Socialism kills more than war

Bad economic policies kill more children than war:

Recent reports that infants now die at a higher rate in Venezuela than in war-torn Syria were, sadly, unsurprising—the results of socialist economics are predictable. Venezuela’s infant mortality rate has actually been above Syria’s since 2008.

But it’s not all bad news.

The big picture, fortunately, is happier. The global infant mortality rate has plummeted. Even Syria and Venezuela, despite the impact of war and failed policies, saw improvements up to as recently as last year. From 1960 to 2015, Syria’s infant mortality rate fell by 91% and Venezuela’s by 78%. This year (not reflected in the graph above or below), Syria’s rate rose from 11.1 per 1,000 live births to 15.4, while Venezuela’s shot up from 12.9 to 18.6. Meanwhile, infant mortality rates have continued to fall practically everywhere else, and have declined even faster in countries that enjoy more freedom and stability. Consider Chile.

Chile’s infant mortality rate in 1960 was actually above that of both Venezuela and Syria. It managed to outperform Syria by the mid-1960s, but was still woefully behind its richer northern cousin, Venezuela.  In the early 1970s, Chile’s progress slowed to a crawl as its elite flirted with socialist policies. Once its government abandoned socialism and began economic reforms in the mid-1970s, the pace of progress sped up again, and soon Chile’s infants were safer than Venezuela’s. Today, Chile’s infant mortality rate is similar to that of the United States.

There is a lesson to be learned from these data points: economic policy matters. While Venezuela’s socialism has managed to kill more infants than a full-blown war in Syria, Chile’s incredible success story shows us that by implementing the right policies, humanity can make rapid progress and better protect the youngest, most vulnerable members of society. Today it is hard to believe that infants in Chile were once more likely to die within a year than their contemporaries in Venezuela and Syria. . . 

New Zealand is in no danger of following Venezuela’s downwards trajectory to complete disaster, but it is concerning that economic growth has slowed:

The economy appears to be slowing with today’s GDP figures showing economic growth in the past three months is the lowest in five years, National’s Finance spokesperson Amy Adams says.

“Economic growth in the past three months of 0.3 per cent doesn’t even compensate for population growth. Economic growth per person, which reflects population growth, actually declined in dollar terms over the past three months.

“Despite all the Government’s talk of wellbeing, that means New Zealanders are becoming worse off.

“While quarterly numbers can be volatile and need to be read with caution, these latest figures do suggest a general slowdown from the economy the Government inherited from National.

“These results will cause embarrassment to the Minister of Finance after he was too quick to boast about the previous quarter’s result, which now appears to be an outlier.

“Despite the economy slowing, the Labour-led Government is projected to take an extra $17.7 billion in tax from New Zealand families over the next four years than was projected under National. That amounts to $10,000 less in the back pockets of the average household.

The announcement of another increase to the minimum wage without a change to tax thresholds will mean even more tax taken.

Any families on low wages will be little if any better off because any gain in their pay will be offset by abatements to Working for Families top-ups. It is better to earn more and be less dependent on government support but that will be cold comfort to people who are struggling.

“National believes New Zealanders deserve to keep more of what they earn. Unlike the Labour-led Government, we know that as a country we can’t tax our way to prosperity.

“New Zealand needs sensible and consistent economic policies that promote growth and reward hard work, as well as wise spending of taxpayer money.” 

Venezuela is an extreme case but the lesson is clear – tax and spend economic policies are no substitute for ones which promote economic growth and lessen the burden of the state.

Good economic policy is the necessary foundation for sustainable social progress.

Socialism big lie of 20th century

Mark J Perry explains why socialism failed:

Socialism is the Big Lie of the twentieth century. While it promised prosperity, equality, and security, it delivered poverty, misery, and tyranny. Equality was achieved only in the sense that everyone was equal in his or her misery.

In the same way that a Ponzi scheme or chain letter initially succeeds but eventually collapses, socialism may show early signs of success. But any accomplishments quickly fade as the fundamental deficiencies of central planning emerge. It is the initial illusion of success that gives government intervention its pernicious, seductive appeal. In the long run, socialism has always proven to be a formula for tyranny and misery.

A pyramid scheme is ultimately unsustainable because it is based on faulty principles. Likewise, collectivism is unsustainable in the long run because it is a flawed theory. Socialism does not work because it is not consistent with fundamental principles of human behaviour. The failure of socialism in countries around the world can be traced to one critical defect: it is a system that ignores incentives. .

In a capitalist economy, incentives are of the utmost importance. Market prices, the profit-and-loss system of accounting, and private property rights provide an efficient, interrelated system of incentives to guide and direct economic behavior. Capitalism is based on the theory that incentives matter!

Under socialism, incentives either play a minimal role or are ignored totally. A centrally planned economy without market prices or profits, where property is owned by the state, is a system without an effective incentive mechanism to direct economic activity. By failing to emphasize incentives, socialism is a theory inconsistent with human nature and is therefore doomed to fail. Socialism is based on the theory that incentives don’t matter!

The failure of the car industry in Venezuela provides a very good example of why socialism and the central planning which goes with it fails.

