The Economics of Wishful Thinking

Every generation seems convinced it has discovered a revolutionary new economic system that will succeed where all previous attempts failed.

It never does.

A thought-provoking column by Greg Sheridan in The Australian highlights what he sees as the growing influence of the Democratic Socialists of America (DSA) within the Democratic Party, arguing that the movement is no longer a fringe curiosity but an increasingly powerful force shaping Democratic primaries and pushing the party further to the left. Readers who have access to The Australian will find Sheridan's full article well worth reading.

Whether one agrees with all of Sheridan's conclusions or not, it raises an important question:

Why are ideas with such a long record of economic failure once again becoming politically fashionable?

Socialism's Familiar Promises

Throughout history socialism has arrived wrapped in attractive promises:

• Affordable housing.

• Free education.

• Government-controlled essential services.

• Equality.

• Protection from "greedy corporations."

These promises sound compassionate. The problem is not the objectives.

The problem is that economics has a habit of ignoring political slogans.

Markets cannot be legislated into producing goods at below-market prices indefinitely.

New York's Latest Experiment

One proposal attracting attention is New York mayoral candidate Zohran Mamdani's plan for government-owned grocery stores intended to provide food at controlled prices.

Supporters present the idea as something bold and innovative.

In reality, governments have been trying versions of price controls for centuries.

The results have been remarkably consistent.

Step One: Sell Below Market Prices

If government stores sell products cheaper than private supermarkets, one of two things happens.

Either:

• the stores sell goods at a loss; or

• suppliers refuse to sell unless government pays market prices.

In either case, taxpayers ultimately fund the difference.

Step Two: Private Competition Shrinks

Private retailers cannot compete indefinitely against government businesses subsidised by taxpayers.

Some close.

Others stop investing.

New entrants stay away.

Ironically, competition declines precisely because government has tried to "increase competition."

Step Three: Subsidies Explode

As losses mount, governments face a choice:

• continually increase taxpayer subsidies; or

• reduce the discounts.

Either outcome disappoints voters.

Subsidies become politically difficult during budget pressures, especially when schools, policing and transport are competing for the same public money.

Step Four: Empty Shelves

Eventually products that cannot be sold profitably disappear.

This has happened repeatedly wherever governments have attempted extensive price controls.

Retailers simply stop stocking products that lose money.

Consumers end up paying less—for goods that are no longer available.

Cheap prices mean very little if the shelves are empty.

The Lesson History Keeps Teaching

History is full of examples.

Price controls may provide temporary political headlines, but they rarely solve the underlying problem.

Instead they tend to produce shortages, distort supply, discourage investment and require ever-increasing taxpayer support.

Markets are not perfect.

But they do communicate information about scarcity, demand and production costs that governments often struggle to replace through bureaucracy.

Why Does Every Generation Believe It Will Be Different?

Perhaps the most puzzling aspect is not that these ideas continue to be proposed.

It is that they continue to attract enthusiastic support despite so much historical evidence.

Every failed experiment is explained away as having been poorly implemented.

Every new proposal is described as "different."

Every generation assumes it has finally discovered the version that will work.

Yet economics is remarkably stubborn.

Governments can temporarily override prices.

They cannot repeal the laws of supply and demand.

A Warning Worth Considering

Sheridan argues that the growing influence of the Democratic Socialists of America represents a significant ideological shift within American politics, one that deserves far more attention than it currently receives. He points to the DSA's success in Democratic primaries and its increasingly mainstream influence as evidence that ideas once regarded as politically marginal are gaining traction.

Whether these policies ultimately remain campaign rhetoric or become governing reality remains to be seen.

But before embracing another round of government price controls and state-run enterprises, it would be wise to ask a simple question:

If the same ideas have repeatedly produced shortages, subsidies and declining choice around the world, why should this time be any different?

History suggests the burden of proof lies not with the sceptics, but with those claiming that economic laws have suddenly stopped applying.

Socialism vs Capitalism: Five Myths That Refuse to Die

John Stossel’s recent YouTube video, “The Complete Guide to Socialism vs Capitalism (Myths Explained)”, tackles an argument that never seems to go away—despite a century of real-world evidence.

Socialism, we’re told, only fails because it’s never been done “properly.” Capitalism, meanwhile, is blamed for inequality, greed, exploitation, unsafe workplaces, and even unhappiness. Stossel methodically dismantles both claims by confronting five enduring myths about socialism and several equally persistent myths about capitalism .

Myth 1: “That wasn’t real socialism”

From the Soviet Union to Venezuela, defenders insist failures don’t count because they weren’t true socialism. Stossel points out the obvious: abolishing private property and placing production under collective (read: state) control is exactly what socialism demands—and exactly what produced shortages, repression, and collapse in practice .

Myth 2: Socialism fails because of bad luck or sanctions

Venezuela’s disaster is often blamed on oil prices, U.S. sanctions, or poor management. The video argues these are distractions. Other oil-dependent nations didn’t descend into mass hunger. The common factor was central planning’s inability to adapt to reality—a problem markets solve daily through millions of decentralised decisions .

