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Posts Tagged ‘Statism’

How do we measure the cost of Venezuelan socialism?

Actually, it’s all of the above.

And there’s plenty of additional evidence. All of which shows that more socialism results in more misery.

Let’s review some examples.

Venezuela has the largest oil reserves in the world. But with government running the industry, producing petroleum products has been a challenge. To put it mildly.

Venezuela — home to the world’s largest oil reserves — has started introducing in some areas to tackle extreme fuel shortages. …for ordinary Venezuelans, it is a cruel joke without a punchline — a driver recently died of a heart attack after waiting in line for days to fill his tank. …Lopez had been waiting in line to fill her tank for six hours in Lara’s capital Barquisimeto, but had to leave without getting any fuel because she had to go search for medicine for her ailing brother, who suffers from meningitis. “It’s a joke!” she fumed again as she left the gas station empty-handed, despite the fact that between state-regulated gas prices, hyper-inflation and black-market dollar exchange rates, a dollar could technically buy almost 600 million liters of fuel. …According to the Organization of Petroleum Exporting Countries (OPEC), Venezuela’s oil output has dropped from 3.2 million barrels per day a decade ago to 1.03 million barrels in April this year. Other estimates put that output as low as 768,000 barrels per day.

Here’s another sign of Venezuela’s descent into third-world status.

…the Center for Malaria Studies in Caracas..is not immune to Venezuela’s economic crisis and is struggling to treat patients. This is a country that lacks 85 percent of the medicines it needs, according to the pharmaceuticals industry. …Scientists who would later work for this clinic contributed in 1961 to helping Venezuela become the first country to eradicate malaria. However, there was a resurgence seven years ago, worsening to become an epidemic in 2016, according to the Red de Epidemiologia NGO. Today the clinic is in a sorry state: yellowed microscopes, a dishwasher stained by purple chemicals, refrigerators corroded by rust. …According to the World Health Organization, Venezuela registered more than 400,000 malaria cases in 2017, making it one of the hardest-hit countries in the Americas. Noya, though, believes the true extent of the epidemic is “close to two million” people affected.

I have no idea if Juan Guaido, the putative leader of the opposition, has what it takes to lead Venezuela out of the dark ages (maybe he’s another Macri rather than a Thatcher). But he’s definitely getting some first-hand experience with socialism.

On Thursday, Juan Guaido woke up and doused himself with a bucket of water. It was his shower. Like millions of Venezuelans, the man who dozens of countries recognize as the legitimate leader of his broken country can’t rely on the taps to run. …“It’s going to get worse” before things turn, he warned.

Reuters reports on how parts of Venezuela are descending into autarky and barter.

At the once-busy beach resort of Patanemo, tourism has evaporated over the last two years as Venezuela’s economic crisis has deepened and deteriorating cellphone service left visitors too afraid of robbery to brave the isolated roads. …These days, its Caribbean shoreline flanked by forested hills receives a different type of visitor: people who walk 10 minutes from a nearby town carrying rice, plantains or bananas in hopes of exchanging them for the fishermen’s latest catch. With bank notes made useless by hyperinflation, and no easy access to the debit card terminals widely used to conduct transactions in urban areas, residents of Patanemo rely mainly on barter. It is just one of a growing number of rural towns slipping into isolation as Venezuela’s economy implodes amid a long-running political crisis. …In the mountains of the central state of Lara, residents of the town of Guarico this year found a different way of paying bills – coffee beans. Residents of the coffee-growing region now exchange roasted beans for anything from haircuts to spare parts for agricultural machinery.

One can only wonder, by the way, why the collapse of trade isn’t creating more jobs and prosperity. Could it be that Trump is wrong on the issue?

But I’m digressing. Let’s get back to our main topic.

What can you say about a country that’s so poor that even criminals are suffering?

Venezuela’s crippling economic spiral is having a negative impact on an unlikely group in society: criminals, who are struggling to afford bullets, and unable to find things to steal as the country’s wealth declines rapidly. …While bullets are widely available on the black market, many muggers cannot afford the $1 price tag anymore, a criminal known as “Dog” told the news organization. …Another gangster, “El Negrito,” who leads a gang called Crazy Boys, has found it increasingly hard to support his wife and daughter with assaults. Firing a bullet is a luxury now, he said. …homicide rate…went down by nearly 10% last year— though Venezuela remains one of the most violent countries in the world. The non-profit, which aggregates the data from morgues and media reports, partly attributes this decrease to the reduction in muggings — because there is nothing to steal. …Shoemaker Yordin Ruiz told The Washington Post: “If they steal your wallet, there’s nothing in it.”

