This week, Bruce, Michael and Dale discuss Obamacare’s failure, and the triumph of socialism in NYC.
The direct link to the podcast can be found here.
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If you thought Hugo Chavez was bad, his successor, Nicolás Maduro, is Chavez without the charisma. But Maduro learned all of Chavez’s tricks to stay in power, and one of them is to claim to be involved in a perpetual war against outside forces who are bent on destroying their socialist paradise. In this case the “high prices” in Daka stores (equivalent to our Best Buys) gained the ire of Maduro who sent the military in to seize the stores and require them to offer “fair prices” on their electronics:
Members of Venezuela’s National Guard, some of whom carried assault rifles, kept order at the stores as bargain hunters rushed to get inside.
Daka’s store managers, according to Maduro, have been arrested and are being held by the country’s security services. Neither Daka nor the government responded to requests for comment.
Of course, Daka is unlikely to continue to serve Venezuela if it can’t make a profit – something most socialists governments have never understood. But let’s look at the real reason this is happening:
“I have no love for this government,” said Gabriela Campo, 33, a businesswoman, hoping to take home a cut-price television and fridge. “They’re doing this for nothing but political reasons, in time for December’s elections.”
Maduro faces municipal elections on Dec. 8. His popularity has dropped significantly in recent months, with shortages of basic items such as chicken, milk and toilet paper as well as soaring inflation, at 54.3% over the past 12 months.
“This is more like government-sanctioned looting,” said 42-year-old Caracas-based engineer Carlos Rivero. “What stops them going into pharmacies, supermarkets and shopping malls?”
It is exactly like government-sanctioned looting. And the engineer’s point is telling – what industry in Venezuela can feel safe given the actions of this government? Why would any foreign entity ever invest or take the chance of establishing itself in Venezuela? Each election would put them on a target list for seizure depending on how poorly the head of the government viewed his popularity and how much he felt it necessary to boost his reputation.
The one entity whose job it is to protect you from force and fraud is engaged in both “legally”.
Why would anyone feel safe?
And it has all the ear-markings of the usual failure. New York mayoral race:
Since the days of Bill Clinton and the New Democrats, it has been a totem of faith in some liberal-progressive circles that the key to lifting up the lower ranks lies in downplaying social and economic conflicts, cozying up to business interests, and tackling inequality covertly, through largely invisible subsidies such as the Earned Income Tax Credit. De Blasio, in pledging to raise taxes on the rich to finance his education programs, has challenged this formula, and turned himself into the standard-bearer for what some see as a new era of urban populism.
Yes indeed, a “new era of urban populism”, or as those who view the idea just a little differently, a new era of class warfare in which the demonized class gets robbed and the proceeds of the theft are supposedly redistributed for the benefit of the “proletariat”. It’s not like we don’t spend enough on education now. You’d think a smart mayoral candidate would consider the possibility that money isn’t the problem. But that’s too difficult and besides, when you’re supported by teachers unions, well, it’s easier to go after the rich.
And, of course, the author of this article is quite excited about it. It’s like this has never happened recently in, oh, I don’t know, France? You know … where they decided those filthy rich should pay for everything. It certainly wasn’t a matter of “urban” populism per se, but it was a matter of socialist populism – same thing. Result? The rich started moving elsewhere. Imagine that.
Of course De Blasio would have to get this past the state legislature – not likely anytime soon. And, as the author mentions, it’s not a huge tax raise so it’s likely not to get much coverage even if it is passed. But the point of course is the left never learns. Ever. They’re committed to the same failed policies and same failed solutions as they always have been.
Most remarkable is the apparent surprise they register when the predictable happens. It is like they’re geese and they wake up in a new world every day? Unfortunately we have to share the world with them and they’re making it progressively unlivable.
At Powerline, John Hinderaker points to an article by Janet Daley in the Daily Telegraph and ponders the question she asks – “why has the collapse of Communism had so little impact on political discourse in the West?”
[I]n spite of the official agreement that there is no other way to organise the economic life of a free society than the present one (with a few tweaks), there are an awful lot of people implicitly behaving as if there were. Several political armies seem to be running on the assumption that there is still a viable contest between capitalism and Something Else.
