Tag: socialism

Venezuela Reaches the Final Stage of Socialism: No Toilet Paper

In 1990 I went to a Cato Institute conference in what was then still the Soviet Union. We were told to bring our own toilet paper, which was in fact useful advice. Now, after only 16 years of Chavista rule, Venezuela has demonstrated that “Socialism of the 21st Century” is pretty much like socialism in the 20th century. Fusion reports:

Venezuela’s product shortages have become so severe that some hotels in that country are asking guests to bring their own toilet paper and soap, a local tourism industry spokesman said on Wednesday….

“It’s an extreme situation,” says Xinia Camacho, owner of a 20-room boutique hotel in the foothills of the Sierra Nevada national park. “For over a year we haven’t had toilet paper, soap, any kind of milk, coffee or sugar. So we have to tell our guests to come prepared.”…

Montilla says bigger hotels can circumvent product shortages by buying toilet paper and other basic supplies from black market smugglers who charge up to 6-times the regular price. But smaller, family-run hotels can’t always afford to pay such steep prices, which means that sometimes they have to make do without.

Camacho says she refuses to buy toilet paper from the black market on principle.

“In the black market you have to pay 110 bolivares [$0.50] for a roll of toilet paper that usually costs 17 bolivares [$ 0.08] in the supermarket,” Camacho told Fusion. “We don’t want to participate in the corruption of the black market, and I don’t have four hours a day to line up for toilet paper” at a supermarket….

Recently, Venezuelan officials have been stopping people from transporting essential goods across the country in an effort to stem the flow of contraband. So now Camacho’s guests could potentially have their toilet paper confiscated before they even make it to the hotel.

Shortages, queues, black markets, and official theft. And blaming the CIA. Yes, Venezuela has truly achieved socialism.

But what I never understood is this: Why toilet paper? How hard is it to make toilet paper? I can understand a socialist economy having trouble producing decent cars or computers. But toilet paper? And soap? And matches?

Sure, it’s been said that if you tried communism in the Sahara, you’d get a shortage of sand. Still, a shortage of paper seems like a real achievement.

Socialism in Venezuela, like Socialism Everywhere, Means Shortages

After 15 years, Hugo Chavez’s socialist revolution is finally reaching socialism’s signature achievement: shortages of toilet paper. The Washington Post reports:

CARACAS, Venezuela — On aisle seven, among the diapers and fabric softener, the socialist dreams of the late Venezuelan president Hugo Chávez looked as ragged as the toilet paper display.

Employees at the Excelsior Gama supermarket had set out a load of extra-soft six-roll packs so large that it nearly blocked the aisle. To stock the shelves with it would have been pointless. Soon word spread that the long-awaited rolls had arrived, and despite a government-imposed limit of one package per person, the checkout lines stretched all the way to the decimated dairy case in the back of the store.

“This is so depressing,” said Maria Plaza, 30, a lawyer, an hour and a half into her wait….

Why is it always toilet paper? I understand why a poorly coordinated economy isn’t likely to produce complicated goods like cars (see the Soviet Lada, the East German Trabant, or the gleaming 1950s American cars still in use on the streets of Havana) or computers. But how hard is it to produce toilet paper? Not that toilet paper is the only thing in short supply:

Each day the arrival of a new item at Excelsior Gama brought Venezuelans flooding into the store: for flour, beef, sugar. Store employees and security guards helped themselves to the goods first, clogging the checkout lines, and then had to barricade the doors to hold back the surge at the entrance.

Meanwhile, as long as you can blame the Americans, the capitalists, Snowball, or Emmanuel Goldstein, you can retain the support of at least some of the people:

“The store owners are doing this on purpose, to increase sales,” said Marjorie Urdaneta, a government supporter who said she believes Maduro when he accuses businesses of colluding with foreign powers to wage “economic war” against him.

“He should tell the stores: Make these items available — or else,” she said.

The regime takes credit for what it can, making sure that

products sold by recently nationalized companies carried little heart symbols and the phrase “Made in Socialism.”

The queues in front of the stores should carry the same symbol.

Even the Establishment Media Is Now Admitting the French Economic Model Is Fatally Flawed

Some things in life are very dependable. Every year, for instance, the swallows return to Capistrano.

And you can also count on Dan Mitchell to wax poetic about the looming collapse of French statism.

