Sunday, April 22, 2012

Despite Its Oil Wealth, Venezuela Has Chronic Food Shortages Due to Government Price Controls


From the New York Times, an article about how despite all of Venezuela's oil wealth at a time of rising oil prices, there are chronic food shortages, empty shelves and long lines, as a direct result of government price controls (see photo above):

"Venezuela is one of the world’s top oil producers at a time of soaring energy prices, yet shortages of staples like milk, meat and toilet paper are a chronic part of life here, often turning grocery shopping into a hit or miss proposition.

Some residents arrange their calendars around the once-a-week deliveries made to government-subsidized stores like this one, lining up before dawn to buy a single frozen chicken before the stock runs out. Or a couple of bags of flour. Or a bottle of cooking oil. The shortages affect both the poor and the well-off, in surprising ways. A supermarket in the upscale La Castellana neighborhood recently had plenty of chicken and cheese — even quail eggs — but not a single roll of toilet paper. Only a few bags of coffee remained on a bottom shelf. 

At the heart of the debate is President Hugo Chávez’s socialist-inspired government, which imposes strict price controls that are intended to make a range of foods and other goods more affordable for the poor. They are often the very products that are the hardest to find." 

MP: As economic theory would predict in the graph below, when prices are set below the market-clearing level by government edict, shortages are guaranteed, along with empty shelves and long waiting lines.  


49 Comments:

At 4/22/2012 9:48 PM, Blogger Benjamin said...

In the United States, milk price are controlled, yet the public seems to get enough milk. The is little sentiment in the GOP or even the D-Party to change government-controlled milk prices.

Lesson: If the people controlling the prices are also the producers, you will have than enough supply.



"A trade group representing milk processors debuted an ad campaign Tuesday to eliminate New Deal-era federal price controls on unprocessed milk. The International Dairy Foods Association (IDFA) complains that the current price support system for dairy farmers dates back to 1937. Its ads call for “Big Government to get out of your milk.”

“The minimum pricing system was developed to address the problems of the past and is now an unnecessary regulatory burden on the dairy industry that limits industry growth,” said association president Connie Tipton. ”It causes consumers, mostly families with children, to pay more for milk and, not surprisingly, consumption of milk has been declining for many years.”

The campaign launched Tuesday with ads in Capitol Hill newspapers, a 30-second television spot in Washington, D.C., and a web video.

Under current law, milk processors must pay a federally mandated minimum price for unprocessed milk. The price is set by a U.S. Department of Agriculture formula and varies according to where the milk is processed and what kind of end-product it will eventually become. Processors pay different prices for raw milk depending on whether it becomes fluid milk; ice creams and yogurts; cheeses; and butter and powdered milk.

--30--

The most regulated, mollycoddled, knock-kneed, subsidized, pink-o sector of the US economy is agriculture (unless it be defense).

 
At 4/23/2012 5:45 AM, OpenID moneyjihad said...

Chavez's cancer is back & he's been off TV for 10 days.

Venezuela is ripe for change.

 
At 4/23/2012 6:26 AM, Blogger Jon Murphy said...

In the United States, milk price are controlled, yet the public seems to get enough milk. The is little sentiment in the GOP or even the D-Party to change government-controlled milk prices.


True, but we have a price floor (minimum price) for milk, which produces a surplus. The problem in Venezuela is a price ceiling (which creates a maximum price). Either way, it distorts the market. Either too many or too little resources are devoted to that market. In the case of Venezuela, you have too few resources, leading to long lines and no supply. In the case of the US dairy and several other ag markets, you have too many resources, leading to waste and the rise of the phrase during the Great Depression "starvation in the land of plenty."

 
At 4/23/2012 8:01 AM, Blogger juandos said...

"The problem in Venezuela is a price ceiling (which creates a maximum price)"...

Black market anyone?

Unsuprisingly the NY Times has a tough time putting two and two together to come up with how socialism of Chavez is driving the problems...

Mérida, November 22nd 2011 The Law for Fair Costs and Prices, which aims to stabilise prices, guarantee access to goods, and to attack inflation, currently at near 26% per year, came into effect today....

