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Posts Tagged ‘Statism’

Leftism and Hypocrisy

I periodically write about our leftist friends who display remarkable hypocrisy on issues such as taxation, education, Covid, and climate.

Here are just a few examples.

Gee, it’s almost as if there’s a pattern.

Writing for Reason, Professors Jason Brennan and Christopher Freiman highlight more of the hypocrisy that seems so prevalent on the left.

It’s been a bad year in public relations for Champagne socialists—or if you prefer, Neiman Marxists. The socialist Twitch streamer and Young Turks host Hasan Piker bought a $2.7 million house in Beverly Hills, complete with a swimming pool and an outdoor widescreen… Millionaire Aurora James designed Democratic New York Rep. Alexandria Ocasio-Cortez’s show-stealing “Tax the Rich” dress, which she wore to the $35,000-per-ticket Met Gala. The phenomenon of egalitarians living in luxury while denouncing the evils of inequality is not new. …socialist Vermont Sen. Bernie Sanders…remains within the top 1 percent of U.S. earners and the top .02 percent worldwide. Curious observers may question why Sanders, a tireless critic of the 1 percent, doesn’t sell his $575,000 vacation home and give the proceeds to charity or offer them as a general donation to the U.S. government via pay.gov. The same goes for Massachusetts Sen. Elizabeth Warren, a longtime progressive who has a net worth of over $10 million… When the disconnect between personal behavior and expressed ideology is this dramatic, and when the person gets rich and famous for expressing that ideology, we have to wonder whether he was ever sincere or was instead merely trying to promote himself. …Talking about socialism is cheap (indeed, even lucrative); a $2 million donation is not. Yet rather than bear a real cost to really help the poor, Piker and other prominent egalitarians adopt a philosophy that they think demonstrates their good hearts but that allows them to live high.

So is there any defense of this type of hypocrisy?

Sort of, though I’m not sure it’s very persuasive.

In a Wall Street Journal column last year, Ted Rall defended rich leftists by claiming that put values above self-interest.

‘Limousine liberals” have driven full circle—or rather the term has returned to its origins. Coined in 1969 by Mario Procaccino, the Democratic Party’s unsuccessful challenger to New York Mayor John Lindsay, the epithet described “hypocritical wealthy do-gooders insulated from the negative fallout of their bad ideas,” in historian David Callahan’s definition. “This theme,” Mr. Callahan has written, “remained a staple of conservative attacks.” Sen. Ted Kennedy was a classic example. He sent his kids to exclusive private schools at the same time he was telling working-class whites to bus their kids to distressed schools in the slums. …The accusation of hypocrisy or inauthenticity is…less logical… Had Kennedy gotten the tax system of his dreams, he and his family would have been poorer. He voted his values, not his self-interest. That’s admirable.

P.S. Libertarians can be hypocrites, of course, but the only article I’ve analyzed on the issue was not convincing.

P.P.S. By contrast, there are plenty of hypocritical Republicans.

P.P.P.S. The champion hypocrites are the bureaucrats at the OECD and IMF, who reflexively support higher taxes while receiving very generous tax-free salaries.

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A new edition of the Human Freedom Index has been released. When you combine measures of personal freedom and economic freedom, the “sensible nation” of Switzerland is at the top of the rankings.

I don’t know if this means we should view Switzerland as the world’s most libertarian nation (or perhaps the world’s least statist nation), but it’s obviously good to lead this list.

And it’s not surprising that New Zealand is next, though many people are probably shocked to see Denmark in third place (it has very bad fiscal policy, but otherwise is a very laissez-faire nation).

The United States is #15, which is good but not great.

Here are a few passages from the report’s executive summary.

The Human Freedom Index (HFI) presents a broad measure of human freedom, understood as the absence of coercive constraint. This seventh annual index uses 82 distinct indicators of personal and economic freedom… The HFI covers 165 jurisdictions for 2019, the most recent year for which sufficient data are available. …fully 83 percent of the global population lives in jurisdictions that have seen a fall in human freedom since 2008. That includes decreases in overall freedom in the 10 most populous countries in the world. Only 17 percent of the global population lives in countries that have seen increases in freedom over the same time period. …Jurisdictions in the top quartile of freedom enjoy a significantly higher average per capita income ($48,748) than those in other quartiles; the average per capita income in the least free quartile is $11,259. The HFI also finds a strong relationship between human freedom and democracy

If you want to know the world’s worst nations, here are the bottom 10.

Venezuela is normally the worst of the worst, but in this case Syria wins the Booby Prize.

Let’s now give some extra attention to Hong Kong.

The report notes that there’s been a very unfortunate decline in human freedom in Hong Kong, mostly because of an erosion of personal freedom.

And Hong Kong’s score is expected to drop even further in future editions.

Freedom has suffered a precipitous decline in Hong Kong. The territory was once one of the freest places in the world, but the Chinese Communist Party’s (CCP) escalating violations of Hong Kong’s traditional liberties has caused its ranking in our index to fall from 4th place in 2008—when the first globally comprehensive data appeared—to 30th place in 2019, the most recent year in our report… Our survey does not yet capture the suppression of 2020 and 2021, including the CCP’s imposition of a draconian security law that enabled its aggressive takeover of Hong Kong.

Thanks to the recent election, I expect we will see a similar discussion of Chile’s decline in future editions.

Here’s a final observation that should be highlighted.

Because the report relies on hard data (which often takes a year or two to be finalized and reported), this year’s HFI is based on 2019 data.

And that means we won’t see the effect of pandemic-related restrictions, which generally were adopted in early 2020, until next year’s version.

…this year’s report does not capture the effects of the coronavirus pandemic on freedom.

P.S. Here’s what I wrote about the previous edition of the Human Freedom Index. And if you want to dig into the archives, I also wrote about the publication in 2016 and 2018.

P.P.S. For what it’s worth, I still think Australia might have the best long-run outlook for human freedom.

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Now that a socialist has been elected (with open support from the Communist Party), what comes next for Chile?

Lots of bad policy, for sure, but Axel Kaiser warns that the left also wants to replace the country’s pro-liberty constitution.

Axel, who is President of Fundación para El Progreso and also a Senior Fellow for the Atlas Center for Latin America, just scratches the surface in this short video. He told me that there are many other desirable provisions, including school choice.

So it shouldn’t be surprising that the left in Chile is so determined to replace it with a document that empowers politicians.

I wrote about this issue last year, citing experts (including folks on the left) who all agreed that giving politicians new powers over the economy was the clear purpose of a new constitution.

This is basically a fight about whether to replace rights with entitlements (or, in the language of philosophers, whether to replace “negative rights” with “positive rights”).

By the way, there’s research showing that a society based on liberties is the best way of generating the prosperity needed for higher living standards (i.e., the access to goods and service that proponents of positive rights claim to support).

And, earlier this year, I showed how that works conceptually.

But you don’t need empirical research or theoretical analysis. Just open your eyes and look around the world. The nations based on socialism and so-called positive rights have produced economic misery and deprivation.

By contrast, there’s a much better track record – especially for ordinary people – in countries where government plays a smaller role.

It’s tragic that Chilean voters chose the redistribution approach in Sunday’s election. If they opt for a new constitution next year, the nation will be doomed.

P.S. By the way, here are some excerpts from today’s Wall Street Journal‘s editorial about the election.

Latin America, or much of it, is moving to the populist left, and Chile became the latest example by electing socialist Gabriel Boric… He’s the most leftist politician to win in Chile since Salvador Allende in the 1970s. His major theme was reducing economic inequality, which he proposes to do through state power. Mr. Boric wants to raise taxes, eliminate the country’s highly successful private pension system and increase government spending and regulation. He supports the constituent assembly now rewriting the constitution, and his goal is to give government more control over just about everything. …Foreign investors and Chileans with money and property are nervous. From the end of 2019—when the left launched riots demanding a new social contract—until August 2021, Chile’s central bank says some $50 billion (15% of Chilean GDP) fled the country. About half was investment capital and half from businesses and households. …on Monday the Chilean peso fell 2% against the U.S. dollar while the broader stock market plunged 10%. …The world is watching closely to see if the new president will…take Chile in the direction of such failing Latin states as Argentina or Peru, or worse.

Amen.

The best case scenario is that Chile is copying Argentina. The worst case is that it is copying Venezuela.

P.P.S. There was a president in the United States who wanted to remake society on the basis of “positive rights.” Fortunately, he did not succeed.

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I warned a few days ago that Gabirel Boric would be bad news if he won Chile’s presidential election. Well, he won, and now we’re going to find out whether he will repeal the policies that made the country successful.

He definitely seems to be another “leftist savior,” as described in this video.

At best, Chile has elected someone as bad as Kirchner in Argentina.

The worst-case scenario is that Boric will be an utter disaster, like Chavez or Maduro from Venezuela.

If you want more details about the election results, Las Últimas Noticias put together this helpful graphic.

I had predicted a 54-46 Boric victory, but these results are even worse.

But what’s really depressing is that Latin America – and the world – is going to lose a role model.

Chile was already declining because of the soft leftism of two recent presidents, Michelle Bachelet and Sebastián Piñera, and it seems almost certain that this degeneration will accelerate as Boric pushes a hard-left agenda.

