Sunday, February 18, 2007
Hugo Chavez: Collectivist Throwback
CARACAS, Venezuela, Feb. 16
— Faced with an accelerating inflation rate and shortages of basic foods
like beef, chicken and milk, President Hugo Chávez has threatened to
jail grocery store owners and nationalize their businesses if they
violate the country’s expanding price controls.
Venezuela’s
collectivist dictator Hugo Chavez is surprised by the fact that there
are shortages in Venezuela. Despite the fact that the science of
economics has been explaining it for over two hundred years, he didn’t
know that inflation of the money supply serves to make prices rise.
Again, despite the centuries-long teachings of economics, he didn’t know
that when the rise in prices is prohibited, the effect of inflation is
to increase the quantities of goods that people want to buy, but not the
quantities available for sale, and thus results in precisely the
situation that is described as a shortage, i.e., people attempting to
buy more of a good than is available for sale.
Chavez doesn’t know, and probably doesn’t want to know, that if he wants
to end the shortages, all he has to do is abolish the price controls.
The rise in prices will serve to reduce the quantities of the various
goods demanded to a point within the limit of the supplies available. He
doesn’t know and probably doesn’t want to know that if he then wants the
rise in prices to stop, all he need do is stop the inflation of the
Venezuelan money supply.
Finally, Chavez doesn’t know, and undoubtedly doesn’t want to know, that
if he would then want prices actually to fall, and for goods to become
more and more affordable by more and more of his countrymen, what he
would need to do is make a 180-degree turn in the rest of his policies.
What this means is that he would have to replace his policy of
socialization/nationalization with privatization, and his policy of ever
increasing regulation and controls with economic freedom. These are the
polices that would provide the incentives and opportunity to rapidly
increase production and thus make goods more and more abundant and thus
lower-and-lower-priced and ever more affordable.
But all of this is way too much to expect. Because this is, after all,
the same Hugo Chavez who apparently slept through the collapse of the
Soviet Union and of socialism almost everywhere in the world but Cuba
and North Korea, where it’s still maintained by dictatorship in the face
of starvation. As such, he’s a man who gives new meaning to the
expression “out of it”—he’s so far out of it, so incredibly ignorant,
that one may wonder what century he’s in and what planet he’s on.
What stops the antics of this collectivist throwback from being
laughable is the fact that many people are suffering from them and soon
will probably suffer a lot more. Large numbers of Venezuelans may even
be killed before this buffoon leaves office.
This article is copyright © 2007, by George Reisman. Permission is
hereby granted to reproduce and distribute it electronically and in
print, other than as part of a book and provided that mention of the
author’s web site
www.capitalism.net
is included.
(Email notification
is requested.)
All other rights reserved. George Reisman is the author of
Capitalism: A Treatise on Economics
(Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University
Professor Emeritus of Economics.
Labels:
collectivist dictator,
economic freedom,
Hugo Chavez,
inflation,
price controls,
privatization,
regulation and controls,
socialization/nationalization
Friday, February 09, 2007
The Environmentalist Noose Is Tightening
Forty-Five
nations joined France in calling for a new environmental body to slow
global warming and protect the planet, a body that potentially could
have policing powers to punish violators.—AP,
Feb. 5, 2007
AP reports
that the French effort was “led by French President Jacques Chirac,”
after the release of the report on global warming prepared by the United
Nations Intergovernmental Panel on Climate Change. The meaning of this
“effort” is that Chirac is attempting to make an international crime out
of attempts to increase production and raise living standards, to the
extent that those attempts entail an increase in the discharge of
greenhouse gases.
This, incidentally, is the same Jacques Chirac who recently announced
that he did not consider it particularly dangerous for Iran to have a
nuclear bomb or two. (New
York Times, Feb. 1, 2007).
Nuclear bombs in the hands of lunatics are not a problem for M. Chirac.
Sane people, pursuing their material self-interest by means of
increasing production—that’s a problem for M. Chirac. That’s what he
considers dangerous and needing to be stopped.
I am not surprised by this attempt to criminalize productive activity.
