Free Markets, Free People

socialism

The Greek tragedy (or socialism runs out of other people’s money)

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?

~McQ

Twitter: @McQandO

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Observations: The QandO Podcast for 12 Sep 10

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.

Observations

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.

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Fidel Castro – Socialism doesn’t work

We could have told him that 50 years ago:

Fidel Castro told a visiting American journalist that Cuba’s communist economic model doesn’t work, a rare comment on domestic affairs from a man who has conspicuously steered clear of local issues since stepping down four years ago.

[…]

Jeffrey Goldberg, a national correspondent for The Atlantic magazine, asked if Cuba’s economic system was still worth exporting to other countries, and Castro replied: "The Cuban model doesn’t even work for us anymore" Goldberg wrote Wednesday in a post on his Atlantic blog.

[…]

The state controls well over 90 percent of the economy, paying workers salaries of about $20 a month in return for free health care and education, and nearly free transportation and housing. At least a portion of every citizen’s food needs are sold to them through ration books at heavily subsidized prices.

Of course the "Cuban model" only “worked” while the USSR existed. It was essentially based in heavy subsidies paid Cuba by the USSR for being its main proxy in the Americas. And the USSR’s woes most firmly underlined the problems with a centralized demand economy run by the state. Even so, Cuba continued on along that vein even after their greatest benefactor and financial supporter collapsed like a wet paper box. Now, finally, after pushing Cuba into poverty, Castro admits socialism is a bust.

China, while still totalitarian, recognized the economic problems soon enough to avert a similar disaster by loosening up economically. Cuba and North Korea, though, have continued to use the disastrous economic model and are basket cases (Cuba has instituted some modest economic changes, but not enough to break the dependency on the state the government of Cuba had ingrained on multiple generations of its population).

Of course Castro’s admission comes to late for the people of Venezuela who’ve been roped into a Cuba-style socialist government by strong man Hugo Chavez. Predictably, the Venezuelan economy is in shambles.

You have to wonder how many more ruined economies it will take before the socialists of the world (or wannabes) recognize that their brand of government and economics is a disaster and has probably ruined more lives than any other economic system in history.

~McQ

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It is safer in Baghdad than Caracas

That socialist paradise created by Hugo Chavez has a new failure to add to its long list of failures – the failure of the government to provide the population with protection and security. Venezuela has become the murder capital of the world:

In Iraq, a country with about the same population as Venezuela, there were 4,644 civilian deaths from violence in 2009, according to Iraq Body Count; in Venezuela that year, the number of murders climbed above 16,000.

Pretty convincing numbers if you ask me. Iraq is war torn and has car bombs going off all over the place and yet there were almost 4 times the deaths in Venezuela the same year.  When you look at the numbers over the whole of Chavez’s rule, they’re mind boggling:

Venezuela is struggling with a decade-long surge in homicides, with about 118,541 since President Hugo Chávez took office in 1999, according to the Venezuelan Violence Observatory, a group that compiles figures based on police files. (The government has stopped publicly releasing its own detailed homicide statistics, but has not disputed the group’s numbers, and news reports citing unreleased government figures suggest human rights groups may actually be undercounting murders).

There have been 43,792 homicides in Venezuela since 2007, according to the violence observatory, compared with about 28,000 deaths from drug-related violence in Mexico since that country’s assault on cartels began in late 2006.

Imagine that – we know a drug war is being waged in Mexico and we know the level of violence it has spawned, especially near the border.   Venezuela has suffered almost twice the number of deaths as have occurred in the Mexican battle with the drug cartels.

In fact, the homicide numbers look more like those you’d find in a war.  It points to a system that is either badly broken, turning a blind eye or incompetent – or perhaps a bit of all three.

More than 90 percent of murders go unsolved, without a single arrest, Mr. Briceño-León said. But cases against Mr. Chavez’s critics — including judges, dissident generals and media executives — are increasingly common.

Henrique Capriles, the governor of Miranda, a state encompassing parts of Caracas, told reporters last week that Mr. Chávez had worsened the homicide problem by cutting money for state and city governments led by political opponents and then removing thousands of guns from their police forces after losing regional elections.

Chavez has spent years wooing the poor as potent electoral allies in his bid to remain in power:

During his 11 years in power, Chávez has cast himself as their champion. He often takes to the airwaves to tell Venezuela’s most humble that “no one loves you like I do” and warn them about being shunted aside by the “squalid bourgeoisie” if he ever loses power.

The government has plowed millions into healthcare, education and subsidies. According to the United Nations, Venezuela is a regional leader in reducing the income-gap between the rich and poor.

But other parts of the economy are stumbling badly, making even some of his most loyal supporters grumble.

In 2010, this oil-rich country will join earthquake shattered Haiti as the only economy in the Americas that will see its gross domestic product shrink; inflation — expected to exceed 30 percent this year — is eating away purchasing power; and crime is rampant.

