Sunday, April 26, 2009

The Zero-sum Fallacy Of Socialism

This paragraph from Warren over at Coyote Blog may well be the best paragraph I read all week:

"For socialists, wealth is not created by man’s mind and his effort — it is a spring in the desert with a fixed flow rate. It just exists to be taken or fought over. The wealthy, by this theory, have not earned their wealth, they are just the piggy ones who crowd to the front of the line and take more than their share from the spring. Unfortunately, socialists have never been able to explain why the spring, which flowed so constantly (and so slowly) for thousands of years, suddenly burst forth with a veritable torrent in lockstep with the growth of capitalism in the west. And why it seems to dry up in countries that adopt socialism."

The fallacy of treating the world as static, rather than as a dynamic system, is a common one; it affects not only socialists, but every person (including many entrepreneurs) who don't seem to realize that Newton's Third Law is almost universally applicable.

3 comments:

EY said...

*Cough*. Newton's Third Law simply is universally applicable. There isn't any law of economics comparable to that, even "Bonds will not pay negative interest rates" (recently violated when everyone was crowding into Treasuries).

Admittedly, this is a sensitive subject for me, since I had an elementary school teacher who didn't understand Newton's Third Law and thought that bouncing a rubber ball off the wall was a valid example.

Chris said...

EY,

Sorry, didn't mean to apply that Newton's Third law wasn't universally true, just that it's not always an appropriate metaphor. In a literal sense, it is always true, but not necessarily in a figurative sense.

Pat said...

Logic 250: (refresher courtesy of Wikipedia):

Correlation does not imply causation

* What are socialist countries?
* What are the "superior" non-socialist countries?
* What comparisons are being made?
* Is China a "capitalist" country or a "socialist" country?
* How about India?
* Has that most purely capitalist of countries, Ethopia ( no functioning government to interfere with the pure expression of capitalism ) been included?
* How about our "socialist" neighbor to the north (Canada) where it costs $1600/car less to manufacture each car because that evil socialistic, single-payer health care system reduces employer costs?

I eagerly await your data!