In fact, I predicted it in
Capitalism. I wrote,
[I]t should
be realized that the belief in the need for global limits on carbon
dioxide and other chemical emissions and thus in the need for
international allocation of permissible emissions implies that every
country is an international aggressor to the degree that it is
economically successful (and thus, of course, that the United States is
the world’s leading aggressor). For the consequence of its success is
held to be either to push the volume of allegedly dangerous emissions
beyond the safe global limit or to impinge upon the ability of other
countries to produce, whose populations have more urgent needs. Thus, in
casting the production of wealth in the light of a danger to mankind, by
virtue of its alleged effects on the environment, and thereby implying
the need for global limits on production, the ecology movement attempts
to validate the thoroughly vicious proposition, lying at the very core
of socialism, that one man’s gain is another’s loss. (p. 101)
In a note
referenced at the end of this paragraph, I added,
If the
influence of the ecology movement continues to grow, then it is
perfectly conceivable that in years to come, the very intention of a
country to increase its production could serve as a cause of war,
perhaps precipitating the dispatch of a U.N. security force to stop it.
Even the mere advocacy of economic freedom within the borders of a
country would logically—from the depraved perspective of the ecology
movement—be regarded as a threat to mankind. It is, therefore, essential
that the United States absolutely refuse to sanction in any way any form
of international limitations on “pollution”—that is, on production. (p.
118)
I regret
having to say that I can’t take very much satisfaction from having had
this foresight. It’s like being marched to a concentration camp and
saying, “I tried to tell everyone this is where we’d all end up.”
The momentum of environmentalism is becoming increasingly powerful and
it looks like its agenda of limits and rollbacks on greenhouse-gas
emissions is going to be imposed, probably after the election of the
next president. I think our situation is comparable to that of Germany
in 1932. Horrendous changes are coming.
I’ve written an essay of almost 4,000 words in reply to the UN panel’s
report and the inferences being drawn from it. It’s a stand against the
tide, consisting both of important new material and material drawn from
Capitalism. But
instead of publishing it as a post on blogs, as I originally planned to
do, I’ve employed an agent to try to place two fifteen-hundred-word
segments of it in major mainstream publications.
Those segments can’t appear here until they appear in whatever
publications accept them, or have been rejected by all of the places to
which they’ve been submitted. If one or both of them is accepted, then
I’ll have reached an audience of several hundred thousand readers rather
than just a few hundred. Unfortunately, the odds of one or both of them
actually being accepted are slim. My subjective estimate is that the
odds are probably less than my chances of my winning a lottery, and
that’s allowing for the fact that I don’t buy lottery tickets.
In any event, here’s the material I took, with some adaptation, from
Capitalism. I offer it for
the benefit of those who haven’t read it before and as a refresher for
those who have.
What
Depends on Industrial Civilization and Man-Made Power
As the result of industrial civilization, not only do billions more
people survive, but in the advanced countries they do so on a level far
exceeding that of kings and emperors in all previous ages—on a level
that just a few generations ago would have been regarded as possible
only in a world of science fiction. With the turn of a key, the push of
a pedal, and the touch of a steering wheel, they drive along highways in
wondrous machines at seventy miles an hour. With the flick of a switch,
they light a room in the middle of darkness. With the touch of a button,
they watch events taking place ten thousand miles away. With the touch
of a few other buttons, they talk to other people across town or across
the world. They even fly through the air at six hundred miles per hour,
forty thousand feet up, watching movies and sipping martinis in
air-conditioned comfort as they do so. In the United States, most people
can have all this, and spacious homes or apartments, carpeted and fully
furnished, with indoor plumbing, central heating, air conditioning,
refrigerators, freezers, and gas or electric stoves, and also personal
libraries of hundreds of books, compact disks, and DVDs; they can have
all this, as well as long life and good health—as the result of working
forty hours a week.
The achievement of this marvelous state of affairs has been made
possible by the use of ever improved machinery and equipment, which has
been the focal point of scientific and technological progress. The use
of this ever improved machinery and equipment is what has enabled human
beings to accomplish ever greater results with the application of less
and less muscular exertion.
Now inseparably connected with the use of ever improved machinery and
equipment has been the increasing use of
man-made power, which is
the distinguishing characteristic of industrial civilization and of the
Industrial Revolution, which marked its beginning. To the relatively
feeble muscles of draft animals and the still more feeble muscles of
human beings, and to the relatively small amounts of useable power
available from nature in the form of wind and falling water, industrial
civilization has added man-made power. It did so first in the form of
steam generated from the combustion of coal, and later in the form of
internal combustion based on petroleum, and electric power based on the
burning of any fossil fuel or on atomic energy.