As you can see Venezuela is also the regional leader in killing not only its citizens but its economy.  And his base is indeed grumbling:

Ana Sanchez, 54, runs a government-subsidized day care center in the Simón Rodríguez sector of Caracas. She said she hasn’t received the funds in more than six months.

In the past five years, she has been mugged three times and her family has quit getting together in the evenings for fear of crime.

“We are living through terrible times,” she said, as she looked for clothes at the market. “It didn’t have to be this way, but the whole tortilla got turned.”

The change is not sudden. For the last two years Chávez has seen his popularity slide, said Saul Cabrera of the Consultores 21 polling firm. The latest polls show just 36 percent of Venezuelans approve of the president’s performance — the lowest figure since 2003, when Chávez survived a strike that decimated the economy.

A poll by Hinterlaces shows similar results — 65 percent of the population thinks the country is headed the wrong direction. But dissatisfaction does not always translate into votes, said Oscar Schemel of Hinterlaces.

The opposition has failed to inspire the poor or provide a coherent or “believable” proposal, he said.

The opposition there sounds like the GOP here.  And the fact that Chavez has actively shut down opposition press.  But there are cracks showing up in the foundation of Chavez’s support:

But even in the 23 de Enero neighborhood, there are signs that Chávez’s support is cracking, said Manuel Mir, the neighborhood campaign coordinator of the Un Nuevo Tiempo opposition party.

In the past, neighbors have torn down campaign tents, threatened opposition candidates and intimidated supporters, he said. During regional elections in 2008, the party had to hold its meetings outside of the area for fear of reprisals.

Now, they are meeting inside the community, he said. People are opening their doors for opposition candidates.

“This time a lot of people are dissatisfied. There are problems with basic public services and crime,” Mir said. “People think now may be the time for a change.”

Sounds like Venezuelans are wanting real change as much as many Americans.  But Chavez runs the electoral process, pretty much owns parliament, and has stuffed the courts with his supporters.  Pushing him out of power is not going to be an easy thing.  But as the situation continues to deteriorate, and even his base of power begins to notice, he may find it very difficult to hang on.  Unfortunately, having watched Chavez over the years, my guess is he’ll end up being carried out of office feet first rather than willingly giving it up. 

~McQ

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Chavez tightens grip on Venezuela

In all the hype about the McChrystal story and the focus on the Gulf spill, you may have missed this story about Hugo Chavez’s continued destruction of the Venezuelan economy:

Venezuelan army soldiers swept through the working class, pro-Chavez neighborhood of Catia in Caracas last week, seizing 120 tons of rice along with coffee and powdered milk that officials said was to be sold above regulated prices. “The battle for food is a matter of national security,” said a red-shirted official from the Food Ministry, resting his arm on a pallet laden with bags of coffee.

How dare they not heed price controls? Meanwhile, in the ultra-efficient state machine bureaucracy, things are going swimmingly:

Critics accuse him of steering the country toward a communist dictatorship and say he is destroying the private sector. They point to 80,000 tons of rotting food found in warehouses belonging to the government as evidence the state is a poor and corrupt administrator.

120 tons confiscated. 80,000 tons allowed to rot. You can do the math.

“We are bringing order to prices,” Trade Minister Richard Canan told Reuters during the Catia raid. “There are traders who are taking these products to the black market … That is a crime and our government will continue to target these stores.”

Food prices are up 41% this past year. Price controls. If you don’t think you’re paying enough now, try them.

~McQ

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Is it the fault of multiple generations of public schooling?

Or is it the constant demonization of capitalism?

This does’t particularly shock me:

Sixty percent (60%) of U.S. adults nationwide say that capitalism is better than socialism. A new Rasmussen Reports telephone survey finds that 18% disagree, while 21% are not sure.

How can you not be sure?  As I see it, you can only not be sure if you really don’t know what each of  them are -seriously.  That 18% disagree isn’t a big deal.  That 21% don’t know, is a big deal.

But what’s up with this?

However, it’s important to note that just 35% believe a free market economy is the same as a capitalist economy. In fact, despite tepid support for capitalism, 77% of Americans prefer a free market economy rather than a government managed economy. That’s consistent with the 75% who say that business is better at customer service than government.

So 17% of that 21% (one assumes those with a definite positive belief in socialism (18%) would know that captalism is a free market system) like a “free market economy” but don’t know what the hell that really means?

Ye gods … They know “free market” is good and preferable, but capitalism has been so demonized by politicians, academics and activists that they don’t associate it with “free market”.

~McQ

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Chavez: Give Us Your Technology, Build The Right Cars, Or Leave!

Hugo Chavez, incompetent manager of the Venezuelan kleptocracy, er, Bolivarian Revolutionary state, has decided outside car makers just aren’t pulling their weight:

Venezuela’s President Hugo Chavez has told car companies they must share their technology with local businesses or leave the country.

Mr Chavez gave the ultimatum to Toyota, Ford, General Motors and Fiat during a public address.