Geesh, looking at that list, I guess I’m guilty of - in the words of Paul Krugman - being part of the “plot against France” by trying to discredit that nation’s economy.

Or maybe I’m just ahead of my time because we’re now seeing articles that almost sound like they could have been written by me appearing in establishment outlets such as Newsweek. Check out some amazing excerpts from an article by Janine di Giovanni, who lives in France and serves as the magazine’s Middle East Editor.

…what is happening today in France is being compared to the revocation of 1685. …the king closed churches and persecuted the Huguenots. As a result, nearly 700,000 of them fled France, seeking asylum in England, Sweden, Switzerland, South Africa and other countries. The Huguenots, nearly a million strong before 1685, were thought of as the worker bees of France. They left without money, but took with them their many and various skills. They left France with a noticeable brain drain.

It’s happening again, except this time the cause is fiscal persecution rather than religious persecution. French politicians have changed the national sport from soccer to taxation!

Since the arrival of Socialist President François Hollande in 2012, income tax and social security contributions in France have skyrocketed. The top tax rate is 75 percent, and a great many pay in excess of 70 percent. As a result, there has been a frantic bolt for the border by the very people who create economic growth – business leaders, innovators, creative thinkers, and top executives. They are all leaving France to develop their talents elsewhere.

It’s an exaggeration to say “they are all leaving,” but France is turning Atlas Shrugged from fiction to reality.

The Misery Index: A Look Back at Bulgaria’s Elections

With Bulgaria’s May 12th election fast approaching, it is useful to reflect on past elections and the resulting economic performance of each elected government. To do this, I have developed a Misery Index inspired by the late Prof. Arthur Okun, a distinguished economist who served as an adviser to U.S. President Lyndon Johnson.

The Misery Index measures the level of “misery” in the economy. My modified Misery Index is equal to the inflation rate, plus the bank lending rate, plus the unemployment rate, minus the annual percent change in GDP.

An increase in the Misery Index indicates that things are getting worse: misery is increasing. A decrease in the Misery Index indicates that things are improving: misery is decreasing. The accompanying chart shows the evolution of Bulgaria’s Misery Index over time.  


The Socialist Party government of Prime Minister Zhan Videnov created hyperinflation and a lot of misery. The Misery Index under the Videnov government’s watch peaked at 2138 in the first quarter of 1997. That number isn’t shown on the accompanying chart—if it was, the chart would take up an entire page of Trud.

So, the chart starts in the second quarter of 1997, with the Kostov government. Shortly after Kostov took power, Bulgaria installed a Currency Board System, based on a draft Currency Board Law, which I authored at the request of President Petar Stoyanov. The Currency Board brought an end to Bulgaria’s hyperinflation, which peaked with a monthly inflation rate of 242%, in February 1997.

Crimes Against the State

William Wan writes in the Washington Post that in China

Citizens have been punished for crimes as trivial as writing an unflattering blog post about a local official.
Trivial indeed. Worse than trivial. Not crimes at all. Just normal speech in a free society.  But of course China isn’t a free society. Despite its moves toward markets and profits, China remains a one-party state still characterized by state ownership of the commanding heights of the economy. And that party is the Communist party, a party born to eradicate capitalism, a party that as it came to power in 1949 spoke of “the extinction of classes, state power and parties,” of “a socialist and communist society,” of the nationalization of private enterprise and the socialization of agriculture, of a “great and splendid socialist state” in Russia, and especially of “a powerful state apparatus” in the hands of a “people’s democratic dictatorship.” That’s a vision that doesn’t fit very well with “unflattering blog post[s] about a local official.” The problem is endemic to socialism. Robert Heilbroner, a distinguished American intellectual who called himself a socialist (though the New York Times declined to be so rude in its obituary), was admirably candid in explaining the place of dissent in a socialist society in a 1978 article in, well, Dissent:
Socialism … must depend for its economic direction on some form of planning, and for its culture on some form of commitment to the idea of a morally conscious collectivity… If tradition cannot, and the market system should not, underpin the socialist order, we are left with some form of command as the necessary means for securing its continuance and adaptation. Indeed, that is what planning means… The factories and stores and farms and shops of a socialist socioeconomic formation must be coordinated … and this coordination must entail obedience to a central plan… The rights of individuals to their Millian liberties [are] directly opposed to the basic social commitment to a deliberately embraced collective moral goal… Under socialism, every dissenting voice raises a threat similar to that raised under a democracy by those who preach antidemocracy.
That is, even an unflattering blog post about a local official threatens “the basic social commitment to a deliberately embraced collective moral goal” under the direction of “a powerful state apparatus” in the hands of a “people’s democratic dictatorship.” So we deplore China’s use of labor camps “as an expedient way to silence critics,” in the words of the Post, but we shouldn’t be surprised by it. Indeed, a front-page article in today’s Post on Hugo Chavez’s legacy refers to
the tenets of what Chavez called 21st-century socialism—intervening in the economy, putting state institutions under the executive’s control and corralling opponents and the press.
Sounds a lot like 20th-century socialism.

