Plus, what about all of the things like corporate exodus, tax evasion and brain drain that can mess up socialists?
My first game as Britain, I got assassinated 52 years in for being too socialist, why? I had created a Britain made of 70% capitalists and I played more-or-less socialist.
It really is a balancing act at some point. Remember that no matter what direction you go, getting rid of your deficit is politically difficult. For example, having tried reducing all forms of government healthcare and school and such to nothing after reducing income tax, it is always harder as the government to take money away than to give it and make it appear out of nowhere (A.K.A. foreign debt).
So if you immediately reduce taxes, you will see a massive wall of debt coming at you before you can get rid of healthcare and all of the other things that money is being spent/wasted on.
Also, it might just be that socialism works better. Even in real life, most first-world countries are more socialist and more liberal than those that aren’t first-world countries (communist countries being an exception, but then again they also do things that no liberal would normally support). Maybe a certain degree of socialism is necessary for a country to work well?