Tag Archives: Marxism

How a small, poor country became the top economy in Latin America

South America Map
South America Map

One way to learn about whether specific economic policies work or not is to look at different countries that have tried them. Believe it or not, patterns do emerge about what works and what doesn’t work, as you look across different times and places. I’ve been reading a book called “Money, Greed and God” with my friend Carla, which talks about what has worked to reduce poverty.

The author basically outlined two approaches. In the first approach, the government 1) confiscates the wealth of the most productive workers, 2) nationalizes (takes control of) the businesses of the most successful entrepreneurs, 3) restricts trading between citizens and with other countries, with minimum wage, price controls and tariffs. In the second approach, the government does the opposite: 1) lowers taxes on the most productive workers, and 2) lets entrepreneurs compete to provide goods and services to consumers, and 3) lowers restrictions on internal trading and trading with other countries, e.g. – eliminating minimum wage, tariffs and price controls.

Let’s take a look at two Latin American countries that went in opposite directions. Venezuela and Chile. Then we can finally find out which policies actually achieve results for the people.

Here is how Chile started out in 1973.

PROBLEM: Price controls and tariffs:

Prices for the majority of basic goods were fixed by the government in 1973. Even though Chile was and still is a small economy, the level of protection­ism was high. By the end of 1973, the nominal average tariff for imports was 105 percent, with a maximum of 750 percent. Non-tariff barriers also impeded the import of more than 3,000 out of 5,125 registered goods. Just as economic theory predicts, large queues in front of stores were usual in Santiago and other cities in Chile as a result of the scarcity caused by price controls.

PROBLEM: Government taking over private businesses:

The decline in GDP during 1973 reflected a shrinking productive sector in which the main assets were gradually falling under government control or ownership through expropriations and other government interventions in the economy.

PROBLEM: Deficit spending and government printing money:

The fiscal situation was chaotic. The deficit reached 55 percent of expenditures and 20 percent of GDP and was the main cause of inflation because the Central Bank was issuing money to finance the government deficit.

SOLUTION: lower or eliminate restrictions on trade:

The most important economic reform in Chile was to open trade, primarily through a flat, low tar­iff on imports. Much of the credit for Chilean eco­nomic reforms in the following 30 years should be given to the decision to open our economy to the rest of the world. The strength of Chilean firms, productive sectors, and institutions grew up thanks to that fundamental change.

SOLUTION: let competing entrepreneurs in the private sector provide goods and services to consumers:

A second fundamental reform was to allow the private sector to recover, adding dynamism to the economy. In fact, important sectors such as elec­tricity generation and distribution and telecommu­nications were still managed by state companies. After we implemented a massive privatization plan that included more than 50,000 new direct share­holders and several million indirect (through pen­sion funds) shareholders, these companies were managed by private entrepreneurs that carried out important expansion plans.

SOLUTION: let people take responsibility for their own lives instead of depending on government:

The 1981 reform of the Chilean pension fund system deserves special mention. Under the leader­ship of Minister José Piñera, an individual capitali­zation account program was designed with specific contributions, administered by private institutions selected by the workers. The Chilean Administra­doras de Fondos de Pension (Pension Fund Administrators or AFP) has been replicated in more than 20 countries, and more than 100 million workers in different parts of the world use these accounts to save for retirement.

SOLUTION: allow parents to choose the school that fits their needs from competing education providers, and push school administration down from the federal government to the municipal level, where it would be more responsive to voter’s needs:

In 1981, Chile introduced a universal educational voucher system for students in both its elementary and secondary schools. At the same time, the central government transferred the administration of public schools to municipal governments…  The financial value of the voucher did not depend on family income.

RESULTS: And I was able to find a nice short, description of how all that worked out for them on the far-left Wikipedia, of all places:

The economy of Chile is a high-income economy as ranked by the World Bank, and is considered one of South America’s most stable and prosperous nations, leading Latin American nations in competitiveness, income per capita, globalization, economic freedom, and low perception of corruption.

In 2006, Chile became the country with the highest nominal GDP per capita in Latin America. In May 2010 Chile became the first South American country to join the OECD. Tax revenues, all together 20.2% of GDP in 2013, were the second lowest among the 34 OECD countries, and the lowest in 2010. In 2017, only 0.7% of the population lived on less than US$1.90 a day.

According to the Heritage Foundation, Chile is ranked as the 18th freest economy in the world. The World Bank ranked Chile as the 50th highest GDP per capita for 2018, just below Hungary and above Poland.

Now, you can contrast those results with Venezuela. I have been blogging about Venezuela for years on this blog, and documenting how they raised taxes, banned guns, nationalized private sector companies, raised tariffs, and increased regulations. They are now ranked JUST ABOVE NORTH KOREA for economic freedom – #179 out of 180 countries measured. Basically, they did the opposite of everything that Chile did – transferring power away from parents, workers, business owners, churches and municipal governments to the powerful centralized federal government.

