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Archive for the ‘Socialism’ Category

Regular readers may have noticed that I generally say that advocates of big government are “statists.”

I could call them “liberals,” but I don’t like that using that term since the early advocates of economic and personal liberty were “classical liberals” such as Adam Smith, John Locke, and Jean-Baptiste Say. And proponents of these ideas are still called “liberals” in Europe and Australia.

I could call them “socialists,” but I don’t think that’s technically accurate since the theory is based on government ownership of the means of production. This is why I’ve been in the strange position of defending Obama when some folks have used the S word to describe him.

I could call them “fascists,” which Thomas Sowell explains is the most accurate way of describing the modern left’s economic ideology, but that term also implies racism. But while leftists sometimes support policies that hurt minorities, they’re not motivated by racial animus.

I could call them “corporatists,” and I actually have used that term on occasion, but I think it’s too narrow. It’s not really an ideology, but rather a description of the sleazy alliance of the left and big business, such as we saw for TARP and Wall Street, or Obamacare and Big Pharma.

I’m motivated to write about my favorite way of expressing opprobrium because I just read a very interesting column in the U.K.-based Telegraph by Tim Stanley, an American historian.

He delves into the issue of whether it’s right to call Hitler a socialist.

…the Nazis did call themselves National Socialists. But…labels can be misleading. …Hitler wasn’t a socialist became apparent within weeks of becoming Chancellor of Germany when he started arresting socialists and communists. He did this, claim some, because they were competing brands of socialism. But that doesn’t explain why Hitler defined his politics so absolutely as a war on Bolshevism… Marxism is defined by class war, and socialism is accomplished with the total victory of the Proletariat over the ruling classes. By contrast, Hitler offered an alliance between labour and capital in the form of corporatism… It is true that the economy was socialised in the latter part of the 1930s, but not for the sake of building socialism. It was to prepare for war. Politics came before economics in the fascist state to the degree that it’s hard to conceive of Hitler as a coherent economic thinker at all. …Marxism defines history as a class struggle. Hitler saw it as a racial conflict… he was sometimes prepared to use socialist economics to pursue his agenda.

These all seem to be valid points, but I wonder whether it makes a difference.

Tarantulas, black widows, and brown recluses are all different species of arachnids, but it’s also correct to say that they are all poisonous spiders.

And I sure as heck wouldn’t want any of them to bite me.

Similarly, socialism, Marxism, and fascism may have specific motivations and characteristics, but they’re all forms of statism.

And I definitely don’t want to acquiesce to any of those coercive ideologies.

Which seems to be Tim Stanley’s conclusion as well.

The moral lesson is that power corrupts everyone: Left, Right, men, women, gay, straight, black, white, religious, atheist. The best countries have constitutions that limit the government, cherish the private sphere and largely leave the individual to make their own mistakes.

Now let’s look at a real-world example of a country that is suffering because of statism.

Allister Heath of City A.M. in London explains what is happening in Venezuela.

IF you want to see how to destroy an economy and a society, look no further than Venezuela. …the country is on the verge of total collapse… Food is running out, as are other essentials, even though the country claims the world’s largest oil reserves. There are shortages of toilet paper and soap, empty shelves and massive crowds queuing for hours in front of supermarkets. …The reason? A brain-dead rejection of basic economics, and a hardline, anti-market approach of the worst possible kind. There are maximum prices, other prices controls, profit controls, capital controls, nationalisations, expropriations and every other statist, atavistic policy you can think of. An extreme left wing government has waged war on capitalism and won; and as ever, ordinary people are paying the price. …The lesson from all of that is clear. Socialism doesn’t work. Price controls don’t work. Stealing people’s property doesn’t work. Chasing away foreigners doesn’t work. Destroying the supply-side of an economy doesn’t work. …It is a spectacularly horrible case of what FA Hayek called the Road to Serfdom.

For all intents and purposes, Venezuela is sort of like France, but without the rule of law. Which means bad policies become catastrophic policies.

And Allister is right. It is ordinary people who suffer. Venezuela’s long-term experiment with statism has resulted in stagnation and chaos. Once one of the richest nations in Latin America, it is now falling behind nations that have liberalized.

The Venezuelan government can’t keep food on the shelves, and it is moving closer and closer to Cuban-style rationing of basic necessities.

And people familiar with the history of statist regimes won’t be surprised to learn that Venezuela also is disarming the citizenry.

P.S. One business leader got a lot of heat for observing that Obamanomics was more like fascism than socialism. And another caught a bunch of grief for using an analogy about tax hikes and the Nazi invasion of Poland.

If they used “statism” instead, they would have been more accurate and avoided criticism.

P.P.S. This image is a funny but accurate illustration of the difference between socialism and capitalism. And here’s a socialism-for-kids image, but it’s really a parody of Obama’s class-warfare mentality.

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Very few political cartoons make me laugh out loud.

Even when I look back at the all-time favorites that I included in my political cartoonist contest, most of them are on that list because they make a very effective and clever point about public policy.

Though I do recall being very amused by Glenn McCoy’s cartoon on media bias, Chip Bok’s war-on-women cartoon, and Robert Ariail’s cartoon about Greece and the euro.

But I don’t think any of them made me laugh as much as this gem by Scott Stantis.

Socialist Obama Cartoon

I don’t even know why it struck me as being so funny.

Yes, I have a peculiar interest in international economic policy, so I’m fully aware that President Hollande of France is a disaster, but I’m not sure that’s enough to make a cartoon amusing.

And I’ve commented several times on the debate over whether Obama is a socialist, but that’s hardly a topic that lends itself to humor.

Hollande v ObamaOr perhaps I’m just a narcissist and I appreciated a cartoon that was somewhat similar to one of my homemade jokes about Hollande and Obama.

Beats me.

But kudos to Scott Stantis (who also is the author of the best-ever cartoon on the failure of Keynesian stimulus).

Since we’re looking at funny cartoons, it’s time to give some credit to the other side.

I don’t often find much humor on the left, but this cartoon on income inequality is worth sharing.

It’s from the New Yorker, though I don’t know the author. And I confess that I’m merely assuming a left-wing perspective.

It’s your call whether this cartoon is as good as the other leftist cartoons I’ve shared, but it is a good caricature of the GOP country club types.

P.S. Yesterday I shared some libertarian valentines.

So in the interest of fairness, here’s are some left-wing valentines.

They’re designed to trick people into signing up for Obamacare.

Our first option is from a group called the National Women’s law Center.

And here’s one from a group named the Young Invincibles.

obamacare valentine

I have to say that I’m not overly impressed with either one of these valentines.

Though anything has to be better pro-Obamacare marketing than Pajama Boy or casual sex (because big government can take the fun out of anything).

JeffersonP.P.S. Speaking of Valentine’s Day, the PotL graced me with her presence, making me an inexplicable winner.

Even if some of my erstwhile friends who watch Modern Family have started to refer to us as Jay and Gloria.

P.P.P.S. Let’s close with a comment on a very odd story from Norway.

The nut-job who killed 77 people has made an announcement.

Anders Breivik…wants the world to know that he’s being treated “worse than an animal” in prison and is considering going on a hunger strike until the “torture”-like living conditions improve. Just how bad are things for the admitted and unrepentant killer? Well, for one, he says he’s being forced to play his video games on an out-of-date Playstation 2 instead of a newer model. …Breivik was deemed sane by a Norwegian court in the summer of 2012 and sentenced to 21 years in prison, the most-severe sentence allowed under the Scandinavian country’s laws… Details of Breivik’s current conditions are a bit unclear, although Norwegian news reports from the time of his sentencing suggested that he was going to be kept in a three-room cell complete with an exercise area and a television.

