Young Democrats are excited about socialism. They are rallying behind mayoral candidates like Zohran Mamdani in New York and Omar Fateh in Minneapolis, as though these democratic socialist politicians had something new to sell.
They do not.
Socialism has been around for a very long time, and it has consistently failed everywhere it has been tried. It has failed in countries such as Venezuela and Mexico. It has also failed in U.S. cities and states that have adopted leftist policies of the very sort proposed by these newcomers.
Most recently, it failed spectacularly in Bolivia, where the ruling leftwing party Movimiento al Socialismo was just voted out of office for the first time in 20 years — excluded by voters from the upcoming presidential runoff election.
Why did citizens of that small South American country revolt? Because inflation is at 25 percent — a 40-year high — foreign exchange reserves have nearly run out, the country is short of fuel and medicines and the government is scrambling to pay its debts.
Bolivia’s socialist government followed socialism’s doctrines, nationalizing key industries, weakening private property protections, expanding the wasteful state and imposing a crushing tax system, causing it to be ranked 150 out of 190 countries in the “Doing Business” report authored by the World Bank. It has done such a lousy job in the formerly prosperous country that the party’s candidate received only 3.1 percent of the recent first-round vote, just barely above the threshold needed to remain a registered party.
There are three main reasons socialism is and always be a dud, and not just in Bolivia.
The first is that redistributing income from producers to non-producers — a key tenet of socialism and communism — reduces the incentives for talented, ambitious and hard-working people. Deprived of the fruits of their labor, producers either work less or move to locales that better reward their efforts.
The second is that giving the government greater control over the economy leads to higher levels of corruption and inefficiency. Private enterprise is imperfect, but the profit motive demands and delivers high productivity compared to unaccountable bureaucracies.
Third, the more money that is funneled to the state and used unproductively, the less investment, productivity and growth will result. That leads to lower incomes, increased poverty and greater inequality — which indeed is the story of most socialist nations.
We see evidence of the first issue in how people respond to burdensome high taxes. When Bernie Sanders began touting democratic socialism, he was asked for examples of where such governance had been successful. Sanders and others on the left often cited Sweden as a country that prospered under the kinds of redistributive policies that he endorsed. But Sweden’s experiment with socialism came to a screeching halt in 1976.
Astrid Lindgren, the country’s hugely successful author of the beloved Pippi Longstocking books, discovered that her country’s tax code was forcing her to pay a marginal tax of more than 100 percent on her income. For every extra hundred dollars she earned, she had to pay the state $102.
In response, Lindgren wrote a satirical fairytale, “Pomperipossa in Monismania,” about an author forced to pay exorbitant taxes. It ignited a furious debate over both Sweden’s tax regime and the governing political party. Fellow Swedes were so outraged about the confiscatory tax laws that they ousted the Social Democratic party for the first time in more than 40 years.
People will only accept so much. Here in the U.S., the top states in terms of losing residents — New York, California, Illinois and New Jersey — all place among the top 10 highest-taxed states in the country. Conversely, the states with the biggest population gains in recent years include Florida, South Carolina and Texas, which rank among the lowest-taxed states.
This is not rocket science.
As monies are allocated away from the private sector and to the government, corruption grows while productivity and growth take a nosedive. The tax burden imposed by the U.S. is lower than that of most countries in the Organization for Economic Cooperation and Development. Specifically, our nation ranked 32 out of 38 OECD countries in terms of the tax-to-GDP ratio in 2023. European nations in particular have prided themselves on providing a bigger safety net than in the U.S., but they have paid a high price in terms of growth and income.
Between 2008 and 2023, the economies of the European Union grew by 13.5 percent, compared to 87 percent growth in the U.S. Economists attribute the disparity to differences in productivity, the more flexible U.S. labor market, an abundance of domestic energy and lighter regulations. None of these advantages is sought or prioritized by socialists.
In Bolivia, the socialist appetite for growing the state not only meant nationalizing important sectors of the economy but also adding costly bureaucracy. According to the Foundation for Economic Education, the government went from a simple and functioning three ministries to 17 ministries and 22 vice ministries, all draining resources from taxpayers. In addition, the country’s leaders created more than 60 state-run businesses, “all of which are deficit-prone and arbitrary to the economy.”
Government bloat encourages corruption. Bolivia numbers 133 out of 180 nations ranked by corruption. Venezuela, sitting on the world’s largest oil reserve, ranks 178 out of 180 — a reminder that socialism makes even resource-rich countries uncompetitive.
Building up the state does not make people wealthy. You won’t find Bolivia or Venezuela listed among the nations with the highest GDP per person; Bolivia actually comes in at 123 and Venezuela at 128.
The appeal of socialism comes from a thirst for more fruits and less labor. Promises of free childcare, subsidized food and controlled rents punctuate the slick campaign promises of socialist candidates. Unhappily, the fairy tales spun by these cynical politicians, embraced by those ignorant of history and precedent, almost never have happy endings.
Winston Churchill said it best: “Socialism is the philosophy of failure, the creed of ignorance, and the gospel of envy.”
Liz Peek is a former partner of major bracket Wall Street firm Wertheim and Company.
Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
For the latest news, weather, sports, and streaming video, head to The Hill.
Comments