Wikipedia explains how Hugo Chavez took over in 1999 and enacted a communist revolution.

More:

Since the Bolivarian Revolution half-dismantled its PDVSA oil giant corporation in 2002 by firing most of its 20,000-strong dissident professional human capital and imposed stringent currency controls in 2003 in an attempt to prevent capital flight, there has been a steady decline in oil production and exports. Further yet, price controls, expropriation of numerous farmlands and various industries, among other government authoritarian policies… have resulted in severe shortages in Venezuela and steep price rises of all common goods, including food, water, household products, spare parts, tools and medical supplies; forcing many manufacturers to either cut production or close down, with many ultimately abandoning the country as has been the case with several technological firms and most automobile makers.

They confiscated private property, took over private sector businesses, implemented tariffs and price controls, redistributed wealth via massive welfare programs, and pushed all decision-making out of families and municipal governments up to the federal government. By depriving the producers of their earnings, the country caused massive shortages of goods and services, to the point where people are fleeing the country, consuming zoo animals, and selling their bodies as prostitutes in order to get food and water.

Application

In the next election, we are not picking a tribe because of how they make us feel about ourselves. We are not choosing in order to see ourselves as “nice” and “not nice”. We need to look at specific policies being proposed, and see what works and what doesn’t work. The examples of Chile (rags-to-riches) and Venezuela (riches-to-rags) are helpful for voters who want to get RESULTS instead of FEELINGS.

I’ll leave you with a list of links from previous posts so you can see how communism worked out for Venezuela.

Related posts

Violent crime surges in large cities as Democrat leaders defund police

How do Democrats respond to riots, vandalism and arson?
How do Democrats respond to riots, vandalism and arson?

We can already see how Democrats respond to criminals by looking at what is happening now in major Democrat-run cities. Criminals are defacing monuments, vandalizing businesses and assaulting law-abiding citizens. The response of the Demoncrats in power has been to order the police to stand down – then cut the police budget in order to fund social workers.

Here’s a report from The Daily Wire:

Homicide rates are hitting decades-long highs in many of the largest cities across the United States as local officials struggle with the fallout of a pandemic and massive anti-police protests.

Homicide rates have increased by double-digits in 36 of the 50 biggest U.S. cities, according to The Wall Street Journal. The spike in killings comes as other forms of violent crime, such as robberies and rapes, are appearing to decrease.

[…]Chicago police say gang violence lead to at least 15 people injured during a July 21 shootout at the funeral for a young man and gang member. At least 60 shell casings were recovered from the scene after a group of men opened fire on people gathered for the funeral and some in the crowd fired back.

Aside from the pandemic, a wave of protests against police brutality has driven a secondary wave of anti-police sentiment as activists push local officials to defund and abolish police departments.

It’s much easier for Democrats to do their rioting and looting and arson if there are no police to stop them.

The police do have some advice for the taxpayers who pay the Democrat leaders to protect them from criminals:

Minneapolis Police informed residents of the city’s embattled 3rd Precinct to prepare for the giving up of their personal belongings to potential robbers and advised them to do as criminals say for their own safety.

According to a July 28 email provided to Alpha News MN that was also forwarded to The Daily Wire, the Minneapolis Police Department offered “prevention tips” to residents hoping to avoid being a victim of the skyrocketing cases of robbery and carjacking that have plagued the city since George Floyd’s death in May.

“Robberies and Carjacking’s [sic] have increased in our Precinct,” the email begins. “Cell phones, purses, and vehicles are being targeted. Some victims have been maced, dragged, assaulted, and some threatened with a gun. Most of these crimes have occurred north of 42nd St. E. 100 Robberies and 20 Carjackings have been reported to 3rd Precinct Police in July alone. Downtown and Southwest Minneapolis have seen an increase as well. We want those who live and work here to be safe!”

The e-mail tells residents of the Democrat stronghold to: “Be prepared to give up your cell phone and purse/wallet.” And when confronted by criminals, to “do as they say.” Not surprising, since the police were previously ordered to vacate a precinct, so that the rioters could set it on fire.

If Joe Biden wins in November, he’ll confiscate your firearms and tell you to do as the criminals say, and hand over your property to them. Let them rape you. Let them kill you. Let them kill your family. And he’ll be protected by armed security. Paid for by you.

Podcast: Was Jesus a socialist? Does Christianity teach socialism?

Let's take a deep dive into the Bible
Let’s take a deep dive into the Bible

I noticed that Christianity Today, which has turned hard left in recent years, is now openly endorsing socialism. So, I thought it might be a good idea to listen to this new episode of the Think Biblically podcast, which deals with the issue of Christianity and socialism. The hosts actually brought an economist on to define socialism, then they analyze the teachings of Jesus.