I guess it’s a good thing I’m not the warden at his prison.

Why? Because I not only would turn down his request, but I also would dump him in a 6X8 call. Moreover, I would station a couple of guards outside his cell and have them play the newest and fanciest version of Playstation 24 hours a day.

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If you ask an economist about the difference between capitalism and socialism, you’ll probably get a boring answer about the size of government, the impact on incentives, and the power of the state.

Or maybe you’ll get a nit-picking answer, sort of like when I explained that Obama technically isn’t a socialist.

That’s why it’s sometimes best to use simple, common-sense analogies.

Two years ago, I used two cows to explain the differences between various economic systems.

But this image may be an ever more succinct way to showing the difference between capitalism and socialism.

Socialism capitalism bread

Or, if you prefer stories, this updated version of the fable of the ant and the grasshopper makes the same point.

And here’s the PC version of the Little Red Hen.

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Some things in life are very dependable. Every year, for instance, the swallows return to Capistrano.

And you can also count on Dan Mitchell to wax poetic about the looming collapse of French statism.

Back in 2011, I said France was engaged in economic self-destruction.

In September 2012, I wrote that it was time to start the countdown for France’s fiscal crisis.

In October of that year, I pontificated about France’s looming fiscal suicide.

Last April, I warned that the fuse was burning on France’s fiscal time bomb.

In June of 2013, I stated that the looters and moochers in France were running out of victims to plunder.

And in October of last year, I expounded on France’s economic death spiral.

Geesh, looking at that list, I guess I’m guilty of – in the words of Paul Krugman – being part of the “plot against France” by trying to discredit that nation’s economy.

Or maybe I’m just ahead of my time because we’re now seeing articles that almost sound like they could have been written by me appearing in establishment outlets such as Newsweek. Check out some amazing excerpts from an article by Janine di Giovanni, who lives in France and serves as the magazine’s Middle East Editor.

…what is happening today in France is being compared to the revocation of 1685. …the king closed churches and persecuted the Huguenots. As a result, nearly 700,000 of them fled France, seeking asylum in England, Sweden, Switzerland, South Africa and other countries. The Huguenots, nearly a million strong before 1685, were thought of as the worker bees of France. They left without money, but took with them their many and various skills. They left France with a noticeable brain drain.

It’s happening again, except this time the cause is fiscal persecution rather than religious persecution. French politicians have changed the national sport from soccer to taxation!

Since the arrival of Socialist President François Hollande in 2012, income tax and social security contributions in France have skyrocketed. The top tax rate is 75 percent, and a great many pay in excess of 70 percent. As a result, there has been a frantic bolt for the border by the very people who create economic growth – business leaders, innovators, creative thinkers, and top executives. They are all leaving France to develop their talents elsewhere.

It’s an exaggeration to say “they are all leaving,” but France is turning Atlas Shrugged from fiction to reality.

“Au revoir, bloodsuckers”

Many of the nation’s most capable people are escaping – ranging from movie stars to top entrepreneurs.

What I find most amusing is that France’s parasitical political elite is whining and complaining that these people won’t remain immobile so they can be plundered.

And when the people who have the greatest ability leave, that has an impact on economic performance – and ordinary people are the ones who suffer the most.

…the past two years have seen a steady, noticeable decline in France. There is a grayness that the heavy hand of socialism casts. It is increasingly difficult to start a small business when you cannot fire useless employees and hire fresh new talent. Like the Huguenots, young graduates see no future and plan their escape to London. The official unemployment figure is more than 3 million; unofficially it’s more like 5 million.

The article also gives some details that will help you understand why the tax burden is so stifling. Simply stated, the government is far too big and pays for things that should not be even remotely connected to the public sector.

Part of this is the fault of the suffocating nanny state. …As a new mother, I was surprised at the many state benefits to be had if you filled out all the forms: Diapers were free; nannies were tax-deductible; free nurseries existed in every neighborhood. State social workers arrived at my door to help me “organize my nursery.” …The French state also paid for all new mothers, including me, to see a physical therapist twice a week to get our stomachs toned again.

Government-subsidized “toned” stomachs. Hey, maybe big government isn’t all bad. Sort of reminds me of the taxpayer-financed boob jobs in the United Kingdom (British taxpayers also pay for sex trips to Amsterdam).

More seriously, all the wasteful spending in France erodes the work ethic and creates a perverse form of dependency.

I had friends who belonged to trade unions, which allowed them to take entire summers off and collect 55 percent unemployment pay. From the time he was an able-bodied 30-year-old, a cameraman friend worked five months a year and spent the remaining seven months collecting state subsidies from the comfort of his house in the south of France. Another banker friend spent her three-month paid maternity leave sailing around Guadeloupe – as it is part of France, she continued to receive all the benefits. Yet another banker friend got fired, then took off nearly three years to find a new job, because the state was paying her so long as she had no job. “Why not? I deserve it,” she said when I questioned her. “I paid my benefits into the system.”

So what’s the bottom line? Well, the author sums up the issue quite nicely.

…all this handing out of money left the state bankrupt. …The most brilliant minds of France are escaping to London, Brussels, and New York rather than stultify at home. …“The best thinkers in France have left the country. What is now left is mediocrity.” From a chief legal counsel at a major French company: “France is dying a slow death. Socialism is killing it…”

As the old saying goes, this won’t end well. Maybe France will suffer a Greek-style meltdown, but perhaps it will “merely” suffer long-run stagnation and decline.

Which is a shame because France is a beautiful country and is ranked as one of the best places to live if you happen to already have a considerable amount of hard-to-tax wealth (and the French also were ranked among the top-10 most attractive people).

But bad government can screw up a country, even if it does have lots of natural advantages.

And that’s exactly what generations of French politicians have done to France. The tax system has become so bad that more than 8,000 French households had to pay more than 100 percent of their income to the government in 2012.

The French government has announced, by the way, that it intends to cap taxes so that no household ever pays more than 80 percent to the state. Gee, how merciful, particularly since the French President has echoed America’s Vice President and asserted that it’s patriotic to pay higher taxes.

That’s why I’ll stand by my prediction that President Obama will never be able to make America as bad as France. Heck, France has such a bad approach on taxes that Obama has felt compelled to oppose some of that country’s statist initiatives.

P.S. The prize for silliest example of government intervention in France goes to the law that makes it a crime to insult your spouse’s personal appearance.

P.P.S. The big puzzle is why the French put up with so much statism. Polling data from both 2010 and 2013 shows strong support for smaller government, and an astounding 52 percent of French citizens said they would consider moving to the United States if they got the opportunity. So why, then, do they elect statists such as Sarkozy and Hollande?!?

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Too bad I didn’t have this Glenn Foden masterpiece when I did the political cartoonist contest last week.

I think it’s better than my previous favorite of his (about the “private sector doing fine”), and it’s thematically quite similar to the famous “European lemming” cartoon from Ramirez.

European Train Cartoon

One tiny correction, though. The Europeans aren’t socialists anymore. It’s more accurate to describe the policy in France, Italy, and elsewhere as cronyism, corporatism, or statism.

Though Thomas Sowell prefers to use an even harsher adjective when analyzing Obama’s approach.

