Capitalism Rules, Socialism Drools

Capitalism Rules, Socialism Drools, by Dan Mitchell.

I don’t care whether it’s called socialism, fascism, or communism, statism is evil and destructive. … In hopes of getting this point across, … my favorite approach, based on decades of experience with one-on-one meetings, public speeches, and private briefings, is to share cross-country comparisons. Such real-world evidence seems to be most persuasive. …

The bottom line [of such comparisons] is that it’s very difficult to find any evidence to suggest that any group of people enjoys more prosperity in a nation with a larger burden of government.

Another good way of determining whether markets work better than statism is to see how fast nations grow over time.

Comparing South Korea and Venezuela:

The amazing takeaway is that Venezuela was about three times richer than South Korea about fifty years ago, but now that ratio is almost reversed. This is an amazing ratification of the all-important principle that sustained differences in growth have an enormous impact on a nation’s long-run prosperity.

And it shows that nations from the developing world can experience “convergence” and join the first world if they adopt good policies. They don’t even need great policies. The key is simply to keep the burden of government at modest levels so the private sector has room to grow.

Mitchell’s two-question challenge:

  1. Can you name a nation that became rich with statist policies?
  2. Can you name a nation that with interventionism and big government that is out-performing a similar nation with free markets and small government?

When Bill Clinton left office, the United States had the world’s 3rd-freest economy. Today, thanks to years of statism under both Bush and Obama, we’ve dropped to #17. … America is copying the nations that are in deep trouble because of excessive government.