00100	THE DEFECTS OF SOCIALISM
00200	
00300	
00400		Capitalism as practiced in the United States, Western
00500	Europe and Japan works better than socialism as practiced
00600	in the Soviet Union, Eastern Europe, China and Cuba.  The
00700	evidence for this is that all the socialist countries
00800	control emigration and none of the capitalist countries do.
00900	Nevertheless, socialism has strong intellectual attraction,
01000	because it seems plausible that a planned economy should
01100	work better than an unplanned one, it sems more just that
01200	rewards should not be based on inherited position, and it
01300	seems better to many people to be working for the good of
01400	all rather than for the good of an employer.
01500	
01600		My thesis is that socialism potentially works better
01700	than capitalism, but in order to do so it must overcome
01800	certain defects that are dear to the ideology of most
01900	socialists.  In fact, after I get through improving socialism
02000	the free enterprisers might like it better than the socialists
02100	do.
02200	
02300		The main fault of socialism is the politicization of
02400	decisions that should be administrative or contractual.  We
02500	can see this best in the institutions in the U.S. that have
02600	a socialist character - the regulatory agencies and the
02700	social welfare system.  These agencies make decisions that
02800	effect the interests of many groups - take, for example,
02900	the Federal Power Commission and its regulation of the price
03000	of natural gas.  Leaving the result aside, consider the procedure
03100	whereby the result is reached.  Hearings are held in which
03200	various interests are represented.  A representative of a city
03300	says that the people are poor and can't afford to pay more
03400	for gas.  A representative of the gas producers says that a
03500	higher price is needed to stimulate production.  The decision
03600	is often the resultant of the political strengths of the various
03700	groups.  Moreover, the lawyers representing the groups argue
03800	for the most obvious and immediate interests of the groups.
03900	You will not persuade a lawyer for a New England town that if
04000	he keeps the low rates he is arguing for, it may happen that
04100	demand will be stimulated and production discouraged to the
04200	point where a shortage will occur that will cause the main
04300	industry of his town to be cut off and the citizens of the
04400	town to become unemployed.  I don't wish to argue that the
04500	lawyers for the other side in this case are necessarily better
04600	although they can often get their clients, being fewer, to see
04700	farther ahead.
04800	
04900		Socialist sentiment wants to extend this kind of
05000	procedure to all institutions.  Should not the students
05100	have a say in running the university.  Should not the workers
05200	run the factory.  Should not the faculty of a university
05300	control appointments?  Why should there be administrators?
05400	Should
05500	not decisions be made by those who will be directly affected
05600	by them?
05700	
05800		The answer to all these questions is NO, especially
05900	to the last.  The worst group to make decisions is often those
06000	directly affected if their immediate interests are in conflict
06100	with those of the social institution that they are part of.
06200	If the faculty ran Stanford University according to its
06300	immediate interests, it might decide to liquidate it and
06400	walk off with $500,000 apiece.