What a perfect symbol of socialism! People are so poor that there’s nothing left to steal.

I want to conclude by emphasizing a point that I’ve made before about greater levels of socialism being associated with greater levels of misery.

As you can see from this chart (based on EFW data), Hong Kong has the most freedom, though it isn’t perfect.

Then you have nations such as the United States and Denmark, that have some statist characteristics but are mostly market oriented. Followed by France, which has a lot more socialist characteristics, and then Greece, which presumably can be described as a socialist nation.

But Venezuela is an entirely different category. It’s in the realm of near-absolute statism.

P.S. Cuba and North Korea presumably rank below Venezuela, but they’re not part of the EFW rankings because of inadequate and/or untrustworthy data.

P.P.S. It’s hard to believe, given the pervasive statism that now exists, but Venezuela in 1970 was ranked in the top 10 for economic liberty.

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Just last month, I wrote about Argentina’s grim economic outlook and criticized the supposed right-of-center President, Mauricio Macri, for failing to deliver any meaningful economic liberalization.

And reform is desperately needed.

According to Economic Freedom of the World, Argentina is one of the most statist nations on the planet (the only nations that do worse are Libya and Venezuela).

For all intents and purposes, Argentina is suffering from decades of bad policy.

Argentina is a sobering example of how statist policies can turn a rich nation into a poor nation. …After World War II, Argentina was one of the world’s 10-richest nations. But then Juan Peron took power and initiated Argentina’s slide toward big government, which eroded the nation’s competitiveness and hampered growth.

To put it mildly, the country is an economic tragedy and it should be a lesson for all countries about the importance of good policy.

Yet why am I writing again about Argentina after last month’s analysis?

Because a story in the New York Times discusses the nation’s upcoming presidential election and manages to paint a grotesquely inaccurate picture of what’s been happening in the country. We’re supposed to believe that Macri has been a hard-charging free-market fundamentalist.

Since taking office more than three years ago, President Mauricio Macri has broken with the budget-busting populism that has dominated Argentina for much of the past century, embracing the grim arithmetic of economic orthodoxy. Mr. Macri has slashed subsidies… “It’s a neoliberal government…It’s a government that does not favor the people.” …tribulations playing out under the disintegrating roofs of the poor are a predictable dimension of Mr. Macri’s turn away from left-wing populism. He vowed to shrink Argentina’s monumental deficits by diminishing the largess of the state. …Mr. Macri’s…presidency was supposed to offer an escape from the wreckage of profligate spending.

And we’re also supposed to believe that his failed free-market policies are paving the way for a return to left-wing populism.

As the October election approaches, Mr. Macri is contending with the growing prospect of a challenge from the president he succeeded, Cristina Fernández de Kirchner… Her return would resonate as a rebuke of his market-oriented reforms while potentially yanking Argentina back to its accustomed preserve: left-wing populism.

For what it’s worth, I suspect that Kirchner will win the next election. So that part of the article is correct.

But the part about free-market reforms is laughably inaccurate.

You don’t have to believe me. Let’s look at the Argentinian data from Economic Freedom of the World. Maybe I’m being dogmatic, but I hardly think a tiny improvement in 2015 followed by backsliding in 2016 qualifies as “diminishing the largess of the state.”

The bottom line is that Macri should have been bold and made sweeping changes once he was in charge. Like Chile after Allende’s Marxist regime was deposed.

Those reforms doubtlessly would have triggered protests. But if they became law, they would have produced tangible results.

Instead, Macri chose a timid approach and the economy has remained stagnant. Yet because many voters think he adopted reforms, they blame him and they blame free markets.

The net result is that they will probably vote for Kirchner, which presumably will mean even more statism for the long-suffering people of Argentina.

P.S. What’s happening in Argentina is not an isolated example. It’s very common for supposed right-wing politicians to choose bad policies, which then paves the way for left-wing election victories. Look at how Bush’s statist policies created the conditions for an Obama victory. Or how Sarkozy set the stage for Hollande in France. Or how Theresa May’s fecklessness in the United Kingdom may lead to a win for Jeremy Corbyn.

P.P.S. I’m tempted to also warn that Trump’s risky protectionism may lead to a victory for Crazy Bernie or some other Democrat in 2020. But Trump does have some good policies as well, so it’s hard to know whether the economy will be a net plus or net minus in the election.

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Argentina is a sobering example of how statist policies can turn a rich nation into a poor nation.

I’m not exaggerating. After World War II, Argentina was one of the world’s 10-richest nations.

But then Juan Peron took power and initiated Argentina’s slide toward big government, which eroded the nation’s competitiveness and hampered growth.

