger generation never lived through the Cold War and all the controversies over socialism like because old timers did and they certainly aren't taught much about it in school and so I think the time is right and it's very important to write a book it's very easy to understand but yet has his well-documented and scholarly and honoured footnotes in there now that explains all aspects of socialism and why it's be a disaster for the economic future of the Millennial Generation to go further down the road of socialism the second chapter is called why socialism is always it everywhere an economic disaster and I just lay out straightforward language as I can the various problems with socialism and one is the incentive problem no one has an incentive to work if there's no link between effort and reward and then there's what Friedrich Hayek called the knowledge problem the idea that what really makes an economy work here's all the dispersed knowledge in the minds of millions of people and then there's the calculation problem the problem of how to decide how to produce things when you don't have market prices determined by supply and demand and so basically if you don't have a market feedback mechanism that rewards good consumer service with profits and penalizes bad service you know high prices or low quality products but losses then you're just going to have economic chaos and I talked about the Soviet Union and Latin American countries that have failed at the African countries that adopted socialism right up to the present day with Venezuela of being the latest example of an economic implosion waiting for hours hoping that by the time one hands in their allotted number they'll still be foolish so what are the kinds of things that basically everybody runs into in school or at work when you're talking to people about capitalism they have all these misconceptions and what are some of them and how do you answer them one of the things I did I looked at the websites of democratic socialists of America and party Oh see you know what are they what are the people who are proud socialist things about this and one of the very first things they always say is the problem with capitalism is that they put profits before people right only interested in profits and not people and of course the fundamental error and that is that in a free market no businessperson can make money without serving the people you know that's customer service is how you make money serve the customer and the customer serves you by giving you an order their money and so there's a basic fundamental fall so that you can make money in a free market economy by ignoring the people and just going after process another one is if some version of the subsistence theory of wages that under capitalism the working class will be stuck at the bottom and then they can't go anywhere and only the rich the one-percenters thrive from that well when you think about it the only really recipe for the working class being stuck somewhere is either socialism itself or the welfare state go on welfare and stay there for several generations and you're going to be at subsistence level of living for a long long time only the market can provide you with economic opportunities that can get you out of a situation like that and so the Socialists are exactly the opposite of the truth when they criticize market has gained enemies over the working class and socialism being their friend it's exactly the opposite of the truth those are those are two of them that I touch upon in this in our last chapter Tom how do you answer this argument from the socialist they'll say that the freedom that we're talking about as libertarians is really a sham freedom because in a market society it's nothing other than what they call as you know the freedom to starve sure you have freedom you don't have to take that job with that abusive employer but you know good luck getting food down your throat how do you answer that is it a sham freedom no I don't think nothing in the world has reduced poverty more than capitalist economic growth certainly much more than the welfare state I have a chapter on how the welfare state harms the poor in that it has grossly crowded up all these many thousands of private charitable efforts that used to exist in America and elsewhere because people think there's attitude that why should I give money or why should I donate my time to help the people in my neighborhood who are in need the government will do it the government why should i educate my own children the government is doing that so people tend to withdraw from these things and both both in their donations of money and in their time and we've done a great deal of harm with now nice night Charles Murray's book in pursuit the documents whatever we have periods of faster economic growth Americans donate many billions of dollars more to charity to help our fellow man and of course we create a lot of jobs and opportunity and so the welfare state not only traps people and horrible public housing projects where crime is rampant and the police do little or nothing about it but it destroys a lot of the private efforts that once existed that are much more effective help people out and so that's one of the things I would use in my book that would address that question you have a chapter in here on the federal reserve explain how you could plausibly fit what the Fed does into a book whose theme is socialism very easily because you know to the extent the Hayek's definition of how socialists redefine their tactics by relying more on the welfare state and the progressive income tax you said you like yellow Arianism was always the goal the you know redistribution is lemony an equality of material goods was always a goal but the means changed means taken over industries to the welfare state in the progressive income tax in the Fed is one of the major funding forces of the whole shebang of the whole welfare state that's why members of Congress did you see especially on the Democratic side ur such a rabid defenders of the whole fed banking complex that's what finances all of their welfare state programs I've been an economic student since I was 18 years old that I've always been talking I've been teaching price controls are a bad idea for many reasons but you know what else does the Fed do but try to impose price controls on interest rates and that's really is a version of central planning that we used to criticize the Soviets about but we employ many of the same techniques nationalization of credits was one of the top planks in the Communist Manifesto and also with the Nazi Party platform of 1925 so whether you're talking about the fascist version of socialism or the communist version the Soviet version they all placed a high priority on the nationalization of the money supply and that's what we've got all right Tom let's talk about the Nazis for a minute they say that even though we know that the Nazi Party was called National Socialists nevertheless in practice they still had private property and in practice it was more or less a market economy so what do you say to that how do you how do you deal with the socialism of national socialism a quote Hayek is showing all these famous fascists would be must started out as socialists for one thing and they just said that you know we have a unique brand of socialism we're going to call it national socialism as opposed to international socialism and of course you know our real free market economy and a free market economy the consumer is king one of my favorite quotes from human action by Ludwig von Mises is in his chapter on the market he says on the outside it looks as though the businessman and the banker is in charge of deciding what gets produced but it's really the consumer and the consumer has whims and rapid changes and his or her preferences and you can be rich one day and poor the next day thanks to the consumer and under under fascism under economic fascism it was the government the determine what was to be produced and I was to be produced and near the labor relations you're going to have and who you can hire everything else so yes they allowed some degree of private property but it was very heavily regimented and controlled and besides that at real fascism in Germany they did nationalize over half of the entire economy and then the other half was so heavily regulated and regimented that it was de facto nationalized yeah so there were there was no semblance to a free market in Nazi Germany at all and Mussolini did much of the same thing in Italy during the same period of time and so I think it's disingenuous is not absurd to call Nazi Germany a free-market economy or a capitalistic economy for those reasons what about the Scandinavian objection aren't they all happy in Sweden taun yeah yeah I have a chapter on the myth of scan successful Scandinavian socialism if you study a you know read up a little bit about about what's been going on in Sweden in the late 19th century early 20th century Sweden was one of the wealthiest countries in the world and they had all these great inventors they Alfred Nobel invented dynamite its Saab and Volvo and a lot of other very successful companies and then the Socialists took over the government in the 1950s and they began basically eating up all the capital a very heavy taxation it was created by these earlier generations of entrepreneurs who we're allowed to limp along you know there's successive decades but Sweden destroyed its economy eventually it's just such an extent that not too long ago 10-15 years ago they had 500 percent interest rates in Sweden because they inflated the currency to try to bail out their big socialist welfare state and so Sweden was forced to cut back privatize the ministries they even sort of privatizing sections of health care and they made a bit of a comeback and their economy became a little more prosperous but still the per capita income in Sweden is still below that of Mississippi which is the poorest state in America so when Bernie Sanders or anybody else points to Sweden they're really spreading a falsehood the only reason Sweden has improved in recent years was cutbacks in government and the Swedish president by the way is out there denying that Sweden is a so country anymore the book is the problem with socialism can cousin mix it up well as a baby doll this