I’m especially worried about damage to the nation’s system of personal retirement accounts.

I’ll close with a personal observation that people sometimes challenge me to point out successful libertarian nations.

I have traditionally responded by stating that there’s no such thing as a pure libertarian country, but that we have some great success stories if we focus on comparative policy.

Sadly, I can’t really use Hong Kong as an example any more, and now it looks like I’ll have to drop Chile off my list. So my fingers are crossed that nothing bad happens to Switzerland, Estonia, New Zealand, or Singapore!

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Greetings from Santiago. Chileans vote today for a new president and there’s a risk that a Venezuelan-style leftist, Gabriel Boric, will prevail.

And that puts at risk the economic progress described in this video.

The video has a good discussion of Chile’s very successful system of private pensions (which will be in danger if Boric wins).

But it also points out how free trade helped create the prosperity of modern Chile.

And that narrative is confirmed by looking at Chile’s score from the Fraser Institute’s Economic Freedom of the World.

I’m always happy to sing the praises of free trade and condemn protectionism, but let’s keep the focus on today’s election in Chile and why it matters.

That’s why this tweet tells you everything you need to know.

Notice how Chile began to prosper after it began to shift to free markets around 1980 and notice how Venezuela began to fall after it shifted to statism starting around 2000.

Notwithstanding all this evidence, Boric is favored to win today’s election. Which would be a vote for national economic suicide – perhaps akin to the British people voting for the pro-nationalization Labour Party after World War II (described in this video, for those interested).

I hope I’m wrong, both about the results of the election and the potential changes to economic policy if Boric prevails.

P.S. If you’ve enjoyed my Chilean election coverage, I did the same thing a couple of years ago in the United Kingdom (see here, here, here, here, and here).

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I explained a few days ago that Sunday’s presidential runoff in Chile should be viewed as the most important election of 2021.

This is because the left’s candidate, Gabriel Boric, wants to turn Chile into Venezuela, as I mention in this radio interview with Ross Kaminsky.

For some reason, you only hear my voice during this Zoom discussion, which means I don’t even have a face good enough for radio.

But let’s set aside that technical glitch and focus on Mr. Boric’s agenda.

Here’s a flyer that a campaign worker gave me as I was walking around Santiago yesterday.

It’s in Spanish, but one of my Chilean friends translated. Here are Boric’s economic proposals.

There was one attractive proposal. He’s proposing to cut the pay of politicians. But that will yield trivial savings if it happens and the odds of it actually happening are laughably small.

Also, he says he wants to fight crime, which is good (in theory).

His worst idea, though, is not on this flyer. If you go to his website, you’ll find this passage in his economic plan (as translated by Google): “The tax reform will collect on the order of 8% of GDP under the regime.”

He is not overly specific on how he will collect so much additional money, but the website mentions higher income taxes, green taxes, and the imposition of a wealth tax.

All of which sounds like a recipe to drive entrepreneurs and investors (and/or their money) out of the country.

To understand the radical nature of his plan, tax revenues in Chile currently grab about 21 percent of the country’s economic output according to the OECD – so Boric is advocating a 38-percent increase.

By comparison, Biden’s tax plan in the U.S. is awful, but he’s “only” proposing a 4-percent increase in the tax burden (about 1 percent of GDP).

P.S. Since Ross and I were comparing Argentina and Chile, here’s a chart I put together using the Maddison database.

P.S. Given that Chile’s free-market reforms have been especially beneficial to poor people (see here, here, here, and here), I wonder if they understand how Boric’s election would threaten their upward mobility.

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If you want visual proof of Chile’s “improbable success,” this chart tells you everything you need to know.

Thanks to free-market reforms in the 1980s and 1990s, growth exploded, Chile became the Latin Tiger and poverty plummeted.

It’s remarkable how quickly per-capita GDP has increased compared to the average of other major Latin American economies (Argentina, Bolivia, Brazil, Colombia, Ecuador, Mexico, Peru, Paraguay, Uruguay, and Venezuela).

Some folks on the left (including editors at the New York Times) bizarrely think Chile’s “neoliberal experiment” has been a failure. Given their upside-down perspective, they probably think Venezuela is a smashing success.

But today’s column is not about what’s happened in the past. It’s about what may happen in the future because of an upcoming presidential election.

Let’s start with this article from the Economist, which expressed concern back in November that the first round of the presidential election would lead to a stark ideological choice between the hard left and hard right.

…stable Chile disappeared two years ago, in an explosion of massive and sometimes violent protests…In a vote for the constitutional convention in May (in which only 43% turned out), support surged for the hard left while drying up for mainstream parties. As a result, the convention has become a theatre of wokeness, with calls to wage war against pivotal industries…, alongside…for a bigger role for the state in pensions, health care and green regulation. …pessimists fear a Utopian list of unaffordable rights and anti-capitalism. …Gabriel Boric, the candidate of the hard left, has seemed poised to win the presidential election. A former student leader, …some of his allies…include the Communist Party… Mr Boric wants to expand tax revenues by 8% of gdp over six to eight years (impossible, say many economists) and review trade agreements in order to engage in industrial policy. …That is why support has grown for José Antonio Kast of the hard right. …Whereas Mr Boric promises the most left-wing government since the chaotic Socialist-Communist administration of Salvador Allende, Mr Kast offers the most right-wing one since the dictatorship of General Augusto Pinochet.

Sure enough, the November election put Boric and Kast in a runoff, which is scheduled for December 19.

I don’t know if it would be accurate to say this is akin to a hypothetical Rand Paul-Bernie Sanders contest, but a report in the Wall Street Journal suggests that are very big economic implications.

After years of protests and political upheaval that seemed certain to shift Chile’s politics sharply to the left, voters in the first round of a presidential election largely backed candidates who support the country’s free-market economy… More than half of the ballots in the Sunday vote went to three right-wing candidates who support the market economy, led by first-place finisher José Antonio Kast with 28% of the vote. Gabriel Boric, the leftist candidate who backs dismantling a private pension system and creating a state-run lithium company, finished second with 26% of the votes… “People didn’t buy the idea that Chile needs to dismantle the market-friendly model, they just want a stronger social safety net,” said Patricio Navia, a Chilean political scientist at New York University. …The future of Chile’s once-lauded economic model that bolstered foreign trade and slashed poverty over the last three decades has been in doubt since mass protests erupted two years ago… Mr. Kast, a 55-year-old former lawmaker…, says he is a democrat who is offering Chileans economic prosperity and freedom.

By the way, the presidential election isn’t the only big thing that’s about to happen in Chile.

The article also acknowledges something I wrote about last year, which is the possibility of a new constitution based on entitlements rather than liberties (i.e., positive rights vs negative rights).

The election is being held as a special assembly made up of mainly leftist delegates is writing a new constitution, which could weaken investor protections and expand social rights. The constitution is expected to be finished next year when it will be put to a referendum.

A Washington Post column published yesterday by Professor Michael Albertus summarizes what’s at stake.

Chile’s presidential runoff election on Dec. 19 is the country’s most important election since its return to democracy in 1990. …Chile’s election pits José Antonio Kast, a bombastic far-right politician whom many liken to Donald Trump and Jair Bolsonaro, against Gabriel Boric, a far-left lawmaker and former student organizer. …The stakes couldn’t be higher. Chile’s ongoing constitutional convention is poised to propose next year the biggest overhaul to the country’s political system since the Pinochet dictatorship.

Prof. Albertus points out that the election isn’t just about economics.

There are big fights about immigration, law and order, abortion, and indigenous rights.

For those of us who care a lot about prosperity, Mary Anastasia O’Grady of the Wall Street Journal opined two days ago on the implications of Chile’s upcoming choice.

The stakes are high in Chile’s Dec. 19 runoff presidential election pitting the free-market former Congressman José Antonio Kast against socialist Congressman Gabriel Boric. The country has been trending left for years. But Mr. Kast’s surprise first-place finish in the election’s first round—with 28% of the vote—and the center-right’s strong showing in legislative elections suggests that Chileans are reconsidering national suicide. …If the vote goes left, Chileans can expect policy geared toward greater redistribution of the existing wealth-and-income pie—higher taxes, nationalization of pensions, populism, etc. If the vote goes right, there will be a chance to restore the fast growth of the 1990s by deepening the liberal economic agenda. …there’s something much bigger at stake. That is the survival of the democratic institutions protecting the pluralism, property rights and public order that have made Chile one of Latin America’s richest countries. Mr. Boric is backed by a coalition—Approved Dignity—heavily influenced by the Communist Party and other hard-left groups. …If Mr. Boric wins the runoff, you can bet they will demand their pound of flesh.

Ms. O’Grady’s column notes that Chile’s free-market reforms dramatically reduced poverty (for more details, see here, here, and here).

The market economy has been enormously successful in Chile. The share of Chileans living in poverty fell to 8.6% in 2017 from 68.5% in 1990, according to official data. Extreme poverty over the same period dropped to 2.3% from 48.8%. It’s a development record that few countries in the world have achieved.

Last but not least, she makes a very important point that Chile’s recent performance has not been very impressive.