Even the Washington Post‘s Bureau Chief shares my assessment.

Perón’s rise marked the start of the country’s long, slow slide. …big-government populism squandered Argentine’s fortunes on nationalized railroads and ports. Perón’s pro-labor policies cultivated devout working-class followers but also laid the groundwork for the conversion of his party into an entity that would mirror a corrupt union. …The country battled bouts of damaging inflation in 1955, 1962, 1966 and 1974. …in the 1980s, Argentina saw a bonanza of public-sector hiring, bloated budgets… Cristina Fernández de Kirchner, the Perónist ex-president, took the helm a decade ago, ushering in a new era of fudged financial data and populism.

Thanks to endless bouts of bad policy, the nation suffers from perpetual crisis.

…a country stuck in what has now become its natural state: crisis. As if living a deja vu, I flipped on the TV to once again hear Argentine newscasters fretting about bailouts, the diving peso and fears of default. Beggars — even more than before — panhandled on the same corner by an imposing church on Santa Fe Avenue. As others had done years before, stores advertised going-out-of-business sales. …Argentina is doomed to a repeating history of financial emergencies. You can almost set your watch to it, and, worryingly, the intervals between implosions are growing ever shorter.

If we focus on policy this century, there was plenty of bad policy under the previous Peronist-oriented Presidents.

And since government amassed so much power over the economy, nobody should be surprised by this BBC report about rampant corruption.

More than a dozen people have been arrested in Argentina after copies of notebooks were found detailing what seem to be illicit political payments. They were kept by Oscar Centeno, who was employed as a driver by a public works official and describe delivering bags of cash. The notebooks cover from 2003 to 2015, when Cristina Fernández and her late husband Néstor Kirchner were president. …She has previously said she is being politically persecuted by the current government, who want to distract people from the country’s economic problems. …the payments total around US$56m (£43m), but Judge Claudio Bonadio says the corruption network could reached up to US$160m.

The Economist reports that the current president, Mauricio Macri, is imposing his share of bad policies, including price controls.

The measures are a change of course for a president who sought to undo the effects of more than a decade of populist government. The most important one is a…revival of a price-control mechanism in force under the two Peronist presidents who preceded him, Néstor Kirchner and his wife, Cristina Fernández de Kirchner. In Mr Macri’s version, which he, like the Kirchners, calls “precios cuidados” (“curated prices”), the price of 64 consumer items, from milk to jam, will be frozen for six months (ie, until the eve of the election). An “army” of inspectors, under the direction of the production ministry, will enforce supermarkets’ adherence to the freeze.

Price controls are spectacularly misguided.

Politicians cause inflation by having the central bank create too much money. They then act as if the result rise in prices is the fault of “greedy businesses” and impose controls.

All of which never ends well (see Venezuela, for instance).

But Macri is also adopting other bad policies.

The government has also opened new credit lines for pensioners and families with children and expanded a plan to build new homes with state financing.

He obviously hopes his short-sighted policies will enable him to prevail in the upcoming elections.

And maybe he will if his main opponent is similarly bad.

But at least one candidate supports pro-market reforms.

Argentine economist José Luis Espert once described President Mauricio Macri’s political movement as “kirchnerism with good manners,”… Now a presidential candidate himself, Espert wants to make government a lot less polite. “We need to lay off approximately 1.5 million public employees,” Espert, the head of the newly-formed Libertarian party, told AQ in an exclusive interview. “What I propose is a complete U-turn.” …The economist claims that he is the only candidate who can actually turn around what he describes as “Argentina’s century-long failure, marked by economic populism.” …“We need to abandon our model of import substitution and of running budget deficits, and revise our labor laws, which are similar to those during Italian fascism. We need to have free trade and a state that can pay for itself through reasonable taxes,” added Espert, who on Feb. 2 released a book called The Complicit Society, in which he describes “the economic myths that led Argentina to decadency.”

Wouldn’t it be a great ending to the story if Argentina become another Chile?

My fingers certainly will be crossed (as they are currently for Brazil).

Ironically, even though the International Monetary Fund has subsidized bad policy in Argentina with periodic bailouts, some of the economists who work at the IMF actually understand what’s plaguing the country.

Here are some excerpts from their study, starting with a description of how big government is stifling prosperity.

