Archive for the 'Communism' Category

Quote Of The Day

“It’s not just bathroom tissue that’s lacking: In recent months, food items such as cooking oil and powdered milk have nearly disappeared from store shelves. But even after a decade of price controls, foreign-exchange restrictions, runaway inflation, currency devaluations, blackouts and takeovers of more than 1,000 companies or their assets, the government still claims the private sector is at fault for the deficiency in consumer staples. The Manpa asset grab came a week after Maduro introduced the new regulatory committee, which will address product hoarding and other abuses that he blames for missing goods.” — Bloomberg, on toilet paper shortages in Venezuela

Food Shortages In Venezuela

The New York Times writes:

Venezuela is one of the world’s top oil producers at a time of soaring energy prices, yet shortages of staples like milk, meat and toilet paper are a chronic part of life here, often turning grocery shopping into a hit or miss proposition.

Some residents arrange their calendars around the once-a-week deliveries made to government-subsidized stores like this one, lining up before dawn to buy a single frozen chicken before the stock runs out. Or a couple of bags of flour. Or a bottle of cooking oil.

The shortages affect both the poor and the well-off, in surprising ways. A supermarket in the upscale La Castellana neighborhood recently had plenty of chicken and cheese — even quail eggs — but not a single roll of toilet paper. Only a few bags of coffee remained on a bottom shelf.

Asked where a shopper could get milk on a day when that, too, was out of stock, a manager said with sarcasm, “At Chávez’s house.”

At the heart of the debate is President Hugo Chávez’s socialist-inspired government, which imposes strict price controls that are intended to make a range of foods and other goods more affordable for the poor. They are often the very products that are the hardest to find.

Maybe this is why you don’t see lefties singing the Hugo Chavez praise anymore? Is it time yet for a little “I Told You So”?

Quote Of The Day

“And yet, most of us realize that there are huge differences between price rationing and government rationing, and that the latter is usually much worse for everyone….The rationing is, first of all, simply worse on a practical level:  goods rationed by fiat rather than price have a tendency to disappear, decline in quality, etc.  Government tends to prefer queues to prices.  This makes most people worse off, since their time is worth much more than the price they would pay for the good.  Providers of fiat-rationed goods have little incentive to innovate, or even produce adequate supplies.  If other sectors are not controlled, the highest quality providers have a tendency to exit.” –Megan McArdle, on why price rationing is far superior to government rationing

Remember Hugo Chavez?

Wondering what he has been up to? The New York Times keeps us informed:

President Hugo Chávez is using his decree powers to enact a set of socialist-inspired measures that seem based on a package of constitutional changes that voters rejected last year. His actions open a new stage of confrontation between his government and the political opposition.

Some of the laws significantly increase Mr. Chávez’s power. For instance, one law allows him to name regional political leaders who would have separate budgets, which could help him offset possible victories by opposition candidates in state and municipal elections scheduled for November.

Mr. Chávez is also trying to assert greater control over the armed forces through a decree creating militias, a new military branch he has pushed for.

Reigniting private property concerns, another law allows his government to “occupy and temporarily operate” private companies not in compliance with bookkeeping rules.

The set of decrees stops short of removing term limits for Mr. Chávez, which was one of the most polarizing measures in the package voters rejected in December. But more than a dozen of the laws are strikingly similar to items included in the failed constitutional overhaul, angering the president’s critics.

The full article can be found here.

Every time I read something on Hugo Chavez I am reminded of Hayek’s book, The Road To Serfdom and this quote from Cato:

“Since the collapse of the Soviet empire, many defenders of socialism have argued that dictators, including Mao, Stalin, and Pol Pot, were aberrations; they took Marx’s ideas in the wrong direction. They claim that nationalization of the means of production (call it communism, socialism, or Marxism) and democracy can be compatible. In The Road to Serfdom, Hayek showed that it cannot. Some 50 years later, Hayek’s argument holds. Every socialist regime tends toward authoritarianism of some sort. Chavez reminds us of the anti-democratic nature of socialism. As such, he is turning into a major embarrassment for many on the Left who supported him. Unfortunately, what the proponents of socialism again and again fail to realize is that it is the message, not the messenger, that is embarrassing”.

The Age Of Milton Friedman

Harvard economist Andrei Shleifer has a new paper on The Age Of Milton Friedman that begins with:

The last quarter century has witnessed remarkable progress of mankind. The world’s per capita inflation-adjusted income rose from $5400 in 1980 to $8500 in 2005.Schooling and life expectancy grew rapidly, while infant mortality and poverty fell just asfast. Compared to 1980, many more countries in the world are democratic today.