Leonardo Hernandez had hoped to buy a new car this year, ending nearly two years of waiting on various lists at different dealerships throughout the country.

Those hopes were dashed last week when Toyota Motor Co. said it would shut down its assembly operations in Venezuela due to the government’s foreign exchange controls that have crippled imports and made it impossible to bring in parts needed to build its vehicles.

The country’s other car manufacturers, including General Motors and Ford, haven’t even started operations this year, while waiting for needed parts to arrive. . .

 

Happiness is enough loo paper

Venezuelan President Nicolas Maduro’s has set up a – Viceministerio Suprema Felicidad Social del Pueblo  – a Vice Ministry of Supreme Social Happiness of the village.

It’s supposed to co-ordinate all the mission programmes started to eliminate poverty by former President Hugo Chavez.

“I have decided to create this Vice ministry and I have given it this name to honour Chávez and Bolívar,” Mr Maduro announced on Thursday in a televised speech made from the presidential palace. He said that the Vice ministry aimed to take care of the most “sublime, vulnerable and delicate, to those who are most loved by anyone who calls themselves a revolutionary, a Christian and Chavista.” . . .

In downtown Caracas, fruit vendor Victor Rey said he is now waiting for Maduro to create a vice ministry of beer.

“That would make me, and all the drunks, happy,” he said. . .

Housewife Liliana Alfonzo, 31, said that instead of a Supreme Happiness agency she would prefer being able to get milk and toilet paper, which disappear off store shelves minutes after arriving at stores.

“It’s a Calvary getting the ingredients for any meal,” she said.

Vice would be the operative word under this regime.

High inflation and government price controls have created shortages of basic goods.

Happiness isn’t the socialism this regime imposes.

It’s enough loo paper and other essential items most of us are fortunate enough to be able to take for granted.

Voluntary co-operation

State control of various necessities in Venezuela has resulted in shortages of food and loo paper  in response to which there’s an app which crowd sources information on where supplies are:

I’m afraid that my Spanish isn’t all that good but it’s good enough to confirm that they really are offering a method of finding out which shops have toilet paper, sugar, flour….you know, the simple basics which shops really shouldn’t be running out of.

It’s all rather bizarre that a country that has sufficient technology to be running smartphones doesn’t have the ability to keep such consumer basics on the shelves. Even worse that a major oil supplier at the peak of an oil boom cannot manage it. . .

The problem is state control.

The solution is to leave it to the market.

There are those who insist that whatever it is going on there must be someone in charge. Like our Soviets above with the bread, like many socialists in many places and times. Things must be planned, organised, someone must make things happen, there must be control. And then there are those who, even if a bit mystified by quite how it happens, accept that the voluntary cooperation within markets does some pretty nifty things. Like keeping toilet paper on the shelves at prices that people are delighted to pay for it.

The real point being that markets are pretty good at some things. They do not need that control, that planning, that guidance, nor even having their prices fixed. I’m pretty much a pro-market extremist, admittedly, but even I don’t say that all markets work perfectly all the time. The trick is to work out which do, at least acceptably, and concentrate on those that don’t, at least not acceptably. For example, we might well argue that the pure free market distribution of income is in some manner not acceptable. Thus we desire to change it through the tax and or benefit systems. I’d go along with that myself, even if perhaps not in the specific manner that many places now do it.

However, at the same time I’d want to point out that markets really do solve some problems without any further intervention being needed. Markets being, really, just voluntary cooperation among people and groups of people. And we’ve a lovely example here of just that. Before state intervention in the toilet paper market there was sufficient for what the populace desired to use. After said intervention there wasn’t: at which point we get further voluntary cooperation through the crowdsourcing of information to overcome the governmental intervention.

Markets really just do work at times and the real trick is to, when observing that they do in a specific sector or activity, step out of the way and allow them to keep working. . .

Markets aren’t perfect but voluntary co-operation usually works better than state control.

 

Capitalism vs Socialism

This could also be used as evidence that economic freedom is more important than oil which would confound red greens who want more regulation but less oil.

Hat tip: Capitalism

Foreign investment brings benefits

Mention foreign investment and opponents will talk about exporting profits.

They rarely if ever mention the benefits:

. . . when foreign companies were investing in the country they were bringing with them the new and interesting ways of doing things, those higher productivity ways, which increase the wealth of the country. Note that these new ways only have to be a few percentage points more efficient than the local ways to more than cover the dividends and profits flowing out again.

Tim Worstall is writing about Venezuela but his point is universal.

Providing foreign investors obey our laws, meet our standards and pay our taxes we’re better off with their money, expertise and technology than without it.

Tuesday’s answers

Monday’s questions were:

1. Through which seven countries does the Amazon River flow?

2. Who said, “I like to see life with its teeth out.”?

3. Which two rivers used to meet at Cromwell before Lake Dunstan was formed?

4. Who is New Zealand’s Minister of Statistics and Land Information?

5. What’s a  sgian dubh?

Paul got two right and a bonus for extra info, imagination & humour.

JC got one.

Gravedodger got 3 and 5/7 and a bonus for extra info and having worn a sgian dubh.

PDM got two – maybe three because his cousins are sure to know what a sgian dubh is.

Tuesday’s answers follow the break: