If you are an avid reader of my Sunday column, Eccentric Economics, you may have come to the conclusion that I am a staunch supporter of a laissez faire, free enterprise system as opposed to ideas that fit more with socialism or other such systems.
Although I maintain a firm stance in my economic methodology, this hasn’t always been the case. In my first few years of college, I was somewhat of a radical socialist. I even have an old copy of the Communist Manifesto sitting on my bookshelf to this day.
What drew me to the ideology, and I assume this applies to many others on the left, is the observant inequalities and corruption that persist within our capitalist system. Although I understood the concepts of cronyism and corporatism, I neglected to comprehend essential economic concepts which make the neoclassical and Austrian doctrines far superior to the converse Keynesian and exploitative theories, such as socialism or communism. Now, I don’t profess to declare the doctrines and economic theories I adhere to be the only truth, and the others wrong. I just have yet to be introduced with the evidence proving otherwise, and particularly find their methodology erroneous.
In the beginning of my academic studies, I was more drawn to political science than economics. My mostly-left-leaning professors only enhanced this tendency. This allowed the rhetoric from the likes of Bernie Sanders to sway me towards democratic socialism. I thought, “Finally, a man of the people.” I was swept off my feet by this crazy-looking old man’s call for the end of the destructive and greedy tendencies of the capitalist system. No longer will we allow the billionaire class to exploit us and live off our beloved tax dollars that could otherwise be designated to “free” college or universal healthcare.
I wondered how one could possibly maintain any ideas contrary to my own. Did my fellow plebeians not see the light? Did they not realize the wealthy obtained their massive wealth, not by their own efforts, but by exploiting us and government subsidies? Why does somebody need to hoard $20 billion? What could they possibly do with that amount of money?
Unfortunately, my introduction-level economic professors supplemented these ideas. Though they did not necessarily teach socialism, rather Keynesian macroeconomics, I was easily convinced that “thrift was bad” and market failures caused “income inequality.” Instead of grasping the fundamentals and widely-accepted economic laws, I was taught to use mathematics and econometrics to multiply, divide, and average data that would ultimately get the answer that I wanted. I was taught not to explain data, but to craft it to confirm my biases. It was until I progressed to my in-depth courses, and from the influence of my free market oriented international economics professor, I began expanding my literature.
After him introducing Frederic Bastiat’s broken window fallacy, which I found quite peculiar, I decided to read his acclaimed work, The Law. This started a domino effect, and after its completion I progressed to the works of Jean-Baptise Say, Eugen Bohm von Bawerk, Carl Menger, Ludwig von Mises, Irving Fisher and so forth. I began to ponder, “Why have I never heard of any of these guys in college?” My assumption is the mass left-wing bias that makes up the demographic of US college professors.
Other than Adam Smith, John Maynard Keynes and the occasional David Ricardo, my first few years at university completely sheltered me from any of the classical economists and the foundations they laid in the dismal science. Though I once held my socialist convictions dear, their works convinced me, up until then, that my principles were emotional based, rather than logical.
This introduction of new concepts allowed me to view the nuances of the issues that I once saw as a tumor originating from free markets. I relinquished the belief that more government was needed to protect us from the evil capitalists who intend to exploit us, failing to deduce that government is exploitative in its nature. I withdrew my view that government intervention was necessary to prevent market failures that left many disenfranchised. Or that powerful regulations and price controls were needed to suppress the ravenous tendencies of the capitalist class.
After grasping common fundamental concepts such as supply and demand, diminishing marginal utility, price determination, capital production, business cycles and so forth, I found the root of nearly every government intervention was the cause of the so-called “market failures.” I discovered regulations and price controls enacted harsh repercussions on the people they were intendes to assist, and in fact strengthened the wicked producers who weren’t really competing, rather being propped up and protected by the regulations that created their monopolies.
Finally, I believed that more government was the cure to our economic woes. However, after actually diving into the literature and grappling with fundamental concepts, I concluded that a free market is the medicine, while government intervention has been the poison.
In the defense of the democratic socialists, they are justified in their frustration with the system. We have an arrangement in which many of us average Joes are being exploited, and it needs to be addressed. The problem, however, is where they are directing their anger: a system that hardly exists, the free market.
Yes, the market is volatile and is undoubtedly imperfect, but when left alone, it works. Instead, democratic socialists hold expectations that are simply unrealistic and seek a utopia in which equality is widespread, and bliss is universal. This is what socialism promises, but fails to deliver. Yet, though it’s many failures, they maintain some egotistical trait in which they believe they can efficiently plan the tendencies of millions upon millions of individual economic actors without damaging ramifications.
I have confidence that if democratic socialists dug into the fine distinctions that serve as the framework of market systems, many would redirect their frustrations to a more deserving entity. To quote the late Friedrich Hayek, “If socialists understood economics they wouldn’t be socialists.”