A Tale Of Four Countries

To adapt Dickens to our current situation: It is the best of times, it is the worst of times.  That is what Liam Halligan is telling us at UnHerd in [Theresa] Should Set Her Sights On Crony Capitalists.  Liam says the Brexit is not the most important topic for the Tories. It is rebooting capitalism and part of that is fighting crony capitalism.  We tend to agree.

We are only mildly supportive because we don’t like the term crony capitalism (CC) and Liam is really vague about how to fight it.  CC is when the government alters the market to favor certain parties.  A classic example is taxis.  We see the cronyism but not the capitalism.  The best way to fight CC is by reducing regulation.  Liam is vague about what he wants yo do to fight CC and his only real suggestion seems to be more regulation for big entities:

Big companies across the Western world have become far too powerful. Our political, business and media elites are much too intertwined. Such cosy relationships have resulted in an enfeebled competition policy, which is further increasing the might of a small number of corporations, to the detriment of consumers, smaller firms and broader society. [Emphasis added]

We are not sure where Liam is going but if he really wants to fight the cronyism in CC then we are with him.  On the other hand, more regulation will make these entities even more intertwined.

It is the best of times.  Liam reminds us that capitalism has enriched everyone everywhere it has been applied:

Or that, since the late-80s fall of the Berlin Wall, the spread of capitalism has enriched billions – with the share of the global population in extreme poverty plunging from two-fifths in 1990 to under one tenth today.

It is the worst of times as socialism has been tried repeatedly and devastated wide areas of the globe:

No matter that the Soviet Union collapsed under the weight of its economic contradictions. [here is remembering the start of the terror]

Of course, Venezuela is a current example that socialism always fails.  The talented and beautifully named Mary Anastasia O’Grady tells us a story of Why Central America Stays Poor in the WSJ.  We are unsure if we disagree with Liam because he is so often vague about evidence and recommendations.  We disagree in part with Mary but we are sure about it because she writes so clearly:

Nature can be cruel in underdeveloped countries. Yet it wasn’t fire, flood, mudslide or volcano that served this economic gut punch. This is a man-made travesty, courtesy of Guatemala’s Constitutional Court. It is a saga worth recounting because it goes to the heart of the country’s intransigent poverty.

Mary lays the problem at the feet of Guatemala’s Constitutional Court for their interpretation of a treaty:

[T]he United Nations International Labor Organization’s Convention No. 169 states that indigenous peoples living in the area of development projects need to be consulted. Guatemala is a signatory to the convention.

We think some of the blame should go to Guatemala for approving the treaty.  Conservatives recognize the folly of vague treaties, laws, and regulations that sound good because they can come back to bite you just like they did for Guatemala.  Even Progressives can become textualists when it benefits them.

To get back to Dickens is the worst of times because of public and media attitudes.  Liam reports that:

A recent YouGov poll suggested around 60% of voters think the railways and Royal Mail should be renationalised. Over half want the water and energy companies back in public sector ownership. A ComRes survey earlier this year showed that young British adults now think capitalism is more dangerous than communism.

Liam seems to think we should accept such foolishness rather that try to educate folks.  It is true that socialism doesn’t work but folks need reminding.  The attitude towards communism is astounding and another reason for education.

It doesn’t help that the Labor party is headed by Jeremy Corbin.  Liam describes Jeremy’s proposals:

And that’s [what we would call bad reporting] allowing [Jeremy] to present, with some success, his programme of aggressive renationalisation, sweeping trade union powers and highly punitive taxation as “the new common sense of our time”.

The next part of Dickens applies even more: It is an age of wisdom, it is an age of foolishness.  The USSR, Venezuela, and Guatemala offer lessons for the UK.  The first two remind us that socialism, government control of the economy, doesn’t work.  Liam reminds us we need reminders.  Guatemala reminds that treaties, laws, and regulations are written and need interpretation and application.  Much of CC lies in the interpretation and application of such documents.  Some is in the creation of such documents.  If we mean to fight CC we should be at least judicious in the creation of such documents and recognized the need to revise them as necessary.

We’d like to say that it would be a far, far better thing than they had ever done before if the Tories really fought CC but the Tories saved Western Civilization from fascism under Churchill and saved the UK from another form of socialism under Thatcher.  But it is still a really good idea and fighting CC will be a worthy challenge.