If this were just the hard Left within a few trade unions and a fringe collection of Socialist Workers’ Party headbangers, it would not much matter. But the truth is that a good proportion of the population harbours a vague notion that there exists a whole other way of doing things that is inherently more benign and “fair” – in which nobody is hurt or disadvantaged – available for the choosing, if only politicians had the will or the generosity to embrace it.
Why do they believe this? Because the lesson that should have been absorbed at the tumultuous end of the last century never found its way into popular thinking – or even into the canon of educated political debate. …
he fall of the Berlin Wall and the collapse of communism which followed it are hugely important to any proper understanding of the present world and of the contemporary political economy. Why is it that they have failed to be addressed with anything like their appropriate awesome significance, let alone found their place in the sixth-form curriculum?
The failure of communism should have been, after all, not just a turning point in geo-political power – the ending of the Cold War and the break-up of the Warsaw Pact – but in modern thinking about the state and its relationship to the economy, about collectivism vs individualism, and about public vs private power. Where was the discussion, the trenchant analysis, or the fundamental debate about how and why the collectivist solutions failed, which should have been so pervasive that it would have percolated down from the educated classes to the bright 18-year-olds? Fascism is so thoroughly (and, of course, rightly) repudiated that even the use of the word as a casual slur is considered slanderous, while communism, which enslaved more people for longer (and also committed mass murder), is regarded with almost sentimental condescension. …
[I]n our everyday politics, we still seem to be unable to make up our minds about the moral superiority of the free market. We are still ambivalent about the value of competition, which remains a dirty word when applied, for example, to health care. We continue to long for some utopian formula that will rule out the possibility of inequalities of wealth, or even of social advantages such as intelligence and personal confidence.
The idea that no system – not even a totalitarian one – could ensure such a total eradication of “unfairness” without eliminating the distinguishing traits of individual human beings was one of the lessons learnt by the Soviet experiment. The attempt to abolish unfairness based on class was replaced by corruption and a new hierarchy based on party status.
If the European intellectual elite had not been so compromised by its own broad acceptance of collectivist beliefs, maybe we would have had a genuine, far-reaching re-appraisal of the entire ideological framework. [Emphasis mine].
We could spend a week discussing any of those highlighted passages, but the question remains – why? In fact, if you think about it, the collapse of communism was all but shrugged off by the left. It wasn’t, as it seemed, of any consequence to their ideology. In fact, for the most part, other than a few “good riddance” quotes, it was business as usual for the left, pushing many of the same ideological principles that underpinned communism as if they were not a reason for that horrific system’s collapse.
As Daley says, its failure should have been a turning point in geo-political power and thinking about the state and its relationship to the economy. But instead there was silence while left leaning governments both here and in Europe doubled down on state intrusion into the economies of their respective states.
The key is to be found in the last emphasized sentence. Unfortunately, there has been a sea-change in much of our thinking which has indeed seen a “broad acceptance” of “collectivist beliefs”. If ObamaCare leaped to your mind immediately, what actually makes the point is Medicare Part D. That’s the “broad acceptance” necessary – compromise of principle on the right – to carry this sort of an agenda forward.
Sure ObamaCare was passed without a single GOP vote, but it was set up by many past GOP compromises. The problem is the right has allowed the left to define both the playing field and the principles of play. It has also framed what little discussion that goes on. It has decided on envy as its vehicle and class warfare as its methodology. And the right has meekly accepted those parameters. Watch the current crop of GOP candidates spend much of their time apologizing for their success instead of celebrating it and tell me the propaganda war hasn’t gone to the left.
And on the left? Why has the result of communism’s collapse been essentially ignored? For two reasons. John Hideraker’s take on the left for one:
I think a very partial answer to the question Ms. Daley poses is that leftism has never been based on idealism. It has always been based, for the most part, on hate and envy. So when Communism was conclusively proved to be a failure, leftists (including not only leftists in politics, but more important, leftists in the media and in academia) didn’t change their minds or admit their mistake. For in their eyes, while there may have been disappointment, there was no mistake. Their resentments and hatreds remained. They merely sought other vehicles, other terminologies, other tactics to bring down the West and the free enterprise system and democratic institutions that define it. Yesterday’s socialists are today’s progressives. They barely missed a beat.