This man-made power, and the energy released by its use, is an equally
essential basis of all of the economic improvements achieved over the
last two hundred years. It is what enables us to use the improved
machines and equipment and is indispensable to our ability to produce
the improved machines and equipment in the first place. Its application
is what enables us human beings to accomplish with our arms and hands,
in merely pushing the buttons and pulling the levers of machines, the
amazing productive results we do accomplish. To the feeble powers of our
arms and hands is added the enormously greater power released by energy
in the form of steam, internal combustion, electricity, or radiation. In
this way, energy use, the productivity of labor, and the standard of
living are inseparably connected, with the two last entirely dependent
on the first.
Thus, it is not surprising, for example, that the United States enjoys
the world’s highest standard of living. This is a direct result of the
fact that the United States has the world’s highest energy consumption
per capita. The United States, more than any other country, is the
country where intelligent human beings have arranged for motor-driven
machinery to accomplish results for them. All further substantial
increases in the productivity of labor and standard of living, both here
in the United States and across the world, will be equally dependent on
man-made power and the growing use of energy it makes possible. Our
ability to accomplish more and more with the same limited muscular
powers of our limbs will depend entirely on our ability to augment them
further and further with the aid of still more such energy. (pp. 77-
78.)
A Free-Market Response to Global
Warming
Even if global warming is a fact, the free citizens of an industrial
civilization will have no great difficulty in coping with it—that is, of
course, if their ability to use energy and to produce is not crippled by
the environmental movement and by government controls otherwise
inspired. The seeming difficulties of coping with global warming, or any
other large-scale change, arise only when the problem is viewed from the
perspective of government central planners.
It would be too great a problem for government bureaucrats to handle (as
is the production even of an adequate supply of wheat or nails, as the
experience of the whole socialist world has so eloquently shown). But it
would certainly not be too great a problem for tens and hundreds of
millions of free, thinking individuals living under capitalism to solve.
It would be solved by means of each individual being free to decide how
best to cope with the particular aspects of global warming that affected
him.
Individuals would decide, on the basis of profit-and loss calculations,
what changes they needed to make in their businesses and in their
personal lives, in order best to adjust to the situation. They would
decide where it was now relatively more desirable to own land, locate
farms and businesses, and live and work, and where it was relatively
less desirable, and what new comparative advantages each location had
for the production of which goods. Factories, stores, and houses all
need replacement sooner or later. In the face of a change in the
relative desirability of different locations, the pattern of replacement
would be different. Perhaps some replacements would have to be made
sooner than otherwise. To be sure, some land values would fall and
others would rise. Whatever happened individuals would respond in a way
that minimized their losses and maximized their possible gains. The
essential thing they would require is the freedom to serve their
self-interests by buying land and moving their businesses to the areas
rendered relatively more attractive, and the freedom to seek employment
and buy or rent housing in those areas.
Given this freedom, the totality of the problem would be overcome. This
is because, under capitalism, the actions of the individuals, and the
thinking and planning behind those actions, are coordinated and
harmonized by the price system (as many former central planners of
Eastern Europe and the former Soviet Union have come to learn). As a
result, the problem would be solved in exactly the same way that tens
and hundreds of millions of free individuals have solved greater
problems than global warming, such as redesigning the economic system to
deal with the replacement of the horse by the automobile, the settlement
of the American West, and the release of the far greater part of the
labor of the economic system from agriculture to industry. (pp. 88-89)
This article is copyright © 2007, by George Reisman. Permission is
hereby granted to reproduce and distribute it electronically and in
print, other than as part of a book and provided that mention of the
author’s web site
www.capitalism.net
is included.
(Email notification
is requested.)
All other rights reserved. George Reisman is the author of
Capitalism: A Treatise on Economics
(Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University
Professor Emeritus of Economics.
Labels:
A Free-Market Response to Global
Warming,
Criminalization of Productive
Activity,
Emissions Caps as a Cause of Global
Conflict,
Industrial Civilization and
Man-Made Power
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