Socialism Is Santa Claus for Adults

An interview with economist Lawrence Read

Socialism is like the story of Santa Claus. “But the truth is that Santa Claus does not exist and nothing is free. With age, children gradually discover this and realize that Santa Claus is just a child’s fantasy. I hope that people will realize this with socialism as well,” says American economist Lawrence W. Reed in an interview.

Nevertheless, its popularity is growing, especially among young people in the West. How does he explain this? According to him, the promises made by socialism are more pleasant. “Capitalism says that man is free, but at the same time it means that he must try. He has to think, work, he can’t take things away from others. He has to produce, trade and at the same time respect the rights of others,” he says, adding that it is not easy.

In the interview, he explains that capitalism is a better system even for weaker or poorer people. He also talks about unaffordable housing, Trump’s tariffs or the victory of the democratic socialist Zohran Mamdani in the New York elections.

Lawrence W. Reed is an American economist and historian. He is President Emeritus of the Foundation for Economic Education, has taught economics at Northwood University in Michigan, and is the author of several books and numerous articles. He is also the holder of Poland’s highest award for foreigners for helping Polish dissidents in the 1980s.

 

Kristína Votrubová: You say that capitalism is morally superior to other systems. Aren’t these strong words, especially when we see its negative consequences?

Lawrence Reed: I think it is more moral and at the same time more effective. Socialism and all its variants are basically someone’s plan for your life. But capitalism leaves people alone. He tells people that as long as they do not violate the rights of others, they have the freedom to be a peaceful and enterprising person.

In socialism, however, a few people with political power decide what is best for the people. Capitalism is therefore more natural.

It is morally superior because it allows the individual to be himself, to decide for himself. It does not tell them what to buy, where to live, what kind of job they should have.

But, of course, we are people who make mistakes, and therefore any political system will always have its problems. But I’d rather have the problems that capitalism brings with it than those that socialism brings.

 

KV: You often say that capitalism needs people of character. But markets reward profit, not virtue. How to make people of character succeed?

LR: Character is necessary for a good life in any system. But it is capitalism that gives the best opportunities for character building.

Of course, there are rotten apples in any system. But socialism takes these people and gives them political power.

Even in capitalism, you must have a government whose task is to defend citizens from bad people and allow them to act freely in a peaceful society.

 

KV: You are a great defender of personal freedom, but at the same time you always add that it is inseparable from responsibility. But how do we ensure that people act responsibly? Isn’t there room for the state there?

LR: Yes, I am not an anarchist, so I believe in the role of the state, albeit a limited one. His role is best shown in defending peace and the rules of the game, which must apply to everyone.

It is important that there is a state that sets these rules, but then it should leave people alone. Yes, people will make mistakes, but the government also makes them.

Moreover, in a free system, man bears the consequences of his mistakes. In capitalism, a person is rewarded for responsibility, but in socialism this is not so true.

 

KV: I would return to the morality of individual systems. You talk about the superiority of capitalism, but it’s more of a socialist left that talks about solidarity, protection or care for the weak.

LR: Yes, it is true. But socialists do not talk about real consequences, only about lofty promises. We will give you things for free, we guarantee your safety, we will take care of you. But they no longer talk about what will actually happen after these promises are made. They don’t like to talk about what needs to be done to pay for it all.

So they don’t tell the whole story. It’s like parents telling their children that Santa Claus will bring them presents. If the child hears only this, he is happy to receive free toys.

But the truth is that Santa Claus does not exist and nothing is free. With age, children gradually discover this and realize that Santa Claus is just a child’s fantasy. I hope that people will realize this with socialism as well. That it is a childish myth and that its representatives are not used to telling the whole story.

 

KV: But is capitalism compatible with values such as solidarity and care?

LR: I believe that capitalism promotes care. I’ll give you an example. When I come to the store, the salesman comes to me, smiles at me and asks me how he can help me. They don’t know me, but the fact that I’m their customer leads to them caring about me.

 

KV: But this is in their business interest, it is not about real care.

LR: Yes, it’s in their interest, they don’t care so much about me, but I can’t care.

 

KV: Capitalism can be beneficial for strong and healthy people, but do the weaker also benefit from it?

LR: What do the weakest need? Do they need benefits and free stuff or independence and business opportunities? In my opinion, the second option is the right one. They need a good job and conditions to start their own business. This is the way in which poor people improve their standard of living everywhere in the world.

And there is much more of this in capitalism than in socialism. Socialism causes an exodus. We see it in Venezuela and we saw it during the Cold War. People are fleeing and want to go where they have more personal freedom, where they can start their own business, build a family, where they have a choice. And that’s what capitalism offers, not socialism.

 

KV: Today’s socialists argue that the regimes you mentioned are extreme cases and that the socialism they propose would be different.