Top General Weighs In

Oh, no, not that general. I’m talking about Eisenhower, as quoted in the June 16, 1952 issue of Quick magazine.

Asked what he thought about “compulsory health insurance,” Ike came out “against submitting our lives toward a control that would lead inevitably to socialism.” Now we get to find out if Ike was right.



The Opposition in Venezuela Doesn’t Get It

Venezuela is in full campaign mode as six candidates vie for the nomination of the Coalition for Democratic Unity (MUD is its Spanish acronym), the opposition movement that will nominate a single candidate to face Hugo Chávez in the October 2012 presidential election. The MUD primary will take place on February 12.

After 13 years of socialist rule that has crippled Venezuela’s economy, and even created shortages of fuel in the oil-rich South American nation, one would expect the opposition candidates to signal a bold U-turn from the failed big-government policies of Hugo Chávez. Unfortunately, that doesn’t seem to be the case.

Let’s look, for example, at Primero Justicia (Justice First), the party whose candidate, Henrique Capriles Rodonsky, is leading in the polls. Capriles doesn’t say much about the economic model he favors. His statements are limited to generalities such as “the only thing I’m obsessed about is that Venezuela has progress.” As governor of the state of Miranda, Capriles likes to compare his approach to that of former Brazilian president Lula da Silva: decent macroeconomic stewardship complemented by generous social programs.

However, Primero Justicia’s platform seems to be a little more specific in its views on the role of government in society. It claims to support a “social-humanist state” that stands between the “social bureaucratic state that provides inefficient social services in a monopolist way and the minimalist neo-liberal state that gives up on its social responsibilities.” As for the economic model that Primero Justicia favors, the platform says that it “stands against the socialist planned economy and … the [classical] liberal tendencies that turn the market into a dogma.” In simple terms, Primero Justicia sees itself as a Third Way alternative between Hugo Chávez’s “Socialism of the 21st Century” and what it claims to be the “neo-liberal dogma.”

I believe that Venezuela needs a decisive rupture from the failed big-government policies of the past, and not just a lighter version of socialism. Nonetheless, a modern social democratic party is certainly a far better alternative for the country than Hugo Chávez. Unfortunately, on the campaign trail Primero Justicia’s officials seem eager to out-compete Chávez in promising more government handouts to Venezuelans. For example, the daily El Universal published a statement [in Spanish] yesterday from Primero Justicia’s chairman Julio Borges where he lambasted Chávez for not spending enough on social programs. He said that his party would use oil revenues to create a Social Security Fund that would give pensions “to all Venezuelans, regardless of whether they had formal employment or not, and even to housewives.”

Any observer of Venezuela’s modern history would say, “Here we go again.” For many decades, Venezuelan politicians, either in government or in the opposition, have seen the government (and particularly oil revenues) as an infinite source of wealth that simply needs to be distributed among all Venezuelans. As Borges previously stated, “every family would have 1.6 billion bolivares [approximately $375,000] if oil resources were distributed fairly.”

Henrique Capriles will formally launch his presidential candidacy tomorrow. Venezuelans have other pressing concerns besides the economy that will play a major role in next year’s election, such as the staggering rise in crime (Venezuela stands now as the most violent country in South America) and the steady erosion of civil and political freedoms. However, Capriles is ill-advised in thinking that he can beat Chávez by playing the populist card of offering yet more government handouts to Venezuelans.

Venezuelans deserve a real alternative to Chávez. They deserve not only a candidate that promises a return to democratic rule of law, but also someone who pledges to break their dependency on government. The election in October 2012 should be something more than choosing a distributor-in-chief at Miraflores Palace.