Patrick Lencioni on the Two Core Problems with Socialism

Patrick Lencioni is an excellent business thinker. He is known for simple yet powerful management wisdom through books like The Five Dysfunctions of a Team and The Three Signs of a Miserable Job.

Recently, he has started The Simple Wisdom Project, which is intended to be “a source of perspective and common sense about topics relating to family, faith, and life’s daily challenges.”

His latest monthly article discusses socialism. He writes it in response to a reader who “wanted to understand why socialism is a bad thing, especially in the context of the Christian commandments to love thy neighbor, care for the poor and avoid materialism.”

The short article is well worth your read. Here are a few key excerpts.

Socialism doesn’t work:

First, it just doesn’t work. At least not for very long. That’s because people are flawed and, outside of a family, a religious order, or a small group of friends, they will not continually work hard for the ‘greater good’ if they do not receive the fruits of that work themselves. As an economics major in college, I learned that this theory had a name: ‘the free-loader effect’. It is the natural tendency of people to do less and less work when they realize that they won’t see a proportionate increase in what they can get for it.

Over time—and this is an inevitable consequence of the free-loader effect—socialist societies experience decreasing productivity, risk-taking, and innovation, along with increasing tax rates, promises of government programs, and expectations from citizens about what they can get from those programs. When the economy inevitably falters under its own weight, those expectations cannot be met.

Socialism diminishes the dignity of human beings:

The second reason why I believe socialism is such a bad idea is very much related to the first, but much more important to me as a Christian: it diminishes the dignity of human beings. In socialist societies, individuals grow increasingly dependent on the government for their well-being, and less and less confident that they are capable of and responsible for themselves. This is an inevitable recipe for cynicism, fatalism and depression.

Socialism advances through a subtle, “slow creep”:

… socialism does not usually spring up over night. Instead, it creeps. Little by little we grow accustomed to new and higher taxes (“it’s just a one percent increase in the sales tax”), more government programs (“how can I vote against free ‘fill-in-the-blank” for children?”), and the false lure of getting something for nothing.

What should we do if we really want to be compassionate and make a difference?

So what are we to do if we want to act on our desire to do good and make a difference? Work hard. Create jobs. Treat our employees with dignity and love. Give generously of our money and our time to good charities and directly to those in need. And demand that our government compassionately provide effective programs and services for those who are truly incapable of providing for themselves.

But we should never, ever, support a program, a tax or a proposal that makes us feel good but ends up making the lives of the people we are supposed to be helping, and the society in which they live, more difficult and dependent.

April 16, 2009 | Filed Under Economics, Politics | 15 Comments 

Comments

  • Michael C.

    Hello Matt. I recently found your blog and have been enjoying reading here.

    Another strong argument against socialism is that without a price system it is virtually impossible to allocate resources. The economist F.A. Hayek demonstrated how much information about supply and demand is consolidated and communicated through the price system. When there is no accurate price mechanism in a command economy, planners have no way to gather the information about supply and demand that is dispersed throughout the economy. As a result there are shortages and all kinds of inefficiencies as resources are allocated.

  • http://www.jasondollar.net Jason Dollar

    I appreciate the clearness of the points Lencioni makes. Unfortunately, the mass of unthinking people are not willing to ponder through these simple, common sense objections to socialism. All they hear is teh mindless drumbeat of: “free healthcare,” “free education,” and so on.

    But nothing (other than God himself) is really free, is it?

  • Mark W

    “And demand that our government compassionately provide effective programs and services for those who are truly incapable of providing for themselves.”

    He was right until that point. The problem is that this inevitably lead to what he next warns against, i.e.: “a tax or a proposal that makes us feel good but ends up making the lives of the people we are supposed to be helping, and the society in which they live, more difficult and dependent.” The problem is that any gov’t program to help the poor is ultimately misguided in that it has the force of law behind it – this is a weakness that charities do not share.

    Think about it. If a charity exists to help those in need, and it fails – it is either too inefficient, or corrupt, or just poorly run, no one will want to support it, it will no longer receive donations and it will eventually cease to exist. Another, better charity will take its place, or the people it was designed to help will solve their problems without the use of a charity. Also, because all charity workers understand this, they have a strong incentive to run their charities honestly, effectively, and efficiently.