What about providing some evidence that Obama’s making America more like Europe? Well, just check out the data from the latest Economic Freedom of the World annual report.

There are now six European nations that score above the United States, including two of my favorite places – Switzerland and Estonia!

It doesn’t justify his bad policies, but it’s worth noting that Obama’s merely continuing a bad trend that started under Bush.

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I’m a big fan of John Mackey, the CEO of Whole Foods. Not only is he a successful, job-creating entrepreneur, but he also cited my work (specifically, this budget analysis) when interviewed by the statists at Mother Jones.

He also has some good insights about the economics of Obamacare. Here’s the key passage from the Washington Times report.

The CEO of Whole Foods compared President Obama’s health care law to “fascism” in a radio interview on Wednesday, a turnabout from earlier comments in which he compared the signature reforms to socialism. “Technically speaking, it’s more like fascism,” John Mackey told NPR’s Morning Edition. “Socialism is where the government owns the means of production. In fascism, the government doesn’t own the means of production, but they do control it — and that’s what’s happening with our health care programs and these reforms.”

I’ve already provided my two cents on the underlying theory of Obamanomics, and I agree that socialism is not the right term.

Like Thomas Sowell and John Mackey, I think that it’s technically more accurate to say that Obamacare is fascism – nominal private ownership but government control.

But I’ve also concluded that it’s a distraction to use that term. Which is why I prefer to call Obama a statist or corporatist. Though maybe we should add redistributionist to that list.

P.S. Here’s the Obama version of Socialism for Kids.

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There are some races you don’t want to win.

I’m glad, for instance, that Greece instead of America is winning the race to fiscal collapse (though both the BIS and OECD predict the U.S. faces a bigger long-run challenge).

And I’m happy that California is farther down the path to chaos and meltdown than my state of Virginia (as illustrated by this amusing cartoon).

So you will understand that I am worried when a French socialist defends bad economic policy by saying that his country is copying the United States.

Here are some excerpts from a CNBC report about Obama being a role model for Hollande’s economic team.

“He’s not nearly as socialist as I am”

The French politician who said Indian steel company ArcelorMittal should leave the country has told CNBC that his government is only acting like U.S. President Barack Obama. Industry Minister Arnaud Montebourg, a member of the governing Socialist party, caused controversy last week when he said that the Indian company, which employs close to 20,000 people in France, should leave after it said it would have to close down a factory. The French government announced on Thursday that it could nationalize the factory in question… The news raised the specter of the nationalizations of the early 1980s, which were instigated by Hollande’s predecessor Francois Mitterrand. Montebourg told CNBC after a meeting with trade unions in Paris: “Barack Obama’s nationalized…” Montebourg brushed off comparisons with that era. He said: “It’s a very good sign to send out (to investors). Nationalizing is a very modern step to take. Especially when you not only nationalize losses but profits as well, when you make public/private partnerships. This is our strategy. …He declined to answer a question about comments from Mayor of London Boris Johnson, who told Indian businessmen earlier this week to come to London instead of France.

I don’t actually think we’re as bad as France, and the rankings from both Economic Freedom of the World and the Index of Economic Freedom both show the United States with more economic freedom.

But a good overall score doesn’t mean that one nation is better than another in all regards. The United States still ranks above Sweden, even though the Swedes have implemented school choice and personal retirement accounts. And America still ranks above the Slovak Republic, even though that country (at least for now) has a simple and fair flat tax.

So maybe Monsieur Montebourg is right about the U.S. being a trendsetter for bad industry nationalization policy. Gee, what a high honor. I guess this is what it means to be called ugly by a frog.

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A couple of years ago, Newt Gingrich accused Obama of being a socialist, causing some squawking and grousing about incivility from the more sensitive types in Washington.

I jumped to the President’s defense, pointing out that Obama is a different type of statist.

I’m gratified that Thomas Sowell of Stanford University’s Hoover Institution agrees with me.

It bothers me a little when conservatives call Barack Obama a “socialist.” He certainly is an enemy of the free market, and wants politicians and bureaucrats to make the fundamental decisions about the economy. But that does not mean that he wants government ownership of the means of production, which has long been a standard definition of socialism. What President Obama has been pushing for, and moving toward, is more insidious: government control of the economy, while leaving ownership in private hands. That way, politicians get to call the shots but, when their bright ideas lead to disaster, they can always blame those who own businesses in the private sector. Politically, it is heads-I-win when things go right, and tails-you-lose when things go wrong. This is far preferable, from Obama’s point of view, since it gives him a variety of scapegoats for all his failed policies… Thus the Obama administration can arbitrarily force insurance companies to cover the children of their customers until the children are 26 years old. Obviously, this creates favorable publicity for President Obama. But if this and other government edicts cause insurance premiums to rise, then that is something that can be blamed on the “greed” of the insurance companies.

So what is the right technical description of what Obama is proposing? Well, if you allow nominal private property, but impose government control, it’s called fascism. Sowell agrees, and also adds some history for the unenlightened.

One of the reasons why both pro-Obama and anti-Obama observers may be reluctant to see him as fascist is that both tend to accept the prevailing notion that fascism is on the political right, while it is obvious that Obama is on the political left. Back in the 1920s, however, when fascism was a new political development, it was widely — and correctly — regarded as being on the political left. Jonah Goldberg’s great book “Liberal Fascism” cites overwhelming evidence of the fascists’ consistent pursuit of the goals of the left, and of the left’s embrace of the fascists as one of their own during the 1920s.Mussolini, the originator of fascism, was lionized by the left, both in Europe and in America, during the 1920s. Even Hitler, who adopted fascist ideas in the 1920s, was seen by some, including W.E.B. Du Bois, as a man of the left. …What socialism, fascism and other ideologies of the left have in common is an assumption that some very wise people — like themselves — need to take decisions out of the hands of lesser people, like the rest of us, and impose those decisions by government fiat. …Only our own awareness of the huge stakes involved can save us from the rampaging presumptions of our betters, whether they are called socialists or fascists. So long as we buy their heady rhetoric, we are selling our birthright of freedom.

All this being said, I want to reiterate something else that I wrote back in 2010. It is counterproductive to call Obama a fascist because that term is now linked to the specific form of evil produced by Hitler and the National Socialist Party.

So if you disapprove of Obama’s policies, call him a statist or a corporatist. Heck, you can say he believes in cronyism or maybe even collectivism. Those terms get across that he wants more government without causing needless controversy that distracts from the main message.

But make sure you apply the same term to Republicans who impose the same types of policies, such as Bush and Nixon.

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Haiti may be the poorest nation in the Americas. Cuba may have the dictator with the longest lifespan. But Venezuela arguably has the worst government.

Not the clownish dictator, Hugo Chavez, is trying to repeal the laws of economics. How’s that working out for him?

Well, here’s some of what the New York Times wrote.