…the clamor for change isn’t irrational. According to Chilean economist and investor José Luis Daza, …In the five years before the pandemic in 2020, the country grew at an average annual rate of 1.9%, less than half that of the world economy. “After 2000,” he told me in a phone interview from Santiago last week, “there has been zero productivity growth. In fact, it has been marginally negative.” …It was in the midst of this economic malaise in October 2019 that extreme-left militants burst onto the scene in Santiago. …Mr. Daza recently put his work in New York on hold to join Mr. Kast’s economic advisory team with a focus on growth.

I’m not surprised. There has not been any meaningful pro-growth reform this century. Indeed, the opposite is true. Policy has actually drifted in the wrong direction.

But if Boric wins this weekend, a drift in the wrong direction could become a tidal wave, washing away the Chilean Miracle.

The last thing Latin America needs is another Venezuela. Milton Friedman will be rolling over in his grave.

P.S. I’m especially concerned that a victory for the left could lead to the repeal of some of Chile’s best policies, including social security personal accounts and nationwide school choice.

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Big government is not good news, assuming you value liberty and prosperity.

But at least it’s good for a few laughs, as we saw in January, twice in May, and July. So let’s squeeze in a few more examples before the year ends.

Our first item today is for people who like being misled.

On a related note, we have a way for pathologists to identify those people after they’re dead.

Now let’s shift from pathologists to historians.

Ah, yes, the slippery slope.

Our fourth item is a visual depiction of Mitchell’s Law.

Per tradition, I’ve saved the best for last.

It’s not just the lettering on the door, it’s also the door not going down to the floor and the upside-down “Watch your step” sign.

Yes, this is satire, but you’ll see it’s not that far from the truth if you peruse my “Great Moments” columns.

Remember, if government is the answer, you’ve asked a very strange question.

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If you want to understand why some nations enjoy much stronger economic growth than other nations, the best place to start is the Fraser Institute’s Economic Freedom of the World.

And if you want to understand why some states have more vibrant economies than other states, you should check out the latest edition of the Fraser Institute’s Economic Freedom of North America.

Since most readers are from the United States, I’ll start with a look at the publication’s sub-national index, which shows how American states rank in terms of economic liberty. Unsurprisingly, a bunch of jurisdictions with no income tax are at the top of the list and California and New York are at the bottom.

By the way, the authors (Dean Stansel, José Torra, and Fred McMahon) specifically note that the rankings are based on 2019 data (the latest-available data) and thus “do not capture the effect on economic freedom of COVID-19 and government responses to it.

With that caveat out of the way, here are some of the findings for the sub-national index (which is where Figure 1.2b from above can be found).

Since the Fraser Institute is based in Canada, they understandably start by looking at Canadian provinces, but you can then read about results for the rest of North America.

For the purpose of comparing jurisdictions within the same country, the subnational indices are the appropriate choice. There is a separate subnational index for each country. In Canada, the most economically free province in 2019 was again Alberta with 6.17, followed by British Columbia with 5.44, and Ontario at 5.31. However, the gap between Alberta and second-place British Columbia continues to shrink, down from 2.30 points in 2014 to 0.73 in 2019. The least free by far was Quebec at 2.83, following New Brunswick at 4.09, and Prince Edward Island and Nova Scotia at 4.20. In the United States, the most economically free state was New Hampshire at 7.83, followed closely by Tennessee at 7.82, Florida at 7.78, Texas at 7.75, and Virginia at 7.59. …In Mexico, the most economically free state was Baja California at 6.01.

Here are the provincial rankings from Canada.

Alberta is the best place for economic growth and Quebec is the worst (by a significant margin).

Here are the some of the findings for the all-government index (which uses a different methodology than the sub-national index mentioned above).

The good news, from the perspective of folks in the U.S., is that most states rank above every other jurisdiction in North America (and the Mexican state all rank at the bottom).

The top jurisdiction is New Hampshire at 8.23, followed by Florida (8.17), Idaho (8.16), and then South Carolina, Utah, and Wyoming tied for fourth (8.15). Alberta is the highest ranking Canadian province, tied for 33rd place with a score of 8.00. The next highest Canadian province is British Columbia in 47th at 7.91. Alberta had spent seven years at the top of the index but fell out of the top spot in the 2018 report (reflecting 2016 data). The highest-ranked Mexican state is Baja California with 6.65, followed by Nayarit (6.62)… Seven of the Canadian provinces are ranked behind all 50 US states.

By the way, here’s some historical context showing that all three nations had their best scores back in the early 2000s (when the “Washington Consensus” for pro-market policy still had some impact.

Historically, average economic freedom in all three countries peaked in 2004 at 7.74 then fell steadily to 7.24 in 2011. Canadian provinces saw the smallest decline, only 0.19, whereas the decline in the United States was 0.51 and, in Mexico, 0.58. Since then average economic freedom in North America has risen slowly to 7.43 but still remains below that peak in 2004. However, economic freedom has increased in the United States and Mexico since 2013. In contrast, in Canada, after an increase in 2014, it has fallen back below its 2013 level.

P.S. If you want some additional historical context, Alberta’s fall from the top (mentioned in the first excerpt) can be partly blamed on the provincial government’s fiscal profligacy when it was collecting a lot of energy-related tax revenue.

P.P.S. I first wrote about Economic Freedom of North America in 2013 and more recently shared commentary about the 2019 and 2020 versions.

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Thanks to socialism, Venezuela is a basket case.

This video from John Stossel asks if the United States can and should learn from this bad example.

The easy answer is yes. Indeed, you can click here and here to get 56 examples of why we should not copy Venezuela’s descent to statism.

The main thing to understand is that the world is an economic laboratory and the various countries are experiments showing what works and what doesn’t work.

Nations such as Venezuela clearly are wretched examples of what happens if there is a large amount of bad policy.

Other nations, by contrast, are examples of what happens if there’s a medium level of bad policy. Think Greece, Argentina, and Italy.

While countries such as the United States and Denmark show what happens if there is a (comparatively) modest amount of bad policy.

All this is depicted in the “socialism slide,” which I created back in 2019 to show how nations score in the Fraser Institute’s Economic Freedom of the World.

The good news is that the United States would have to fall a long way down the slide before approaching Venezuela-style economic despotism.

Even Biden’s plan would represent just a small step in that wrong direction.

P.S. I’m focused on the dangers of copying Venezuela’s bad economic policies, but I agree about the downsides of the other two policies – gun control and speech control – mentioned in the video.

P.P.S. I’ll never stop being amazed that the New York Times wrote about Venezuela’s economic crisis and never once mentioned socialism.

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Two days ago, I shared the most morally reprehensible tweet of the year.

Today, we’re going to share a tweet that also is painful to read, but in this case only our friends on the left will be discomforted.

I’ve opined about Chile’s success and Venezuela’s failure on multiple occasions, but here’s the great José Piñera with an especially powerful comparison of the two nations.

I’ve had dozens and dozens of conversations with friends on the left about Chile and Venezuela and they have no response other than to sputter “Pinochet was a dictator!”

That’s true, I tell them, but please respond to my question about what we can learn when we compare Chile’s successful experience with economic liberty and Venezuela’s awful experience with statism.

At which point they bring up Pinochet again and refuse to deal with the actual data.

Speaking of data, since embedding a chart in a tweet sometimes doesn’t lead to the most user-friendly presentation, I went to the Our World in Data website to create my own version of Jose’s chart.

This type of chart looks at “relative changes” in per-capita economic output, so all nations start at the same place and we then examine which ones grew the fastest.

Or, in the case of Venezuela, which ones declined (and the ones, such as Argentina, that performed poorly).

Here’s another version of the chart, but this one gets rid of all the other nations so we can more easily compare Chile and Venezuela. As José Piñera wrote in his tweet, this is “extraordinary.”

Because Venezuela has a lot of oil, the nation’s economy does face exaggerated ups and downs as energy prices fluctuate.

But it’s easy to see a trend of economic stagnation (the nation’s energy industry was nationalized and is now collapsing, so that will augment Venezuela’s misery).

Our final version of the chart adds the average performance for the world and the average performance for Latin America. As you can see, Chile is still the best performer and Venezuela is still at the bottom.

I’ll close with two final observations.

But perhaps José Piñera‘s preferred candidate, José Antonio Kast Rist, will win this year’s election and save Chile from going in the wrong direction.

P.S. Venezuela used to be much richer than Chile, so it makes sense that Chile began to converge. But now the two countries are part of the anti-convergence club because Chile is now richer and continuing to grow much faster.

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Don Boudreaux, Deirdre McCloskey, and Dan Hannan have all explained how capitalism enabled mass prosperity after endless stagnation and poverty.

There’s a similar message in this video from Kite & Key Media. The most relevant parts start at 2:30, though I recommend watching the entire video.

But if you don’t have time to watch any of the video, here are four of the key points.

  1. We are much richer, on average, than we were 50 years ago. This is a point I made both in June and September, and it’s worth adding that the all income groups tend to rise together.
  2. There was almost no growth for much of world history, a dismal reality that is beyond the comprehension of politicians such as Congresswoman Ayanna Pressley.
  3. Technological progress enabled by capitalism not only ended mass poverty, but it also brings many luxuries within reach of lower-income and middle-class people.
  4. As shown by basket cases such as Venezuela, Lebanon, and North Korea, bad policy can wreck economic progress.

