Tag: socialism

Cuba, Venezuela, and the Eternal Shortage of Toilet Paper

Marketplace Radio takes a look at the challenge of filming movies and television shows in Cuba, focusing specifically on Showtime’s “House of Lies” starring Don Cheadle. The episode is titled “No es facil” – “It’s not easy.” The title appears to be a description of doing business in Cuba, and also of filming a show about doing business in Cuba. As Marketplace’s Adrienne Hill and show creator Matthew Carnahan explain:

Camera equipment was shipped from Germany because it couldn’t be sent directly from the U.S. Even basic supplies – “there’s not hammers and toilet paper, and things that people need.” 

Journalists have stopped reporting on the privations of socialism in Cuba. But Hugo Chavez was a great admirer of Fidel Castro and the society he built, and he wanted to give Venezuelans the same thing. And of course he did:

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….

Rest well, Comandantes Castro and Chavez, while your people dream of toilet paper. And hammers. And soap.

Socialism Destroys Venezuela as its People Feel the “Bern”

Venezuela no longer can feed or care for its people. Yet many Americans have forgotten what socialism really is. Sen. Bernie Sanders campaigns as if Karl Marx was just another Santa Claus.

Real socialism largely disappeared decades ago. The collapse of the Soviet Union and its Eastern European satellites effectively ended the age of collectivism.

Nevertheless, oil-rich Venezuela since became a flamboyant exponent of socialism. Its travails should remind us how America’s power is built upon a prosperous economy. Prodigal spending at home and promiscuous intervention abroad are undermining our nation’s economic foundation.

Like most Latin American nations, Venezuela never enjoyed a genuine market economy. After years of misrule, Lt. Col. Hugo Chavez attempted a coup in 1992. He failed, but six years later frustrated Venezuelans elected him president, leading to his “Bolivarian Revolution.” Before his death in 2013 he nationalized industries, provided bountiful social benefits, spent wildly on domestic and foreign ventures, turned the state oil company into a fount of political patronage, and imposed price controls.

Chavez’s successor, Vice President Nicolas Maduro, is no more competent but less charismatic. Today the economy is in virtual collapse. With oil revenues declining the regime no longer can mask its many failures.

Free Markets Are Popular Where People Need Them

Polls recently have found that millennials have a more favorable view of socialism than older Americans do. Of course, Emily Ekins suggests that those attitudes are likely to fade as they start paying taxes. But I was interested to read this in the Washington Post today:

another Pew poll found that 95 percent of Vietnamese felt that people were better off in a free-market economy.

Wow, 95 percent. Rand Paul should run for president there. Today’s Vietnamese, of course, grew up in a Stalinist political and economic system. Since 1986 the Communist party government has pursued “market economy with socialist direction.” That’s not a Western-style free(ish) market, but it’s a lot better than Stalinist socialism, and the economy has prospered. Sounds like the Vietnamese people want more market, less socialist direction.

U.S. millennials grew up in a market economy, and after the fall of the Soviet Union they didn’t even hear much criticism of socialist economies, so they can support some imaginary vision of “socialism.” Even there, though, Ekins notes that 

millennials tend to reject the actual definition of socialism — government ownership of the means of production, or government running businesses. Only 32 percent of millennials favor “an economy managed by the government,” while, similar to older generations, 64 percent prefer a free-market economy. 

Older Generations Flip-Flopped on Big Government, Will Millennials Do the Same?

National exit polls show that Democratic presidential candidate Bernie Sanders has captured many of the hearts and minds of the young Democratic electorate. Fully 70-80% of young Democrats, under the age of 30, are casting their ballots for Sanders over Hillary Clinton in state primaries and caucuses.

Many young people are drawn to Sanders’ vision of Democratic socialism. First, they don’t associate socialism with Soviet-style command and control economies with long bread lines and political repression. Instead, millennials associate the basic concept of socialism with Scandinavia. They like the idea of these countries’ large social welfare programs where government plays an active role in providing for people’s needs. Indeed, young people are the only cohort in which a majority—52%—support a “bigger government providing more services” compared to 38% of Americans overall.