The last quarter century also saw wide acceptance of free market policies in both rich and poor countries: from private ownership, to free trade, to responsible budgets, to lower taxes. Three important events mark the beginning of this period. In 1979, Deng Xiao Ping started market reforms in China, which over the quarter century lifted hundreds of millions of people out of poverty. In the same year, Margaret Thatcher was elected Prime Minister in Britain, and initiated her radical reforms and a long period of growth. A year later, Ronald Reagan was elected President of the United States, and also embraced free market policies. All three of these leaders professed inspiration from the work of Milton Friedman. It is natural, then, to refer to the last quarter century as the Age of Milton Friedman.

The full paper can be found here. Link via Greg Mankiw.

Milton Friedman Debates Naomi Klein

And one that only Youtube can bring.

Link via CD.

The Economics Of Vouchers

Explained by my favorite economic blogger, Megan McArdle blogging at The Atlantic:

One thing that strikes me about the arguments I’ve been having with voucher opponents is just how little they seem to understand how markets work. Markets don’t work because they get it right the first time; they succeed because if at first they don’t succeed, they try, try again.

A public school, by and large, cannot fail. If it screws up, no matter how badly, we will continue pouring money into it. This is particularly true because most of the employees of most systems can’t fail either. They can be atrocious at their jobs, but provided that they are not actually molesting the students, it’s nearly impossible to get rid of them.

Failure, to put it bluntly, works. Failure is nature’s way of telling you “Hey, that doesn’t work!” The American economy is vastly strengthened by the fact that companies are allowed to fail–and also by the fact that our crazy culture encourages us to try things that don’t work.

In the first few iterations, this often looks inferior to a centralized system. Look, the critics say, they sat down and planned it all! Compare that to our messy, fragmented market where half the stuff doesn’t work!

It can take a decade or more before the cracks in the planning appear. The planners, it turns out, didn’t foresee that the world would change, and now the giant, planned system can’t cope.


But the way public schools are set up, they can’t really fail–and so they don’t succeed at the hardest task we’ve given them. The schools are not set up to learn; they’re set up to follow the rules, and to serve their customer base, who are not in the case of poor schools the parents, but the various people who work for the system…

The full post, which I recommend be read in full, can be found here.

Capitalism Vs. Others – A Discussion

This post is a continuation of the discussion between me and tin that started here and continued here.

Let me start the discussion with some definitions. I define communism, or more generally collectivism, as any economic system that exhibits the following criteria,

1. Little to no property rights

2. little to no free trade

3. the means of production and the price of goods are controlled by government

I define capitalism as the following,

1. strong property rights

2. high levels of free trade

3. an overall laissez-faire economy where people are allowed to enter into whatever contractual agreements they like

4. An economic system where prices are allowed to signal scarcity – the more expensive something is, the more scarce and in demand it is

5. A government that protects property rights, enforces contracts, and holds up the rule of law

Why is capitalism superior to other forms of economic ideologies? One of the primary reasons is that because it has been implemented and seen to work – especially in comparison to other economic systems.

Walter Williams, professor of economics at George Mason University, explains the differences this way:

There’s no complete explanation for why some countries are affluent while others are poor, but there are some leads. Rank countries along a continuum according to whether they are closer to being free-market economies or whether they’re closer to socialist or planned economies. Then, rank countries by per-capita income. We will find a general, not perfect, pattern whereby those countries having a larger free-market sector produce a higher standard of living for their citizens than those at the socialist end of the continuum.

What is more important is that if we ranked countries according to how Freedom House or Amnesty International rates their human-rights guarantees, we’d see that citizens of countries with market economies are not only richer, but they tend to enjoy a greater measure of human-rights protections. While there is no complete explanation for the correlation between free markets, higher wealth and human-rights protections, you can bet the rent money that the correlation is not simply coincidental.

So we see here that the more capitalist a country becomes, especially compared to collectivist economies, the higher the standard of living and human rights are.

This is not just a pattern in the West, this pattern has been repeated all over the world. To see how the spread of capitalism around the world is affecting global poverty I recommend everybody watch this short ted talk by Hans Rosling, a Swedish professor on international health and economic development.

Click here to watch the ted talk

That is not to say that we don’t have more to learn on economics or that capitalism is perfect – we certainly do and it definitely isn’t, but any reasonable discussion on economics must first start off acknowledging what we know works and must work within that system. History has shown as clearly as it possibly can that a market oriented economy is superior, indeed vastly superior as far as standard of living for the poor and human rights go, to a government centered economy where prices are dictated by government fiat instead of by scarcity. Utopian aspirations may be good for establishing an end goal but actual economic implementation should be dictated by theory and empirical evidence, especially when so many lives depend on it.

