“I will replace the frigidity of rugged individualism with the warmth of collectivism.” — Zohran Mamdani, new NYC mayor
Over the past few years, I’ve been giving a popular speech on campuses around the country with the provocative title, “What’s Better than Democratic Socialism?”
I lure them in because they wonder, “What could be better than Democratic Socialism?”
It draws a large standing-room only crowd because many college students are naturally attracted to the new socialism of Bernie Sanders, Elizabeth Warren and the newly elected mayor of New York, Zohran Mamdani.
It’s really what we might call “socialism lite.” They don’t advocate nationalization of all industries, but rather progressive taxation and regulation, including wage/price/credit/rent controls. But not total totalitarianism a la North Korea, Cuba or Venezuela. (They know better than recommending these disastrous experiments in hard-core totalitarianism.)
In my talk, I explain why socialism has failed time and time again because of one word: “incentives.” Socialist policies lack incentives to work hard beyond your needs, and create “surplus wealth” that you can keep. They also create shortages and discourage innovation.
I prove it all logically with sound economics — what I call “econologic,” based on the title of my textbook, “Economic Logic” (available at a substantial discount at www.skousenbooks.com).
Why This Socialist Statement Is Fundamentally Flawed
I use as an example the socialists’ favorite mantra: “From each according to his ability, to each according to his needs.” You work hard, and get what you need, right?
The Ideal Society?
The problem is that this idealistic policy results in a 100% marginal tax rate that destroys people’s incentives to work hard, whether rich or poor.
After demonstrating the fatal flaw in socialism, I offer an alternative, because you can’t get rid of a bad idea unless you can replace it with a good idea.
Replacing a Bad Idea with a Better Idea: ‘Democratic Capitalism’
And that good idea is what I call “Democratic Capitalism,” through profit sharing and stock options to all employees. For instance, Microsoft gives stock options to employees, and so far, over 30,000 ordinary workers there have become multi-millionaires. It’s what John Mackey calls the “stakeholder” philosophy of business.
By the end of my lecture, I’ve converted 90% of the young people to my way of thinking. It’s quite a remarkable experience.
Where to Find a Better Alternative to Socialism
My talk is summarized in simple, but powerful terms in my 15-page report, “Economics of Life Made Simple.”
Recently, Michael Shermer commissioned me to write a cover story, “Economics of Life Made Simple,” for Skeptic magazine in honor of Adam Smith’s 300th birthday. It’s been a hit ever since, with hundreds of people buying multiple copies.
Non-Economists Love This Essay
My essay is especially popular among business people, lawyers, accountants, ministers and non-economists.
For example, David Berkovitz, who teaches business law and accounting, recently told me, “Mark, I always wanted to understand economics, so I read ‘Economics for Dummies,’ and still couldn’t understand it… until I read your essay, ‘Economics of Life Made Simple.’”
The next day, he wrote me the following blurb: “Concise and clear, this essay is THE source for anyone seeking to understand this important topic. It should be required reading for everyone in the College.”
In this essay, I tried to answer fundamental questions about money and the economy, such as: What is the secret to our tremendous economic growth over the past 250 years?… Why are young people so attracted to socialism?… Why is inflation coming back?… Is capitalism inherently unstable?… What is the economists’ solution to global warming? It also includes a section on gross output (GO).
I’ve had so many requests for this article that I reprinted the essay three times, and sent them to friends and handed them out at various conferences. A professor at the University of the Bahamas bought 50 copies to hand out to his students. A coin dealer asked for 25 copies to hand out to his clients.
A highly successful lawyer from North Dakota attended FreedomFest and picked up a copy. He told a colleague, “This is the best brief in economics that I’ve ever read,” and made copies to send out to all his clients.
One Christian minister, Dallin H. Oaks, wrote, “I have just finished reading your ‘Economics of Life Made Simple.’ Marvelous! I have never read a better expression by a sophisticated professional who has written to the clear understanding of laymen. Congratulations! I hope this will be widely circulated. It is very important.”
A top official of the Bureau of Economic Analysis (BEA), which puts out the quarterly data on gross domestic product (GDP) and GO, was so impressed that he sent it to his youngest son, who is pursuing a degree in business analytics at the University of Tennessee.
A mother wrote me from Colorado, “I’m making copies for my boys to send to them in college.”
And I just got word that Union Editorial, the prestigious book publisher in Spain, is translating it into Spanish.
How to Order Your Own Copy
You can read my essay online here.
If you like it, why not buy a printed copy and pass it along to your friends and colleagues? They are more likely to read it as a printed copy. I sell it for $3 each at Skousen Books at Discount. The minimum order is three copies.
Meet Me at Reason Headquarters in LA This Saturday to Celebrate Ben Franklin’s Birthday!
SPECIAL REMINDER: Reason Foundation is hosting my talk and book signing of “The Greatest American” at its headquarters, 5737 Mesmer Ave. in Los Angeles, 2-5 p.m. PT, this Saturday, Jan. 17, Ben Franklin’s birthday! Refreshments will be served. This event is free, but you need to register at https://reason.org/event/ben-franklin-genius/. This will be a great occasion to celebrate Ben Franklin’s birthday and the 250th anniversary of our nation’s founding. See you there!
If you can’t make it, you can receive an autographed copy of my book at a nice discount, $24 each ($19 for additional copies) by going to Skousen Books at Discount. Each copy will include a rare Franklin stamp, a collector’s dream.
Good investing, AEIOU,
You Blew It!
Donald Trump Wants to Impose Credit Controls
“I was misinformed.” — Rick in the movie “Casablanca”
Donald Trump is showing his true colors as a populous president who advocates intervention in the free market. Recently, he advocated banning stock buybacks and dividends on defense companies that didn’t invest more in war-related production and technology.
By executive order, he has imposed hefty import duties on U.S. companies that use foreign components.
The latest example is his requirement that prohibits credit card companies like Visa and American Express from charging more than 10% interest rates on account balances.
Trump suggests a one-year cap of 10% on credit card interest rates, aiming to protect Americans from high rates of 20-30%.
What’s shocking is that the vast majority of voters — Democrats, Republicans and Independents — support this form of price control.
Polls show 64% of Democrats, 70% of Republicans, and 58% of independents support the proposal. Congress has introduced a bipartisan bill, so it may become law.
I guess few voters or congressmen have taken a class in sound economics, the kind I teach at Chapman University. Wage/price/credit/rent controls may be popular, but they are not good policy.
Visa, American Express and other credit card companies saw their stocks dropped sharply on the news. Critics warn it could limit credit availability, affecting millions who rely on credit cards for daily expenses and borrowing.
In economics, we call it “unintended consequences” to bad legislation.
Just as one example, President Richard Nixon imposed wage-price controls in 1971, and as a result, the country suffered shortages and long-lines the gas stations. Years later, Nixon regretted the decision, saying his bold controls proved to be a “failure,” even though at the time they were popular.
Shame on the White House economists who are willing to close their eyes while Trump goes down this interventionist path.