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It Always Depends

Kevin Williamson is extolling some of the many virtues of markets at NRO.  Here he is talking about the power of markets to bring down tyrants and he starts with Recep in Turkey:

Recep Tayyip Erdoğan is learning a lesson that history has taught, sometimes harshly, to many men of his kind in the past: Tyrants have power, but markets have more power.

The problem is that markets enrich the masses and not Recep and his cronies.  Markets teach lessons to tyrants but many like the various Kims, Mugabe (getting rid of him at 94 doesn’t count for much), and Castro can ignore the lessons because they are willing to impose suffering on the masses to retain power.  Kevin says, perhaps tongue in cheek:

The case of Venezuela is too well known to require further elaboration here.

But then he says:

Remember [Venezuelan dictator] Hugo Chávez being lionized by beaming Democratic grandees while handing out discounted heating oil? That kind of thing can provide some mileage, but it isn’t sustainable. What’s sustainable is secure property rights, the rule of law, an independent judiciary, enforceable contracts, flexible labor markets, free trade, investment, and entrepreneurship.

Or The Donald’s immediate predecessor calling Hugo Mi Amigo?  This lesson is one, as he notes Mrs. Thatcher was fond of saying, that politicians need to continually relearn.  In fact, Kevin spends two NRO articles on Elizabeth Warren’s plans to run afoul of the markets, here and here.  Argentina is probably the gold medalist for trying to ignore the markets the most times.

To summarize: First, folks never stop trying to beat the markets.  Statistics tell us that a few folks will for a short time but the house wins eventually.  Second, when dictators ignore the markets their people suffer rather than them.  The more evil the dictator the longer they prosper while the people suffer.  The markets send signals to everyone including dictators.  As always, it is up to the individuals to heed those signals.  Some dictators do not and they can avoid the penalty.

 

 

Venezuela And Zeros

Brian Ellsworth of Reuters has reported today that Venezuela has an interesting solution to the expected inflation of one million percent this year.  It will knock five zeros off its currency, the bolivar.  That is, 200,000 bolivars has become 2 bolivars soberano.  But inflation is just a paper problem as the currency switch suggests.

Sidebar: Inflation is similar to stock dividends and stock splits.  In all three cases, pieces of paper has less value.  Why would the former be more of a problem?  It is because the impact of stock dividends and splits have an impact on only one value while inflation has an impact on all values.  Thus, folks spend too much of their time trying to keep up with inflation rather than doing something productive.  Thus, inflation is a bigger problem then it seems.  End Sidebar.

How are the people doing?  Brian says the minimum wage is a dollar a month and that has left citizens unable to eat properly.

What has caused these problems?  It is the same as always, socialism.  Brian is kind when he says:

The OPEC nation’s economy has been steadily collapsing since the 2014 crash of oil prices left it unable to maintain its socialist economic system that for years provided lavish subsidies while enforcing strict price controls.

Here is a slightly different take a few years ago on the same data:

During the prolonged oil bonanza, Venezuela’s economic mismanagement was masked by its soaring oil revenues, which were used to finance populist social programs. This improved the country’s social indicators and led to macroeconomic balances. However, the oil-dependent economy, without a competitive non-oil sector, has now been facing a huge challenge as the per-barrel prices hit a five-year low, with the situation expected to worsen by the first half of 2015.

At the time of the second article Venezuela had not even hit 100% annual inflation although that was predicted.  The second article reminds us that Venezuela squandered the fortune it received when oil prices shot up.  See this chart for the enormous windfall to Venezuela from 2003 through 2014.  The two articles tell us that the leaders of Venezuela doubled down on socialism after the first bad results and it failed the citizens.  It is easy to avoid or undo the Great Enrichment and Venezuela, despite its oil reserves, shows us just how to do that.  We hope the citizens will make different choices in the future.