Argentina’s economic fortune has been on a declining path for a long time. Argentina’s per capita output relative to that of advanced economies nearly halved over the past 50 years. …yearly labor productivity growth has been close to zero on average since 1980… Argentina’s regulatory and administrative burden on businesses is one of the heaviest among EMs… Argentina has the worst overall PMR index among 42 OECD and non-OECD countries, owing to high barriers to entrepreneurship (including complex regulatory procedures which impede firm entry/expansion, and barriers in network sectors), …high trade and other external barriers, and a significant involvement of the state in the economy, both through state-owned enterprises and price controls. …Stringent labor market regulations, such as high firing costs and restrictions on temporary employment, hamper efficient allocation of resources in the economy, discourage investment, and lead to labor underutilization and informality… High tax burden, especially on labor, have similar adverse effects on investment, labor utilization (particularly formal employment), and overall competitiveness of the economy.

Here’s a chart showing how Argentina is de-converging, which is remarkably depressing since conventional theory tells us that poor nations should be catching up with rich nations.

Here are the main findings from the study.

The main objective of this paper is to…assess the role of the reforms in boosting long-term GDP growth through their impact on (i) capital accumulation, (ii) labor utilization, and (iii) total factor productivity or efficiency. …The paper finds that structural reforms can have significant impact on long-term GDP growth through all three supply-side channels. …An ambitious reform effort, which were to improve business regulatory environment (closing half the gap with Australia and New Zealand over two decades), would add 1–1½ percent to average annual growth of GDP. Reducing trade tariffs and payroll taxes (closing half the gap with Australia and New Zealand) could each boost average annual real GDP growth by about 0.1 percent.

Keep in mind, by the way, that even small increments of sustained growth make a huge difference to a nation’s long-run prosperity.

Here’s a table showing the IMF’s suggested reforms.

I actually agree with almost everything on the list.

The only mistake is calling for aggressive anti-trust laws. Yet history teaches us that such laws wind up being tools to protect incumbent companies.

Moreover, the best way to fight monopolies is to have completely open entry to the marketplace.

But I don’t want to quibble. By IMF standards, that list of proposed policies is excellent.

P.S. Pope Francis inexplicably wants to export the failed Argentine model to the rest of the world. Not surprisingly, I think Thomas Sowell and Walter Williams have a better approach.

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What’s socialism?

Is it the centrally planned economies of Cuba and North Korea? Or the kleptocracies of Zimbabwe and Venezuela?

How about the interventionist welfare states of Greece, Italy, and France? Or the redistribution-oriented Nordic nations?

Since socialism means different things to different people, the answers will be all over the map.

But there’s one constant. However it’s defined, it doesn’t work.

Joshua Muravchik, writing for the Wall Street Journal, shares the many and inevitable failures of socialism.

It’s hard to think of another idea that has been tried and failed as many times in as many ways or at a steeper price in human suffering. …Marx (1818-83)…called his vision “scientific socialism.” Inspired by the dream of proletarian revolution overthrowing capitalist immiseration, socialist parties sprouted across Europe. Yet instead of growing poorer, workers in industrialized countries saw improvement in their living standards; and instead of disappearing, middle classes expanded—all disproving Marx. …Lenin pioneered modern communism, which in the 20th century was imposed on 18 countries and one-third of mankind. Repression was justified by socialism’s purported economic benefits, but the actual trade-off entailed economic misery and the snuffing out of as many as 100 million lives. …“Social democrats” and “democratic socialists” rejected Lenin’s methods. But their goals remained transformational. …British Labour Party leader Clement Attlee…sought to bring “main factors in the economic system”—including banks, mining and energy—under “public ownership and control.” Nationalization worked so badly, however, that Attlee soon beat a retreat and was voted out in 1951.

Though there was plenty of socialism until Margaret Thatcher was elected.

And if you consider the creaky National Health Service, some sectors of the economy remain socialized.

Anyhow, self-described American socialists claim they simply want to be like Scandinavian countries.

But as Muravchik notes, those nations aren’t technically socialist (i.e., they don’t have government ownershipcentral planningprice controls).

Yes, they have expensive welfare states (which have hampered growth), but markets determine how resources are allocated.

American socialists like Mr. Sanders, while often defending the likes of Fidel Castro, Daniel Ortega, Hugo Chávez and Nicolás Maduro, prefer to point to Scandinavia as a model. But Scandinavian social democrats learned to settle for dense social safety nets underwritten by remarkably free, capitalist economies. On the World Bank’s Ease of Doing Business scale, Denmark ranks third of 190 countries, Norway seventh and Sweden 12th.

The bottom line is that socialism has failed every place it’s been tried.

Socialism has failed everywhere it’s been tried… Surely today’s young people can create their own ideas and make their own mistakes rather than repeat those that darkened the times of their parents, grandparents and the generations before.

Now let’s look at a column by Richard Geddes of the American Enterprise Institute.

He notes that there’s a grim relationship not only between socialism and economic failure, but also that the ideology has a long list of victims.