I think there is a lot of truth to that analysis, although I’d quibble somewhat on the dismissal of idealism. I’ve always said the left never viewed communism as a systemic failure but more of a failure based on the fact that the wrong people were executing the idea poorly. There’s never really been an acknowledgement on the left that communism itself was “wrong”, “bad” or even totalitarian. Just that some of those who got into power under that system were (if they’ll admit even that).
And it is hard to look at the left of today, view their ideology and conclude they’ve learned a thing by its collapse. While they’ve certainly learned that it is unwise to use certain words or phrases when pushing their agenda (you won’t see “proletariat” or “bourgeoisie” tossed around by today’s lefty, but “middle class” and “[pick your favorite class to denigrate] elite” work along with “Big this” and “Big that”.
The truth in Daley’s point is to be found in reviewing how we’ve gotten to where we are today since the collapse of the Berlin Wall. We’re much less free economically and politically. The left continues to define the debate and the right continues to accept the framing. How can you have a real discussion about the failures of communism specifically and collectivism in general when you continue to allow the collectivists to frame the discussion? Naturally they’re going to pretend that nothing untoward happened with the demise of the USSR and Warsaw pact. Why would they?
I mean think of the irony – over 20 years after its collapse, the principles of socialism and its offspring communism continue to touted as “the answer” while the system that sharply defined the West until then and made it more successful by orders of magnitude – capitalism (or a reasonable facsimile thereof) – is under constant and sustained assault.
Talk about a world upside down.
President Obama did the nation a huge service today, in two respects. First he took off the mask and told us explicitly that the "change" he wants is an explicit move towards welfare-state socialism, and, second, in doing so, he set out the major thrust of his re-election campaign. In a 55-minute speech in Osawatomie, KS, the president explicitly argued that capitalism is a failed economic system, and the main thrust of government economic policy should be the redistribution of income.
It’s darkly amusing that he makes this argument just weeks—perhaps months—before a major political and financial crisis, caused mainly by their socialist policy leanings, strikes Europe. They are just about to hit the stark reality of what happens when you run out of other people’s money to spend to finance extravagant social benefits. President Obama, it seems, is keen to rush us down the road to meet them. Not that we aren’t already pretty far down that road ourselves. The national debt is now over $15 trillion, more or less 100% of GDP, with no clear path to reducing that percentage in the near future, or even in reducing the rate of growth substantially.
President Obama apparently thinks that the solution is to take the money from "the rich" and distribute it to the rest of us. The trouble is, we could take pretty much everything the rich have, as well as all the profits of all the Fortune 500 companies, and it wouldn’t even even cover 1 year’s worth of government spending. As economist Walter William notes:
This year, Congress will spend $3.7 trillion dollars. That turns out to be about $10 billion per day. Can we prey upon the rich to cough up the money? According to IRS statistics, roughly 2 percent of U.S. households have an income of $250,000 and above. By the way, $250,000 per year hardly qualifies one as being rich. It’s not even yacht and Learjet money. All told, households earning $250,000 and above account for 25 percent, or $1.97 trillion, of the nearly $8 trillion of total household income. If Congress imposed a 100 percent tax, taking all earnings above $250,000 per year, it would yield the princely sum of $1.4 trillion. That would keep the government running for 141 days, but there’s a problem because there are 224 more days left in the year.
How about corporate profits to fill the gap? Fortune 500 companies earn nearly $400 billion in profits. Since leftists think profits are little less than theft and greed, Congress might confiscate these ill-gotten gains so that they can be returned to their rightful owners. Taking corporate profits would keep the government running for another 40 days, but that along with confiscating all income above $250,000 would only get us to the end of June. Congress must search elsewhere.
According to Forbes 400, America has 400 billionaires with a combined net worth of $1.3 trillion. Congress could confiscate their stocks and bonds, and force them to sell their businesses, yachts, airplanes, mansions and jewelry. The problem is that after fleecing the rich of their income and net worth, and the Fortune 500 corporations of their profits, it would only get us to mid-August.
We could take everything the rich have, and it still wouldn’t give us a balanced budget for one year. Collecting money the next year would also be…problematic, too.
But, the president has to be—well, not admired, exactly, but recognized—for his utter inability to accept that reality. As well as his apparent ability to construct "realities" that aren’t true.