Here’s the description: (H/T Nathan)

It has not been uncommon for advocates of virtually every economic system to invoke Jesus in support of their views, though some of the most ardent advocates for both capitalism and socialism did not have any particular religious views themselves (Rand, Marx). Over the years, some of the more recent advocates of socialist type economic arrangements have appealed to Jesus and the gospels in support of such systems. Economist Lawrence Reed helps us sort out the application of the teaching of Jesus to economics and its relevance for economic life today. Join us for this provocative conversation as he tackles the question of Jesus and socialism.

Show notes, including a full transcript, are available at: biola.edu/thinkbiblically

Topics:

  • who plans the economy in socialism?
  • who should own the means of production in socialism?
  • how should wealth be distributed in socialism?
  • what tools does socialism use to provide people with health care, employment, security, etc.
  • which countries have adopted socialism? North Korea? Cuba? Venezuela? How about the Scandinavian countries?
  • what in the New Testament has caused people to think that Jesus was a socialist?
  • did Jesus ever advocate for concentrating power in the government in order to meet the material needs of people?
  • did Jesus ever advocate for voluntary charity in order to meet the material needs of people?
  • in our experience, is government seen to be more compassionate or less compassionate than individual people?
  • does voluntary charity have any advantages over forced redistribution by a powerful central government?
  • what about the example of common possessions among the earliest Christians?
  • what is the Bible’s view of wealth? is it always bad to be wealthy, or does it matter how you obtained it and how you use it?
  • what does the parable of the talents tell us about socialism vs capitalism?
  • what does the parable of the good Samaritan tell us about socialism vs capitalism?
  • what does the parable of the three different shifts of workers tell us about socialism vs capitalism?
  • what about socialist policies and higher tax rates in countries like Canada and Scandinavian countries?

I have to be honest. I think that some of the economics reasoning about the parables was a stretch, because those parables are talking mainly about other topics, not economics. But it’s true that the parables aren’t friendly to socialism even if they are interpreted as being about economics.

Children dying in droves in cities that have been run by Democrats for decades

Only 15 unarmed black men were shot and killed by police in the past year. The BLM push for Marxism as a fix for “police brutality” is based on these 15 deaths. But what about the hundreds and thousands of black deaths at the hands of black criminals? BLM, their mainstream media allies are silent about that, because they know Democrats run those cities.

Daily Wire explains:

At least half a dozen children were shot and killed over the holiday weekend as high levels of violence ravaged some of the United States’ largest cities.

The children’s ages ranged from 6 to 14 as they fell victim to violence in cities from Washington, D.C., to San Francisco, according to the list compiled by CNN. In some cases, the tragedies added to already surging levels of violence from last year to this year.

In Washington, D.C., 11-year-old Davon McNeal was preparing to leave a Fourth of July cookout with his mother when shooting broke out somewhere nearby. A bullet struck the youth football player in the head, killing him, according to The Washington Post.

[…]Just under 90 people have been killed in Washington, D.C., this year, a roughly 17% increase over last year. 2019 ended with the most people killed in the city in a decade.

The victim was black.

More:

In Atlanta, 8-year-old Secoriea Turner was killed when a group of armed individuals fired at the vehicle she was riding in near the burned-out shell of a Wendy’s restaurant where Rayshard Brooks was killed last month.

[…]More than 30 people were killed on Saturday and Sunday in the city, continuing a wave of violence that has ravaged Atlanta since protests over the death of George Floyd began. The violence intensified after Brooks’ death.

The victim was black.

More:

In Chicago, 7-year-old Natalia Wallace and a 14-year-old boy whose name has not yet been released were victims in two separate shootings over the weekend. Both children were killed while celebrating the July 4th holiday with friends and family, according to ABC News.

[…]The number of homicides in Chicago has jumped by about 34%. This June, there were 329 homicides, up year over year from 246 in 2019.

The victims were black.

All of these cities are run by Democrat party mayors, and Democrat party city councils. They have been for decades. Many of the majors and city council members are black. But in all that time, nothing was done by these Democrats to fix crime. These Democrat politicians are extremely permissive of crime and criminals, and they don’t dare take on the root cause of the crime problem: fatherlessness.

Fatherlessness and crime
Fatherlessness and crime

Here is how BLM responds to the problem of fatherlessness:

We disrupt the Western-prescribed nuclear family structure requirement by supporting each other as extended families and “villages” that collectively care for one another, especially our children, to the degree that mothers, parents, and children are comfortable.

The more people get married and stay married, the less supportive they are of communist government. They don’t want government confiscating and redistributing their earnings – they want their earnings to stay in the family. BLM isn’t in favor of that. And that’s why they are strangely silent about the crime wave caused by children raised in fatherless homes. They don’t want to fix the root cause of crime, because that would destroy support for their real goal: communism.