Socialism has an abysmal record in the twentieth and twenty-first century, its effects include economic destruction, failure, and misery — Venezuela being the latest in a long line of wretched examples. Yet today, Democratic Party leaders such as Bernie Sanders and Alexandra Ocasio-Cortez are still proud to adopt the label of “democratic socialist.” …the more rigorously socialist principles are applied, the greater the human suffering, regardless of race, creed, or geographic location. …the grim statistics of those who died in the Soviet Union and elsewhere in the name of socialist experimentation (such as those who suffered forced starvation during the collectivization of agriculture) are pegged at about 100 million.

Geddes looks at the argument over how to define socialism and notes that regulation can be a back door form of socialism.

The Oxford English Dictionary defines socialism as: “A political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.” New socialists argue that the distinction between government ownership and regulation is critical, and that they want extensive regulation but not nationalization. Yet, if regulation is sufficiently intrusive and onerous, private property rights are neutered, and control is effectively transferred to the socialist state.

That’s also a good definition of fascism, for what it’s worth. In other words, nominal private ownership, but the heavy hand of government actually determines how resources are allocated.

Geddes notes that American socialists don’t favor dictatorship, but that doesn’t change the fact that their policies will have a very adverse impact on the economy.

New socialists argue that, unlike their 20th century counterparts, they oppose the use of force to achieve their policy goals, instead preferring peaceful democratic processes. …however, whether socialist ends are achieved through forceful or democratic processes matters little when it comes to the nefarious effects of policies such as “free” healthcare, “free” college tuition, and so on. The destructive effects on both the supply and demand side of those markets would be much the same in the end.

Like Muravchik, Geddes also explains that Nordic nations don’t qualify as socialist.

Nordic countries (Denmark, Finland, Iceland, Norway, and Sweden) — beloved by some as examples of successful socialism. …those countries are in many ways more market-oriented that the United States… Indeed, those countries are decades ahead of the United States in adopting market reforms in two of my areas of policy expertise: postal services and infrastructure delivery.

My two cents is that the Scandinavian nations are not socialist based on the technical definition.

And here’s my amateur depiction of how that works, with degree of intervention measured from top to bottom. Notice that Sweden is well above the line and isn’t socialist (indeed, it is farther from socialism than the United States.

But if everyone now thinks socialism simply means a lot of redistribution, then we get a different picture.

Under this Crazy Bernie/AOC approach, Sweden is to the right of the line and is socialist but (perversely) Venezuela doesn’t qualify.

But maybe the way to accommodate both the traditional definition and the modern usage is to draw a diagonal line.

Here’s my depiction, and I deliberately put Sweden on the socialist side to make some of my lefty friends happy (though if you’re looking at overall levels of economic freedom, they shouldn’t be socialist unless the United States also is socialist).

The obvious takeaway is that it’s best to be near the top left, near Hong Kong. And it’s also good to avoid the bottom right (Venezuela being closest to that corner, which makes sense since it is in last place according to Economic Freedom of the World).

P.S. Since I bent over backwards to define socialism in ways to make the left happy, I will atone by calling attention to my collection of socialism/communism humor.

P.P.S. The Soviet Union, as far as I understand, didn’t have any sort of welfare state other than meager pensions for the elderly. So it’s in the lower left.

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I was in Bratislava earlier today as part of the Free Market Road Show, where I spoke about how European nations are in trouble because of excessive spending and aging populations.

But I’m not going to write about my presentation because Peter Gonda of the Konservatívny Inštitút M.R. Stefánika shared some data on the post-World War II economic performance of Czechoslovakia that is far more interesting.

As you can see from his chart (the English title would be “The Economic Reality of Socialism”), Czechoslovakia, West Germany, Austria, and Finland all had very similar levels of income in 1948. But over the next 40 years, the socialist Czechoslovakian economy (CZ) fell further and further behind the market-oriented economies of those other countries.

Indeed, after just four decades, the market-oriented nations averaged twice as much per-capita economic output at the beleaguered Czechoslovakian economy.

By the way, things have improved since the collapse of communism.

Czechoslovakia in the early 1990s peacefully split into two nations, the Czech Republic and Slovakia. And both of them have since adopted a decent amount of pro-market reforms and have begun to converge with Western Europe.

So our story has a semi-happy ending (though I wrote last year that I’m worried about Slovakia backsliding a bit).

P.S. If you want other compelling examples that show – over multiple decades – the superior performance of market-oriented nations, click here and here.

P.P.S. Under Soviet rule, Czechoslovakia was genuine socialism (i.e., government ownershipcentral planningprice controls), which obviously is more damaging than what many people think of today as socialism (i.e., punitive taxes and a big welfare state).