Regarding point #4, my only complaint with the video is that some viewers might conclude that economic growth will be automatic so long as politicians don’t make catastrophic Venezuelan-style policy mistakes.

It would have been nice to point out that, yes, the worst-possible set of policies produces the worst-possible economic damage, but also to explain that a modest amount of statism can hurt growth by a modest amount and a lot of statism can hurt growth by a significant amount.

In other words, there’s a spectrum of possible policy outcomes (I’ve also referred to this as the “socialism slide“) and it’s best to get as close to laissez-faire capitalism as possible.

Remember, even small differences in economic growth lead to big differences in long-run living standards. And the “size of the pie” is a good predictor of whether a nation enjoys broadly shared prosperity.

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Economists of all types agree with “convergence theory,” which is the notion that poor countries should grow faster than rich countries.

Though they are usually wise enough to also say “ceteris parisbus,” which means the theory applies if other variables are similar (the translation from Latin is “other things equal”).

I’m very interested in this theory because we can learn a lot when we look at nations that don’t have “equal” policies.

And the biggest lesson is that you have divergence rather than convergence if one nation follows good policies and the other one embraces statism.

Take a look, for instance, at what’s happened to per-capita economic output (GDP) since 1950 in Taiwan and Cuba.

The obvious takeaway from these numbers from the Maddison database is that Taiwan has enjoyed spectacular growth while Cuba has suffered decades of stagnation.

If this was a boxing match between capitalism and socialism, the refs would have stopped the fight several decades ago.

By the way, some folks on the left claim that Cuba’s economic misery is a result of the U.S. trade embargo.

In a column for the Foundation for Economic Education, Emmanuel Rincón explains the real reason why these two jurisdictions are so wildly divergent.

…the Communist Party of Cuba has blamed the United States for Cuba’s misery and poverty, alluding to the “blockade” that the U.S. maintains against Cuba. However, …the rest of the world can trade freely with the island. …Taiwan’s economy is one of the most important in the world, with a poverty rate of 0.7%, as opposed to Cuba, which has one of the most depressed economies on the planet and 90% of its population living in poverty. What is the difference between the two islands? The economic and political model they applied in their nations. …Taiwan has the sixth freest economy according to the Index of Economic Freedom… While Taiwan took off with a capitalist model, Cuba remained anchored in the old revolutionary dogmas of Fidel Castro… With popular slogans such as redistribution of wealth, supposed aid to the poor, and socialism, Fidel Castro began to expropriate land and private companies to be managed by the state…today the GDP of the Caribbean island is five times less than that of Taiwan, and 90% of its population lives in poverty, while in the Asian island only 0.7% of its population is poor. It is definitely not the fault of the “blockade”, but of socialism.

To be sure, Cuba would be slightly less poor if there was unfettered trade with the United States, so maybe Taiwan would only be four and one-half times richer rather than five times richer in the absence of an embargo.

The moral of the story is that there’s no substitute for free markets and small government.

P.S. Though I appreciate the fact that our friends on the left are willing to extol the virtues of free trade, at least in this rare instance.

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Two years ago, I wrote that China needed to choose between “Statism and Stagnation or Reform and Prosperity.”

Sadly, as I noted last month in Part I of this series, it seems that President Xi is opting for the former.

Which is unfortunate since China needs a lot more growth to get anywhere near U.S. levels of prosperity.

Yet that’s not very likely when the United States is ranked #6 and China is ranked #116 for economic liberty.

For what it’s worth, China’s score is likely to drop in future years rather than rise, and I’m certainly not the only one to notice that China has economic problems.

Writing for the Atlantic, David Frum looks at the country’s shaky economic outlook.

China’s economic, financial, technological, and military strength is hugely exaggerated by crude and inaccurate statistics. Meanwhile, U.S. advantages are persistently underestimated. The claim that China will “overtake” the U.S. in any meaningful way is polemical and wrong… China misallocates capital on a massive scale. More than a fifth of China’s housing stock is empty—the detritus of a frenzied construction boom that built too many apartments in the wrong places. China overcapitalizes at home because Chinese investors are prohibited from doing what they most want to do: get their money out of China. …More than one-third of the richest Chinese would emigrate if they could, according to research by one of the country’s leading wealth-management firms.

David mentioned “inaccurate statistics,” which is a big problem in China.

But I also worry about bubble statistics, which is an issue the Wall Street Journal editorialized about earlier this year.

…credit has exploded, with total public and private debt expected to exceed 270% of GDP in 2020, up 30 points in one year. Most of that has gone to state-owned firms and exporters. Smaller, more productive private companies that serve the domestic market report credit shortages. This undermines long-term growth… Unless China can unlock and expand its productive private economy, it will never be able to manage the burden of the debt Beijing has created.. China’s unbalanced recovery represents an enormous lost opportunity for the Chinese people.

David Ignatius of the Washington Post opines on President Xi’s embrace of bad policy.

President Xi Jinping has moved down a Maoist path this year toward tighter state control of the economy — including “self-criticism” sessions for Chinese business and political leaders whose crime, it seems, was being too successful. Xi’s leftward turn represents a major change… The result is a severe squeeze on what Xi views as “undisciplined” entrepreneurs. …Xi’s crackdown has rocked the Chinese economy. The top six technology stocks have lost more than $1.1 trillion in value over the past six months… Xi is animated by what he has called his “China Dream,” of a nation of unparalleled wealth and power — and also the egalitarian ideals of socialism.

In a column for the Wall Street Journal, Dennis Kwok and Johnny Patterson warn that private investors should not trust the Chinese government.

Beijing’s crackdown on private businesses has wiped out hundreds of billions of dollars in market value in the past two months. Under the policies of “advancement of the state, and retreat of private enterprises” and “common prosperity,” the state’s tightening of control will increase. …Beijing assails “foreign forces” for seeking to curb China’s rise as a great nation. That refrain is constantly pushed by state media… Investors and shareholders of Wall Street firms must understand that there has been a paradigm shift in Mr. Xi’s China. Long gone are the days of pragmatism. What the Chinese state wants, the Chinese state gets.

In an article for the Atlantic, Michael Schuman explains how China’s heavy subsidies for electric cars haven’t produced vehicles that can compete with Tesla and other western  vehicles.

Do Chinese state programs actually work? …bureaucrats have never stopped meddling with markets. State direction, state money, and state enterprises remain core features of the Chinese economic model. President Xi Jinping has even reversed the trend toward greater economic freedom, notably with a hefty dose of state-led programs aimed at accelerating the progress of specific sectors. …China’s industrial program has resulted in a lot of production, but only questionable competitiveness. Even Beijing’s spendthrift bureaucrats seem to have awoken to that—sort of. They’ve been rolling back direct subsidies to carmakers, with an eye on eliminating them.

In other words, industrial policy is backfiring on China.

The former Prime Minister of Australia, Kevin Rudd, opined for the Wall Street Journal about China’s resurgent statism

In recent months Beijing killed the country’s $120 billion private tutoring sector and slapped hefty fines on tech firms Tencent and Alibaba. Chinese executives have been summoned to the capitol to “self-rectify their misconduct” and billionaires have begun donating to charitable causes in what President Xi Jinping calls “tertiary income redistribution.” China’s top six technology stocks have lost more than $1.1 trillion in value in the past six months… Mr. Xi is executing an economic pivot to the party and the state… Demographics is also driving Chinese economic policy to the left. The May 2021 census revealed birthrates had fallen sharply to 1.3—lower than in Japan and the U.S. China is aging fast. The working-age population peaked in 2011… While the politics of his pivot to the state may make sense internally, if Chinese growth begins to stall Mr. Xi may discover he had the underlying economics very wrong.

That final sentence is key.

Free enterprise is only tried-and-true recipe for economic prosperity. Chinese leaders are wrong to think they can get faster growth with more intervention.

Simply stated, China appears to be moving further left on this spectrum when it desperately needs to move to the right.

The bottom line is that I’m not optimistic about the future of China.

The country needs a Reagan-style agenda (the approach used by Singapore, Hong Kong, and Taiwan) to achieve genuine convergence.

P.S. Amazingly, both the IMF and OECD are encouraging more statism in China.

P.P.S. I used to be hopeful about China. During the 1950s, 1960s, and 1970s, China was horrifically impoverished because of socialist policies. According to the Maddison database, the country was actually poorer under communism than it was 1,000 years ago. But there was then a bit of economic liberalization starting in 1979, which generated very positive results. As a result, there was a significant increase in living standards and a huge reduction in poverty. But that progress has ground to a halt.

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The Fraser Institute in Canada has released its latest edition of Economic Freedom of the World, an index that measure and ranks nations based on whether they follow pro-growth policy.

Based on the latest available data on key indicators such as taxes, spending, regulation, trade policy, rule of law, and monetary policy, here are the top-20 nations.

You may be wondering how Hong Kong is still ranked #1.

In this summary of the findings, the authors explain that EFW is based on 2019 data. In other words, before Beijing cracked down. This means Hong Kong will probably not be the most-free jurisdiction when future editions are released.

