Socialism, like all political philosophies is a complicated and diverse ideology.
It has its pros and cons. It has its tradeoffs. Yet, like all political philosophies, it needs to actively address it's downsides to be at its best.
Some of the major downsides of socialisms are:
1. As decisions are made by the government, corruption is increased as special interest groups lobby the government for their own benefit. Banks are bailed out. Public sector unions enrich themselves. Well connected corporations get contracts... Those connected to the government do well. Those not connected do worse. Of all the downfalls of socialism, this is one of the most dangerous in my view.
2. Irresponsibility is increased in the society as people are not called to handle problems themselves. They do not learn how to be responsible and accept the costs of various realities. This can lead to unrealistic expectations and thus bankruptcy. Examples here include pension and healthcare issues in much of the developed world. Healthcare is a big issue as socialized aka 'free' healthcare removes the cost equation from very expensive healthcare. Before, most families had to deal with the cost of healthcare. If your 89 year old grand mother needed a million dollar surgery for a 10% chance of living a few more years, most families except for the very rich would not do it and let her pass. Under socialized healthcare, this cost is removed from the families discretion and expectations are raised such that healthcare is pursued without attention to costs.
3. Inability to centrally plan. When money and power is in the hands of governments, it is then up to the government to decide which projects to fund. If for example you wish to pursue solar energy, it would be the government deciding which technology to fund and which gets deployed... It turns out this has a rather poor history of success as central planners rarely have the information or honesty to make it the best option. A free market where everyone has a chance to innovate brings better results. Under a free market when one company stagnates, another rises. Microsoft stuck to its desktop computing model throughout the 2000s. It fought the web. Google rose, taking advantage of the technology and became a major force.
Examples of Responsible SocialismThose socialist governments that take an active hand in addressing the pitfalls of socialism enable it to be more successful and trustworthy.
I'll go through a few examples in the world of such policies.
Sweden Pension FormulaHelps avoid irresponsibility.
Essentially, Sweden uses a formula taking into account the strength of the economy to determine retirement payouts. This forces it to be responsible and fair to each generation. If the economy slows down, pension benefits are cut with a base minimum of course.
It sounds simple and it has been successful up to a point. It still has issues that people don't want to accept the formulate. For example, when the formula decided that pensions had to be cut, there was outrage and the government moved to find ways to stop it.
Eventually, it reduced taxes for those over 65... offsetting the cuts to the pensions.
Even under a formula, it is hard for socialism to be responsible.
A similar situation occurs regularly in the United States. The Medicare Sustainable Growth Rate (SGR) was supposed to make Medicare sustainable by cutting payments to doctors when it was underfunded. Yet, every time the cuts need to be made, congress delays it.
Nonetheless, it is a good example, but it has obvious problems with the political process.
Sweden Speeding LotteryHelps avoid regulatory corruption.
In this case, Sweden takes some of the money handed out in fines for speeding and gives it away in a lottery to those drivers doing the speed limit.
This helps ensure that regulating speed is done for safety and not for financial gain of the government.
There is a long history of governments using regulation not for safety, but to increase revenues.
For example, red light camera are often used for revenue with many government reducing the time of a yellow light so more people are caught running a red light and thus more revenue.
On a greater scale, the war on drugs is more than likely a case of regulatory corruption. The self interest of lawyers, police officers, prison guard unions... all make money from the drug war and thus do not want to give it up.
The Swedish speeding lottery experiment has an interesting side effect of helping ensure the profits from regulation to do not become enticing for the government to be corrupted. Indeed, I have often argued that if something is worth regulating, it is worth regulating via general taxation. Indeed in my view, the revenue for all traffic fines should go into a pool to compensate victims of traffic accidents.
The Swedish lottery is a form of this pool, but instead of rewarding victims, it rewards a random driver obeying the law. It accomplishes the same thing.
Indeed, as we enter our confusion state of politics, it will be interesting to see how our political classes react. We are seeing nations struggle with the problems of the welfare state and slowing economic growth. How will they react.
Some I suspect will simply seek to secure alliances and maintain power. Some will entrench their relationships with the banks and government workers at the expense of society... strengthening the political ties to socialist and progressive movements. Others will seek to maintain the welfare state while addressing its short comings. Others might throw off the whole idea.
I personally think the whole problem with the welfare state is that it was created without any constitutional limits. A constitution provides a framework upon which policies are built. For example, law and order has been a role of government for centuries. The result is that constitutions have taken into account limits on governments in terms of law and order. There are limits on privacy, search, a fair trial...
However, with the progressive movement's desire to have a living constitution, as opposed to going through the head ache of amending or changing current constitutions, an entirely new field of government... the welfare state... was created without any constitutional framework. I hope some of the political classes recognize this and begin to work towards frameworks of handling the welfare state within a constitutional framework.
For example, I'll throw off a few constitutional guide lines that would have helped prevent many of the problems with the welfare state. I do not attempt to write a legal constitution here. I am just attempting to give some general principals that would serve well. The exact wording and nuances is of course better handled by legal people.
- All citizens are to be treated equally. There shall be no benefit or guarantee granted to those working for the government that is not available to every citizen. This would entail something prevent public sector pensions, while the private sector suffers. It would keep public sector salaries in line. A minimum wage would be the same in the public sector and private sector... It would prevent institutional corruption and gangsterism within society.
- For government program that does not necessitate a monopoly, a option for an equal direct payment to an individual shall be made available when it can be reasonably done for those not wishing to participate in the government run system. This would contain the power of government monopolies as well increase innovation via trial and error. For example, if the government run healthcare system spends $10,000 per year per person and you are not happy with it, you could take an optional $10,000 payment to spend on your own healthcare and opt out of the government system.
- All citizens have the right to pursue their life in their own fashion. For any victimless activity, it shall be up to the government to prove the harm of the activity exceeds the social and economic costs to ban the activity. This would contain the power of regulatory corruption. Things like the war on drugs could be challenged in court on this basis.
Again, this is not an all-empassing list of constitutional frameworks which would help guide the welfare state. They are merely some talking points to demonstate what would be done.