At no time during the president’s hour-long perversion of the country’s economic history did he even allude to the massive growth in government spending we’ve seen, the cronyism between government and big business that led to private profits and socialized losses, or the explosion of debt that’s grown from $1 trillion in 1980 to $15 trillion today, all of which has resulted in removing money from the productive economy, and funneling it into government priorities, rather than into private income and investment. At no time did he mention the aggressive enforcement of the Community Re-Investment Act, which essentially forced banks into making sub-prime loans—indeed, explicitly instructed banks to make such loans—that led to the mortgage bubble and, when the less credit-worthy mortgagees couldn’t pay, it’s collapse—as a prime cause of our present economic difficulties. These are failures of government, and the president calls it a failure of capitalism.
"The market will take care of everything," they tell us. If we just cut more regulations and cut more taxes — especially for the wealthy — our economy will grow stronger. Sure, they say, there will be winners and losers. But if the winners do really well, then jobs and prosperity will eventually trickle down to everybody else. And, they argue, even if prosperity doesn’t trickle down, well, that’s the price of liberty.
Now, it’s a simple theory. And we have to admit, it’s one that speaks to our rugged individualism and our healthy skepticism of too much government. That’s in America’s DNA. And that theory fits well on a bumper sticker. (Laughter.) But here’s the problem: It doesn’t work. It has never worked.
In the president’s mind, economic freedom and capitalism don’t work. Never have. How he explains America’s ability to become the richest country the world has ever seen while operating under such a system is a complete mystery. And never mind that, to the extent the American system has failed, it is the reduction of economic freedom and the growth of government—especially over the last 50 years—that caused the failure.
But have no doubt that he believes this foolishness, even as the government-run technocracy he admires so much is literally weeks away from running the European Union’s economy straight into the ground. In a bit less than a year from now, we’ll see whether a majority of Americans believe it as well.
And if they do believe it, then the interesting question will be how they expect to pay for it.
This is so “Econ 101” I’m surprised it has to be stated out loud, but of course it does because the Democrats insist on raising taxes now. Bill Clinton, for heaven sake, on the David Letterman show last night:
“Should you raise taxes on anybody right today — rich or poor or middle class? No, because there’s no growth in the economy,” Clinton said on the “Late Show.” “Should those of us who make more money and are in better position to contribute to America’s public needs and getting this deficit under control pay a higher tax rate when the economy recovers? Yes, that’s what I think.”
I disagree with his final bit of collectivist nonsense, but his point about raising taxes now is simply common sense, something which seems to be in short supply on the left these days.
Look, the problem isn’t one of revenue, it’s a problem of spending. More revenue won’t solve the problem. It may slow the debt accumulation a bit, but until these yahoos face up to the fact that the rich aren’t the problem -they are -we’re going to see the same spending patterns that have gotten us into the mess we’re in now.
Like it or not, soaking the rich for more taxes won’t change a thing in terms of debt unless Congress kicks the spending habit and restores fiscal sanity. This class warfare meme the Democrats are running is just another version of kicking the can down the road because they want to spend just like the old days.
This nonsense is directly out of Karl Marx’s “‘Critique of the Gotha Program” which outlines this deadly principle of socialism – “From each according to his ability, to each according to his need.”
We continue to be told we’re not a socialist nation and we’re not headed in that direction, but observation and listening to what certain politicians say gives lie to that claim. The first part of the Clinton quote may be “Econ 101”, but the second part is “Marxism 101”.
We need to quit tiptoeing around and call it what it is.
In this podcast, Bruce Michael, and Dale discuss el-Awlaki killing and the Social Contract.
The direct link to the podcast can be found here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.
Venezuelan socialist strong man Hugo Chavez is reported to have had cancer surgery in Cuba (how freakin’ bad is it when you have to go to Cuba for treatment).
The usually vivacious Chavez, 56, confirmed in a stern speech on Thursday he had surgery in Cuba to remove a cancerous tumor and was receiving more treatment. He said he needed time to recover before returning to Venezuela to run his self-styled revolution.
A fiery critic of the United States, Chavez will miss events marking Venezuela’s 200th anniversary of independence from Spain. He had to cancel a regional summit planned for the momentous July 5 date.