The most recent comprehensive data available are from 2019. Hong Kong remains in the top position. The apparent increased insecurity of property rights and the weakening of the rule of law caused by the interventions of the Chinese government during 2020 and 2021 will likely have a negative impact on Hong Kong’s score, especially in Area 2, Legal System and Property Rights, going forward. Singapore, once again, comes in second. The next highest scoring nations are New Zealand, Switzerland, Georgia, United States, Ireland, Lithuania, Australia, and Denmark.

The United States was #6 in last year’s edition and it remains at #6 this year.

There are some other notable changes. The country of Georgia jumped to #5 while Australia dropped to #9.

Perhaps the most discouraging development is that Chile dropped to #29, a very disappointing result (and perhaps a harbinger of further decline in the nation that used to be known as the Latin Tiger).

And it’s also bad news that Canada has deteriorated over the past five years, dropping from #6 to #14.

The good news is that the world, on average, is slowly but surely moving in the right direction. Not as rapidly as it did during the era of the “Washington Consensus,” but progress nonetheless.

By the way, the progress is almost entirely a consequence of better policy in developing nations, especially the countries that escaped the tyranny of Soviet communism.

Policy has drifted in the wrong direction, by contrast, in the United States and Western Europe.

Indeed, the United States currently would be ranked #3 if it still enjoyed the level of economic liberty that existed in 2000.

In other words, the BushObamaTrump years have been somewhat disappointing.

Let’s look at another chart from the report. I’ve previously pointed out that there’s a strong relationship between economic freedom and national prosperity.

Well, here’s some additional evidence.

Let’s close by considering some of the nations represented by the red bar in the above chart.

You probably won’t be surprised to learn that Venezuela is once again ranked last. Though it is noteworthy that its score dropped from 3.31 to 2.83. I guess Maduro and the other socialists in Venezuela have a motto, “when you’re in a hole, keep digging.”

Argentina isn’t quite as bad as Venezuela, but I also think it’s remarkable that its score dropped from 5.88 to 5.50. That’s a big drop from a nation that already has a bad score.

Given these developments (as well as what’s happening in Chile), it’s not easy to be optimistic about Latin America.

P.S. There isn’t enough reliable data to rank Cuba and North Korea, so it’s quite likely that Venezuela doesn’t actually have the world’s most-oppressive economic policies.

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What motivates the tax-and-spend crowd? Why do they want high tax rates and a big welfare state?

The most charitable answer is that they don’t want anyone to suffer from poverty and they mistakenly think big government can solve problems.

But there’s another answer that may be more accurate.

As Margaret Thatcher observed about three decades ago, it seems that many folks on the left are primarily motivated by jealousy and resentment against their successful neighbors.

I realize I’m making an ugly accusation. But in my defense, I’m simply reporting what they write. Or what they admit to pollsters.

And now we have another example. Christine Emba of the Washington Post opined earlier this year that politicians should somehow put a ceiling on how much wealth any American can create.

The most shocking thing about ProPublica’s extensive report on the leaked tax returns of the super-rich wasn’t what the report contained — it was the fact that we’re barely shocked anymore. …we, as a society, let them do it. …every billionaire is a policy failure. But more than that, every billionaire is a failure of our own moral imagination. …Should we tax capital gains at a higher rate? Raise the corporate tax rate? Create a wealth tax? (I’d vote yes to all three.) But these debates are small bore. …Instead of debating tweaks at the edges of our tax system, what we should be…focused less on what is “allowed”… Such a philosophy already exists. It’s called limitarianism. …Just as there is a poverty line under which we agree that no one should fall, limitarianism holds that one can construct a “wealth line” over which no one should rise, and that the world would be better off for it.

Ms. Emba doesn’t explain how her “limitarian” policy might be implemented.

But since she’s embraced a wealth tax, the simple way to achieve her goal would be adding a 100 percent rate to that levy for any taxpayers who create so much wealth for society that they wind up with assets of $1 billion.

In case you think I’m joking, here’s part of her conclusion.

…the prospect of having “only” $999 million dollars would not stop innovators in their tracks. And even if it did stop some, would the trade-off be so bad?

I’ll close this column by answering her rhetorical question.

The trade-off wouldn’t just be bad, it would be terrible. A wealth tax (or any other possible policy to achiever her “limitarian” utopia) necessarily would reduce saving and investment.

And that would mean less innovation, slower (or negative) productivity growth, and wage stagnation (or decline).

Which is a good excuse to recycle my Eighth Theorem of Government.

Simply stated, here’s little reason to think that the folks who hate their successful neighbors actually care about their poor neighbors.

P.S. The New York Times also has published a column embracing the resentment-fueled limitarian notion.

P.P.S. Plenty of folks on the left explicitly argue that government has first claim on income. And that you’re the beneficiary of a favor if you get to keep some of what you earn. Once again, I’m not joking.

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Long-time readers know that I periodically pour cold water on the notion that China is an economic superstar.

Yes, China did engage in some economic liberalization late last century, and those reforms should be applauded because they were very successful in reducing severe poverty.

But from a big-picture perspective, all that really happened is that China went from terrible policy (Maoist communism) to bad policy (best described as mass cronyism).

Economic Freedom of the World has the best data. According to the latest edition, China’s score for economic liberty rose from a horrible 3.69 in 1990 to 6.21 in 2018.

That’s a big improvement, but that still leaves China in the bottom quartile (ranking #124 in the world). Better than Venezuela (#162), to be sure, but way behind even uncompetitive welfare states such as Greece (#92), France (#58), and Italy (#51).

And I fear China’s score will get even worse in the near future.

Why? Because it seems President Xi is going to impose class-warfare tax increases.

In an article for the Guardian, Phillip Inman shares some of the details.

China’s president has vowed to “adjust excessive incomes” in a warning to the country’s super-rich that the state plans to redistribute wealth… The policy goal comes amid a sweeping push by Beijing to rein in the country’s largest private firms in industries, ranging from technology to education. …Xi…is expected to expand wealth taxes and raise income tax rates… Some reforms could be far reaching, including higher taxes on capital gains, inheritance and property. Higher public sector wages are also expected to be part of the package.

And here are some excerpts from a report by Jane Li for Quartz.

Chinese president Xi Jinping yesterday sent a stark message to the country’s wealthy: It is time to redistribute their excessive fortunes. …Another reason for the Party’s focus on outsize wealth is to reduce rival centers of power and influence in China, which has also been an impetus for its crackdown on the tech sector… China already has fairly high income tax rates for its wealthiest. That includes a top income tax rate of 45% for those who earn more than 960,000 yuan ($150,000) a year… Upcoming moves could include…a nationwide property tax.

These stories may warm the hearts of Joe Biden and Bernie Sanders, but they help to explain why I’m not optimistic about China’s economy.

If you review the Economic Freedom of the World data, you find that China is especially bad on fiscal policy (“size of government”), ranking #153.

That’s worse than China does even on regulation.

Yet the Chinese government is now going to impose higher taxes to fund even bigger government?!?

Is the goal to be even worse than Venezuela and Zimbabwe?

P.S. Many wealthy people in China (maybe even most of them) achieved their high incomes thanks to government favoritism, so there’s a very strong argument that their riches are undeserved. But the best policy response is getting rid of industrial policy rather than imposing tax increases that will hit both good rich people and bad rich people.

P.P.S. I’ve criticized both the OECD and IMF for advocating higher taxes in China. A few readers have sent emails asking whether those international bureaucracies might be deliberately trying to sabotage China’s economy and thus preserve the dominance of Europe and the United States. Given the wretched track records of the OECD and IMF, I think it’s far more likely that the bureaucrats from those organizations sincerely support those bad policies (especially since they get tax-free salaries and are sheltered from the negative consequences).

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As I’ve repeatedly pointed out, capitalism (oops, I mean free enterprise) is far superior than the various forms of statism.

Just last month, I shared a video with 20 example of market-friendly jurisdictions growing much faster than government-dominated nations.

But markets aren’t just superior at producing mass prosperity. Or at reducing mass poverty (the normal state of human existence).

Free enterprise also is the best option for dealing with a pandemic.

I wrote back in March about how free markets saved the day after the coronavirus struck.

In a column for the Wall Street Journal, Walter Russell Mead further elaborates on this theme.

The World Health Organization has been a shame and a disgrace, from its initial silence over China’s coverup of early data on the outbreak through its unreasoning hostility toward Taiwan and its collusion with Beijing’s efforts to discredit the lab-leak hypothesis. The premier international health agency has failed. Covax, the much-touted international program aimed at providing vaccines to citizens of countries too poor to purchase adequate supplies on the open market, has also fallen abysmally short. …What’s worked in the pandemic so far has been the dog everyone wants to kick: Big Pharma. Pfizer, Moderna, AstraZeneca and Johnson & Johnson succeeded where the internationalists failed. Scientists in free societies working with the resources that capitalism provides have given the world hope. The WHO, Covax, the Chinese and Russian vaccines, and the “global community,” not so much.

Amen. Let’s be thankful for pharmaceutical companies. Their pursuit of profit is what led to the vaccines that have saved millions of lives.