Quote Of The Day

“Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience.” –C.S. Lewis

Quote Of The Day

“What kind of society isn’t structured on greed? The problem of social organization is how to set up an arrangement under which greed will do the least harm; capitalism is that kind of a system” –Milton Friedman

Quote Of The Day

“Since the collapse of the Soviet empire, many defenders of socialism have argued that dictators, including Mao, Stalin, and Pol Pot, were aberrations; they took Marx’s ideas in the wrong direction. They claim that nationalization of the means of production (call it communism, socialism, or Marxism) and democracy can be compatible. In The Road to Serfdom, Hayek showed that it cannot. Some 50 years later, Hayek’s argument holds. Every socialist regime tends toward authoritarianism of some sort. Chavez reminds us of the anti-democratic nature of socialism. As such, he is turning into a major embarrassment for many on the Left who supported him. Unfortunately, what the proponents of socialism again and again fail to realize is that it is the message, not the messenger, that is embarrassing”. –Cato @ Liberty

Quote Of The Day

“Nobody spends somebody else’s money as carefully as he spends his own. Nobody uses somebody else’s resources as carefully as he uses his own. So if you want efficiency and effectiveness, if you want knowledge to be properly utilized, you have to do it through the means of private property.” –Milton Friedman

Quote Of The Day

“One’s initial surprise at finding that intelligent people tend to be socialists diminishes when one realises that, of course, intelligent people will tend to overvalue intelligence, and to suppose that we must owe all the advantages and opportunities that our civilisation offers to deliberate design rather than to traditional rules, and likewise to suppose that we can, by exercising our reason, eliminate any remaining undesired features by still more intelligent reflection, and still more appropriate design and ‘rational coordination’ of our undertakings. This leads one to be favorably disposed to the central economic planning and control that lie at the heart of socialism”. –F. A. Hayek, in The Fatal Conceit

Time To Pray For The Citizens Of Venezuela

I don’t pray very often but there are times when events are so catastrophic, so desparate, and so predictable that prayer is in order and Venezuela has reached that point. While Hugo Chavez is big on socialist rhetoric, he has always been very short on actual implementation.

James Surowiecki, the financial columnist for the New Yorker, explained it this way:

To people on both the left and the right, Hugo Chávez is a kind of modern-day Castro, a virulently anti-American leader who has positioned himself as the spearhead of Latin America’s “Bolivarian revolution.” He calls for a “socialism of the twenty-first century,” and regularly floats radical economic ideas; during his recent campaign for reëlection, he suggested he might move Venezuela to a barter system. When he spoke in front of the United Nations General Assembly in September, a day after President Bush, he said, “The devil came here yesterday.” And, just last month, after he was overwhelmingly reëlected to the Presidency, he dedicated the victory to Castro and proclaimed it “another defeat for the devil who tries to dominate the world.”

Chávez’s rhetoric might not be out of place in “The Little Red Book,” yet everyday life for many Venezuelans today looks more like the Neiman-Marcus catalogue. Thanks to the boom in the price of oil, many Venezuelans have been indulging in rampant consumerism that might give even an American pause. In the past year, auto sales have doubled, property prices have soared (mortgage loans are up three hundred per cent), and, thanks to this buying frenzy, credit-card loans have nearly doubled. And while Chávez has done a good job of redistributing oil revenue to the Venezuelan poor, via so-called misiones, designed to improve education, health care, and housing, and has forced oil companies to renegotiate contracts, there has been no nationalization of industry, relatively little interference with markets, and only small gestures toward land reform. If this is socialism, it’s the most business-friendly socialism ever devised.

In other words, most people thought Hugo Chavez was all bark and no bite when it came to actually implementing socialism. Then Chavez had this to say:

As Venezuela embarked on another six years under Hugo Chavez, the president announced plans to nationalize power and telecommunications companies and make other bold changes to increase state control as he promised a more radical push toward socialism.

Chavez, who will be sworn in Wednesday to a third term that runs until 2013, also said he wanted a constitutional amendment to strip the Central Bank of its autonomy and would soon ask the National Assembly, solidly controlled by his allies, to approve ”a set of revolutionary laws” by presidential decree.

”We’re moving toward a socialist republic of Venezuela, and that requires a deep reform of our national constitution,” Chavez said in a televised address after swearing in his new Cabinet on Monday. ”We’re heading toward socialism, and nothing and no one can prevent it.’

In other words, Chavez is serious and is now planning on doing the real work that socialism requires, that of heavy nationalizing of industry, changing constitutions, and possibly (sic) reducing property rights. History has repeatedly, universally, and clearly shown what results those policies lead to – political censorship (already begun, see here), large poverty, and finally the mass killing of innocent people, espeically farmers, and the poor.