P.P.P.S. Ludwig Erhard deserves much credit for West Germany’s post-war recovery.

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I listed the collapse of Venezuela’s socialist dictatorship as one of my “hopes” for 2018.

That didn’t happen, so I included the same hope in my list for 2019.

But will it happen? David Asman seems very confident in this clip from a recent interview.

I was a bit less hopeful. Or at least more guarded in my ability to predict.

But one thing I can state with full certainty is that I hope it happens as soon as possible.

Though I have become a bit jaded. I no longer share lengthy compilations of everything that is going awry in the country.

As far as I’m concerned, the real debate is now whether a new government will adopt the right policies when Maduro is finally evicted (in other words, is there any hope for Chilean-style economic liberation?).

But there are a couple of stories and columns about the ongoing crisis that caught my eye.

Especially ones written by Venezuelans.

Andres Malave wrote for Investor’s Business Daily about what has happened to his country.

Hugo Chavez took power, promising to usher in shared prosperity for all with his “21st century socialism.” …So, when Teen Vogue tweeted recently, “Can’t #endpoverty without ending capitalism!” my initial reaction was, “Let them come to Venezuela.” Venezuela was once the most prosperous country in Latin America, but today almost 90% of its population lives in poverty. Venezuela’s economy is in shambles. …Venezuela’s misery means that it is not uncommon to see children rummaging through the garbage for food. And as basic medical supplies and medicine run dangerously low, newborns and the elderly die unattended in Venezuelan hospitals. …In a 2006 column, Sen. Sanders wrote: “These days, the American Dream is more apt to be realized in South America, in places such as Ecuador, Venezuela and Argentina,” all practitioners of 21st century socialism. …What’s particularly galling about Sen. Sanders waxing poetic about the virtues of socialism is that he looks the other way as socialist leaders live in opulence while the masses starve.

A retired professor who still lives in Venezuela explained the wrenching descent of his nation in the U.K.-based Spectator.

The descent began in the early 2000s when the Hugo Chavez government began to take control of…private companies, the judiciary and the police. The descent turned into a nosedive when Nicolas Maduro came to power and the state tightened its grip on oil production, our country’s main source of revenue. Investors fled and skilled workers emigrated. As living standards plummeted, the response was to print more money. Hyperinflation has been the result. …my friends and relatives have lost a lot of weight. We call it the ‘Maduro diet’. …Not so long ago, I lived as you do. I would have thought it impossible that my country, with its hard-won progress, could fall so quickly into the abyss. The wrong politicians with the wrong ideas can have a bigger effect than anyone can imagine.

I don’t want to discriminate against non-Venezuelans, so let’s look at excerpts from some other authors.

In a column for CapX, Kristian Niemietz points out that Venezuela was supposed to be an example of modern “democratic socialism.”

Chávez fans frequently emphasised the many ways in which Venezuela differed from the old Eastern Bloc. They were especially proud of the fact that there was no apparent conflict between socialist economics and political democracy. They also pointed out that the Chavez government, rather than just nationalising lots of big companies like the socialists of yore, was experimenting with lots of different models of social ownership, looking for alternatives to both private enterprise and conventional state-owned enterprises. And they were right. Chávez and Maduro never tried to imitate the former Soviet Union or any of its allies. They tried, really hard, to build something new. And look how that turned out. …Previous socialist experiments have gone through the same honeymoon period as Venezuela, during which they were widely and enthusiastically praised by Western intellectuals.

Notwithstanding, I’m sure we’ll still hear about how “real socialism hasn’t been tried.”

Actually, I’m open to the argument that what happened in Venezuela was a different form of statism.

Though the end result is always the same.

In the case of Venezuela, it’s like Atlas Shrugged in real life.

Francisco Toro opined in the Washington Post about the recent collapse of Venezuela’s power system.

In a country already trudging through a serious humanitarian crisis, the collapse of the electric grid is a final catastrophe. Venezuelans were already chronically hungry, with large numbers reportingthey lost weight because they could not afford enough food. …The stories coming out of hospitals up and down the country have been harrowing. Only some had working back-up generators, and virtually none were designed to carry a whole hospital over many days. A video of a nurse using a hand pump to try to keep an infant alive has been circulating on social media. Thousands of kidney dialysis patients, unable to receive treatment, may face a slow and agonizing death. …the Maduro government has blamed U.S. sabotage for the power crisis. …sabotage accusations against the United States lack any semblance of credibility: Venezuela’s power grid has been in gradual decline for over a decade. …over the past 12 years, the government has run the grid into the ground. After nationalizing the utility companies, the government simply stopped investing in routine maintenance of power stations or transmission lines, setting off a slow deterioration that has made the grid unstable for years.