 

Never Forget

The term Never Forget is often associated with the Nazi’s treatment of the Jews but there should be a number of things on that list.  Madeleine Kearns at NRO reminds us of the evils of Communism on its 100th anniversary as well as our tendency to forget about such evil.  She gives an example of a young person that lists herself as literally a Communist.  After the Wall fell we were once confronted with an Eastern European wearing a Che t-shirt.  Now Cory Booker has equated opposing Brett Cavanaugh opposing as evil.  Madeleine says this about the young person but it would apply to so many more:

One generous interpretation is that, as Douglas Murray suggests in The Spectator, this is ignorance: “ignorance on such a scale and of such a catastrophic obscenity that any person becoming aware of it would hide away from shame.”

Yet they don’t know.  We have a suggestion to help folks.  Any version of socialism is evil: Communism, socialism, National Socialism (Nazi), fascism, Hugo Chavez in Venezuela and so on.

Sidebar:  It is a couple of years old but this article comparing the economies of Venezuela and Chile is instructive.  Nothing has gotten better in Venezuela in the past two years.  End Sidebar.

Socialism isn’t the only evil in the world but it simplifies the problem of identifying evil by helping you avoid foolish mistakes.  It could help Cory and lots of other folks.

Heretic Alert

Paul Embery is a self-described socialist writing at Unherd.  We always worry about self-descriptions like I’m a life-long XXX that can stand the current  XXX elected official.  Paul describes socialism as the traditional left so his idea of tradition left is much more left than our description.  Here is what he says about the family and the spineless politicians that won’t support families:

What is so difficult or revolutionary about making the simple argument that, as the evidence conclusively demonstrates, children are generally better-served by being brought up by both biological parents, and that it should be the job of government to use every available lever available to encourage this outcome?

This is not to decry lone parents, many of whom undoubtedly do a grand job. It is merely to recognise that we should encourage as best we can the model that is proven to work most effectively.

We agree entirely but he might ask James Danforth Quayle how standing up to such folks works.  We think that trying it now would create an even bigger firestorm.  We agree with Paul that politicians are often spineless but they would need titanium reenforced ones to follow his suggestion.

The good news is that Paul is a socialist that listens to data.  We hope that means he won’t be a socialist for long.

A Venezuela Reminder

Kevin Williamson is on the Venezuela beat at NRO.  It has the electronic marker of socialism-always-fails.  Nice.  Do read the whole thing.  Kevin channels Jonah’s new book (the review is currently in the works) when he concludes about the aberration of capitalism’s great enrichment of humans:

That’s because being rich is temporary. Countries, like families, can go from shirtsleeves to shirtsleeves — and it need not take three generations. As the Scots say: “The father buys, the son builds, the grandchild sells, and his son begs.” A nation that is not building is on its way to begging. Venezuela is already there.

In a 2006 poll conducted by the University of Chicago, Venezuelans led the world in national pride. One wonders what they would say now, if they weren’t too terrorized to speak. It is difficult to be proud when you are scared, hungry, and miserable.

Funny thing: The second-proudest nation in that poll was the United States.

We need to avoid Venezuela.  As many folks have pointed out the problem with socialism is socialism. It never works as NRO points out.  The problem with capitalism is capitalists.  Capitalism works but capitalists, like Harry Brock in Born Yesterday (another review from APT in the works) make folks reluctant to embrace capitalism.  Keep reading Kevin will help us make the critical decisions.

Good News On Venezuela

What happens in Venezuela is largely up to its citizens.  But the WSJ editors report that the Organization of American States (OAS) and The Donald are trying to make it easier for those folks.  First the OAS:

The Organization of American States voted 19-4 on Tuesday for a resolution to suspend Venezuela as a member for its violations of democracy and human rights. The vote reflects shared horror over Venezuelan atrocities against its own people, fear of an exploding migration crisis and a notable shift in the region toward center-right governments willing to defend liberty.

And then The Donald:

The U.S. is also playing an important role in building regional consensus on Venezuela after eight years of abdication under Barack Obama. Venezuela bullies its neighbors, and many countries haven’t been willing to oppose Caracas and its handlers in Havana without assurances that the U.S. would back them up.

We agree that the previous administration harmed Venezuela but no US administration can fix Venezuela.  What it can do is increase the probability that Venezuela can fix itself.

It doesn’t mean that the hell that is Venezuela is going to end soon.  It doesn’t mean that it will be easy.  It doesn’t mean that Venezuela will ever recover its freedom.  But it does mean that Venezuela has a chance to escape socialism.  We hope it does.