Venezuelans have been experiencing a coffee shortage (akin to the Sahara experiencing a sand shortage) since the government took over the two largest producers in 2009...

Yeah, that central planning works like a charm everytime its tried...

 
At 4/23/2012 9:19 AM, Blogger morganovich said...

venezeula was a big exporter of food just a decade or so back (pre chavez).

the problem began when he set price controls below the cost of production in many cases and then made it very clear that he would seize the land of any "profiteers".

farmers are just not producing. they never bothered to plant in many cases. doing so would lose money and pose huge risks.

actual food production has plummeted.

the contrasts between columbia and venezeula would make a great case study (or econ thesis).

the former goes from socialism to capitalism, the latter from capitalism to socialism with dramatically different results.

 
At 4/23/2012 11:32 AM, Blogger Benjamin said...

Jon Murphy--

Exactly my point--but no one is calling for a free market in the USA. Just in Venezuela.

Funny how "libertarians" and GOP free marketeers in the USA are so mute about federal government-controlled milk prices.

Why has no Dr. perry has a few posts bashing government-mandated milk prices?

 
At 4/23/2012 12:22 PM, Blogger Jon Murphy said...

Funny how "libertarians" and GOP free marketeers in the USA are so mute about federal government-controlled milk prices.

True. It's all politicking, of course. Many of the GOP-ers get support from the Ag businesses and states. If you forgive the pun, you don't slaughter the cash cow.

One of the things people don't see or understand is the United States has enough farm land currently to feed the entire world 3 square meals a day. But we would rather let food spoil and go to waste then feed the world. Ladies and gentlemen, we have government subsidized hunger.

 
At 4/23/2012 12:58 PM, Blogger james said...

You can blame much of the problems in venezuela on the socialist hugo chavez.

 
At 4/23/2012 1:32 PM, Blogger Jon said...

This comment has been removed by the author.

 
At 4/23/2012 1:33 PM, Blogger Jon said...

Just pointing out that a state has problems tells us nothing.  Are they getting better?  That's the question.  Take a look at the changes.

If you want to see how a state looks after price controls are removed and privatization sets in, check Russia and the other former Soviet states from 1990 onward.  The death tolls as a result of the collapse in health services and removal of price controls was not much different from the death tolls under Stalin's purges.

Another free market test tube baby?  Saipan.  Or look at the effects on Chile after the Pinochet military dictatorship, with Milton Friedman in the background giving economic advice.  Unemployment went from 3.8% under Allende to about 25%.  Inflation soared to about 350%, the highest in the world.  Price controls removed, privatization set in.  Average caloric consumption dropped dramatically.  Worst amongst the poor.  Deregulation of finance caused a brief bubble from about 1980 until 1982 when the whole banking sector then collapsed and required state bail out.  The Chicago trained economists were finally fired in the mid 80's and government intervention was back.

All of Latin America was subjected to right wing neoliberal economics, backed usually with military dictatorships.  The whole place collapsed in ruins.  But what it did do was make the presently rich even more rich.  Chavez crime is that he hasn't given away the store to the rich just yet.  That's why he's demonized so much.  The other right wing governments in the region generally aren't criticized by AEI fellows, though the people suffer much more.

 
At 4/23/2012 1:39 PM, Blogger Methinks said...

If you want to see how a state looks after price controls are removed and privatization sets in, check Russia and the other former Soviet states from 1990 onward.

I did, sweetheart. I left Moscow in 1976 and my family still lives there. You're spewing pure bullshit.

Death tolls as high as under Stalin. Does anybody believe your BS? Besides you?

 
At 4/23/2012 2:51 PM, Blogger Jon said...

Given that you lived there you ought to know better, but apparently not. Here's one source and here's another. Are you seriously unaware of what happened in Russia? Go to Gapminder.org and plot Russia. The drop in life expectancy is astonishing. You find nothing else like it except in countries that go through wars. That's right wing economics in action. And yet we are supposed to be afraid of Chavez.

 
At 4/23/2012 3:18 PM, Blogger Methinks said...

I just can't help but laugh, Jon.

You think that a country that just underwent 70 years of destruction and torture by a Socialist regime was going to come out of it unscathed and without turmoil? HA HA HA HA HA!!