By 6:30 a.m., a full hour and a half before the store would open, about two dozen people were already in line. They waited patiently, not for the latest iPhone, but for something far more basic: groceries. …Venezuela is one of the world’s top oil producers at a time of soaring energy prices, yet shortages of staples like milk, meat and toilet paper are a chronic part of life here, often turning grocery shopping into a hit or miss proposition. Some residents arrange their calendars around the once-a-week deliveries made to government-subsidized stores like this one, lining up before dawn to buy a single frozen chicken before the stock runs out. Or a couple of bags of flour. Or a bottle of cooking oil. The shortages affect both the poor and the well-off, in surprising ways. A supermarket in the upscale La Castellana neighborhood recently had plenty of chicken and cheese — even quail eggs — but not a single roll of toilet paper. Only a few bags of coffee remained on a bottom shelf. Asked where a shopper could get milk on a day when that, too, was out of stock, a manager said with sarcasm, “At Chávez’s house.” At the heart of the debate is President Hugo Chávez’s socialist-inspired government, which imposes strict price controls that are intended to make a range of foods and other goods more affordable for the poor. They are often the very products that are the hardest to find. …many economists call it a classic case of a government causing a problem rather than solving it. Prices are set so low, they say, that companies and producers cannot make a profit. So farmers grow less food, manufacturers cut back production and retailers stock less inventory. Moreover, some of the shortages are in industries, like dairy and coffee, where the government has seized private companies and is now running them, saying it is in the national interest.

Here’s a chart that I’ve used before, using international data to compare living standards in Venezuela, Argentina, and Chile since 1980. One nation (take a wild guess) has tried statism, one nation has tried a mix of statism and capitalism, and the other has tried capitalism.

And just in case you need one more reason to despise Chavez’s despotic government, the regime is copying Hitler, Stalin, Mao, and other murderous tyrants in imposing gun control.

(h/t: Greg Mankiw)

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Last year, I did a popular post on what happens if you redistribute grades in a classroom.

Someone has turned this idea into a video, starring some well-known political figures.

And if you want to see a real-world example of how students react to this idea, here’s another good video.

By the way, I can’t resist being pedantic and re-explaining that socialism is not the same as redistributionism.

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I have several amusing posts about the left’s fixation on redistributionism, including this Halloween classic, this Elizabeth Warren takedown, this mockery of the Occupy Wall Street nitwits, and this caricature of Obama’s class warfare.

In this grand tradition, here’s a funny poster sent to me by a reader.

This is an appropriate point for the disclaimer that Obama is not a socialist, which technically requires government ownership of the means of production. As I’ve explained before, it’s much more accurate to say he’s a statist, a corporatist, or a redistributionist.

And since we’re looking at definitions and this post features young children, I’m reminded of the great description of libertarianism put forth by my Cato colleague David Boaz.

You could say that you learn the essence of libertarianism — which is also the essence of civilization –  in kindergarten: don’t hit other people, don’t take their stuff, keep your promises.

That definition isn’t amusing, like what’s portrayed in this satirical video or shown in this mocking poster featuring the 24 types of libertarians, but it has the advantage of being simple and accurate.

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The Washington Post is a left-wing newspaper, so I’m never surprised to find examples of biased reporting.

Last month, for instance, I made fun of the Post for asserting that Germany was “fiscally conservative.”

I also mocked the Post last March, when a reporter hysterically claimed that a proposal to trim $6 billion from a $3,600 billion budget would “slash” government.

Today, I want to analyze a column by Jonathan Alter.

Entitled “Five Myths about Barack Obama,” it’s in the opinion section, where people are supposed to present a point of view.

So I’m not going to complain about bias, but I am going to disagree about some of his judgments. Here are the five supposed myths, along with my two cents on whether Alter is correct.

Myth 1. Obama is a socialist.

I basically agree with Alter. As I explained two years ago, a true socialist wants “government ownership of the means of production.” To be sure, most self-avowed socialists today have given up on that goal and instead focus on redistribution. And since Obama also is a redistributionist, I understand why people call him a socialist. Nonetheless, it is much more accurate to call him a statist or corporatist.

Myth 2. Obama is a tool of Wall Street.

Alter is right and wrong. Obama is pursuing policies that Wall Street doesn’t like, such as class-warfare tax hikes. On the other hand, he supported the TARP bailout and pushed for the Dodd-Frank bailout legislation that was supported by Goldman-Sachs and the other big players on Wall Street.

Myth 3. Obama is an effective public speaker.

I’m not sure what to say about this assertion. I don’t find his pedantic ramblings effective or persuasive, but I’m not the target audience.

Myth 4. Obama’s stimulus failed.

This is Alter’s most absurd assertion. To bolster his claim, he cites a handful of institutions that have Keynesian models, including the laughably inaccurate crowd at the Congressional Budget Office. Wow, what a revelation. Keynesians support Keynesianism. What’s next, a poll of Obama campaign staff showing that people support the President’s reelection? Read this post for a good explanation of how Keynesianism has failed.

Myth 5. Obama is a weak leader.

This isn’t my area of expertise, but I mostly agree with Alter’s assessment. For better or worse (and you know how I feel), the President put everything on the line to enact Obamacare. That was bad for the nation, but I suppose it required effective leadership.

In closing, the Washington Post does deserve some credit for having diversity on the opinion page. Yes, Alter’s column has a leftist perspective, but the paper routinely carries people like George Will, Robert Samuelson, and Charles Krauthammer.

That doesn’t excuse the Post for displaying bias in news articles, as I mentioned above, but I think it’s better than the New York Times (damning with faint praise).

Lastly, it’s worth noting that the Post’s editorials are dogmatically statist (though it does support Postal Service privatization, perhaps because that affects the paper’s bottom line).

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I’m glad that China has taken some steps away from communism. According to Economic Freedom of the World, China was one of 10-worst nations for economic liberty back in 1980 and they’ve since climbed to 92nd place out of 141 nations.

I’ve even offered a small bit of praise for China’s shift to a more business-friendly environment, and I was greatly amused when the head of China’s sovereign wealth fund mocked the Europeans for destructive welfare state policies.

That being said, 92nd place is still a very anemic rank, far below the first- and second-place jurisdictions, Hong Kong and Singapore.

So I was flabbergasted when Andy Stern, a former union boss and long-time Obama ally, wrote a column for today’s Wall Street Journal praising the efficiency and vitality of China’s planned economy.

You probably think I’m pulling your leg and/or deliberately misrepresenting what he wrote, but his article was titled “China’s Superior Economic Model.”

And just in case you think that’s the fault of editors and he couldn’t possible say such a thing, let’s look through the piece.

He starts off praising the goals of China’s latest five-year plan.

The aims: a 7% annual economic growth rate; a $640 billion investment in renewable energy; construction of six million homes; and expanding next-generation IT, clean-energy vehicles, biotechnology, high-end manufacturing and environmental protection—all while promoting social equity and rural development. Some Americans are drawing lessons from this. Last month, the China Daily quoted Orville Schell, who directs the Center on U.S.-China Relations at the Asia Society, as saying: “I think we have come to realize the ability to plan is exactly what is missing in America.”

Gee, that sounds so uplifting and inspirational. But there’s one tiny problem. China is still a very poor country. Here’s a chart showing the 2010 data from the World Bank.

Maybe I’m a crazy free-market ideologue, but I’d rather copy the Singapore or Hong Kong economic model.

But if I can’t choose one of those Asian tigers, I’ll stick with the U.S. system. Americans, after all, are about six times better off than the Chinese. Heck, China is still behind Albania.

Mr. Stern then writes about the supposed failures of “free-market extremism” in the United States.

The conservative-preferred, free-market fundamentalist, shareholder-only model—so successful in the 20th century—is being thrown onto the trash heap of history in the 21st century. In an era when countries need to become economic teams, Team USA’s results—a jobless decade, 30 years of flat median wages, a trade deficit, a shrinking middle class and phenomenal gains in wealth but only for the top 1%—are pathetic. …This should motivate leaders to rethink, rather than double down on an empirically failing free-market extremism. As painful and humbling as it may be, America needs to do what a once-dominant business or sports team would do when the tide turns: study the ingredients of its competitors’ success.