By contrast, the WHO has been very unhelpful.

And America’s domestic bureaucracies, the FDA and CDC, have arguably been harmful.

Notwithstanding this track record, the Biden Administration wants to weaken the private sector.

The Biden administration…seems to believe that the best response…is to sabotage the American pharmaceutical industry. The U.S. development bank—the International Development Finance Corp.—will provide billions of dollars to firms based in countries like Brazil, Rwanda, Senegal, South Africa and South Korea that agree to manufacture Covid-19 vaccines. Meanwhile, the State Department’s coordinator for global Covid response, Gayle Smith, said last week that she wants to push Big Pharma to share its technology with its new government-subsidized foreign competitors. …one wonders exactly how President Biden squares subsidizing cheap overseas competition for one of the most successful industries in the U.S. with promoting jobs for the American middle class.

This proposal is nuts.

Only curmudgeonly libertarians will get upset about an effort to subsidize vaccines for the developing world.

But every rational person should be horrified about a plan that would weaken one of America’s most successful industries.

P.S. Moreover, we should reject short-sighted policies such as European-style price controls on drug companies. Such an approach would undermine our ability to deal with future pandemics and also reduce the likelihood of new and improved treatments for things such as cancer, dementia, and heart disease.

P.P.S. I like pharmaceutical companies when they are being honest participants in a free market. I don’t like them when they get in bed with big government.

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It’s been almost three months since I shared some satiric images about government.

So let’s rectify that oversight with five new items.

We’ll start with some very wise words from Forest Gump (not the imposter).

The second item in today’s collection sort of reminds me of this “shovel” cartoon about Keynesian economics.

Both involve pointless gestures that will never produce results.

I don’t think I need to add any commentary to this next photo.

I shared a cartoon many years ago suggesting that organized crime and government have a lot in common.

Here’s a different view.

Per tradition, I’ve saved my favorite example for the conclusion.

The lower-right frame may not be proof of a stroke, but it’s definitely evidence of brain damage of some kind.

Remember, you’ve asked a very strange question if government is the answer.

P.S. My full collection of amusing images (and cartoons) about government can be viewed here.

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Economists widely agree with the theory of “convergence,” which is the (mostly true) idea that poor nations should grow faster than rich nations.

This means that we can learn important lessons by looking at examples of “divergence,” and I provide 20 examples in this presentation.

The above video is an excerpt from a presentation I made earlier this week to a seminar organized by the New Economic School in the country of Georgia.

While it seems like I was making the same point, over and over again (and I was), I wanted the students to understand that the real-world evidence clearly shows that good policy is critical if less-developed nations want convergence.

And I also wanted them to realize that there are many examples of free market-oriented nations growing much faster than anti-market countries.

But, by contrast, there are not examples that go the other way.

I’ve challenged my leftist friends to cite one case study of a poor nation that became a rich nation with big government.

Or to cite a single example of an anti-market nation that has grown faster than a market-oriented country.

Especially when using decades of data, which means there’s no ability to cherry-pick the data and create a misleading impression.

Needless to say, I’m still waiting for them to give me an answer.

Here are the background stories from the examples of divergence in my presentation.

My last example showed important examples of convergence.

  • Example #20: United States vs. Hong Kong, Singapore, and Switzerland

And here are a few other examples of divergence that I didn’t include in my presentation.

Shifting back to convergence, my column on breaking out of the “middle income trap” also has very interesting data on how Hong Kong, Singapore, Ireland, and Taiwan have closed the gap with (or even exceeded) the United States.

I also recommend this column which looks at a wide range of nations that are converging with, diverging from, or staying flat compared with the United States, as well as this column showing how Ireland has caught up and surpassed other European nations.

The moral of the story is that there’s a very simple recipe showing how poor nations can become rich nations.

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When writing about economic policy in Latin America, Chile gets lots of attention because it’s a remarkable story of success.

Similarly, Venezuela gets lots of attention because it’s a remarkable story of failure (with Argentina also deserving condemnation for its downward slide).

But we can also learn from other Latin nations.

For instance, I wrote back in 2016 that Peru was one of the world’s “overlooked success stories” because of a big increase in economic liberty back in the good ol’ days of the Washington Consensus.

The huge increase in economic liberty that began in the mid-1980s has subsequently been followed by a period of stability.

Policy is not perfect in Peru, especially with regards to regulation and the legal system.

But it is #29 in the world according to the most-recent edition of Economic Freedom of the World, which puts the country in the “most free” quartile.

Not bad for a nation that was in the “least free” quartile as recently as 1990 (and among the five-lowest-scoring nations in 1985).

Perhaps more important, the economic liberalization in Peru is paying dividends.

Looking at the Maddison data on per-capita GDP (adjusted for inflation), you can see that living standards have basically doubled this century.

In this case, “not bad” would be an extreme understatement. Peru deserves to be viewed as a success story.

Now for some bad news.

While Peru has made great progress in recent decades, the nation may be on the verge of slipping into Venezuelan-style economic mismanagement following the recent election of Pedro Castillo, who campaigned on a far-left platform.

Surprisingly, the Washington Post has a superb editorial on this topic.

Now, the question is whether Mr. Castillo will seek to undermine…the country’s free market economy, or pursue or a more moderate course. At stake is whether the South American country of 32 million will follow the disastrous example of Venezuela, whose autocratic socialist regime has destroyed its prosperity, or continue what, until the covid-19 pandemic, was a record of steadily rising living standards. …Mr. Castillo, who was nominated by a Marxist-Leninist party founded by a Cuba-educated hardliner, says he is not a Communist. He campaigned on nationalizing the mining companies that are the foundation of the economy and summoning a constituent assembly to rewrite the constitution, the political tactic pioneered by Venezuelan strongman Hugo Chávez. But the head of his economics transition team has said there will be no nationalizations, expropriations, or exchange and price controls, and Mr. Castillo has indicated he will leave the conservative president of the central bank in place.Given that the president’s party lacks the parliamentary majority it would need to authorize a new constitution or change foreign investment laws… Venezuela’s implosion, which has caused 5 million people to flee the country for its neighbors — including 1 million in Peru — has demonstrated the consequences of leftist misrule for the region.

Wow, that’s a great defense of free markets that shows a great understanding that statism is a recipe for disaster.

I only wish the Washington Post was similarly concerned about “leftist misrule” in the United States (a.k.a., the Biden-Bernie agenda).

But I’m digressing. For purposes of today’s analysis, let’s simply hope that soon-to-be President Castillo doesn’t wreck Peru’s progress.

After all, we know the recipe for growth and prosperity, so it makes sense to worry when politicians want to do the opposite.

P.S. Let’s similarly hope that Chile’s progress isn’t undone by a new, dirigiste constitution.

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Part I of this series looked at socialism’s track record of failure, while Part II pointed out that greater levels of socialism lead to greater levels of misery.

For Part III, let’s start with this video on the economics of socialism.

If the world was governed by logic, there would be no need to address this topic for a third time.

After all, the evidence is overwhelming that capitalism (oops, I mean free enterprise) does a better job than socialism.

But it seems that we don’t live in a logical world. We have too many people who have an anti-empirical belief in bigger government.

And, if the polling data is accurate, the problem seems especially acute with young people.

I’ve wondered whether sub-par government schools are part of the problem. Are they mis-educating kids?

I don’t know if that was a problem in the past, but Richard Rahn warns in the Washington Times that it will probably be a problem in the future.

Recent polls have shown rising support for socialism and an increasingly negative view of capitalism, particularly among the young.  …Most of those who say they support socialism are probably unaware that it has failed every place and time that it has been tried. …They may also not be aware that socialism relies on coercion to function… By contrast, capitalism relies on the voluntary exchange of goods and services… Last week at the NEA’s annual meeting, the delegates demanded that the union issue a study criticizing, among many things, “capitalism.” Has anyone thought through the alternatives – a system based on slavery or serfdom…? Under capitalism, investment and productive labor are allocated by individual consumer choice. …Under socialism, there is no good mechanism for meeting consumer demand; the socialist leaders decide what the people should have. There is no mechanism for creating and encouraging innovation – that is why socialist states normally only produce something new after it has already been produced in a capitalist country… So why then are the teachers’ unions advocating that capitalism be attacked, and socialism be applauded? The answer is simple, willful ignorance.

I’ve always supported school choice because I want better educational outcomes, especially for poor and minority students.

In recent months, I’ve wondered we also need school choice because of what teacher unions are doing on issues such as critical race theory and school re-openings.

Now it seems we need choice simply to protect kids from the risk of being propagandized.

P.S. Or protect kids from nonsensical forms of discipline.

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One week ago, I shared five images that capture the essence of government.

Today, we have another collection, starting with a reminder of, in the words of Ronald Reagan, the most terrifying words in the English language.

Next, we have warning signs about all sorts of things, but not about the the biggest threat we face.

Our third item captures what happens over time as a small government becomes medium-sized government and then evolves into big government.

Here’s a succinct explanation of how government and organized crime are similar (though here’s a cartoon reminding us how they are different).

Here’s my favorite, though given the spending proclivities of many Republicans, it should simply read “politicians promising everything for ‘free’.”