  1. The problem was the Wall St. ripoff in 2008. None of those banksters went to jail. That's why we have this socialist problem now.

  2. Money create poverty can't get it ? And the world is going to be a free one with your help or without it FUCKING GREEDY GENERATION!

  3. we don't have nationalism of the money supply. the 'federal' reserve is a privately owned company! When a so called economics expert doesn't even know this it makes me question their understanding of.. well anything really.

    And when was Sweden's per capita income ever lower than Mississippi? in 1960 Sweden was 18K vs 3K in Mississippi. Lies! It's all lies and deception.$-q-nsa-fed-data.html

  4. Poor people who give birth to children that they can't take care of are complaining of capitalism. 😂

  5. People should just become a consultant with a niche. Then they can actually make more than their sweat equity would allow under a contract with an employer. The days of being an employee are going to be over soon. People stay working for companies because of healthcare benefits. Employees make far less than consultants. Most workers don't consider going into business for themselves because they are simply uneducated on how to go about it and just how much money you can make with the same or less amount of work you would give an employer. The masses are stuck at jobs working for employers at low rates because they are given incentives that the employer negotiates with insurance groups that give them kickbacks/price cuts to allocate insurance opportunities to the employee base. With the healthcare situation all up in the air and a mess in general, I can see more young people opening up businesses to make more money than as opposed to graduating high school and going to work for some company. Granted you need to have some experience to gain any leverage, there are ways to negotiate as a consultant that will give the client/company leverage in the beginning. You will take merit-based contracts where you won't get paid until you deliver a service or product to the client/company. But when you do deliver you will get paid better than an employee and the client/company will not have to pay for taxes and insurances of an employee. Everyone should consider revolutionizing the market by contributing to capitalism and starting their own company. This will incentivize more growth financially and force the healthcare field to cater to small businesses as opposed to big businesses. This isn't socialism, this is capitalism in evolutionary progress. Don't beg or demand more as an employee that's dumb. Start your own business. If you want to work for a company and not start your own then you are choosing to be lazy, entitled and a scourge on the world's buttocks.

  6. DiLorenzo is a smart man, but he's blinded by his own beliefs. There are some potent examples of so-called "Free Market" capitalism where corporations put shareholder profits ahead of customers. The biggest example, but certainly not the only one, involves individual health. Those corporations have pushed to outlaw cures, demonize cures unjustly, and push for Disease Maintenance, instead of Health Maintenance.

    Corporations have committed heinous crimes against humanity. Ignoring this makes it harder to reach Lefties. We need to own up to the mistakes and vow to make things better.

  7. Curious, if Britain and Canada and Denmark and Sweden are socialist, why aren't they failing? I mean you claim they are unmotivated, but we seem to be at economic war with them (considering the tariffs 45 has instituted.) I find you are a corporate socialist (tax cuts that harm consumers and rewards corporations – no benefit to the workers of said corporations.) And you fail to elucidate how US policy contributed to the failed western hemisphere socialist republics.