Wuhan virus: communist China destroyed samples, silenced doctors, and disappeared critics

The Wuhan Virus started in China
The Wuhan Virus started in China

I’m not a big fan of National Review these days, but I wanted to link to this article because it quoted a bunch of pay-walled articles to make some good points about how we got the Wuhan virus. Not only is China to blame for the Wuhan virus, but they are actually trying to cover it up now, and shift the blame to the countries that they are damaging.

Here are the main points of the article:

  • China destroyed samples and suppressed information about the Wuhan Virus since December 2019, leaving other nations in the dark and unprepared
  • Chinese doctors who warned about patients with the Wuhan virus were silenced by the communist regime in China
  • In January, Chinese authorities denied that the Wuhan virus could be spread between people, and allowed huge gatherings of people in Wuhan
  • The President of China knew about the Wuhan virus for weeks but refused to tell anyone about it
  • The communist China government let 5 million people leave Wuhan without screening them
  • Critics of China’s handling of the Wuhan virus – even rich businessmen – are disappearing

I love the article, because it links to articles behind paywalls from the UK Times, the Wall Street Journal, the Washington Post, the New York Times, etc.

Here’s the UK Times:

Chinese laboratories identified a mystery virus as a highly infectious new pathogen by late December last year, but they were ordered to stop tests, destroy samples and suppress the news, a Chinese media outlet has revealed.

A regional health official in Wuhan, centre of the outbreak, demanded the destruction of the lab samples that established the cause of unexplained viral pneumonia on January 1. China did not acknowledge there was human-to-human transmission until more than three weeks later.

The detailed revelations by Caixin Global, a respected independent publication, provide the clearest evidence yet of the scale of the cover-up in the crucial early weeks when the opportunity was lost to control the outbreak.

And here’s the Washington Post:

As word of a mysterious virus mounted, Li Wenliang shared suspicions in a private chat with his fellow medical school graduates.

The doctor said that seven people seemed to have contracted SARS — the respiratory illness that spread from China to more than two dozen countries and left hundreds dead in the early 2000s. One patient was quarantined at his hospital in Wuhan, China, Li said. He urged people to be careful.

Li and seven other doctors were quickly summoned by Chinese authorities for propagating “rumors” about SARS-like cases in the area — but their warnings were prescient. Soon, health officials worldwide would be scrambling to combat a novel virus with a striking genetic resemblance to SARS.

Here is something else I found on the Daily Wire – the response of the atheistic communist Chinese regime to being caught:

The National Security Council blasted the Chinese Communist Party on Tuesday for expelling journalists from the country and spreading false information about the origin of the virus instead of focusing on stopping the virus, which originated in China.

“The Chinese Communist Party’s decision to expel journalists from China and Hong Kong is yet another step toward depriving the Chinese people and the world of access to true information about China,” the NSC said in a statement. “The United States calls on China’s leaders to refocus their efforts from expelling journalists and spreading disinformation to joining all nations in stopping the Wuhan coronavirus.”

The statement from the NSC comes after China announced it would expel American journalists working for The New York Times, The Washington Post, and The Wall Street Journal.

“It also demanded that those outlets, as well as the Voice of America and Time magazine, provide the Chinese government with detailed information about their operations,” The New York Times reported. “The announcement went on to say that the American journalists now working in mainland China ‘will not be allowed to continue working as journalists in the People’s Republic of China, including its Hong Kong and Macao Special Administrative Regions.’ The two territories are semiautonomous and in theory have greater press freedoms than the mainland.”

Rather than admit responsibility, apologize and make restitution, they are responding by throwing out the journalists who criticize them. And you can bet those journalists would be murdered in secret if they were not American citizens. After all, the communist Chinese regime has been credibly accused of a massive organ harvesting operation – including harvesting the organs of living victims as they are being killed:

Last week, the Independent Tribunal into Forced Organ Harvesting from Prisoners of Conscience in China issued its final report concluding that China engages in the systematic human-rights atrocity of killing political and other prisoners and harvesting their organs.

[…]The Judgment convincingly concludes that China is guilty as charged. According to the report, beginning at page 415, there are four methods by which China kills prisoners and harvests their organs.

  1. Organ harvesting from prisoners incompletely executed by shooting;

  2. Organ harvesting from prisoners after lethal injection;

  3. Execution by organ explanation (killing by organ harvesting);

  4. Organ harvesting under the pretext of brain death (taking organs from people not really dead).

The United States is not alone in suffering major economic and public safety consequences because of the decisions of the communist Chinese government. There is even talk of demanding reparations. We are already in a bear market, and there is likely to be a recession because of their suppression of the evidence. And I also think that there is a lesson there for our election in November – this is what people on the secular left always do when they fail to deliver on their promises. They deny responsibility and silence or destroy those who warned them. It’s standard operating procedure for communists. Communism requires atheism. And without God, any immorality you can imagine is possible.