...The difference between market-based and socialist economies is not the presence of redistributive policies per se. For over a century, around the world, market-based economies have taxed and redistributed wealth and provided a host of services such as public education and care for the poor, sick, and elderly. The difference is that in market-based systems, taxation is regarded as an unfortunate burden employed out of necessity to ensure that other priorities are achieved. In contrast, in socialist regimes, taxation is not regarded as an undesirable consequence but as a means to prevent individuals from counterproductively controlling their collective economic destiny.
Socialism’s appeal has always been its false promise to create wealth better than capitalism can....
Not only has socialist theory been wrong about the economic and political fruits of capitalism, but it also failed to see the problems that arise in socialist governments. Socialism’s record has been pain, not gain, especially for the poor. Socialism produced mass starvation in eastern Europe and China as it undermined the ability of farmers to grow and market their crops. In less extreme incarnations, such as the UK in the decades after World War II and before Margaret Thatcher, it stunted growth. In most cases, socialism’s monopoly on economic control also fomented corruption by government officials, as was especially apparent in Latin American and African socialist regimes. The adverse economic consequences of socialism led the Scandinavian countries to dial back their versions of socialism in the past decades. If the United States had imitated Scandinavian-style socialism, the CEA study estimates, our GDP today would be 19 percent lower.
Socialism has been abandoned in virtually all of the developing world....
This philosophical shift in the developing world is a major change since the 1980s when socialism was still fashionable among some. The shift away from socialist thinking was grounded in the growing body of empirical evidence about the kinds of policies that produced growth and poverty alleviation—that is, policies that used markets as a lever of economic development. Now developing countries such as Mexico, Brazil, Colombia, Chile, India, China, South Africa, Vietnam, Thailand, and Indonesia are known as “emerging economies,” a description that recognizes their need to emerge from state control of their economies through privatization, free trade, and the creation of viable private financial intermediaries to promote growth and poverty alleviation. All around the developing world, socialism is understood as a false promise, an ideological opium that repressive elites use to retain and expand power. Capitalism, in contrast, is seen as the force that has lifted over a billion people out of poverty worldwide since 1990....
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