A story from Fox looks at the wretched circumstances of ordinary Venezuelans.

Thousands upon thousands of Venezuelans pour into Colombia over the crowd cross-country bridge, their faces gaunt, carrying little more than a backpack. Rail-thin women cradle their tiny babies, and beg along the trash-strewn gutters. Teens hawk everything from cigarettes to sweets and water for small change. …the Venezuelans – many with university degrees or decent jobs in what was once the wealthiest nation in Latin America – are now resorting to whatever it takes to survive. …Women sell their locks to local wigmakers in Colombia for around $10-30, depending on length and quality. Other women sell their bodies. Girls as young as 14 line the Cucuta streets available “for hire,” earning around seven dollars “per service.” …more than 55 percent of the healthcare professionals – doctors, nurses, and others – have left the country. Resident doctors who have stayed in Venezuela earn the equivalent of $24 a month, while specialists make just a little more, at $30.

I’ve saved the worst for last.

BBC reports that Venezuela has become such a basket case that graves are being robbed.

At Caracas’s largest cemetery, Cementerio del Sur, most of the graves have been looted, for jewellery, gold teeth, or even bones, which can be sold for use in rituals. For grieving relatives like Eladio Bastida, who checks on his wife’s grave every week to make sure it’s not been looted, the situation is a metaphor for that of embattled Venezuela as a whole.

As far as I know, Venezuela has yet to experience cannibalism, so I suppose things can still get worse.

But that begs the question. Why did Bernie Sanders and other leftists and socialists lavish so much praise on Venezuela?

And now that the chickens have come home to roost and the economy has collapsed, why are they dodging questions about their past support?

Most important of all, why do they want similar policies for the United States?!?

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I’ve written about how totalitarian ideologies such as communism and Nazism have a lot in common. Both subordinate the individual to the state and both give the state power over the economy.

And both slaughter millions of people.

My buddy from grad school, Matt Kibbe, has a great video on this issue.

Needless to say, I agree with Matt’s characterization.

The battle is not right vs. left. It’s statism vs. individualism.

Let’s look at some writings on this issue.

We’ll start with an article by Bradley Birzer, published by Intellectual Takeout. He worries that totalitarianism on the left is making a comeback.

In 1936, you had three choices: National Socialism, international socialism, or dignity. In 2018, we find ourselves in similar circumstances… Why is this happening now…?  First, we scholars have failed to convince the public of just how wicked all forms of communism were and remain. …Almost all historians ignore the most salient fact of the 20th century: that governments murdered more than 200 million innocents, the largest massacre in the history of the world. Terror reigned in the killing fields, the Holocaust camps, and the gulags. …Second, an entire generation has grown up never knowing such things as the Soviet gulags or even the Berlin Wall. …most younger defenders of communism buy into the oldest propaganda line of the Left—that real communism has never been tried.

He explains that fascism and socialism are two sides of the same coin.

That the National Socialists embraced socialism is factually accurate. …they did nationalize very vital industry in Germany, even if by outright intimidation rather than through the law. In his personal diaries, Joseph Goebbels wrote in late 1925: “It would be better for us to end our existence under Bolshevism than to endure slavery under capitalism.” Only a few months later, he continued, “I think it is terrible that we and the Communists are bashing in each other’s heads.” Whatever the state of the rivalry between the two camps, Goebbels claimed, the two forces should ally and conquer. …The Italian fascists had even closer ties to the Marxists, with Mussolini having begun his career as a Marxist publicist and writer. A few Italian fascists even held positions in the Comintern.

Richard Mason makes similar points in a piece he wrote for the Foundation for Economic Education.

…how do we react to the hammer and sickle? I don’t have to write an article explaining the millions of deaths that occurred at the hands of communist regimes; like the Holocaust, the gulags of the Soviet Union and killing fields of Cambodia are widely known. Yet journalists in the UK openly and proudly advocate communism. Statues of Karl Marx are erected. …there is no justifiable way a fascist could argue ‘That wasn’t real Nazism.’ The same is not true for communism. …Since Karl Marx never implemented communism himself, the leaders of communist states always have that get-out-of-jail-free card. Any shortcomings, tragedies, or crises a communist regime faces can always be blamed on a misapplication of Marx’s infallible roadmap… The communist ideology in its purest form might be separated from its implementations, but at what point does its awful track record discredit any attempts to advocate it? …The history of communism is as bloodstained as that of Nazism; much more so, actually. It’s time we treated it as such.

