Economic Crisis: Debate on Socialism

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The situation described in the initial post does indeed compromise socialism as a utopian idea. However, when applied to real-life scenarios, it becomes evident that the reasons for state and economic failures are diverse. Economist Thomas Sowell warns against using “one-factor explanations” (Fox Business, 2019, 0:28). Therefore, blaming socialism alone is not sufficient to explain the crisis in Venezuela and the risks to the United States.

First, Venezuela had inadequate wealth distribution, where the majority of the population was removed from the oil revenues of the highest class. What is noteworthy is that the deeply capitalist US also faces the problem of income inequality. I have a friend who believes that a steeper wealth tax should be implemented – a message commonly heard in mass media (Fox Business, 2019, 4:04). Therefore, inadequate wealth distribution is not an inherent part of socialism itself.

Second, Venezuela is too dependent on the government-controlled oil industry. Starting in 2006, president Chavez started a policy of nationwide nationalization, which led to the destruction of “the production capacity of the country” (The Big Picture, 2018, 4:59). The government attempted to flood the economy with money generated by oil revenues resulted in hyperinflation (Real Vision, 2018, 09:01). Yet, my parents are also worried about the possibility of hyperinflation in the US due to the massive printing of dollars. Once again, there is no immediate relation between socialism and poverty.

Finally, income inequality inevitably creates feelings of jealousy among poorer people. Thomas Sowell states that promising wealth tax is a politician’s means of capitalizing on the people’s desires (Fox Business, 2019, 3:56). This is also true in the initial post’s example, where the teacher forced high-scoring students to achieve lower marks, thus pandering to low-performing students. However, my online friend from Sweden notes that they have such a strong tax culture that social spendings are real. Therefore, a government can use some socialist ideas provided people are willing to work and pay taxes.

Altogether, in my opinion, it is not reasonable to suggest that socialism is inherently flawed. Venezuela’s crisis is based on corruption, overreliance on the oil industry, and income inequality. Yet, it would be an overstatement to state that the US does not face these problems, although it does have a diversified economy. As such, socialism does not necessarily lead to ruin – people’s greed and laziness do.