Recently, I’ve been thinking a lot about socialism.

In the US, it’s been a dirty word until the past election. Very few (except academics) would claim to support it. There was simply too much negative stigma attached to it.

It was dangerously close to communism…

…and the second half of National Socialism (Nazism).

Those are two enemies that America has shed blood to defeat.

Claiming to be a socialist was on par with burning a flag…kneeling during the anthem…or being vegan.

Simply un-American.

But the latest generation hasn’t been exposed to socialism like our forefathers. Instead, we’re in an era of big pharma, late capitalism and too-big-to-fail.

The modern villain isn’t the bayonet-clad commie; it’s the rich fat cat on Wall Street. It’s old money. It’s the one percent.

It’s the people who have, the people on the other side of the have-not fence.

And like the Soviet Union or post-WWI Germany, this sort of sentiment against the overly powerful elite sets the stage for a ‘hero’ like socialism to step in.

Vote for Robin Hood and he’ll steal from the rich and give to the poor.

With the snap of his fingers, he’ll balance everything just as it should be.

You’ll get access to free college, housing and healthcare…all at the expense of those dirty robber barons who live in their mansions and swim in their cash like Scrooge McDuck.

They’ll pay their ‘fair share’ even if they don’t want to.

Justice will finally be served.


The New Zealand flavour

In New Zealand, socialism is standard. Cultural acceptance of socialism ideology has been much more ingrained in society for much longer than in the US.

In the early 20th century, the newly budded labour movement in Britain overflowed into New Zealand. It rode in on the shoulders of the trade unions and industralisation.

It began as fragmented groups of socialists, each with their own unique approach. Between 1900 and 1940, these groups combined into a mostly unified group called the Socialist Party of New Zealand.

At the same time, communism was gaining acceptance. Auckland, especially, was supportive of Stalinism. By the 1960s, the Communist and Socialist parties had grown to significant numbers and were intertwined in both doctrine and political power.

Today, there aren’t too many loud-and-proud communists or socialists in New Zealand. At least, not many would claim that title.

Instead, there’s a more general acceptance of socialist concepts, particularly among pro-government parties like the Labour Party.

As far as I understand it, there are those who fight for equality and believe that a strong-handed government is the way to achieve that.

Meanwhile, there are those who fight for freedom and believe individuals are responsible for their own success.

And in economics, the distinction between pro-government and laissez-faire is more related to whether or not you trust the market to correct itself efficiently.

If you don’t, then it would make sense that you like the idea of the government stepping in.

If you do have faith in the invisible hand, then government intervention tends to make everything less efficient. [openx slug=inpost]


Case in point — Kiwi construction

At the moment, there’s a battle about the government’s role in solving the housing crisis. Some, like Housing Minister Phil Twyford, believe that a centralised effort like KiwiBuild can provide relief.

Personally, I don’t have much trust in the man. This week, he admitted that he was ‘shocked’ to discover that his administration has been dealing in some dirty business.

His ministry has been ignoring procurement guidelines and has forced heaps of builders into risky contracts.

We’re talking corner-cutting, least-cost contracts that have been unsustainable, as proven by Fletcher and Ebert.

This has meant that buildings built by government contracts can be cheap on the front end…and more expensive to maintain over a lifetime.

That’s not necessarily surprising, is it?

Because there’s a clear disconnect between the people ordering the buildings and those inhabiting/working in them.

The former base their success on how little they pay. The latter have to think about year two, three and beyond…

The state is simply not incentivised to focus on quality.

And the only time they act like they care is when there’s public outrage over their practices.

It often takes a crisis of some sort…like today’s construction mess.

The public scratches the surface of just how messy the whole industry is; they demand that heads roll; and you get people like Twyford who are ‘shocked’ to find out they’ve been acting naughtily.

There will be some new ethics reform that’ll be passed. Maybe a couple of mid-level procurement folks will be fired. Then the whole thing will start all over again.

That’s the nature of the beast. When the state is in charge, projects are rarely efficient. Instead they overpay and underdeliver. All with tax dollars.

So, when I hear about the perks of socialism, I struggle to see how they outweigh the cons of giving more responsibility to the cumbersome, unwieldy mammoth that is our government.

Some of the ideas I actually like, but I could never trust the government to do it right.

Maybe we could just do it ourselves. The right ideas done right — vote for the Money Morning Party.

Taylor Kee
Editor, Money Morning New Zealand

PS: Think I’m off-base here? Tell me why — I want to hear it. Reach me at [email protected]