Amen. I’ve weighed in on that issue, and I strongly recommend what Jeff Jacoby wrote on the issue as well.

And Sheldon Richman expands on this theme.

…fascism is socialism with a capitalist veneer. The word derives from fasces, the Roman symbol of collectivism and power: a tied bundle of rods with a protruding ax… Where socialism sought totalitarian control of a society’s economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners. …Where socialism abolished all market relations outright, fascism left the appearance of market relations while planning all economic activities. Where socialism abolished money and prices, fascism controlled the monetary system and set all prices and wages politically.

He explains the vast gulf between capitalism and fascist economics.

…Entrepreneurship was abolished. State ministries, rather than consumers, determined what was produced and under what conditions. …Fascism is to be distinguished from interventionism, or the mixed economy. Interventionism seeks to guide the market process, not eliminate it, as fascism did. …Under fascism, the state, through official cartels, controlled all aspects of manufacturing, commerce, finance, and agriculture. Planning boards set product lines, production levels, prices, wages, working conditions, and the size of firms. Licensing was ubiquitous; no economic activity could be undertaken without government permission. …“excess” incomes had to be surrendered as taxes or “loans.” …since government policy aimed at autarky, or national self-sufficiency, protectionism was necessary: imports were barred or strictly controlled…fascist governments also undertook massive public-works projects financed by steep taxes, borrowing, and fiat money creation.

These are not new observations. Here’s what Ludwig von Mises wrote on this topic back in the 1940s.

The Marxians have resorted to polylogism because they could not refute by logical methods the theories developed by “bourgeois” economics, or the inferences drawn from these theories demonstrating the impracticability of socialism. As they could not rationally demonstrate the soundness of their own ideas or the unsoundness of their adversaries’ ideas, they have denounced the accepted logical methods. …The German nationalists had to face precisely the same problem as the Marxians. They also could neither demonstrate the correctness of their own statements nor disprove the theories of economics and praxeology. Thus they took shelter under the roof of polylogism, prepared for them by the Marxians. Of course, they concocted their own brand of polylogism. …Neither Marxian nor Nazi polylogism ever went further than to declare that the logical structure of mind is different with various classes or races. …Polylogism is not a philosophy or an epistemological theory. It is an attitude of narrow-minded fanatics.

And those fanatics are motivated by hate. The Nazis hate people of different races and religions, while the Marxists hate people of different incomes and classes.

Given the various articles cited above, this meme from The Matrix is spot on.

Well, we now know what happens when someone learns about the common characteristics of statist ideologies. The Daily Caller has a report on a student who got very upset after learning that the National Socialist Workers Party was…yes, socialist.

Social justice warrior and history major Shelby Shoup was arrested for throwing chocolate milk at a fellow student and College Republican tabling at Florida State University while saying “nazis weren’t socialists.” She has been charged with battery.

Since we’ve detoured into humor, this is a good opportunity to share this satire from the clever folks at the Babylon Bee.

At a press conference on Thursday, American Nazi Party leader Emmett Scoggins told reporters that his group is not trying to instate full-on Nazism, but a much better system called “democratic Nazism.” …Scoggins was questioned about the use of the word “democratic” and how democratic Nazism was any different from plain-old Nazism. “The main difference is we add the word ‘democratic’ on there because people like that word a lot more than just plain ‘Nazi,’” Scoggins said. …The conference ended with a long speech from Scoggins about…how “real” Nazism has never been tried.

I’ll close with my amateur attempt to classify various ideologies.

In the above video, Matt used a circle.

I’m wondering if a triangle makes more sense, with freedom at the top and totalitarianism at the bottom.

Here are a couple of additional observations on the triangle.

  • Back in 2017, I differentiated between liberal socialism and Marxist socialism. The same is true across the board. We could add a line right above authoritarian, collectivism, and socialism and assert that ideologies above the line are democratic and that ideologies below that line are dictatorial.
  • Given the difference between the technical definition of socialism (government ownership, central planning, price controls) and the everyday definition (lots of redistribution), I’m wondering whether I should use “welfare state” rather than “democratic socialism”? The end result isn’t pretty, regardless.
  • If we just focus on economic policy, I think my “statism spectrum” suffices.
  • If we just focus on the left, my Bernie-inspired classification system still holds up.

P.S. I like to think that there aren’t any civilized people willing to tolerate the Nazi ideology. But I do worry the same can’t be said about communism. The head of the European Commission recently helped celebrate Marx’s birthday, companies like Mercedes-Benz glorify racist murderers in their advertising (part of the Che death cult), and even symphonies use communist symbols.

How high does the death toll need to get before people realize that communism, like its sister ideology of Nazism is despicably evil?

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