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Why Socialism Doesn’t Work

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This is a re-post from:



Within a free economy, societal equality means everyone starts the same.  Within socialism, societal equality means everyone finishes the same.  Economics students at one well-known university learned the hard way why socialism doesn’t work.

The course was on comparative economic policies.  The instructor asserted that finishing the same under the socialistic model would remove incentives to excel and the risk of failure and would ultimately lower the overall quality of life in a society.  Some students asserted that without incentives to excel or the risk of failure, people would give their best effort and altruistically excel to advance the greater good.  So, the professor proposed an experiment: on individual exams in the course, all students would receive a score equal to the average score of all students.  Students would finish the same.  The students agreed.

On the first exam, the average score was a B and all students received a B.  On the second exam, the average score was a C and all students received a C.  After successive exams in the course, the average score dropped to an F.  At the end of the course, all students received a cumulative grade of F.

Why did this happen?  The instructor learned from the lower performing students that they saw no reason to study at all.  The top performing students related that their hard work was for naught, so they studied less.

And, then what happened?  The students complained to the university’s administration that they each received an F and not a higher grade.  After confirming that the students agreed to the grading methodology and that the students chose to apply themselves less, the university’s administration left their grades unchanged.

Government must not remove the ability of the individual to excel or fail.  Similarly, government must not remove the ability of companies to excel or fail.  A company that is “too big to fail” presents threats to an economy not dissimilar in magnitude than the threats posed at the individual level.  In spite of all of the gnashing of teeth, nothing meaningful has been done about the corporate socialism that continues to exist in the United States.  Dodd-Frank is an abysmal failure.

Former British Prime Minister Margaret Thatcher once said that socialism is great until you run out of other people’s money.  We find that Lady Thatcher’s wisdom has greater applicability than she first thought.



This is a lesson that all need to accept.  The world would be a much better place if all would do this.


The facts no one wants to read.

Comments and referrals to this blog would be greatly appreciated.


Written by solutions777

February 18, 2012 at 8:42 pm

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