Socialism Must Lower – It Cannot Raise – Living Standards for the Masses

(Don Boudreaux) Tweet My latest column for AIER is the first of a two-part series on the indispensability, for the productive use of resources, of market-determined prices . A slice:

The reason socialism inevitably wastes resources is rooted in the fact that, under such a regime, the state owns all means of production (or what Mises called “goods of higher order”). Without private ownership of the means of production, there is no genuine exchange of the means of production. There is no transfer of ownership of plots of land, of factories, of commercial lathes, or of stockpiles of iron ore and bauxite. With no exchange of the means of production, there are no prices of the means of production. (Each price, after all, is among the terms on which one thing is exchanged for another.) And with no prices of the means of production, the manager of a factory that produces, say, lawn mower blades can’t possibly know whether the lowest-cost method of producing these blades involves the use of steel or of aluminum or of carbon fiber.

Source: Socialism Must Lower – It Cannot Raise – Living Standards for the Masses

America’s middle-class is disappearing…. but it’s because they’re moving up, NOT down!

The new animated “bar chart race” visualization above is a dynamic version of the second static chart, and both show the percent shares of US households by total money income for three income categories annually from 1967 to 2020: a) low-income households earning $35,000 or less, b) middle-income households earning between $35,000 and $100,000 and c) high-income households earning $100,000 or more (all in constant inflation-adjusted 2020 dollars).


As I’ve explained many times before in reference to these data, the “middle-class is disappearing” as we hear all the time, but it’s because middle-income households in the US are gradually moving up to higher-income groups, and not down into lower-income groups as the mainstream media and leftists (but I repeat myself) would have you believe….

Source: Animated chart of the day: America’s middle-class is disappearing…. but it’s because they’re moving up, NOT down!

The True Reasons Why Medical Costs Are So High

While it’s easy to see some of these problems from a logical perspective, it’s very hard to actually fix them.

Source: The True Reasons Why Medical Costs Are So High

The Insurance Dilemma


Over time, health insurance became popularly provided by employers in the United States and unions fought hard to make insurance available to all full-time workers.

While on the surface, this may seem like a good thing — after all, why should only some people be insured? — it led to a problematic pricing environment. Doctors and healthcare organizations would be inclined to charge more for services when they knew insurance was going to be billed; it didn’t add more financial strain to patients but generated more revenue. In turn, insurance companies caught on and imposed policies that stated they wouldn’t pay more than standard prices paid by uninsured patients.

In effect, this led to a constant push to move prices higher; insured patients barely noticed, since they weren’t the ones footing the bill, but uninsured patients began having to pay more and more for their services.

Lack of Price Transparency and Competition

The lack of price transparency and lack of competition means that organizations in the healthcare industry aren’t incentivized to offer lower prices to consumers.


The Doctor Shortage and Costs of Professional Services

Administrative Waste


Vaccination Arithmetic

A good deal of the current discussion of vaccination takes it for granted that it is in almost everyone’s interest to get vaccinated, hence that failure to get vaccinated is evidence of false beliefs or irrational behavior. To see why this is not true for everyone, it is worth looking at some numbers.

According to the CDC, the estimated infection fatality rate is 0.05 percent for 18-to-49-year-olds. I start my calculations with someone who is certain to get infected and has a life expectancy of thirty years. Thirty years is 262,800 hours, so the reduction in life expectancy is .0005×262,800=131 hours.

If you believe your chance of getting infected is only .1, not unreasonable if you regard the current wave as the last of the epidemic, that reduces it to 13 hours. If you are 25, which according to one source gives an IFR of .01, that takes it down to less than three hours. Saving that may not be worth the time and trouble of two injections, a likely few days of not very serious side effects and some small risk of more substantial side effects. The same is more true for younger ages or people in particularly good health.

Source: Vaccination Arithmetic

Early Communist Utopia: Like An HOA For Vegans Who Hate Fun

Author Louisa May Alcott got dragged off to one of these, writes Lawrence W. Reed at FEE:

Louisa May Alcott’s Little Women was published more than a century and a half ago–in 1868–and all these decades later, it remains a popular novel. What the author’s many fans may not know is that as a young girl, Alcott learned firsthand just how ridiculous a utopian socialist commune is.Alcott was just 11 when her father moved the family to the experimental village of Fruitlands in Massachusetts. It was not a promising place. Elizabeth Dunn at writes,

Fruitlands was founded in Harvard, Massachusetts, as a self-sufficient farming community by Charles Lane and Bronson Alcott, two men with no practical experience in either farming or self-sufficiency…Settlers were forbidden to eat meat, consume stimulants, use any form of animal labor, create artificial light, enjoy hot baths or drink anything but water. Lane’s ideas later evolved to include celibacy within marriage, which caused no small amount of friction between him and his most loyal disciple, Bronson Alcott, who had relocated his wife and four daughters [Louisa being one of them] to Fruitlands in a characteristic fit of enthusiasm.

At least 119 utopian, communal or socialist settlements were founded in the early 1800s in America. As most of the country reveled in newly won freedoms and a market economy that allowed the enterprising to create wealth, a few malcontents sought a different life. They spurned private property in favor of sharing material things in common. They preferred a “planned” community over the supposed “chaos” of the market’s spontaneous order. They thought if they just worked out on paper what their preferred society would look like, everything and everybody would just fall into place.