You get the same message from this Glenn McCoy cartoon and this Michael Ramirez cartoon.

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My approach during the Trump years was very simple.

Other people, however, muted their views on policy because of their partisan or personal feelings about Trump.

I was very disappointed, for instance, that some Republicans abandoned (or at least downplayed) their support for free trade to accommodate Trump’s illiteracy on that issue.

But those people look like pillars of stability and principle compared to the folks who decided to completely switch their views.

Max Boot, for instance, is a former adviser on foreign policy to Republicans such as John McCain and Marco Rubio, who has decided that being anti-Trump means he should now act like a cheerleader for high taxes and big government.

Here’s some of what he wrote in a column for today’s Washington Post.

Republicans accuse President Biden of pursuing a radical agenda that will turn the United States into a failed socialist state. …It’s true that Biden is proposing a considerable amount of new spending… But those investments won’t turn us into North Korea, Cuba, Venezuela or the Soviet Union — all countries with government ownership of industry. …with proposals such as federally subsidized child care, elder care, family leave and pre-K education — financed with modest tax increases on corporations and wealthy individuals — Biden is merely moving us a bit closer to the kinds of government services that other wealthy, industrialized democracies already take for granted. …That’s far from radical. It’s simply sensible.

Part of the above excerpt makes sense. Biden is not proposing socialism, at least if we use the technical definition.

And he’s also correct that Biden isn’t trying to turn us into North Korea, Cuba, Venezuela, or the Soviet Union.

But he does think it’s good that Biden wants to copy Europe’s high-tax welfare states.

…by most indexes we are an embarrassing international laggard. …the United States spends nearly twice as much on health care as a percentage of gross domestic product than do other wealthy countries… The United States is also alone among OECD nations in not having universal paid family leave. …Our level of income inequality is now closer to that of developing countries in Africa and Latin American than to our European allies. …it’s possible to combine a vibrant free market with generous social welfare spending. In fact, that’s the right formula for a more satisfied and stable society. In the OECD quality-of-life rankings — which include everything from housing to work-life balance — the United States ranks an unimpressive 10th.

Mr. Boot seem to think that it’s bad news that the United States ranks 10th out of 37 nations in the OECD’s so-called Better Life Index.

I wonder if he understands, however, that this index has serious methodological flaws – such as countries getting better scores if they have bigger subsidies that encourage unemployment? Or countries getting better scores if they have high tax rates that discourage labor supply?

But the real problem is that Boot seems oblivious to most important data, which shows that Americans enjoy far more prosperity than Europeans.

And he could have learned that with a few more clicks on the OECD’s website. He could have found the data on average individual consumption and discovered the huge gap between U.S. prosperity and European mediocrity.

The obvious takeaway is that big government causes deadweight loss and hinders growth (as honest folks on the left have always acknowledged).

P.S. I can’t resist nit-picking four other points in Boot’s column.

  1. As show by this Chuck Asay cartoon, you don’t magically make government spending productive simply be calling it an “investment.”
  2. Like beauty, the interpretation of “modest” may be in the eye of the beholder, but it certainly seems like “massive” is a better description of Biden’s proposed tax hikes.
  3. It’s worth noting that Europe became a relatively prosperous part of the world before governments adopted punitive income taxes and created big welfare states.
  4. America’s excessive spending on health is caused by third-party payer, which is caused by excessive government intervention.

P.P.S. I’ve wondered whether the OECD (subsidized by American taxpayers!) deliberately used dodgy measures when compiling the Better Life Index in part because of a desire to make the U.S. look bad compared to the European welfare states that dominate the organization’s membership? That certainly seems to have been the case when the OECD put together a staggeringly dishonest measure of poverty that made the U.S. seem like it had more destitution than poor countries such as Greece, Portugal, and Turkey.

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Since more than 100 million people have been killed by communist regimes, should we conclude that Karl Marx is the worst person in world history?

To address that question, let’s start with this video from Prager University, which is narrated by Professor Paul Kengor of Grove City College.

At the risk of understatement, the video is a damning indictment of Marx’s legacy.

His political ideas provided the justification for the genocides of dictators such as Stalin, Mao, and Pol Pot.

His economic ideas led to policies that produced mass deprivation, starvation, and immense human suffering.

Now let’s take a closer look at Marx rather than just his ideas.

Was he a good person who simply had some horribly misguided ideals?

Hardly. Everything we know suggests he was a sickeningly despicable excuse for a human being.

Professor Richard Ebeling has some of the sordid details in an article for Intellectual Takeout.

Karl Marx was born on May 5, 1818, in the Rhineland town of Trier. …he was generally a lazy and good-for-nothing student. …Marx’s only real jobs during his lifetime were as occasional reporters for or editors of newspapers and journals most of which usually closed in a short period of time… He had sex enough times with the family maid that she bore him an illegitimate son… He often used racial slurs and insulting words to describe the mannerisms or appearance of his opponents in the socialist movement.  …In Marx’s mind, the Jew in bourgeois society encapsulated the essence of everything he considered despicable in the capitalist system… Marx’s caricaturing description of the asserted “Jewish mindset” rings amazingly similar to those that were later written by the Nazi “race-scientists” of the 1930s.

All told, it appears that Marx lacked a single redeeming feature. He was a very bad person with very bad ideas.

Indeed, it’s safe to assume that the best thing he did in his life occurred on March 14, 1883.

P.S. For those seeking more economic analysis, Marx advocated for the pure version of socialism, meaning government ownership of the means of production (state factories, collective farms, etc).

P.P.S. It’s disgusting that there’s a statue of Marx in his birth city and it’s equally disgusting that the former President of the European Commission went there to celebrate the 200th anniversary of his birth.

P.P.P.S. Marx gets featured frequently in my collection of jokes mocking communism.

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What nation serves as the most powerful example of how statism can wreck an economy and impoverish people?

Those are all good choices, but perhaps Argentina is the best example (or should we say worst example?).

If you go back 100 years, Argentina was one of the world’s richest nations. And, as recently as the late 1940s, it still ranked in the top 10 for per-capita economic output.

But then the nation veered to the left. Whether you call it Peronism or democratic socialism, there was a huge increase in the size and scope of government.

As you might expect, the results were terrible. Argentina since then has been the world’s worst-performing economy.

But things can always get worse.

In an article for National Review, Antonella Marty points out that President Fernandez is doing his part to continue the awful pattern of statism-generated crises in Argentina.

…it was already challenging for Argentines to maintain businesses and overcome the endless regulations and bureaucratic hurdles that comprise everyday life…the government of Alberto Fernández and Cristina Fernández de Kirchner has made matters worse… In brief: …The Argentine economy has been in recession since 2018. …Argentina ranks 126th in the World Bank’s Doing Business index, between Paraguay and Iran. It takes about five months to open a business in Argentina. …Argentina has public debt approaching 90 percent of GDP. …Argentina has one of the highest inflation rates in the world: 36.6 percent over the past year. Every month, wages steadily decline, and every 10 or 12 years, like clockwork, the Argentine peso crashes, diminishing household savings. …Argentine debt still trades at a steep discount, because investors rightfully recognize the dim prospects for a government that limits the creation of wealth through aggressive taxation, price controls, currency regulation, and skyrocketing levels of public spending. Argentina still does not realize the problem that has trapped us in a cycle of repeated crises for decades: the government. …The “solutions” invoked by left-wing Peronists — the progeny of the populist 20th-century president Juan Perón — always involve increased state intervention in the economy. Alberto Fernández has done nothing different. …As always, Argentina cannot solve the problem of big government with more government.

Perhaps the worst policy under Fernandez is the new wealth tax.

In an article for the Washington Post, Diego Laje and Anthony Faiola look at Argentina’s embrace of this destructive levy.

At least as far back as the 1940s, …class conflict has lingered just below the surface of this chronically indebted South American state. To dig itself out of a gaping fiscal hole made worse by the pandemic, Argentina is issuing a clarion call now echoing around the globe: Make the rich pay. …So why not, proponents argue, foist the cost of the epic global recession caused by the pandemic onto those who can most afford it? …Argentina, saddled with crippling debt exacerbated by the pandemic, adopted a one-time special levy on the rich in December, demanding up to 3.5 percent of the total net worth of citizens who hold at least $3.4 million of assets. …Argentina is turning to its wealthiest citizens after having lost the faith of foreign investors, and with little other means to plug financial holes. …fearful Argentines hoarded U.S. dollars, and the government, as it so often has in the past, turned to the printing press to make ends meet. Now Argentina is seeking another major bailout from the IMF… In recent months, Walmart, Latam Airlines, Uber Eats, Norwegian Airlines and Nike have reduced operations in Argentina or left the country. …Argentina crashed from its place at the top of the global wealth chain long ago, in a succession of economic crises, dictatorships and bruising political battles between the ruralistas and the Peronistas. 

The reporters don’t make the obvious connection between Peronist policies and the economy’s decline, but at least readers learn that Argentina hasn’t been doing well.

And the authors deserve credit for acknowledging that there are serious concerns about how wealth taxes can undermine prosperity.

