Archive for socialism

My Social Justice Is Better Than Yours

6791D.W. MacKenzie writes in Mises Daily Wednesday:

It is a great irony that visions of socialist harmony necessarily result in rancorous and destructive struggles among groups with contradictory visions of the good society. It is perhaps equally ironic that profit-driven competition in markets results in the highest attainable degree of social harmony. Yet, this is how the world really works.

Saving Socialists From Themselves

1024px-François_HollandeFrench Socialist President Francois Hollande won his election in 2012 on a platform to soak the rich and protect the generous welfare state. Now his Prime Minister Manuel Valls is warning that such policies could cause the French left to disappear unless Socialist party supporters start backing the government’s business-friendly reforms.

After humiliating losses to the National Front in the recent European parliamentary elections, France’s government is now promising to help companies by cutting taxes and reducing the government’s spending (the highest in Europe).

The problem with these reforms is that the left wing of the Socialist party doesn’t want to accept them. Hollande is deeply unpopular and may not be supported for reelection by his own party.

The change of faith by the upper brass of the Socialist government might be a desperate attempt to save socialism from itself. Time will tell if it can save socialism from the socialists.

(Originally posted at Mises Canada.)

Health Care and the Candy Store Called Socialism

6746Jim Fedako writes in today’s Mises Daily:

But the folks championing socialized medicine are always repeating tales of visits for simple cases of the flu or other travel-related illnesses. What is seen is the overflowing abundance of care at that level. This is the sugar, so to speak. Unseen are other types of care. The meat, eggs, etc. And this is where the failures of socialized medicine are as obvious as the lack of nutritious food in a Yugoslavian store.[1]

The stories from travelers paint a different picture from those told by people living in countries with socialized medicine. Many of these folks — those looking for meat — complain about either the unavailability of care or wait times that exceed the life expectancy of those suffering from the disease.

So we end up hearing contrasting stories: ones from visitors who are amazed by the candy, and others from residents who complain about no meat. And both are right.

The Surveillance State in Socialist Romania

800px-Flag_of_Romania_(1965-1989).svgThe BBC is running a tragic but fascinating article about political oppression under the Ceausescu regime in socialist Romania. The article tells the story of Carmen Bugan, whose father, Ion Bugan, was repeatedly spied on, arrested, and tortured for political dissent. Since 1999, the files of the Romanian secret police, the Securitate, have been available to those who were investigated during the socialist period, and Carmen has uncovered the files kept on her family. In the process, she has revealed publicly the true extent of the surveillance and suffering her family (and many other Romanians) endured.

Like every socialist country, Romania under Ceausescu failed economically. As Carmen Bugan describes it, “This was a Romania of food shortages, frequent power cuts, and ferocious reprisals for any form of dissent… Evening bread queues often ended in fist fights.” In order to quell any calls for reform, his government brutally suppressed any opposition, including that of Ion Bugan. Bugan agitated for political reform and attempted to flee the country, but more than once was arrested and sentenced to hard labor.

Part of the sentence was a five-month period of torture by solitary confinement and starvation while wearing 45kg of chains day and night, in the “special” wing of the prison at Alba Iulia… My father’s own account of this period is hair-raising: he was fed once every two days, and allowed to wash three times in the entire period he was held there.

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How Government Wrecks the Economy

6701Robert Murphy writes in today’s Mises Daily:

The fall of the Soviet Union should have spelled the demise of central planning, yet the socialist mentality thrives — albeit in a diluted form — in all governments in the so-called “free world.” No one explained the failures of pure socialism and of (the more moderate) interventionism better than Ludwig von Mises. Whether we want to understand why people are starving in North Korea, why minimum wage laws lead to teen unemployment, or what caused the boom and then crash in the U.S. housing market, the answer is in the Austrian School of economics. As the Obamacare disaster unfolds before our very eyes, it is critical for the average person — both adults and young people alike — to understand how economic science makes sense of these heartbreaking outcomes, and shows the way to solve them.

In this context, I am pleased to announce that on April 24, we will begin a six-week Mises Academy course that offers an introduction to the Austrian understanding of both pure socialism and of interventionism (or what is often called “the mixed economy” though Mises himself didn’t use that term). This course, titled “How Government Wrecks the Economy,” is the final installment of a three-part series that uses my Lessons for the Young Economist as the main textbook.

Venezuela’s Ongoing Economic Crisis

download (1)A few months ago, Carmen Dorobăţ and I wrote an article discussing Venezuela’s rapidly deteriorating economic situation. Since then, conditions in Venezuela have worsened, and in the last week political unrest has escalated quickly, with large protests of the Maduro government taking place in Caracas and elsewhere around the country. Maduro and his supporters have responded by violently cracking down on the protests and censoring media outlets covering the events.

The protests do not appear to be guided by a specific ideological movement or set of political goals, but are instead a more general reaction to the country’s economic turmoil. As one protester explained, “I’m here because I’m tired of the crime, of the shortages, tired of having to stand on line to buy anything. I’m tired of the politicians of both sides.” In the last few years, Venezuela has become a classic and tragic case of Mises’ argument that systematic government intervention leads to socialism. The country has had a pseudo-socialist government for some time, but the logic of economic planning has gradually eroded what few economic freedoms there once were. In particular, the current system of price controls (which Maduro has expanded) has caused shortages of sugar, toilet paper, and many other essential goods. It is always easier and more tempting for government to increase control than relinquish it, and the increasing economic disorder resulting from the initial shortages has only resulted in more price controls, just as Mises predicted.

Venezuela’s monetary policy has also played an important role in this process. Its rate of inflation has been rising rapidly, and is now 56% per year. Mises emphasized that price controls are governments’ natural response to inflationary price increases. When faced with the choice of stopping the printing press or expanding price controls, governments tend to choose the latter. As is often the case, bad monetary policy is driving the broader increase in socialist policies.

Price controls and inflationary policy are both recipes for social disintegration, which is what the protests in Venezuela seem to be struggling against. It’s not clear to what extent Maduro’s government is actually threatened by these events, but we can only hope that the protests will help set Venezuela on the path to peace and economic and social freedom.