Markets have generally reacted positively to news of Chavez’s health problems, on the presumption they improve the chances of a more business-friendly government.
The last sentence says it all. If ever there’s been a person to ruin the economic health of a country, it is Hugo Chavez. He’s now vulnerable. And as the article says, there’s a power vacuum forming and in most cases that’s not a good thing – in this case, it could be a good thing:
"Political vacuums are rarely to be encouraged, but this one could lead to a slowdown in public spending and could raise the likelihood of an opposition victory in the next elections, and thus a less confrontational governing style," said Richard Segal, an emerging markets analyst at Jefferies in London.
An interesting situation. And the longer he remains in Cuba, the shakier his position in Venezuela becomes. Nothing would do the world and Venezuela more good than to see another revolution which ousts him from power and returns the country to a real democracy and market based economy.
And, of course, Greece isn’t the only country going through this at the moment, it is only the worst off of the bunch. In fact, it is a case study in the end result of socialist programs (although you’d think, given its fairly recent collapse, that much could have been learned from the Soviet Union). Greece has, for decades, piled up more and more debt than the other European socialist countries and, with the global economic downturn, was the first of the Euro zone to hit the shoals of bankruptcy – although Europe is doing everything it can to forestall that.
The problem is that socialism and its benefits (whether they’re affordable or not) are like being hooked on heroin. Even if you know you have too, you just can’t seem to get off the stuff. Addicts deny reality, fight the cure because it is horribly painful and thus somehow come to believe they can continue to survive on the drug as they have before. And it slowly and inexorably kills them.
Greece, if it isn’t able to kick the habit, is on its economic death bed. Europe understands this and also sees the possibility that Greece’s inability to break this habit, i.e. pass and impose austerity measure – draconian austerity measures – might also mean the death of Europe’s currency, the Euro and conceivably the break up of the European union.
That’s how serious it is.
But the addict continues to fight the cure. Led by the two major unions, Greece has been shut down for 2 days as protesters vent their spleen about the unacceptability of these austerity measures. The irony, of course, is the measures are being imposed by a socialist government which has been given no choice but to impose such measures.
However, that government is seen as week and socialist members who supported the measures at first are now opposing them.
But the austerity program has met with resistance from within the ranks of Mr. Papandreou’s own party, especially over the privatization of state companies whose workers have traditionally been at the heart of the Socialists’ constituency.
As many as four Socialists in Parliament have said they will consider opposing the measures, including one who opposes the planned privatization of the water utility of Thessaloniki, in her district.
Another Socialist, Alexandros Athanasiadis, said he would vote against the plan to reduce the state’s stake in the Public Power Company to 34 percent from 51 percent. Some of the company’s coal-burning plants are in his district in northeastern Greece.
Naturally the socialists oppose privatization because, you know, the government has done such a bang up job to this point of running businesses it has no business being involved in. Why? Because the government, and therefore the parliamentary members, control the jobs, pay and pensions. More heroin. As government gets more involved in areas it has no business and it (those who run it) begin to understand the power such intrusion brings them, they’re loathe to give it up, even when they’re doing a horrible, inefficient and costly job that could be better and more cheaply done by private industry.
The symbiotic relationship between the unions and the MPs is mutually beneficial and ensures an incumbent who properly plays the game (support union demands) remains in power (see public sector unions and Democrats here). That, of course, has led to unaffordable pensions, wages which aren’t competitive and a public stuck with the ever increasing bill.
Well, the bill has come due.
On Monday, Mr. Venizelos, a Socialist veteran known for his ability to rally his troops, told lawmakers that the measures might be “tough and even unfair” but that they were unavoidable. “We have to finally come to our senses and get serious,” he said.
With 2 days of protests, one has to wonder whether indeed the Greeks are going to actually come to their senses and get serious”, because if they don’t the repercussions could be devastating.
And knowing all of that, and looking at our debt problems, one also has to wonder why we seem bent on creating an addiction of our own, given the real world examples of where that must eventually lead.
It makes absolutely no sense, does it?
In this podcast, Bruce, Michael, and Dale discuss Fidel Castro’s reported admission that Cuban economic system doesn’t work, and whether the upcoming election is a mandate for the Republicans, or something else entirely.
The direct link to the podcast can be found here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.