Socialism Is the ‘Leeching’ of Our Time

By | 2018-11-08T21:04:45+00:00 November 9th, 2018|
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Published in 1818, Horace Smith’s “Ozymandias” imagines a London long-since abandoned—the English civilization is gone. Collapsed. The city is a new Rome. A half-forgotten memory like Babylon. Troy.

…We wonder—and some Hunter may express

Wonder like ours, when thro’ the wilderness

Where London stood, holding the Wolf in chase,

He meets some fragment huge, and stops to guess

What powerful but unrecorded race

Once dwelt in that annihilated place.

Perhaps this is London’s destiny—perhaps it’s ours too. After all, many of America’s greatest cities are decaying before our very eyes.

Consider Detroit. Its population plummeted by 63 percent since 1950, in no small part because it is plagued by America’s highest violent crime rate. More than 78,000 buildings are empty and many of its greatest monuments—reminders of its gilded past—lie abandoned. Within our lifetimes this all-American city, once teeming with life and commerce, ossified into an archeological ruin. Soon Detroit will be a memory, not a place.

Detroit is not unique—large swathes of America are rotting away beneath our feet. Look at California: 50 years ago the Golden State was home to America’s largest and most affluent middle class. It was a beacon on a hill, the apotheosis of the American dream. Now it is dystopia. One-in-five Californians live below the poverty line. It is “home” to one quarter of America’s homeless population. California’s income inequality is worse than Mexico’s.

What happened?

Leech Me, Doctor!
A favorite cure of 19th century physicians was leeching. They thought that letting leeches suck their patient’s blood could rebalance their body fluids and cure their tuberculosis, pneumonia—anything. Doctor’s orders. Of course, draining sick people of their blood rarely improves their condition. Often it makes things worse.

Eventually physicians figured this out and invented a term to describe those situations where medical treatment actually aggravated people’s ailments: iatrogenics. Now for the weird part. Although many people—physicians included—were well-aware that leeching was harmful, this didn’t stop physicians from prescribing it, nor patients from requesting it. Why?

People are predisposed toward action—not non-action. We are doers. When confronted with a problem, be it illness or poverty, our instinct is to take positive steps towards solving it, rather than simply waiting or removing negative stimuli. For example:

The year is 1850. Your son gets sick. What do you do? You cannot simply do nothing while your son wastes away, so you call a doctor. The doctor prescribes leeching. Even though you’ve heard that leeching is harmful, you go through with it. It feels right.

Psychologically, you’re correct: if your son lives then the leeching was successful and you saved him; if he dies then at least you tried. Either way you are blameless. At no point do you even consider letting nature take its course—which would have been the best option. Our psychological bias towards action explains why doctors have existed since the beginning of recorded history, despite the fact that they did more harm than good until perhaps 150 years ago.

Our bias towards action also explains the allure of socialism—and why it doesn’t work.

Blizzards, Not Billiards
Socialism is a political philosophy predicated upon interventionism. It’s all about taking action. Doing. Unemployment? Create jobs. Poverty? Provide welfare. High rents? Impose rent controls. Socialism is popular because it appeals to one of mankind’s most powerful psychological biases. Sadly, socialism is also often little more than an exercise in political iatrogenics: it just makes things worse.

There are two primary reasons for this. First, socialism is redistributive: the government taxes productive industries and individuals and gives the proceeds to unproductive or nonproductive industries and individuals. A socialist government is like Robin Hood—it steals from the rich and gives to the poor. Sometimes this “theft” (taxation) is morally justified. Often it’s not. Regardless, redistribution virtually guarantees that our economic resources will be used inefficiently, and this makes everyone a little bit poorer.

The second, and main reason why socialism fails is because it confuses simple for complex systems. Simple systems are governed by something called first order causality: cause and effect are related in a linear, Newtonian way. Imagine a billiards table. Every time a ball is struck, it responds perfectly predictably. There are no surprises in pool. Socialists naïvely believe that the economy works like a giant pool table in that we can understand the consequences of our actions. If only we had perfect knowledge then we could “solve” the economy.

But that’s not how the economy works. The economy is a complex system governed by second order causality: cause and effect are related in an opaque, nonlinear way.

Imagine a butterfly. It flaps around your garden, disturbing the air ever so slightly. Although this disturbance alters our immediate atmospheric conditions imperceptibly, its effect may magnify because of exponential interactions and positive feedback loops. Perhaps this disturbance gives a breeze just enough impetus to blow. This catalyzes another breeze, and another. Now a gust of wind. A month later a storm rumbles overhead—it was born of the butterfly’s wings. It is not always obvious how cause and effect are related in complex systems, and this is why tampering with them is so dangerous. Will we get a butterfly or a tornado?

Socialists believe that every problem has a corresponding solution. What they fail to understand is that the “solution” itself will have a myriad of unknown—and often unknowable—effects. Not all of them savory. For example, socialists say that rents are too high. The solution? Rent control: cap the maximum amount that greedy landlords can charge their tenants. Surely lowering rents will lower rents? How could it be otherwise?

Of course, it is otherwise. A 2017 study from Stanford University looked at the effect of rent control laws in San Francisco. The authors found that because rent control regulations made renting less profitable, many landlords sold their properties or converted them into condominiums. This led to a 25 percent decline in the number of renters living in “rent-controlled” units, relative to 1994. Not only did rent control chase poor tenants from their apartments, but the decrease in housing supply actually led to citywide rent increases of 7 percent. This cost renters the sum of $5 billion. Rent control hurt the very people it was supposed to help.

This observation is not limited to rent control: many socialist policies are iatrogenic in nature. Studies from Harvard University and the National Bureau of Economic Research show conclusively that minimum wage increases hurt minimum wage earners the most. Meanwhile, a plethora of studies demonstrate that racial preference programs actually harm minority students and workers. The list goes on and on.

The socialist prescribes leeches to cure our economic ills, and in doing so drains America of her economic lifeblood. We grow weaker. Weaker still. And the weaker we become the more we demand the socialist’s leeches. We must do something—anything. All the while our people fall into poverty’s arms. Our cities decay.

Was Horace Smith a poet or a prophet? I wonder.

Photo Credit: J.D. Pooley/Getty Images

About the Author:

Spencer P. Morrison
Spencer P. Morrison is a writer and author of Bobbins, Not Gold. He is the editor-in-chief of the National Economics Editorial. Follow him on Twitter @SPMorrison_.