The economist writes:

This is terrible news for Venezuela, which has already disastrously underinvested in its main source of revenue; if oil prices keep tumbling, Mr Chavez and his constituents will both be in serious trouble. It is one thing to demand better terms on favourable oil leases, and another thing to nationalise wide swathes of your economy; I find it hard to imagine that this won’t chase out much of the foreign investment that Venezuela will desperately need. The bishops of Caracas should be praying hard that oil prices stay high.

P.J. O’Rourke has a term for stories that are invalidated by later developments: OTBE, or OverTaken By Events. For journalists, this is annoying, but since universal, not too much so. But when events in the oil market finally overtake Venezuelans, it may be disastrous.

It is time to start praying for the citizens of Venezuela.

The Difference A Dictator Makes

With the recent death of Pinochet, Chile’s former dictator, it is a good time to stop and compare two ideologically opposed dictators – Chile’s Pinochet vs Cuba’s Castro/Che.

The Washington Post writes:

A Dictator’s Double Standard

Augusto Pinochet tortured and murdered. His legacy is Latin America’s most successful country.

Tuesday, December 12, 2006; Page A26

AUGUSTO PINOCHET, who died Sunday at the age of 91, has been vilified for three decades in and outside of Chile, the South American country he ruled for 17 years. For some he was the epitome of an evil dictator. That was partly because he helped to overthrow, with U.S. support, an elected president considered saintly by the international left: socialist Salvador Allende, whose responsibility for creating the conditions for the 1973 coup is usually overlooked. Mr. Pinochet was brutal: More than 3,000 people were killed by his government and tens of thousands tortured, mostly in his first three years. Thousands of others spent years in exile.

One prominent opponent, Orlando Letelier, was assassinated by a car bomb on Washington’s Sheridan Circle in 1976 — one of the most notable acts of terrorism in this city’s history. Mr. Pinochet, meanwhile, enriched himself, stashing millions in foreign bank accounts — including Riggs Bank, a Washington institution that was brought down, in part, by the revelation of that business. His death forestalled a belated but richly deserved trial in Chile.

It’s hard not to notice, however, that the evil dictator leaves behind the most successful country in Latin America. In the past 15 years, Chile’s economy has grown at twice the regional average, and its poverty rate has been halved. It’s leaving behind the developing world, where all of its neighbors remain mired. It also has a vibrant democracy. Earlier this year it elected another socialist president, Michelle Bachelet, who suffered persecution during the Pinochet years.

Like it or not, Mr. Pinochet had something to do with this success. To the dismay of every economic minister in Latin America, he introduced the free-market policies that produced the Chilean economic miracle — and that not even Allende’s socialist successors have dared reverse. He also accepted a transition to democracy, stepping down peacefully in 1990 after losing a referendum.

By way of contrast, Fidel Castro — Mr. Pinochet’s nemesis and a hero to many in Latin America and beyond — will leave behind an economically ruined and freedomless country with his approaching death. Mr. Castro also killed and exiled thousands. But even when it became obvious that his communist economic system had impoverished his country, he refused to abandon that system: He spent the last years of his rule reversing a partial liberalization. To the end he also imprisoned or persecuted anyone who suggested Cubans could benefit from freedom of speech or the right to vote.

The contrast between Cuba and Chile more than 30 years after Mr. Pinochet’s coup is a reminder of a famous essay written by Jeane J. Kirkpatrick, the provocative and energetic scholar and U.S. ambassador to the United Nations who died Thursday. In “Dictatorships and Double Standards,” a work that caught the eye of President Ronald Reagan, Ms. Kirkpatrick argued that right-wing dictators such as Mr. Pinochet were ultimately less malign than communist rulers, in part because their regimes were more likely to pave the way for liberal democracies. She, too, was vilified by the left. Yet by now it should be obvious: She was right.

I have no problem with those who remain consistent and despise all dictators regardless of political leanings, but I find it hard to stomach those who praise Che on the one hand and condemn Pinochet on the other. Yeah, they were both evil scandalous killing machines and will both probably end up in hell, but if you’re going to value one aside from his evil killings, then Pinochet should definitely be your pick.

Update: John O Sullivan, writing in the Chicago Sun-Times, gives the context behind Pinochets dictatorship in Chile.

Quote Of The Day

“Chinese Communists have persecuted Christians since taking power in 1949. (Communists do that; they kill and imprison Christians whenever possible, but are rarely condemned for these actions by leftist journalists and historians anywhere.) Those Catholics loyal to the papal see were forced underground, and their numbers today may be as high as 10 million. In 1999, the government began an intensive crackdown. Six bishops who refused to join the government’s puppet Catholic Patriotic Association have been arrested, and their whereabouts are unknown”. –Thomas C. Reeves, historian writing in the History News Network