But wealth taxes are notoriously tricky to get right, and they have a history of deeply negative side effects that can seriously undermine their intent. In France, for instance, a long-standing wealth tax, repealed in 2018, was blamed for an increase in tax dodging and the flight of thousands of the country’s richest citizens. …A decade ago, 12 of the world’s most-developed countries had wealth taxes on the books. The number has fallen to three.

I’m tempted to say the big takeaway from today’s column is that wealth taxes are a bad idea.

That’s true, of course, but the bigger lesson we should absorb is that a rich nation can become a poor nation.

Simply stated, if a government imposes enough bad policies – as has been the case in Argentina – then it’s just a matter of time before it declines relative to nations with sensible policies.

Perhaps there’s a lesson there for Joe Biden?

P.S. I sometimes fantasize that Argentina can experience a Chilean-style economic revitalization, but that seems very unlikely since even supposedly right-wing politicians pursue statist policies.

P.P.S. Though there is a small sliver of libertarianism in Argentina.

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Two years ago, I explained that socialism is an economic failure, regardless of how it is defined.

In today’s follow-up column, let’s start with an excellent video from John Stossel.

Before addressing the three myths mentioned in the video, it’s worth noting that there’s a technical definition of socialism based on policies such as government ownershipcentral planning, and price controls, and a casual definition of socialism based on policies such as punitive tax rateswelfare state, and intervention.

I don’t like any of those policies, but they are not identical.

That’s why I came up with this flowchart to help illustrate the different strains of leftism (just as, on the other side of the spectrum, Trumpism is not the same as Reaganism is not the same as libertarianism).

Now that we’ve covered definitions, let’s dig into Stossel’s video. He makes three main points.

  1. Socialist policies don’t work any better if imposed by governments that are democratically elected. Simply stated, big government doesn’t magically have good consequences simply because a politician received 51 percent of the vote in an election.
  2. Scandinavian nations are not socialist. I’ve addressed this issue several times and noted that countries such as Sweden and Denmark have costly welfare states, but they are based on private property and rely on private markets to allocate resources.
  3. Socialism has a lot in common with fascism. Stossel could have pointed out that Hitler was the head of the National Socialist Workers Party, but he focused on the less inflammatory argument that socialism and fascism both rely on government control of the economy.

By the way, Stossel also narrated an earlier video on this same topic that addressed two other topics.

First, he countered the argument that we can’t learn anything from the failure of nations such as the Soviet Union and Cuba because they did not have not “real socialism.” My two cents on that topic is to challenge socialists (or anyone else on the left) to answer this question.

Second, he addressed the specific argument that Venezuela can’t teach us anything because its collapse has nothing to do with socialism. The New York Times may want people to think Venezuela’s failure is due to factors such as low oil prices, but the real reason is that economic liberty has been extinguished.

The bottom line is that socialism doesn’t work. Regardless of how it’s defined, it’s both immoral and a recipe for economic decline.

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The economic disintegration of Venezuela is a powerful example how socialism fails. Even in a nation with massive oil wealth.

This video from Reason tells the tragic story.

I think long-run data is especially valuable when assessing a nation’s economic performance.

And Venezuela definitely looks terrible when looking at decades of data on per-capita economic output.

Especially when compared to a pro-market nations such as Chile.

Not that we should be surprised. This is what we find anytime capitalist-oriented counties are compared with statism-oriented countries.

And there are many other case studies.

But let’s re-focus on the problems of Venezuela. In one of her Wall Street Journal columns, Mary Anastasia O’Grady analyzes the government-caused crisis. She starts by describing what happened.

Efforts to guarantee outcomes are at odds with what it means to live in a free society where equality under the law is the guiding principle. …Hugo Chávez…promised to make everyone in his country equally well-off. The concept sold in a nation that believed it was infinitely rich because it was swimming in oil. …stick it to the haves. When he did, they packed their bags and left. …it is the flight of the knowledge worker that has done the most harm to the nation. …The Bolivarian revolution’s earliest large-scale assault on know-how came during a lockout at the monopoly oil company Petróleos de Venezuela (PdVSA) in December 2002. …the regime used it to purge at least 18,000 PdVSA and related-company employees, gutting the industry of most of its experienced personnel. By replacing fired workers with political loyalists, Chávez believed he was protecting his golden goose. …In 2009 the regime expropriated Venezuelan companies that served the oil industry.

And she concludes by describing the consequences.

as long as oil prices were high, the costs of such recklessness was hidden. The party ended when prices tanked in 2014, government revenues dropped precipitously, and central bank money-printing led to a mega-devaluation of the bolivar. …another wave of oil engineers—this time led by a younger generation—went abroad to work. In the years that followed, more oil technicians threw in the towel on life in Venezuela. This vicious circle of declining revenue and human-capital flight has brought the once-mighty Venezuelan petroleum powerhouse to a standstill. 

In other words, exactly as depicted in the video at the start of this column.

No wonder Venezuelans are eating their pets.

Or joining gangs simply as a strategy to get food.

The bottom line is that socialism doesn’t work. Even in a country that has massive reserves of oil.

Sooner or later, the attempt to achieve coerced equality will mean that too many people are on the dole and too few people are producing. Which brings to mind Margaret Thatcher’s famous observation.

P.S. The New York Times actually wrote a big story about Venezuela’s collapse and somehow never mentioned socialism.

P.P.S. Here are four other videos about the impact of socialism in Venezuela.

P.P.P.S. The situation has become so dire that even some socialists are disavowing Venezuela.

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Back in 2018, I shared five images that accurately capture leftism, which is the Mussolini-ish notion of “All within the state, nothing outside the state, nothing against the state” (one of the images was subsequently deleted, so you can enjoy this column if you want five of them).

Today, we’re going to look at five more example that reveal the statist mindset.

We’ll start with this algorithm showing how our leftist friends analyze real and imagined problems.

It’s especially frustrating that they inevitably decide that the proper response to government-caused problems is more power for government.

Anyhow, here’s a picture of two of those leftists.

Speaking of government, here’s a cartoon showing the attitude statists have when they obtain power.

Yes, there are serious ways of explaining why the private sector does a better job, but sometimes humor is an effective way of making that point.

Next, we have this clever meme.

The opposite of libertarianism, to say the very least.

I’ve saved the best for last, as usual.

By the way, I’ve never considered Dwight Eisenhower to be a great president like Reagan or Coolidge, but he made a similar point about prison being an ideal leftist world.

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Even if these things are simply click-bait, I can’t resist taking online tests and quizzes that ostensibly reveal a person’s philosophical outlook.

Today, I’m writing about another version. It’s called the Six-Triangle Test and it’s supposedly special because you get three-dimensional analyses of your approach to various issues.

You can take a 72-question test or a 144-question test, depending on how much time you have (or your tolerance level).

As is often the case, I think some of the questions are poorly worded. For instance, there are people in Bangladesh who presumably work much harder than any of us, yet they don’t make much money because what actually matters is productivity per hour worked. So this question left me with mixed feelings. I assume I should answer “strongly agree,” but that’s not technically accurate.

Likewise, I wanted to answer “strongly disagree” on this next statement because I assume that would be the most pro-free market answer. That being said, while I view capitalism as a system that generates mass prosperity, doesn’t the existence of “public goods” suggest that it’s not the answer to everything?

I also wasn’t sure how to respond to this statement about international cooperation. Does that mean open trade? If so, my response is “strongly agree.” But if cooperation means a global tax cartel, my answer is “strongly disagree.”

Here’s one more example. Does free education mean dumping kids into sub-par government schools? Or does it mean comprehensive school choice? Needless to say, there are wildly different answers depending on how the statement is interpreted (for what it’s worth, I’m assuming “strongly agree” is interpreted as a left-wing answer).

I realize that I’m being somewhat pedantic, but I figure I should share my concerns.

In any event, before giving my results, I want to nit-pick one other aspect of the test.

It’s designed to measure your ideology on six different issues – economics, personal freedom, culture, equality, government, and foreign policy. And it uses three different ways of measuring those six issues.

In many cases, such as the approach to economics, I think this makes a lot of sense. Your answers determine whether you want socialism (“control”), laissez-faire (“markets”), or a mixed approach (“regulation”).

That being said, I don’t like how they measure responses to equality. More specifically, “burden” implies that if you oppose redistribution, then you somehow don’t want others to succeed.

At the risk of stating the obvious, redistribution tends to trap people in poverty and dependency. At the very least, the description is misguided.

With that final bit of grousing out of the way, here are my results.

But that doesn’t tell you much unless you know what the symbols mean.

So here are my results for each category, based on the three variables.

Other than my already-discussed qualms about the way equality is measured, I’m happy with the results. I am a fanatic for markets over government, I have a minarchist view of government as opposed to statism (or anarcho-capitalism), and otherwise believe in freedom.

Regarding the results for equality, I am pleased that I got 0% for equality of outcomes. In other words, nobody can accuse me of having Kamala Harris’ warped point of view.

P.S. Here’s the link again to the test if you want to take it. Feel free to share your results in the comments section, along with any analysis.

P.P.S. I don’t object to “moderate isolationism” as a summary of my views on foreign policy, but don’t understand why I got 31.3 percent for “imperialism” and also wonder whether they use the right definition of globalism (i.e., globalization rather than global governance).

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