Socialism And The Incentive Problem

The idea that a person can get something for free is an illusion. Nothing in this world is for free. It’s merely subsidized by the contribution of others or through some form of coercion. Socialism and the incentive problem exacerbate these issues dramatically.

Consider the story of the birds by Dr. Amrhein:

Dr Amrhein produced a study through giving extra food to certain birds to determine their mating reactions to the un-gathered nutrients.

He expected that males who were being given extra food would perform better during the dawn chorus than those that were not.

To his surprise, he discovered exactly the opposite. Those who received food supplements got lazy.

He and his colleagues report in Animal Behaviour that 36% of the males whose feeders were filled started singing only after the sun had already come up.

Among the birds without this extra food, that happened only 10% of the time.

Moreover, the effect was sustained after feeders were removed, for it was still apparent at the time of the third observation.

Why extra food has this effect is unclear. What is clear is that delaying dawn singing is a dangerous game for males to play.

I think it’s pretty clear why the extra food has this effect: the birds got lazy.

If you are given everything you need to sustain, why push yourself to thrive?

We humans (similar to the birds) are driven by incentives. These incentives provide a reason to reach forward and conquer hardship.

When the incentives are taken away, you no longer have a reason.

This is why we do anything that we do. There is some incentive. Whether its financial compensation, social validation, or moral righteousness, there is always an incentive to provide the reasoning for an action.

The incentive for the birds to create their chorus, and thus mate, was to create a sustainable unit. If they already have the food, why would they need the unit? They lost a prime incentive.

And likewise, we see this with humans.

Under socialism, we lose some of the principle driving incentives for productivity. If you’re going to be hit with a tax rate that will bring you down to someone that does not work hard, why would you work hard? If you can receive government handouts in place of a grueling 40 hours a week job, why would you pick the job?

Consider accountants. There isn’t really a moral incentive to being an accountant. Nor would many argue for a social incentive. But there is a clear financial incentive for top performing accountants, making over 100k a year.

Socialism takes that financial incentive away. If the lonely accountant gets put under an 80% tax, and makes just enough to get by—the same as someone on welfare—what would be the purpose to put in that much work and productivity? There isn’t one. The incentive isn’t there.

The accountant would be better off either not working, or not working hard/efficiently. It doesn’t matter either way if most of their earnings will be going to taxes. The incentives aren’t there.

But there is also another issue at play here.

While certain incentives are taken away under socialist policy, others take their place. Harmful ones.

One of these harmful ones is the incentive to keep their dependent position.

If you don’t work hard and get handouts through socialist redistribution policies, you now have an incentive to ensure that these policies aren’t stripped from you.

Why would anyone try to better themselves if they could keep an easy and low productive lifestyle through taking from those who do work hard to provide for themselves? Why would they fight against their own self interest to lose their policy that gives them welfare?

They wouldn’t.

Their incentive would be to keep the action in place that allows them to remain sustainable.

And that’s the socialist model in a nutshell. The politicians eventually develop individuals to be dependent on them through the aversion of healthy incentives. Instead, by replacing them with dependent incentives.

Thus, they develop a voting bloc based on dependency. And it grows with the growing dependent population. We’ve seen this in practically every modern day socialist country.

It creates a power-vacuum which is practically impossible to destroy through democratic means until the country runs out of money and the socialist camp collapses in on itself (See: Venezuela).

While it seems morally righteous to provide a high means of living for everyone, it isn’t a stable governmental form. Socialism always results in large, controlling governments and less freedom. It has historically always faced tyranny and collapse as well.

Instead of facing the reality of life and her struggles, we are prolonging those issues and making our children face them the next cycle around.

Society should be working toward granting its children a brighter future. One with new technologies in place that make life easier for them, even if they have to work for it.

Under socialism, those technological advances will never come to fruition because of the lack of incentives to create them. Likewise, the benefits you receive now, your children will have to pay for later.

If you think that you can get everything for free, and dis-incentivize the individuals who provide them, you are economically insane. It has never, and will never, work.

You merely put the debt on the next generation. Pass it around like a hot potato in a children’s game.

This isn’t moral. It isn’t righteous. It’s cowardice and selfishness.

Incentives can be used for great things: incentivizing people to work hard to create a great life for them and their family. However, it can also be used to keep people chained.

The socialist ideas of incentives are harmful to the individual and society itself. But it’s also a problem that is incredibly difficult to backtrack on (See: Social Security).

The only way I see these problems being rectified is through the immediate acknowledgement of the problem and education on the threat. Otherwise, socialism will always conquer capitalism through democracy, simply because of the socialist ability to capitalize on incentives and the inability of people to break free from them in a large crowd.

Check out our related article: “55 Reasons Why Socialism Sucks”