Since this is a pro-family blog, I won’t repeat the inappropriate words that came out of my mouth upon reading these passages.

Instead, I’ll simply call your attention to this post, which shows how America’s score in the Economic Freedom of the World ranking declined during the past decade. Indeed, the United States was among the five nations with the biggest declines over that 10-year period and the United States dropped from 3rd to 10th during those years.

If that was a period of “free-market fundamentalist” policies, then I guess I need to start cheering for socialism.

I’ll conclude by doing one of my favorite things – quoting myself. Here’s a bit of what I wrote last year.

China has been growing in recent decades, but it’s almost impossible not to grow when you start at the bottom – which is where China was in the late 1970s thanks to decades of communist oppression and mismanagement. And the growth they have experienced certainly has not been enough to overtake other nations based on measures that compare living standards. …This is not to sneer at the positive changes in China. Hundreds of millions of people have experienced big increases in living standards. …But China still has a long way to go if the goal is a vibrant and rich free-market economy.

I’ve probably exhausted everyone’s interest in this topic, but if anyone’s a glutton for punishment, I was part of a debate on English-language Russian TV about Chinese and American economic policy.

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I posted a video making this point earlier in the year, and I also posted a version of this joke back in 2010, but here’s another version that’s worth sharing because of the five lessons to be learned at the conclusion.

=================================

An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, “OK, we will have an experiment in this class on Obama’s plan”. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A…. (substituting grades for dollars – something closer to home and more readily understood by all).

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

The second test average was a D! No one was happy.

When the 3rd test rolled around, the average was an F.

As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed.
It could not be any simpler than that.

There are five morals to this story:

1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it!

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

=================================

I’ll make one final point. There are five morals to the story, but there are dozens of nations giving us real-world examples every day.

Sort of makes you wonder why some people still believe this nonsense?

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There’s an odd debate in the blogosphere. As happens every Thanksgiving, libertarians and conservatives take joy in pointing out that there was mass starvation and suffering during the early years of the Plymouth Colony because of a socialist economic model. Here’s what John Stossel recently wrote.

Long before the failure of modern socialism, the earliest European settlers gave us a dramatic demonstration of the fatal flaws of collectivism. Unfortunately, few Americans today know it. The Pilgrims at Plymouth Colony organized their farm economy along communal lines. The goal was to share the work and produce equally. That’s why they nearly all starved. When people can get the same return with less effort, most people make less effort. Plymouth settlers faked illness rather than working the common property. Some even stole, despite their Puritan convictions. Total production was too meager to support the population, and famine resulted. This went on for two years. “So as it well appeared that famine must still ensue the next year also, if not some way prevented,” wrote Gov. William Bradford in his diary. The colonists, he said, “began to think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still thus languish in misery. At length after much debate of things, (I) (with the advice of the chiefest among them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves. And so assigned to every family a parcel of land.” In other words, the people of Plymouth moved from socialism to private farming. The results were dramatic. “This had very good success,” Bradford wrote, “for it made all hands very industrious, so as much more corn was planted than otherwise would have been. By this time harvest was come, and instead of famine, now God gave them plenty, and the face of things was changed, to the rejoicing of the hearts of many.”

My colleague Dan Griswold has a blog post making the same point. And here’s a new video from the prolific folks at Reason TV.

This story must bother the statists. For the first time I can remember, they tried to push back this year. A blogger called Liberal Curmudgeon attempted to puncture the supposed myth, blaming the Colony’s woes on lazy Englishmen.

The real problem, though, was that the men recruited for Jamestown and Plymouth were expecting quick and easy riches without having to work at all.

That’s an interesting theory, and Andrew Sullivan swallows it, hook, line, and sinker (apparently any criticism of Rush Limbaugh and Glenn Beck must be true).

But this argument suffers from a couple of flaws. Don Boudreaux deals with one of the problems in his post, but I have a much simpler criticism for Andrew Sullivan, the Liberal Curmudgeon, et al.

If the Plymouth Colony initially was failing because of the wrong type of people, why did those wrong people suddenly succeed once communalism was replaced with private property?

Maybe statists have a good answer to this question, but I won’t be holding my breath.

So the real lesson of Thanksgiving (at least from an economics perspective), is that incentives matter. The Pilgrims figured this out and changed course. Nearly four hundred years later, the question for today is whether Obama is similarly capable of learning from his mistakes.

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Here’s a story for the better-late-than-never file. Former Cuban dictator Fidel Castro confessed that communism doesn’t work and that his nation’s economic system should not be emulated.

Fidel Castro told a visiting American journalist that Cuba’s communist economic model doesn’t work, a rare comment on domestic affairs from a man who has conspicuously steered clear of local issues since stepping down four years ago. The fact that things are not working efficiently on this cash-strapped Caribbean island is hardly news. Fidel’s brother Raul, the country’s president, has said the same thing repeatedly. But the blunt assessment by the father of Cuba’s 1959 revolution is sure to raise eyebrows. Jeffrey Goldberg, a national correspondent for The Atlantic magazine, asked if Cuba’s economic system was still worth exporting to other countries, and Castro replied: “The Cuban model doesn’t even work for us anymore” Goldberg wrote Wednesday in a post on his Atlantic blog.

Too bad Castro didn’t have this epiphany 50 years ago. The Cuban people languish in abject poverty as a result of Castro’s oppressive policies. Food is harshly rationed and other basic amenities are largely unavailable (except, of course, to the party elite). This chart, comparing inflation-adjusted per-capita GDP in Chile and Cuba, is a good illustration of the human cost of excessive government. Living standards in Cuba have languished. In Chile, by contrast, the embrace of market-friendly policies has resulted in a huge increase in prosperity. Chileans were twice as rich as Cubans when Castro seized control of the island. After 50 years of communism in Cuba and 30 years of liberalization in Chile, the gap is now much larger.

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I sometimes joke that the French are the world’s most statist people. I have no idea if that is actually true, but the latest protests in France certainly are a good piece of evidence. French workers (especially government bureaucrats) are protesting a plan to increase the retirement age from 60 to 62. They apparently think marching in the street will magically change demographic reality. I discuss this issue in a new Cato Institute Podcast.

Incidentally, my comments are not favorable to Sarkozy. I point out that his pension proposal is just a tiny step in the right direction, and that any positive impact is undermined by concomitant class-warfare tax increases.

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Hugo Chavez is a palpably evil thug, and he confirms this status with a new proposal to issue cards that almost certainly will be used to ration food. Left-wing despots claim that their policies put “people above profits,” but they never can explain why people (especially the masses) have much higher living standards in countries where “capitalist greed” runs rampant.

