Two Reasons
– Waste and Lack of Innovation.
Socialism is
defined as government running a nation's economy. Socialism is the
most failed economic system in human history and has left all of its
victims poor and miserable, and many often dead from starvation.
On the other
hand, Capitalism is the most successful economic system in human
history and the only economic system to lift billions of people out
of poverty.
For a company
to succeed under Capitalism, it must provide the products and
services with the quality and price that consumers are willing to pay
without producing significantly more than what the free market is
willing to purchase. The better it does this, the more profit it
makes, which is the “reward” and “incentive” for being in
business in the first place. If a company doesn't provide what
people want to buy or produces much more than people are willing to
buy, it has wasted the physical and human resources responsible for
its products and services causing the company to lose money or
profits to substantially shrink. When a company has produced an
overstock of products that people are willing to purchase at the
original price, Capitalistic companies monitor this and cut back on
future production and/or are willing to cut prices to increase demand
for their products so that they at least get something for their over
production instead of nothing plus having to pay to store the
unsaleable overstock, further adding to over production costs and
therefore losses.
Socialist
nations have none of these incentives and simply set socialist
company sell prices and production “goals” to meet, whether or
not those goals meet demand or are much more than demand, or are the
price and quality that meet consumer wants and needs. Normally, they
do not cut prices, nor reduce production quotas when their product
sales are weak because governments have no incentive to do so. Nor do
they increase production when product demand exceeds production
goals, thus losing a profitable opportunity. Governments do not go
out of business in these wasteful situations as do capitalistic
companies.
Also, unlike
capitalistic companies, Socialist government companies have no
incentive to innovate. Unlike capitalist companies, there is no
“reward” for doing so in a socialist nation, thus no incentive.
That explains why the world's major innovative and wealthy companies
originated right here in the United States – Microsoft, Apple,
Amazon, Walmart, Home Depot, Google, Facebook, Tesla, Intel, etc..
Also explains why older, formerly successful companies that rest of
their former laurels and do not compete aggressively and/or innovate
shrink or go out of business – Sears, K-Mart, JCPenney, TWA, Pan
Am, Grant's, A&P, Montgomery Wards, Radio Shack, Blockbusters,
WoolWorths, etc..
Consequently,
the people of Socialist governments, the victims of government waste,
inefficiency, and lack of innovation, have much less wanted and
needed products and services, and therefore much less wealth than the
people of Capitalistic nations.