If the demand isn’t met, he said: “I invite you to pack up your belongings and leave. I’ll bring in the Russians, the Belorusians, the Chinese.”

Chavez’s homegrown auto industry is building cars that remind one of the ’50s (you’d think they’d sell well in Cuba – oh, wait, they have no money either). Obviously, the control freak in charge of Venezuela would love to have the technology Ford, Toyota or even Government Motors could offer his industry. So he’s decided they can just “share” their technology or leave.

And one more thing:

Mr Chavez attacked Toyota in particular, saying it was not producing enough four-wheel drive vehicles, which are used for public transport, and ordered an investigation.

Mr. Command Economy has decided that Toyota just doesn’t understand his market.

Of course his own domestic auto industry, the one he “commands” managed all of 135,000 vehicles last year. Why? Because of the bangup job he’s done running the place:

Currency controls in Venezuela mean the industry is struggling to get enough money to import parts and pay off debts.

So if he can’t actually produce them domestically, he’ll threaten and hector the existing one’s to save his rear-end or invite in a bunch of others to do so. Sounds like a typical socialist paradise to me.

~McQ

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Is The Locomotive Of “Chavismo” Losing Steam In Venezuela?

Gallup’s latest poll says it is:

President Hugo Chavez’s popularity among Venezuelans has waned in recent years. Less than half of Venezuelans (47%) in August 2009 said they approved of Chavez’ job performance — down from 61% in late 2006 when he was elected to a second six-year term.

That’s not a good sign for a dictator “president for life”. And what’s even worse is his inability to do much about what is causing that decline but attempt to distract attention by stirring up an existential threat (Colombia).

The reasons for this decline in popularity aren’t hard to figure out. Again, Gallup:

This year, 30% of Venezuelans said economic conditions in their city or area are improving, down from 47% in 2008 and 63% in 2007. Electricity and water shortages have become frequent, and violent crime is rampant in much of the country. This year, 23% of Venezuelans said they feel safe walking alone in their areas at night, the second-lowest figure among the 67 countries in which Gallup asked the question.

Politicians, whether socialist or capitalist, are held responsible for their country’s ability to provide the basics in life – especially when in the past those basics were cheap and plentiful. And, politicians are also held responsible for providing basic security. In all areas the socialist “Bolivarian revolution” is failing. And, because of actions by Chavez over the years to nationalize many industries, Venezuelans who supported Chavez are now beginning to see his government as more of a threat to them:

Conversely, concern about the heavy hand Chavez has demonstrated in the recent wave of nationalizations may be growing. The proportion of Venezuelans who said people in the country can feel very confident their private property will be respected by the government has dropped to 40% this year, from 52% in 2007. And 44% of Venezuelans currently agree that life is very hard for those who oppose the government, up from 36% in 2008.

As Megan McArdle points out, Chavez was able to paper over much of this when the price of oil was high and revenue plentiful, but at the present price and faced with the fact that because he diverted money from the state run oil company PDVSA to fund social programs, his golden goose is on life support. And Chavez has been forced to impose some unpopular restrictions:

President Hugo Chávez has been facing a public outcry in recent weeks over power failures that, after six nationwide blackouts in the last two years, are cutting electricity for hours each day in rural areas and in industrial cities like Valencia and Ciudad Guayana. Now, water rationing has been introduced here in the capital.

The deterioration of services is perplexing to many here, especially because the country had grown used to cheap, plentiful electricity and water in recent decades. But even as the oil boom was enriching his government and Mr. Chávez asserted greater control over utilities and other industries in this decade, public services seemed only to decay, adding to residents’ frustrations.

With oil revenues declining and the economy slowing, the shortages may have no quick fixes in sight. The government announced some emergency measures this week, including limits on imports of air-conditioning systems, rate increases for consumers of large amounts of power and the building of new gas-fired power plants, which would not be completed until the middle of the next decade.

Combine that with growing food shortages and rampant inflation and the picture is not pretty for our boy Hugo.  And while his popularity remains slightly north of the critical 50% mark, his job approval rating of 46% portends a fall for that as well.  Chavez, like all socialists,  is finding out the hard way that they call them the laws of economics for a reason.  You just wonder if we’ll learn something from his inevitable decline.

~McQ

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How many times do we have to tell you…

… that was then, this is now!

President Obama, to The New York Times, March 6, 2009, on how he’s not a socialist:

[I]t wasn’t on my watch that we passed a massive new entitlement… without a source of funding.

No sir. That wouldn’t be “entirely consistent with free-market principles.”

So I’m sure Pres. Obama will come up with something better than (a.) letting the Bush tax cuts expire and (b.) ending the Iraq War as a means of funding his massive new entitlement.  Because those things won’t even handle the existing structural deficit, much less a new program.

Podcast for 07 Jun 09

In this podcast, Bruce, Michael, and Dale discuss the Obama “Muslim” speech, and the socialization of the economy.

The direct link to the podcast can be found here.

Observations

The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download 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 2007, they can be accessed through the RSS Archive Feed.