Presented by President Hugo Chávez as an instrument to make shopping for groceries easier, the “Good Life Card” is making various segments of the population wary because they see it as a furtive attempt to introduce a rationing card similar to the one in Cuba. The measure could easily become a mechanism to control the population, according to civil society groups. “We see that in short-term this could become a rationing card probably similar to the one used in Cuba,” Roberto León Parilli, president of the National Association of Users and Consumers, told El Nuevo Herald. “It would use more advanced technological means [than those used in Cuba], but when they tell you where to buy and what the limits of what you can buy are, they are conditioning your purchases.” Chávez said Tuesday that the card could be used to buy groceries at the government chain of markets and supplies. …In theory, the government could begin to favor the import of products to be sold through the government chains and have more control over the type of products purchased and the people buying them. Jaime Suchlicki, director of the University of Miami’s Institute for Cuban and Cuban-American Studies, said that Venezuela’s current problems of scarce supplies are very similar to those Cuba faced when Fidel Castro introduced the rationing card. “The card emerged when goods began to become scarce,” Suchlicki said. “The government had seized many companies that did not work because the government managed them poorly. Then they decided to distribute groceries through those cards.” And although the cards were introduced as a mechanism to deal with scarcities, Suchlicki said, they later became an instrument of control.

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This little story appeared in my inbox. It’s obviously meant to illustrate the perverse incentive structure created by redistribution, but one wonders why statists in the academic world don’t follow through on their convictions and use this grading system.

A professor said he had never failed a single student before but had, once, failed an entire class. The class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer. The professor then said ok, we will have an experiment in this class on socialism.

All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A.

After the first test the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. But, as the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too, so they studied little.

The second test average was a D. No one was happy.

When the third test rolled around, the average was an F.

The scores never increased as bickering, blame, and name calling all resulted in hard feelings and no one would study for anyone else.

To their great surprise, all failed. The professor told them that socialism would ultimately fail because the harder it is to succeed the greater the reward, but when a government takes all the reward away, no one will try so no one will succeed.

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A reader has asked me to weigh in on the mini-controversy that was triggered when a Wall Street financier said fighting Obama’s tax hikes was like a war and that the battle was “like when Hitler invaded Poland in 1939.” While it seems clear that Stephen Schwarzman was not saying Obama was a Nazi or that his policies were akin to those pursued by the National Socialist Workers Party, he obviously should have used a better analogy. Even if the intent is totally innocent and/or intellectually legitimate, it distracts from the core message when you make references to Nazis or fascism (indeed, I’ve made this point in previous posts about whether Obama is a socialist). Here’s an excerpt for those who want to know more about the story.

The billionaire Blackstone private equity boss Stephen Schwarzman, who is among Wall Street’s most visceral proponents of the free market, has been obliged to apologise after comparing Barack Obama’s tax policies to the Nazi advance across Europe at the beginning of the second world war. The tycoon, whose empire stretches from Hilton hotels to the Weather Channel, United Biscuits and the London Eye, has worked himself up into a lather about a proposed tax hike on so-called “carried interest” profits – the gains made when private equity firms buy and sell businesses – from 15% to as much as 35%. “It’s a war,” he told a board members of a non-profit organisation, whose members leaked Schwarzman’s remarks to Newsweek on condition of anonymity. “It’s like when Hitler invaded Poland in 1939.” …Schwarzman expressed regret for his comments, telling the New York Post: “I apologise for what was an inappropriate analogy.” But he added: “The fundamental issue of the administration’s need to work productively with business for the benefits of the overall economy is still of very serious concern not only to me, but also to large parts of the business community.”

P.S. Obama’s tax hikes are very misguided. But the best analogy is that this is like…um…when the Germans bombed Pearl Harbor.

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According to a new poll from a Democratic firm, an astounding 55 percent of people think “socialist” is a term that describes Obama. Here’s a blurb from a National Review post.
Deep in the poll, they ask, “Now, I am going to read you a list of words and phrases which people use to describe political figures. For each word or phrase, please tell me whether it describes Barack Obama very well, well, not too well, or not well at all.” …When asked about “a socialist,” 33 percent of likely voters say it describes Obama “very well,” 22 percent say “well,” 15 percent say “not too well,” and 25 percent say “not well at all.” 
I’ve already commented on this issue twice, remarking that Obama technically is a fascist, but that it is much better to call him a statist or corporatist. But there is the tricky issue of whether a word should be defined by experts (to the extent economists are experts on anything) or whether it is more appropriate to accept the common understanding of what a word means. I don’t have a firm opinion on that issue, but if socialism now means someone who believes in lots of government intervention and redistribution, then Obama is a socialist (heck, Bush also would be a socialist). But if we stick with the official definition, which involves government ownership of the means of production, then Obama has relatively few policies that meet that standard.
 
Here’s what the Christian Science Monitor reported on the issue. The most amusing part of the story is that self-identified socialists are insulted to be linked to Obama.
The assertion is getting louder: President Obama is a socialist, a wealth-redistributing wolf in Democrat’s clothing gnawing at America’s entrepreneurial spirit. …So, is Mr. Obama trying to form The Socialist Republic of America? Or are the accusations mainly a political weapon, meant to stick Obama with a label that is poison to many voters and thus make him a one-term president? …[Some] refute the idea that government involvement in failing industries defines a president as socialist – or that wealth is being redistributed from the Forbes 500 richest Americans to the nation’s “Joe the plumbers.” What Mr. Johns, Mr. Gingrich, and others brandishing the “socialist” s-word are really complaining of is a return to the policies of John Maynard Keynes, the English economist who advocated vigorous government involvement in the economy, from regulation to pump priming, says labor historian Peter Rachleff of Macalester College in St. Paul, Minn. “Socialism suggests getting rid of capitalism altogether,” says Dr. Rachleff. “Mr. Obama is not within a million miles of an ideology like that.” For what it’s worth, socialists deny that Obama is one of them – and even seem a bit insulted by the suggestion. “I have been making a living telling people Obama is not a socialist,” says Frank Llewellyn, national director of the Democratic Socialists of America. “It’s frustrating to see people using our brand to criticize programs that have nothing to do with our brand and are not even working.”

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Barack Obama and Angela Merkel are the two main characters in what is being portrayed as a fight between American “stimulus” and European “austerity” at the G-20 summit meeting in Canada. My immediate instinct is to cheer for the Europeans. After all, “austerity” presumably means cutting back on wasteful government spending. Obama’s definition of “stimulus,” by contrast, is borrowing money from China and distributing it to various Democratic-leaning special-interest groups.
 
But appearances can be deceiving. Austerity, in the European context, means budget balance rather than spending reduction. As such, David Cameron’s proposal to boost the U.K.’s value-added tax from 17.5 percent to 20 percent is supposedly a sign of austerity even though his Chancellor of the Exchequer said a higher tax burden would generate “13 billion pounds we don’t have to find from extra spending cuts.”
 
Raising taxes to finance a bloated government, to be sure, is not the same as Obama’s strategy of borrowing money to finance a bloated government. But proponents of limited government and economic freedom understandably are underwhelmed by the choice of two big-government approaches.
 
What matters most, from a fiscal policy perspective, is shrinking the burden of government spending relative to economic output. Europe needs smaller government, not budget balance. According to OECD data, government spending in eurozone nations consumes nearly 51 percent of gross domestic product, almost 10 percentage points higher than the burden of government spending in the United States.
 
Unfortunately, I suspect that the “austerity” plans of Merkel, Cameron, Sarkozy, et al, will leave the overall burden of government relatively unchanged. That may be good news if the alternative is for government budgets to consume even-larger shares of economic output, but it is far from what is needed.
 
Unfortunately, the United States no longer offers a competing vision to the European welfare state. Under the big-government policies of Bush and Obama, the share of GDP consumed by government spending has jumped by nearly 8-percentage points in the past 10 years. And with Obama proposing and/or implementing higher income taxes, higher death taxes, higher capital gains taxes, higher payroll taxes, higher dividend taxes, and higher business taxes, it appears that American-style big-government “stimulus” will soon be matched by European-style big-government “austerity.”
 