Source: Early Communist Utopia: Like An HOA For Vegans Who Hate Fun

See also

Only Monopolists With Sinecures Can Get Away With Such Nonsense


You rightly support parents who resist the poisoning by K-12 public schools of schoolchildren’s minds with Critical Race Theory (“The Teachers Unions Go Woke,” July 8). But of course such resistance would be much easier and more sure in a regime of school choice. In such a regime, each school’s funding would depend exclusively on its ability to attract parents.

No lawsuit or political campaign can be as effective as would genuine competition among schools at obliging teachers actually to teach rather than to indoctrinate.

Donald J. Boudreaux
Professor of Economics

Source: Only Monopolists With Sinecures Can Get Away With Such Nonsense

Hugh Hewitt pointed out, when stimulus payments had been authorized to parents in the amount of $250 per child, that amount would cover tuition at a large fraction of private schools, especially parochial ones. In effect, the Administration had passed a voucher program, if parents chose to use it that way.

I wonder how many parents have been able to use those payments that way.

There is No Such Thing as Trickle-Down Economics

Another related term is “trickle-down economics.” People who argue for tax cuts, less government spending, and more freedom for people to produce and trade what they think is valuable are often accused of supporting something called “trickle-down economics.” It’s hard to pin down exactly what that term means, but it seems to be something like the following: “those free market folks believe that if you give tax cuts or subsidies to rich people, the wealth they acquire will (somehow) ‘trickle down’ to the poor.”

The problem with this term is that, as far as I know, no economist has ever used that term to describe their own views. Critics of the market should take up the challenge of finding an economist who argues something like “giving things to group A is a good idea because they will then trickle down to group B.” I submit they will fail in finding one because such a person does not exist. Plus, as Thomas Sowell has pointed out, the whole argument is silly: why not just give whatever the things are to group B directly and eliminate the middleman?

There’s no economic argument that claims that policies that themselves only benefit the wealthy directly will somehow “trickle down” to the poor. Transferring wealth to the rich, or even tax cuts that only apply to them, are not policies that are going to benefit the poor, or certainly not in any notable way. Defenders of markets are certainly not going to support direct transfers or subsidies to the rich in any case. That’s precisely the sort of crony capitalism that true liberals reject.


What the critics will find, if they choose to look, is many economists who argue that allowing everyone to pursue all the opportunities they can in the marketplace, with the minimal level of taxation and regulation, will create generalized prosperity. The value of cutting taxes is not just cutting them for higher income groups, but for everyone. Letting everyone keep more of the value they create through exchange means that everyone has more incentive to create such value in the first place, whether it’s through the ownership of capital or finding new uses for one’s labor.

In addition, those of us who support such policies don’t want to “give” anything to anyone, whether rich or poor. When people talk about tax cuts as “giving” something to someone, they implicitly start from the premise that everything belongs to government and we are only able to keep some for ourselves by its indulgence of us.

A new take on the devastating effects of ‘political wage-setting’: the ‘minimum wage paradox’

There are some uncomfortable truths about raising the minimum wage from its current level of $7.25 per hour to $15 per hour that are revealed by an online tool created by our Center for the Study of Economic Mobility (CSEM) at Winston-Salem State University. The tool, which we call the Social Benefits Calculator, enables anyone to go online and experience for themselves what it is like to be receiving social benefits and experience a monthly wage increase. Designed for Forsyth County (North Carolina), the calculator shows that with more than a 100% rise in the minimum wage, many people who currently receive social benefits will barely experience a change in their standard of living.


Let’s use the calculator and create a hypothetical example: a full-time working parent earning the minimum wage, who is unmarried with two children in subsidized day care. As seen in Table 1 (above, click to enlarge), after his or her wages more than double from $7.25 an hour to $15 an hour, earnings rise from $1,160 to $2,400, or a $1,240 change.

Sounds good, right? That’s an enormous bump up of wages by 107%. But after subtracting the decrease in benefits and higher taxes, that $1,240 increase erodes to just a $199 net improvement, or just a 16% change.
Imagine getting a big raise and seeing 84% of it go away. In comparison, millionaires and billionaires pay just 37% for the federal marginal tax rate on higher income. Through multiple scenarios using the CSEM calculator, I have found long ranges of income where work barely pays — what I call “disincentive deserts” in my published research. In some cases, individuals are actually worse off by accepting wage increases because of larger drop-offs in benefits, in what are called “benefits cliffs.”


Notice another surprising consequence: dependency on social programs drops with higher wages. For the full-time employee making $7.25 an hour, social benefits make up 74.3% of the overall wage and social benefits package; at $15 an hour the share drops to 52.3%.

This is a finding that may irk both conservatives and liberals since the chief beneficiary of a $15 minimum wage is the government itself. If passed, the cost of providing social programs will fall (though I don’t expect taxes to fall anytime soon). But from the workers’ perspective, little has changed in their lives after a huge wage hike. Moreover, employers will see little return on investment from higher wages, such as greater retention, loyalty and productivity.

Source: A new take on the devastating effects of ‘political wage-setting’: the ‘minimum wage paradox’

The Reusable Bag Fairy Tale

First, mea culpa: I was a big believer in reusable bags, though I have the rip-stop nylon kind, not cotton. The entire 144-page paper, “Life Cycle Assessment of grocery carrier bags,” here . (See page 13 for “executive summary” in English.) This life cycle analysis by Denmark’s Environment Ministry compares plastic bags with alternatives. [ ] It finds that you must reuse a shopping bag from Organic cotton 20,000 times if you want the environmental damage to be lower than that of 1 plastic bag. — Max Roser (@MaxCRoser) July 4, 2021 The researchers’ take, ultimately:

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Source: The Reusable Bag Fairy Tale