In
Capitalism: A Love Story, Michael Moore explores "the disastrous impact of corporate dominance on the everyday lives of Americans." Although I would argue that the vast majority of today's troubles are directly due to government meddling in the free market (e.g. the housing bubble was caused by the Community Reinvestment Act, government sponsored enterprises Freddie Mac and Fannie Mae, and the actions of the Federal Reserve), let's for the sake of argument assume that today we have pure capitalism in America. In many ways, things are bad in America now, but how has the alternative worked out?
As a leader in the KBG, current Russian Prime Minister Vladimir Putin had a front row seat for the collapse of the Soviet Union under a communist economic system. In a recent speech at the World Economic Forum Putin warned:
In the 20th century, the Soviet Union made the state's role absolute. In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated.
The 20th century also gave us two very good controlled experiments to compare capitalism to socialism: Germany and Korea.
In 1945 West Germany began life as a free, capitalist society and East Germany started down the road of socialism. The two new countries emerged out of the pre-war country of Germany and shared a largely homogeneous population and common history. When the Berlin Wall fell in 1989, the results of the experiment were as follows. Note that East Germany was largely regarded as the most successful communist country.
| |
East
|
West |
1950-1989 population change
|
down 11%
|
up 24%
|
per capita GDP (1992)
|
$6,500 |
$17,400 |
number of telephones (1992)
|
4 million
|
40 million
|
km of autobahn (1992)
|
1,855 |
6,435 |
life expectancy of males (1990)
| 69.2 | 72.7 |
life expectancy of females (1990)
| 76.4 | 79.1 |
In the the 17 years after abandoning communism for capitalism, per capita GDP in East Germany roughly doubled.
Korea offers another interesting contrast between the two economic models: North Korea employing communism and South Korea captialism. Sadly for the people of North Korea this experiment continues. This partition came into being at the close of World War II and the Soviet occupation of North Korea to the 38th Parallel, a border that divides the nation into roughly two equal parts. The Korean war (1950-1953) left many dead, but the border and economic systems unchanged.
| | North | South |
per capita GDP (2008)
| $1,800 | $27,600 |
life expectancy (2009)
| 63.81 | 78.72 |
Electricity Production (2007)
| 21.72 billion kWh
| 440 billion kWh
|
number of telephones (2008)
| 1.18 million
| 46 million
|
airports with paved runway (2009)
| 37 | 72 |
km of paved roads (2006)
| 724
| 80,642 |
I saved my favorite sad fact for last. In August of 2009 (yes this year) the socialist paradise of Cuba ran out of toilet paper and did not expect a resolution to the shortage until the end of the year. I am not making this up. You can get all the dirty details
here.
Another interesting point is that socialist countries build walls to keep their citizens from fleeing (e.g. the Berlin Wall) while the capitalist USA (rightly or wrongly) build fences aiming to keep out some of the throngs of people desiring to live in America.
I know my socialist friends mean well. But, if you examine history and in many cases the sad ongoing facts, the only conclusion you can make is that socialism does not work.
References