Here’s a blurb from the Christian Science Monitor about the Potemkin Village fiscal fight in Canada:

This weekend’s G-20 summit is shaping up as an economic clash of civilizations – or at least a clash of EU and US economic views. EU officials led by German chancellor Angela Merkel are on a national “austerity” budget cutting offensive as the wisest policy for economic health, ahead of the Toronto summit of 20 large-economy nations. Ms. Merkel Thursday said Germany will continue with $100 billion in cuts that will join similar giant ax strokes in the UK, Italy, France, Spain, and Greece. EU officials say budget austerity promotes the stability and market confidence that are prerequisites for their role in overall recovery. Yet EU pro-austerity statements in the past 48 hours are also defensive – a reaction to public statements from US President Barack Obama and G-20 chairman Lee Myung-bak, South Korea’s president, that the overall effect of national austerity in the EU will harm recovery. They are joined by US Treasury Secretary Tim Geithner, investor George Soros, and Nobel laureate and columnist Paul Krugman, among others, arguing that austerity works against growth, and may lead to a recessionary spiral.

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It’s been amusing, in an I-told-you-so fashion, to follow the fiscal crises in Greece, Spain, and other European welfare states.And I feel like a voyeuristic ghoul as I observe the incredibly misguided bailout policies being adopted by the political elites (who are trying to bail out the business elites who made silly loans to corrupt nations in Southern Europe). But I’m not sure how to describe my emotions (dumbfounded fascination?) about the latest bad idea emanating from Europe – to have a fiscal federation that would give bureaucrats in Brussels power over national budgets. It’s quite possible that this would result in some externally-imposed discipline for a basket case such as Greece, so it would not always lead to terrible results. But most of the decisions would be bad, particularly since the Euro-crats would use new powers to curtail tax competition in order to enhance the ability of governments to impose bad tax policy in order to seize more money. Moreover, fiscal centralization would exacerbate the main problem in Europe by creating a new avenue – cross-border subsidies - for people who want to mooch by getting access to other people’s money. The Wall Street Journal Europe has a good editorial on the issue:
Of all the possible responses to Europe’s sovereign debt woes, the notion of centralizing fiscal authority in Brussels may well be the most destructive. But that was exactly what European Central Bank President Jean-Claude Trichet proposed in testimony before the European Parliament Monday. Mr. Trichet’s idea is that an independent body within the European Commission should have broad power to sanction national governments for fiscal or macroeconomic policies that threatened the stability of the euro. This would amount, in Mr. Trichet’s words, to the “equivalent of a fiscal federation” for the euro zone. Mr. Trichet has spent nearly 40 years as a civil servant in one form or another, which may explain his belief that Europe’s budgetary problems can be solved by technocrats. …Fiscal centralization would also undermine competition between different fiscal and macroeconomic policies within the euro zone. That would delight some countries, and probably some at the European Commission as well. During this crisis, French Finance Minister Christine Lagarde has criticized Germany for becoming too competitive for the euro zone’s own good. And a decade ago, France was among the euro-zone countries that attacked Ireland for lowering its corporate income-tax rate to 12.5% to attract investment. …Ireland’s 12.5% corporate tax rate was an experiment that contributed to a lowering of rates around the world in the succeeding years.

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Jeff Jacoby righteously – and rightfully – condemns the moral perversion that allows people to overlook the barbaric cruelty and oppression of communism.

If Jose Saramago, the Portuguese writer who died on Friday at 87, had been an unrepentant Nazi for the last four decades, he would never have won international acclaim or received the 1998 Nobel Prize for Literature. Leading publishers would never have brought out his books, his works would not have been translated into more than 20 languages, and the head of Portugal’s government would never have said on his death — as Prime Minister José Sócrates did say last week — that he was “one of our great cultural figures and his disappearance has left our culture poorer.” But Saramago wasn’t a Nazi, he was a communist. And not just a nominal communist, as his obituaries pointed out, but an “unabashed” (Washington Post), “unflinching’’ (AP), “unfaltering’’ (New York Times) true believer. A member since 1969 of Portugal’s hardline Communist Party, Saramago called himself a “hormonal communist’’ who in all the years since had “found nothing better.” …the idea that good people can be devoted communists is grotesque. The two categories are mutually exclusive. There was a time, perhaps, when dedication to communism could be absolved as misplaced idealism or naiveté, but that day is long past. After Auschwitz and Babi Yar, only a moral cripple could be a committed Nazi. By the same token, there are no good and decent communists — not after the Gulag Archipelago and the Cambodian killing fields and Mao’s “Great Leap Forward.’’ Not after the testimonies of Alexander Solzhenitsyn and Armando Valladares and Dith Pran. In the decades since 1917, communism has led to more slaughter and suffering than any other cause in human history. Communist regimes on four continents sent an estimated 100 million men, women, and children to their deaths — not out of misplaced zeal in pursuit of a fundamentally beautiful theory, but out of utopian fanaticism and an unquenchable lust for power. Mass murder and terror have always been intrinsic to communism. “Many archives and witnesses prove conclusively,’’ wrote Stéphane Courtois in his introduction to “The Black Book of Communism,’’ a magisterial compendium of communist crimes first published in France in 1997, “that terror has always been one of the basic ingredients of modern communism.’’ The uniqueness of the Holocaust notwithstanding, the savageries of communism and of Nazism are morally interchangeable — except that the former began much earlier than the latter, lasted much longer, and shed far more blood.

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I hope the title to this blog post is completely wrong, but the news out of Europe is very grim. Politicians have been over-spending and going deeper and deeper into debt. This negatively affects the private sector in the usual ways (higher taxes, unproductive allocation of resources, etc), but also creates instability in the financial sector since many banks and other institutions have naively lent lots of money to corrupt and inefficient governments. And as this story from the Telegraph indicates, the European Central Bank has been forced to surrenders its independence and is now monetizing government debt. In theory, the ECB is taking other steps to compensate, but the problem is so large (and the political willingness to solve the problem by radically shrinking government is so small) that it is difficult to see a good ending to this saga.

Fitch Ratings has warned that it may take massive asset purchases by the European Central Bank to prevent Europe’s sovereign debt crisis escalating out of control. …The ECB agreed to start buying Greek, Portuguese, and Irish bonds in April to help buttress the EU’s `shock and awe’ package, known as the European Financial Stability Facility. Total purchases so far have been €47bn (£39bn). It has focused its firepower on Greece, mopping up some €25bn of government bonds. This has prevented a collapse of the Greek debt market but at the high political price of letting banks and funds dump their holdings onto the EU taxpayer. ECB council member Jose Manuel Gonzalez-Paramo said it was “not entirely correct” to assume that the ECB was the sole buyer of the debt. “We will continue buying bonds until the situation has stabilized,” he said. …Fitch said European banks must refinance nearly €2 trillion of long-term debt by the end of 2012 in an unfriendly market. “There’s an awful lot of debt coming due in 2011 and 2012, and that is becoming a concern,” said Bridget Gandy, the agency’s banking expert.