Are young people the first generation to support activist government in their youth? Not in the least.

The Fundamental Fallacy of Redistribution

The idea that government could redistribute income willy-nilly with impunity did not originate with Senator Bernie Sanders. On the contrary, it may have begun with two of the most famous 19th Century economists, David Ricardo and John Stuart Mill.   Karl Marx, on the other side, found the idea preposterous, calling it “vulgar socialism.”

Mill wrote, “The laws and conditions of the production of wealth partake of the character of physical truths.  There is nothing optional or arbitrary about them… . It is not so with the Distribution of Wealth.  That is a matter of human institution only.  The things once there, mankind, individually, can do with them as they like.”[1]

Mill’s distinction between production and distribution appears to encourage the view that any sort of government intervention in distribution is utterly harmless – a free lunch.  But redistribution aims to take money from people who earned it and give it to those who did not.  And that, of course, has adverse effects on the incentives of those who receive the government’s benefits and on taxpayers who finance those benefits.

David Ricardo had earlier made the identical mistake. In his 1936 book The Good Society (p. 196), Walter Lippmann criticized Ricardo as being “not concerned with the increase of wealth, for wealth was increasing and the economists did not need to worry about that.” But Ricardo saw income distribution as an interesting issue of political economy and “set out to ascertain ‘the laws which determine the division of the produce of industry among the classes who concur in its formation.’

Lippmann wisely argued that, “separating the production of wealth from the distribution of wealth” was “almost certainly an error. For the amount of wealth which is available for distribution cannot in fact be separated from the proportions in which it is distributed… . Moreover, the proportion in which wealth is distributed must have an effect on the amount produced.” 

The third classical economist to address this issue was Karl Marx.  There were many fatal flaws in Marxism, including the whole notion that a society is divided into two armies – workers and capitalists.[2]  Late in his career, however, Marx wrote a fascinating 1875 letter to his allies in the German Social Democratic movement criticizing a redistributionist scheme he found unworkable.  In this famous “Critique of the Gotha Program,” Marx was highly critical of “vulgar socialism” and considered the whole notion of “fair distribution” to be “obsolete verbal rubbish.”  In response to the Gotha’s program claim that society’s production should be equally distributed to all, Marx asked, “To those who do not work as well? … But one man is superior to another physically or mentally and so supplies more labor in the same time, or can labor for a longer time… . This equal right is an unequal right for unequal labor… It is, therefore, a right to inequality…”  

Just Say No to Socialism, Hillary

This week Hillary Clinton became the second prominent Democrat to refuse to answer the question, “What’s the difference between a socialist and a Democrat?”

In July MSNBC host Chris Matthews stumped Democratic national chair Rep. Debbie Wasserman Schultz (D-FL) with the question. Asked three times, Wasserman Schultz first looked blank, then evaded: “The relevant debate that we’ll be having this campaign is what’s the difference between a Democrat and a Republican….The difference between a Democrat and Republican is that Democrats fight to make sure everybody has an opportunity to succeed and the Republicans are strangled by their right-wing extremists.”

On Tuesday Matthews asked Clinton the same question. Clinton could see it coming, and she did say of socialism, “I’m not one.” But pressed to explain “What’s the difference between a socialist and a Democrat?” she too retreated to boilerplate:

I can tell you what I am, I am a progressive Democrat … who likes to get things done. And who believes that we’re better off in this country when we’re trying to solve problems together. Getting people to work together. There will always be strong feelings and I respect that, from, you know, the far right, the far left, libertarians, whoever it might be, we need to get people working together.

Hey, thanks for the “libertarians” plug, Madam Secretary! But seriously, why is this a hard question? Here’s a clear answer:

“Socialists believe in government ownership of the means of production, and Democrats don’t.”

Would that be a true statement? If so, why don’t Clinton and Wasserman Schultz just say it?

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.

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