Earlier today, I hosted a Fox Nation special on the totalitarian dangers of socialism and why that system always fails, and instead made the case for free-market capitalism and a free economy as the surest path to prosperity. Free market capitalism is a triumph of human power. Socialism is a catastrophe of state or government power.
The problem with socialism and state central planning is that it never delivers the goods, literally. Show me a socialist economy like the former Soviet Union or today’s China, Venezuela, Cuba, Iran, North Korea and others and I’ll show you an impoverished and sunken economy. Even China, which prospered thanks to market reforms between 1980 and 2000, has relapsed in recent decades into ever-increasing state control, and indeed its economy has faltered badly in recent years.
Milton Friedman in his famous book “Capitalism and Liberty” argued that “a society that puts equality before liberty will get neither.” Thomas Sowell tells us that “socialism is a wonderful idea. Just as a reality it has been disastrous.” Hayek argues that if socialists understood economics, they would not be socialists.
Margaret Thatcher said years ago that the problem with socialism is that you eventually run out of other people’s money and my former boss Ronald Reagan said that the scariest words in the English language are “I’m from the government and I’m here.” help.”
We have all learned throughout history how the totalitarian evils of socialism destroy freedom and prosperity. The idea that governments can set prices and wages is what Hayek called “the knowledge claim.”
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We have learned that only free market and the free exchange between buyers and sellers have the ability to discover prices. The free market is by far the most efficient mechanism for allocating resources to workers, producers, investors, and entrepreneurs operating within a free economy.
That is why free market capitalism has created the most prosperous economic conditions for all classes of individuals. Free markets are colorblind, blind to gender, blind to religions and ethnicity. Healthy free-market economies keep tax rates low, minimize regulatory burdens, and limit government power by restricting federal spending.
The free market model provides incentives and motivations for work, production and investment. The very dignity of work is the heart and soul of a free and successful economy. The state cannot tell us where to work, how to work, how much you are paid, or other centrally planned statist dictates.
The free economy, subject to the rule of law in a free society, is probably the greatest theory that has emerged in all of history. His success in lifting people out of poverty and enabling them to climb the ladder of opportunity has changed the world.
Lately, however, the United States has been drifting toward socialism, to use economist Kevin Hassett’s phrase. Today, socialism no longer attempts the old Joseph Stalin approach of taking over the means of production such as state ownership of steel mills, factories, farms, or even financial companies.
Instead, to borrow from Steve Forbes’ construct, today’s modern socialists seek to control the economy through the centrally planned regulatory state. A perfect example is President Joe Biden’s war on fossil fuels. Radical climate change planners use extreme and untested environmental standards to stop drilling, fracking, laying pipelines, and building new LNG terminals or gasoline refineries.
This is modern socialism. This is dictatorial central planning or, look at the government response to COVID, literally shutting down schools, businesses, and entire cities and states without any scientific proof.
Another problem: Modern Marxism is leading us back into the totalitarian habits of the old Soviet system: through the media, the universities, keeping Hunter Biden’s laptop out of the news, canceling speeches, mercilessly attacking former President Trump or the rewriting of the extreme left of Americans. history, even separating families, but there is a way out, an optimistic vision.
People everywhere must fight for freedom, free markets, capitalism, and the prosperity that these values bring. We must preserve our Judeo-Christian culture. The future of this great nation hangs in the balance and in case you missed our summit before, it’s airing right now on Fox Nation and airing Friday at 8pm on Fox Business.
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Speaking of the evils of central planning, let’s go back to today’s announcements from the Federal Reserve and Jay Powell. They raised the target 75 basis points and say they are going to raise another 125 basis points in the last two meetings in November and December. Somehow, they think they will leave the end point of the terminal rate at 4.6% next year. Good luck on that.
Then they say they expect three rate cuts in 2024. Good luck with that. Sure doesn’t sound like Jay Powell’s new hair on his chest, in the spirit of Paul Volcker and they believe the unemployment rate will peak next year at 4.4%. Good luck with that and somehow, miraculously, like manna from heaven, the inflation rate will hit 2% in 2025. Good luck with that.
This article is adapted from Larry Kudlow’s opening commentary in the September 21, 2022, issue of “Kudlow.”