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Czech President Vaclav Klaus is one of the few European politicians to believe in the classical liberal ideals of individual freedom, personal responsibility, free markets, and small government. He has wisely warned about the European Union superstate being erected in Brussels is a dangerous mix of centralization, bureaucratization, and harmonization. The economic troubles in Europe show he has been right on the mark, of course, so we should all pay attention as he discusses the prospects for Europe in a column for the Wall Street Journal:

I have not rejoiced at the current problems in the euro zone because their consequences could be serious for all of us in Europe—for members and non-members of the euro zone, for its supporters and opponents. Even the enthusiastic propagandists of the euro suddenly speak about the potential collapse of the whole project now, and it is us critics who say we have to look at it in a more structured way. The term “collapse” has at least two meanings. The first is that the euro-zone project has not succeeded in delivering the positive effects that had been rightly or wrongly expected from it. It was mistakenly and irresponsibly presented as an indisputable economic benefit to all the countries willing to give up their own long-treasured currencies. Extensive studies published prior to the launch of the European single currency promised that the euro would help to accelerate economic growth and reduce inflation and stressed, in particular, that the member states of the euro zone would be protected against all kinds of external economic disruptions (the so-called exogenous shocks). This has not happened. After the establishment of the euro zone, the economic growth of its member states has slowed down compared to previous decades, increasing the gap between the rate of growth in the euro-zone countries and that in other major economies—such as the United States and China, smaller economies in Southeast Asia and other parts of the developing world, as well as Central and Eastern European countries that are not members of the euro zone. Economic growth in Europe has been slowing down since the 1960s, thanks to the increasingly damaging economic and social system which started dominating Europe at that time. The European “soziale Marktwirtschaft” is an unproductive variant of a welfare state, of state paternalism, of “leisure” society, of high taxes and low motivation to work. The existence of the euro has not reversed that trend. According to the European Central Bank, the average annual rate of growth in the euro-zone countries was 3.4% in the 1970s, 2.4% in the 1980s, 2.2% in the 1990s and only 1.1% from 2001 to 2009 (the decade of the euro). A similar slowdown has not occurred anywhere else in the world (speaking about “normal” countries, e.g. countries without wars or revolutions).

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Every so often, perhaps inadvertently, a collectivist says something very smart. In the case of Lula da Silva, Brazil’s socialist president, he made the common-sense observation that you can’t redistribute without first producing. He didn’t quite realize what he was saying, one imagines, since he presumably would have realized that capitalism is a superior system in both the short run and long run, but at least he recognized the role of wealth creation. Obama, by contrast, acts as if the blessings of a free market economy automatically exist and that people will continue to produce even if he persists with his statist plans to simultaneously subsidize sloth and penalize productive behavior. Here’s the excerpt with the Brazilian President’s amazing statement:

He described the situation when he was elected Brazilian president: “The country had no credit, had no working capital or financing or income distribution. What kind of capitalism was that? A capitalism without capital. I decided then that it was necessary to first build capitalism, then make socialism, we must have something to distribute before doing so.”

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I’m sure it could be true, so it’s worth sharing even if it is an urban legend.

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Newt Gingrich writes in the Washington Post today to defend his assertion that Obama is a socialist. He cites several examples of the President’s big-government agenda, which are excerpted below. These are all examples of bad policy, to be sure, but other than the student loan takeover, these are all examples of fascism rather than socialism. Socialism, technically speaking, is government ownership of the means of production. Fascism, by contrast, involves government control and direction of resources, but cloaked by a system of nominal private ownership.

Calling Obama a fascist, however, is counterproductive. Other than a few economists and historians, people don’t understand that fascism developed (with Mussolini perhaps being the best example) as a social/economic system. Instead, most people associate it with Hitler’s lunatic ideas on matters such as race and militarism. That’s why I prefer to call Obama a statist or a corporatist. Those words accurately describe his governing philosophy without creating the distractions caused by calling him a socialist or fascist.

Creating czar positions to micromanage industry reflects the type of hubris of centralized government that Friedrich von Hayek and George Orwell warned against. How can a White House “executive compensation czar” know enough to set salaries in multiple companies for many different people? Having a pay dictatorship for one part of the country sets the pattern for government to claim the right to set pay for everyone. If that isn’t socialism, what word would describe it?

Violating 200 years of bankruptcy precedent to take money from bondholders and investors in the auto industry to pay off union allies is rather an anti-market intervention.

Proposing that the government (through the Environmental Protection Agency or some sort of carbon-trading scheme) micromanage carbon output is proposing that the government be able to control the entire U.S. economy. Look at the proposals for government micromanagement in the 1,428-page Waxman-Markey energy tax bill. (I stopped reading when I got to the section regulating Jacuzzis on Page 442.) If government regulates every aspect of our use of power, it has regulated every aspect of our lives. What is that if not socialism?

Nationalizing student loans so that they are a bureaucratic monopoly. This will surely lead to fraud on the scale we see in Medicare and Medicaid, from which more than $70 billion per year is stolen.

Expanding government mortgage intervention to 90 percent of the housing market.

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Fiscal crises have a predictable pattern. Step 1 occurs when the economy is prospering and tax revenues are growing faster than forecast. Step 2 is when politicians use the additional money to increase government spending. Step 3 is that politicians do not treat the extra tax revenue like a temportary windfall and budget accordingly. Instead, they adopt policies – more entitlements, more bureaucrats – that permanently expand the burden of the public sector. Step 4 occurs when the economy stumbles (in part because more resources are being diverted from the productive sector to the government) and tax revenues stagnate. If the resulting fiscal gap is large enough, as it is in places such as Greece and California, a crisis atmosphere is created. Step 5 takes place when politicians solemnly proclaim that “tough measures” are necessary, but very rarely does that mean a reversal of the policies that caused the mess. Instead, the result in higher taxes.

Greece is now at this stage. I’ve already argued here that perhaps bankruptcy is the best option for Greece, and I showed the data proving that Greece has a too-much-spending crisis rather than a too-little-revenue crisis. I’ve also commented (here, here, and here) about the feckless behavior of Greek politicians. Sadly, it looks like things are getting even worse. The government has announced a huge increase in the value-added tax, pushing this European version of a national sales tax up to 21 percent. On the spending side of the ledger, though, the government is only proposing to reduce bonuses that are automatically given to bureaucrats three times per year. Here’s an excerpt from the Associated Press report, including a typically hysterical responses from a Greek interest group:

Government officials said the measures would include cuts in civil servant’s annual pay through reducing their Easter, Christmas and vacation bonuses by 30 percent each, and a 2 percentage point increase in sales tax to bring it to 21 percent from the current 19 percent. …One government official, speaking on condition of anonymity ahead of the official announcement, said…that “we have exhausted our limits.” …”It is a very difficult day for us … These cuts will take us to the brink,” said Panayiotis Vavouyious, the head of the retired civil servants’ association.

Now, time for some predictions. It is unlikely that higher taxes and cosmetic spending restraint will solve Greece’s fiscal problem. Strong global growth would make a difference, but that also seems doubtful. So Greece will probably move to Step 6, which is a bailout, though it is unclear whether the money will come from other European nations, the European Commission, and/or the European Central Bank. Step 7 is when politicians in nations such as Spain and Italy decide that financing spending (i.e., buying votes) with money from German and Dutch taxpayers is a swell idea, so they continue their profligate fiscal policies in order to become eligible for bailouts. Step 8 is when there is no more bailout money in Europe and the IMF (i.e., American taxpayers) ride to the rescue. Step 9 occurs when the United States faces a fiscal criss because of too much spending. For Step 10, read Atlas Shrugged.

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