Visual Economy

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Socialism in under 3.5 Minutes

The reason that socialism always fails, fund manager Jim Rogers says, is that “us, the people” can never know know as much as “us, the market.”

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WealthCycles Commentary


Most humans are motivated to help when they see other humans in need. However, when government takes on the role of ensuring that no one shall be in need and of commandeering individuals’ resources in order to enforce mandated equality, the result is inevitably disastrous.

In this video, well-known fund manager Jim Rogers takes the philosophy of socialism and demonstrates that socialist systems simply don’t work. Identify any situation, Rogers demands, in which socialism has been successful.

In two separate interviews Jim Rogers is asked why a society regulated by “Us” would not work and to explain why anyone should believe that capitalism can “get us out of this mess.” The interviewer asks:

We spoke to a biologist, and he claims that our basic instinct is cooperation rather than competition. Suppose we regulate our society according to that principle. What would be wrong with that?

In response to this question, Rogers responds incredulously with his own question: Who’s going to regulate? “Us, the people,” the interviewer responds. But the problem, Rogers explains, is that it is impossible for us “us, the people” to know as much as “us, the market.” Rogers explains it like this:

Your system is saying, “Oh, well, we’re going to have some people in the capitol who are smarter than everybody else, and they’re going to tell us what to do and how to live?” That’s never worked. If you can tell me any case where that has worked then I will be more than willing to listen to your story.

In contrast to a centrally run societies, Rogers goes on to say, nations have attained economic success only when markets are able to operate freely (for more on why see here).

Countries that have built and become successful and rich have not done it through bureaucracy; they’ve done it through the unfettered human spirit. Entrepreneurship. Call it what you will. Those are the countries that have done well. Throughout history.

In the second interview Rogers is asked whether capitalism is the solution to global financial problems. Yes, he responds, but capitalism is not currently free to work properly:

Well, capitalism could get us out of it, but capitalism is not being allowed to work right now. Had capitalism been allowed to work we wouldn’t be in this situation now.
If back in 1994 or 1998 people had been allowed to collapse, we wouldn’t have had the prosperity we’ve had in the early part of this decade. Umm, on the other hand we wouldn’t of had the collapse that we have now. We had an artificial prosperity, and now we’re having an artificial decline.

What people have experienced throughout the artificial prosperity and the artificial decline is government interference, not capitalism. Although Rogers defends capitalism, he also acknowledges its flaws. But, had government only stayed out of the way, all of us would be in much better shape.