This is an excerpt from my new book

There is a recurring myth in American media. The myth is that Americans and American companies will not be able to compete in a global market place. The myth is that some how we have lost our preeminence in international business. We have been led to believe that America after dominating markets for the twentieth century will fall by the way side in the 21^st. This cannot happen. Americans and American companies are protected. They are protected from the most feared and loathsome creatures in the world, political leaders and their bureaucratic lackeys.

It’s socialism. The problem is socialism. The problem of socialism is the conceit of government leaders and bureaucrats. In 1856, Alexis de Tocqueville wrote about a “regulating, restrictive administration, which seeks to anticipate everything, take charge of everything, always knowing better than those it administers what is in their interests.”[i] The problem is that they do not know better. People screw up. Government leaders and officials are people. The difference is that when government leaders and officials screw up, more people suffer. They could be forgiven, but they rarely apologize.

Not only do people screw up, we have problems admitting when we are wrong and correcting the problem. This is due to a number of cognitive biases, which by definition is a distortion of the way we perceive reality. A few of the cognitive biases that prevent people from making the right decisions include: Confirmation bias, which is the tendency to search for or interpret information in a way that confirms one's preconceptions; The Disconfirmation bias, which is the tendency for people to extend critical scrutiny to information which contradicts their prior beliefs and accept uncritically information that is congruent with their prior beliefs; and the Loss aversion, which is the tendency for people to strongly prefer avoiding losses over acquiring gains. [ii]

A recent notorious example of these cognitive biases is the American involvement in Iraq. The Bush administration interpreted information in ways that confirmed their preconceptions about Iraq and then applied scrutiny only to information that contradicted their belief. The administration continued to hold on to its beliefs long after everyone else had abandoned them to avoid admitting to a major disaster.

Only democracy and choice stepped in to change policy. The disastrous mid term election of 2006 decimated the president’s party. After the election there was no other choice. Policy had to change. The conceit remained.

The problem of socialism is that these poor choices are not applied to questions of foreign policy, tax policy, welfare, defense or public safety. They are applied to questions of economics. The basic premise is that a government leader, official or bureaucrat’s knowledge and opinion are superior to the billions of people who make up any market. Socialism believes that the choice of the market is wrong and that given the proper guidance by skilled and enlighten leaders, the markets missteps can be corrected and its energies guided.

Any socialist will insist that their motives are pure. When a socialist is elected, appointed, or assumes power, they intend to take not only political but economic power as well. They intend to take power away from the market, away from investors, away from consumers, workers and business people and give it to themselves. They argue that the point of government is to protect the governed. Since markets allow some people to be better off than others, the others, those less fortunate need protection and that the government is in the best position to provide that protection.

Sounds good, but doesn’t work. Markets are the most basic form of democracy. We do not make our choices known with our votes. We make them known with our money. We make our choices known by placing our money on whatever product service or investment that we feel will suit our needs. By making these choices even the poorest of the world’s citizens is exercising power. Taken together, the power of all of these choices is huge. It changes in an instant. It adapts to every taste. It supplies most every need. It is this power that is the object of every socialist’s desire. They lust after the power.

Sometimes they even get it right. Sometimes socialist leaders can actually guide countries in ways that actually benefits large segments of the population. Sometimes they can encourage spectacular economic growth. But no one gets it right forever. Sooner or later they start to make mistakes. They choose the wrong company to invest in. They choose the wrong people to run the companies. They choose the wrong technologies. They choose the wrong places to put profits. Eventually, over time, the system runs down. The economy slows.

The United States will always avoid this problem. The reason is that our constitution and our laws protect us from government leaders. They protect the freedom of the market. They protect our rights to own property. Most of the rest of the world is not so fortunate. Their laws do not limit government power. On the contrary, they help government leaders and officials to extend power to places where it should never be. They allow the government to take property ostensibly in the name of the people. The government then pretends to run these companies for the benefit of the state. The reality is that they always are run for the benefit of those individuals who govern the state.