LR: That’s what they always say, and whenever it doesn’t work out somewhere, they say that it didn’t work there, but it will work here and now. But they should explain why the next experiment should work better than the previous one.

People have believed them so many times and it has always ended in disaster. I don’t know of any society where capitalism would mess things up so much that socialism would have to come along to solve the situation. But I can point to many examples where the opposite has happened.

 

KV: So how do you explain the popularity of socialism among young people?

LR: Socialism does not require a person to think. It only requires that you want something at the expense of someone else. It doesn’t require you to think about things in the long term or from a sustainability perspective. It does not require you to think about the moral implications of stealing from Peter in order to pay Paul. Socialism is full of promise.

But single people should look more to the future. Single people should be able to say, “I can go to a party, have a good drink, and feel comfortable. But the next day I’m going to feel terrible, so I probably shouldn’t do that.”

Socialists only promise that celebration, they never talk about what will come the next day.

 

KV: But why is his popularity increasing?

LR: It’s easier and the fact that someone gives something to a person always sounds good. Capitalism says that man is free, but this also means that he must try. He has to think, work, he can’t take things away from others. It must produce, trade and at the same time respect the rights of others.

 

KV: Do you also explain the recent victory of the American socialist Zohran Mamdani in the New York elections?

LR: The main reason for his victory was not what Mamdani did, but the disastrous selection of opponents. He fought for victory against two of the worst candidates imaginable.

His main opponent was a discredited governor who was removed from office because he was corrupt. How can you not win an election when the second choice is like this?

So Mamdani was lucky. But he also promised a lot without talking about the consequences of fulfilling these promises. If he were honest, he would also say about the economic consequences of his promises. But the Socialists never do that.

 

KV: The popularity of socialism among young people is also due to the fact that many feel that capitalism has deceived them. They face unaffordable housing, stagnant wages and see no way out. Aren’t they right?

LR: Socialists blame capitalism for everything. Although the truth is that it was socialist measures that caused the disaster.

The idea that politicians are supposed to bring solutions to problems is usually silly, because politicians are not magicians. They can’t do things better than people who actually create wealth. They do not create wealth, they only redistribute it. We should not think of the state as a very generous uncle who thinks only of us.

Capitalism is just a framework that says that as long as you are a proper citizen, you can produce, invent, participate, go wherever you want. It will not be perfect, but it will certainly be much better than living according to the orders of politicians.

We have to ask ourselves why we trust the state or the government so much. Maybe it’s because we went to public schools. We cannot expect state schools to teach about all points of view or why it is not good to have a strong state.

 

KV: Nevertheless, it seems that the unavailability of housing is a problem that the state will either intervene in or will only get worse.

LR: As for the unavailability of housing in America, it is clear that the root of the problem is in the state. First of all, because it supports housing loans even for people who cannot actually afford them.

This may seem like a good thing at first glance, but we learned back in 2008 that we can help people get housing, but if they can’t afford it, it’s only a matter of time before they lose it.

At the same time, there are a lot of stupid regulations in America at the local and national level. And this increases housing prices, especially in large cities.

 

KV: In the past, you ran for Congress for the Republican Party. How do you view Donald Trump’s customs policy now?

LR: Economists have been warning for 250 years that tariffs have negative consequences. They raise the prices of goods, divide people and, in general, make it difficult for the economy to thrive. From an economic point of view, they are therefore very bad. However, Donald Trump uses tariffs in other ways.

Sometimes he uses them in uneconomical ways. For example, it will tell a country that it will raise its tariffs until it changes its foreign policy. This is a new way of using tariffs. The question remains whether this is an effective step, whether it will really lead the country to change its foreign policy. Maybe Trump will have some success there.

But I have no doubt that, from an economic point of view, tariffs do not lead to greater prosperity. Prosperity will grow as trading grows. Higher tariffs usually cause other countries to increase tariffs as well. So I’m not a big advocate of Trump’s tariffs. Maybe they can bring something good here and there, but in the vast majority of cases they bring negative consequences.

 

KV: Will Trump’s tariff policy change global trade in the long run?

LR: It depends on what Trump’s actions ultimately provoke. He says he wants to achieve a reduction in tariffs on American products. If it turns out that countries really do this, then I would say that it was a good thing.

Lower tariffs are a good thing. So if he uses higher tariffs in the short term to achieve lower tariffs in the long term, I will not oppose it. Time will tell. But we have already seen what happened in some cases.

After the tariffs were announced, for example, Israel immediately responded that it would reduce tariffs on American goods to zero. When I heard this, I was excited and thought that now Trump also has the opportunity to reduce tariffs to zero. But he did not do so and imposed tariffs of 17 percent on Israel. You need to reduce tariffs quickly when another country does so to you.

So the question remains – and we will be able to answer it in a year or so – how countries have responded to these tariffs and how Trump will react to it.

This interview originally appeared in the international journal Postoj, and is reprinted by Mr. Reed’s permission.