Myth 3: “Democratic socialism is different”

Socialism may begin with elections, but once the state controls livelihoods, dissent becomes impossible. Economic dependence quickly turns political power into permanent power. History shows that economic freedom is a prerequisite for political freedom—not the other way around .

Myth 4: Scandinavia proves socialism works

Stossel reminds viewers that Sweden, Denmark, and Norway are not socialist economies. They are market economies with high taxes and strong property rights. When Sweden experimented with heavy state control in the 1970s, it reversed course after stagnation set in—cutting taxes, privatising industries, and restoring growth .

Myth 5: Capitalism enriches the few at the expense of the many

Capitalism isn’t a fixed pie. Entrepreneurs create new wealth, and research shows they keep only a small fraction of what they generate. The rest flows to consumers through lower prices, better products, safer workplaces, and higher living standards. The poor and middle class are vastly richer today than their grandparents—not despite capitalism, but because of it .

Stossel also addresses claims about monopolies, “robber barons,” unsafe workplaces, automation, and job loss—arguing that most genuine monopolies and inefficiencies are creations of government intervention, not free markets .

This video doesn’t pretend capitalism is perfect. It argues something more modest—and more important: no other system has lifted more people out of poverty, created more opportunity, or allowed more freedom of choice.

If you’re tired of slogans and want evidence instead, the video below is well worth your time.

Why the young support socialism

The political scale is ever wobbly. At times, the swing is towards the Right, while at others, it is towards the left. In many ways, the swing in recent years has been towards the Right. We saw it in the Brexit decision, the election of Trump, twice, and the rise of right-leaning governments in Europe. No doubt some of these were driven by circumstances peculiar to the individual countries. Others are due to general trends. For example, the rapid increase in immigration from developing countries in Western Democracies has contributed to the overall shift to the Right in the West. 

However, at the same time, there has been an increasing support for Leftist policies, especially among the young. Indeed, a significant majority of under-25s lean Left. This has been evident in our streets, with demonstrators of all ages, but particularly youth, taking to the roads for various purposes. Whether it be Climate Change, Black Lives Matter, Indigenous rights, or expressing support for Palestinians or anti-Israel, the majority of demonstrators are always the young, and often University students. It is the youth of the world who are attracted to causes, and what more experienced or mature adults would call lost causes. Most notably, Socialism. 

Yes, socialism, the political system that has failed in any country where it has been implemented, seems to attract the young, and with unrelenting passion. Just last week, a self-declared Socialist won the primary to become the Democratic candidate for Mayor of New York City. It is astounding. 

Why are the young attracted to Socialism? I could cite many potential contributing factors, ranging from poor education systems that fail to teach history, the politicial leanings of Teachers, who themselves have never left the Education system and lived in the real world, and of course the University system that seems to incubate far Left ideologies, and no doubt 'corrupts the minds of the young'. 

These factors may tell at least part of the story.  However, Konstantin Kisin has his own perspective, which is worth considering. He claims that our Western Societies are failing their youth by not providing them the path to achieve the lifestyles that they have seen in previous generations. This is due to rapid increases in housing costs, which lock young people out of home ownership. This perspective is interesting and poses significant challenges to our societies.

Although it's a short video, it's well worth watching. 

Of course, this raises the question: How can Western Societies make home ownership achievable again?

The poor are not getting poorer...Shhh don't tell Shorten

In what seems to be rampant hysterical amnesia, Socialism is being viewed by too many in our liberal Western societies as a 'better' alternative to Capitalism. Social justice warriors constantly decry the exploitation of the impoverished masses by the greedy capitalists. The rich are getting richer and the poor are, as a consequence, getting poorer. This class warfare mantra is widespread; from Jeremy Corbyn in the UK, Bernie Sanders in the US to our very own Bill Shorten in Australia. Hardly a day passes without Bill claiming he will restore some sort of equality by attacking the "Rich".

Yet, it is a patently false narrative. History shows the opposite to be true. As the rich get richer the poor have been getting richer too! Indeed the supposed rise inequality in Australia is also a myth perpetuated by self serving politicians to advance their cause , and I have to note, abetted by a media blinded by their own political bias.

A recent Prager video makes the argument clearly, as always. Well worth the few minutes.

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Capitalism Rocks - time to say so!

Prager U's latest video, "If You Hate Poverty, You Should love Capitalism" should not be anything new. All those living in any Western society should be well aware of the enormous benefits to the world wrought by the Free enterprise, Innovation, open markets and competition.
Unfortunately this is far from true. Too many are unaware of the simple fact that it is capitalism that has created the modern world; increased the living standards for everyone and is rapidly eliminating poverty worldwide.

You won't hear this from much of the media, nor from academia. They focus on and amplify the problems of capitalism, and pontificate on options that solve this problem or that. However the simple fact is that all the alternatives that have been proposed and tried are abject failures.

We should always remember that Free Enterprise is the foundation of our prosperity and resist any attempts to undermine it.