    Now consider a branch of the gov’t designed to help the poor. Regardless of how well it is run, or what need it fills, all American citizens are required by law to “donate” to this “charity.” They have no choice. If they don’t they will be thrown in jail for failing to pay their taxes. Therefore this “charity” has an assured revenue stream regardless of its performance. Its managers/workers incentive to perform their job well and help the people they’re supposed to help is erased. They will kept alive by the force of law in perpetuity.

    In addition, because everyone has no choice but to support this charity, those who are already struggling financially will be placed under a greater burden. They will either be more put out, or worse, the gov’t will step in to help them. And then the inefficient cycle continues, self-perpetuating by the force of law…

  • http://pugnaciousirishman.com Rich Bordner

    Wow, he makes some good and powerful points!

    I’m no econ expert, but I’ve noticed that most bad systems start with a flawed view of human nature…they don’t take into consideration the depravity of man. This was one (of a plethora) thing that hamstrung Communism, and it hamstrings Socialism too.

  • Rob

    Your argument might be a solid one if it were not such a clear example of post-hoc theorizing. It is easy to look at examples of societies with mixed capitalist-socialist societies and find problems and shortcomings while ignoring the massive problems that persist in systems that are theoretically market driven and capitalist.

    A better approach, Patrick, might be to identify specific failures in socialistic systems rather than sweeping generalizations that play to your readers proclivities.

    The funny part is that if Marx was right, socialism is the inevitable result of market capitalism and its abuses and excesses.

  • http://barrywallace.wordpress.com Barry Wallace

    Very good. On principle, I vote against all tax increases, even if they’re for something I support.

  • Brent

    Just want to draw attention to Rob’s comment:

    “The funny part is that if Marx was right, socialism is the inevitable result of market capitalism and its abuses and excesses.”

    I think as believers we should be careful not to champion any economic or political system founded by men. Perhaps we should be announcing the inauguration, and soon coming commencement of the kingdom of God on the earth (theocratic kingdom).
    The problem with all human governmental systems is that they all finally lead to oligarchy. Even our republic has managed this one if we’re honest about it. I’m sure some would disagree, but I would encourage doubters to check out the dominance of the two major political parties in this nation for starters. Anyone who has spent a considerable amount of time in D.C. can probably admit that money fuels politics in this nation. And the political parties with the most money are more likely to possess the most influence.
    Oh and perhaps we should read the Sermon on the Mount, and rethink our political persuasions and sympathies for we are aliens ultimately.

  • Mark W

    Rob,

    Your argument might be a solid one if you were able to present evidence of “the massive problems that persist in systems that are theoretically market driven and capitalist.”

    Please also explain the positives of socialism.

    I’ll wait.

  • Rob

    Mark,

    Second things first. I did not make a claim that socialism is a desirable economic arrangement. All I said was that Marx predicted that capitalism would lead to socialism due to its abuses. I never stated a preference for one system or the other and, as a Christian, never will.

    First things second. The problems with capitalist markets are clearly seen in today’s economic mess: corporate greed and fraud led to bad decision making on the part of bankers, home builders, consumers, and even government leaders. Unemployment is rampant, and consumption was out of control (and will be again when the economy recovers). Companies pay only what they MUST for labor rather than what they SHOULD.

    None of this is a preference for one type of system or another. Just my conviction that ALL economic systems are rife with shortcomings. We can argue ad nauseum about which shortcomings are worse but that would neither be edifying or profitable (biblically speaking).

  • http://mises.org Havvy

    If you start with the axiom “Humans act”, you’ll find conclusions similar to that mentioned in this blog post, and you will ultamitely find that socialism will not work. The most efficient method of delivering scarce resources can only be done through the voluntary exchange system known as capitalism. Any system that attempts to force the giving or taking of resources (taxes, stimulus bills, redistribution schemes, welfare) will ultimately cause more net harm than benefit.

  • http://steves99things.wordpress.com steve

    hey,
    i thought the religious standpoint towards sociology was interesting. i would recommend max weber’s “the protestant ethic and the spirit of capitalism.” it might provide some insight as to why a christian would be adverse to the idea of a socialist government… and it all starts with martin luther.

  • http://steves99things.wordpress.com steve

    oh, for a short summary:
    weber talks about how we moved from working in order to live towards living in order to work.

  • Pingback: Gargantuan Government « The Pugnacious Irishman

  • Pingback: Patrick Lencioni on the Two Core Problems with Socialism : What’s Best Next | CBC

  • Pingback: Patrick Lencioni on the Two Core Problems with Socialism : What’s Best Next | thecripps.net