  8. Socialism is just outright theft. Without your permission, they take from you what you earned. In every country that has adopted socialism, has absolutely failed, to the detriment of the citizens of those countries.

  9. Who is in controlof the monetary system in socialism? The same kind of guys who control of our system now. So basically, we have socialism now, but don't want to admit it.

  10. 3:10 no the problem is that the company values profits before it's workers. If you can pay your worker less one will, hell, the only reason we have a minimum wage is because of government intervention.

  11. Denmark, Sweden, Norway, Scotland, England, Switzerland, France all have socialist tendencies most notably their healthcare system are socialist. And btw the Soviet Union was communist not socialist big difference.

  12. The problem(s) with socialism
    1:It ruins creativity.
    2:Lack of competition in the market cus there is no market under socialism everything is owned by the public.
    3:when it inevitably collapses then more people will die because they can't find work nor can they provide food for their family (Venezuela, Cuba, North Korea as examples).
    4:it ALWAYS leads to communism.

  13. The real problem is we are going to go to socialism due to all the outsourcing , what we now have is winner take all Capitalism . If we had a want to sell it here BUILD it here policy , there would never be a need for Socialism . Simply put , those Millennials in self defence will vote in a Socialist government when they get enough voters . TheReaper!

  14. People here in the nordic countries hate taxes, crappy public services and our power mad, brain dead politicians.

  15. Socialism cannot be a reality because human's are greedy and selfish we are thought to share your toys as children we can distribute the wealth.

  16. There's no such thing as a FREE MARKET. There are regulations set forth by WE THE PEOPLE, therefore the elected government REGULATES COMMERCE and that's SOCIALISM by definition. How much SOCIALISM? That's what the elections and the political arena IS ALL ABOUT!

    I agree , the more to the RIGHT we lean , the better.

  17. Socialism is the perpetual violation of the Non-Aggression Principle, of the rights of every Individual who does not wish to be enslaved to others and whom the adherents of socialism will constantly force to cooperate or suffer ever greater torment and annihilation! Socialism is the false philosophical justification of political slavery and the annihilation of the Individual as a free person able to act upon his own conscience and will! No socialist country has ever been able to avoid the scarcity which results from the authoritarian controls inherent in the practice of central planning! Many have caused abject starvation on a massive scale! Many more have engaged in the wholesale slaughter of their own subject people's! All enslave every individual to the collective, thus exterminating freedoms which are the very foundation of a worthwhile society, the birthright of every human being, and the font of human prosperity! Socialism fails because it is wrong in every aspect of its guiding principles! It is antithetical to human liberty, material prosperity, and the ability to function properly as independent individuals, which is necessary for every advancement of civilization! Socialism is the worst set of ideas the world has ever known, granted unlimited power and authority to perpetuate itself in defiance of the essential nature of the human race and in utter nullification of the mind of every Individual! It exists by the process of removing from men the ability to act on their own will and in so doing eliminates the value of their virtues and renders them the cause of suffering when they aught to be the cause of exaltation! Socialism is the process of taking a fully capable human being and restricting their actionable choices to that of primordial ooze! Socialism is guilty of the worst mass murders in human history and its advocates stand atop the largest pile of corpses ever assembled proclaiming they occupy the moral high ground as they call for the pile to grow ever higher with the product of their destructive ideology! Socialism is political slavery wrapped in a spurious justification constantly telling its victims that it is for the greater good, when in fact it is the greatest evil that has ever been faced by the human race! Socialism is human evil given the power to commit atrocity on an unfathomable scale and limited only by the ability of other countries to stop its spread and the limits of its own inefficient and misallocated resources! Socialism is not a voluntary interaction between equals, but the permanent yoking of every Individual to every other, insuring only the universality of suffering wence it promises universal liberation! Socialism is the single most immoral set of ideas ever advanced by anyone at anytime since the dawn of agriculture! Socialism is perpetual human sacrifice! Socialism is evil! Socialism must be abolished!

    And furthermore the progressive establishment must be abolished!

    Michael Paul Foye

  18. I once worked at The Disney Store for Christmas, and after watching two mothers in-line literally start to beat each other up over the last Little Mermaid doll, it really started to hit home hard how flawed capitalism is. It's a system that naturally puts things over people. However, that said, it's still a better system than socialism or communism.

  19. The problem with "The Problem of Socialism" is that it posits the possibility that socialism at this point in time is a possibility. Socialism at this point in time is not a possibility. The only way for socialism to become a possibility is through violent revolution. Violent revolution can only become a possibility when the material conditions of the masses has become so unbearable that life itself has become so miserable to the masses that socialism becomes desirable. In the United States, the citizens live in an almost extreme abundance. Sure there might be reasons to protest, but as far as revolution is concerned, as far as the highly miserable conditions of revolution are concerned; in order for socialist revolution to become a possibility, life itself would already have had to become extremely unbearable under the capitalist mode of production.

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