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Capitalism, cronyism, and socialism
Capitalism, cronyism, and socialism
Jan 15, 2025 7:38 AM

“Having a heart for the poor isn’t hard. Having a mind for the poor…that’s the challenge.” –Poverty, Inc.

This quote from the documentary Poverty, Inc. highlights the reason why so many people are willing to give their money to foreign aid, without necessarily understanding its harmful effects. This quote can also shed some light on the recent embrace of socialism by many millennials.

When young people look at the rate of poverty in the U.S. and see that we are not doing as well as some other developed countries, it is easy for them to place this blame on what they believe is “capitalism.” If capitalism has caused the U.S. to experience this poverty then it logically follows that people today, especially millennials, would embrace socialism instead of capitalism.

Given that I am a millennial myself, this makes sense to me. It’s clear that we care about these causes and that we are willing to give our time and money. That’s the easy part. We have a heart for the poor. The challenge is having a mind for the poor.

Having a mind for the poor may seem like a challenge, but it’s certainly not impossible. It all begins with a basic understanding of economics. It is not capitalism that makes people poor, but the crony capitalism that creates a two-tiered society. Socialism does not help the poor, but bination of moral principles and free-market capitalism does. Sam Gregg recently highlightedhow free-markets revived West Germany’s stagnant socialist economy in 1948.

Up until recent political movements, this was rarely debated among the different sides of the political spectrum, especially among the major political parties. Many understood that the power of the free-market was the leading tool used in alleviating poverty.

Economics does not change because of current political and social movements. All that changes is the way that people understand economics. What was once understood as free-market capitalism became horribly mistaken for a big government that chooses winners and losers in the economy. Crony capitalism and free-market capitalism are now grouped together as simply “capitalism” and capitalism has e public enemy number one for millennials and other “social justice warriors.”

Last January, the hashtag #resistcapitalism trended throughout the world on Twitter. Do the people who belong to this movement truly understand what capitalism is?

Socialist/Communist/Anti-capitalist history is heroic! A fight for humanity and for this planet! #ResistCapitalism /KGnEyLScGK

— TayGo (@taygogo) January 8, 2016

This tweet using the hashtag #resistcaptialism, claims that “Socialist/Communist/Anti-capitalist history is heroic!” I can’t think of one situation when socialism munism was “heroic.”

There is something genuinely appealing about belonging to a movement that claims to be for the underdog and against the establishment. It’s appealing to belong to the camp that claims to care for the less fortunate and is actually talking about these issues. This is why a previously unknown senator from Vermont was able to start a movement that quickly attracted millions of followers. Everything about his “democratic socialism” sounds good but none of it makes any economic sense at all.

When college students are asked what they like about Bernie Sanders, one student replies with “I like socialism!” I wonder if she truly knows what socialism is. Or does she know of all the harm that socialism has caused? One phrase that I often hear from millennials is “I don’t know the economics of socialism, but look, it’s working in all of the Nordic countries.”

How can people who know practically nothing about economics and claim to want to help the poor be so quick to embrace an economic system that is responsible for the death of millions of people?

Murray Rothbard once said, “It is no crime to be ignorant of economics… but it is totally irresponsible to have a loud vociferous opinion on economic subjects while remaining in this state of ignorance.”

We cannot let the ignorance of economics blind us to the most effective ways of bringing about poverty alleviation. Instead, we should use what we know about economics to approach the issue of poverty in a way that has proven to be successful. Before we can begin to talk about helping the poor, not only in our country but all across the world, we need to educate ourselves on the differences between capitalism, cronyism, and socialism. We need to educate ourselves on what works and what doesn’t.

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