I notice that none of your little stories extend beyond 1999 - 8 years after the Soviet State fell apart and Gorbachev's Market Socialism reforms emptied the scraps still left on the shelves. Why is that? You know it's 2012 now, right? That's what?....13 years since your little stories?

How are Russians doing today in comparison to to when we were all toiling for socialism and building communism? Hmmmm?

I'm guessing you're going to switch to beating the old "Russia wasn't Socialist or Communist" drum again. 'Cuz if my favourite capitalist, Gnome Chompsky, ran the show it would be a totally different socialism, amaright? There are zero examples of successful socialist states, but it'll be different this time. Eh, Jonny?

 
At 4/23/2012 3:18 PM, Blogger Methinks said...

I just can't help but laugh, Jon.

You think that a country that just underwent 70 years of destruction and torture by a Socialist regime was going to come out of it unscathed and without turmoil? HA HA HA HA HA!!

I notice that none of your little stories extend beyond 1999 - 8 years after the Soviet State fell apart and Gorbachev's Market Socialism reforms emptied the scraps still left on the shelves. Why is that? You know it's 2012 now, right? That's what?....13 years since your little stories?

How are Russians doing today in comparison to to when we were all toiling for socialism and building communism? Hmmmm?

I'm guessing you're going to switch to beating the old "Russia wasn't Socialist or Communist" drum again. 'Cuz if my favourite capitalist, Gnome Chompsky, ran the show it would be a totally different socialism, amaright? There are zero examples of successful socialist states, but it'll be different this time. Eh, Jonny?

 
At 4/23/2012 3:20 PM, Blogger Methinks said...

Oh, muffin, how I wish I could send you back in time to experience it for yourself.

 
At 4/23/2012 4:42 PM, Blogger Jon said...

You're just dodging the issue. Going through neoliberal reforms is like going to war. Why is it that Chavez is bad even though he's demonstrated improvement, while right wing policies are good when they kill millions?

Chomsky's works were banned in the Soviet Union and he was barred from entering Soviet controlled Czechoslovakia, only one of two times he's been barred from entering a country and speaking. I suppose that is strange in your mind. Here's a good article from Chomsky on the Soviet Union written in 1986.

http://www.chomsky.info/articles/1986----.htm

 
At 4/23/2012 4:49 PM, Blogger Jon said...

And why would you want to send me there? Why do you want to send me to a place that radically violates my own idea of what a better society would be? Do you think I would have preferred to move away from the richest country in the world and move into one of the poorest? I find it strange hearing right wingers say stuff like this as if it has any relation to the discussion.

 
At 4/23/2012 4:58 PM, Blogger Jon Murphy said...

If you want to see how a state looks after price controls are removed and privatization sets in, check Russia and the other former Soviet states from 1990 onward.

You mean like Poland, one of the fastest growing countries in the world? Or East Germany, the Czech Republic, Ukraine to some extent?

The drop in life expectancy is astonishing. You find nothing else like it except in countries that go through wars. That's right wing economics in action.

Health care in Russia is a constitutional right. It cannot be denied no matter what. That was true in the Soviet Union and is true now. What is different is the number of doctors. The number of doctors in Russia now is significantly lower than in the Soviet Union. That's because, since the Fall, the barriers to emigration have dropped. The brain drain of Russia is in full swing. The reason for this is you cannot make a good living being a doctor in Russia. So, they leave chasing higher wages.

More comments coming. Need to go home.

 
At 4/23/2012 5:37 PM, Blogger Methinks said...

What issue am I dodging? That transitioning from the hell you'd like to inflict is torturous or that the last piece of data to "prove" that Russians are worse off now than in Stalin's Gulags is 14 years old?

And watcha mean, "kill millions"? You mean "keep accurate statistics for the first time" (for the most part) as the people struggle to dig themselves out of the rubble of a state imploding on top of them?

Okay, okay. I'll entertain your Chavez love for a minute. Let me look at the link that will surely tell me what improvements food shortages, rising poverty and tanking productivity are.

Ah. Yes. This is familiar. Everything is marvelous. The people are free of want and joyous and rich. It's just that they have to spend all day in a queue in the vain hopes of being rewarded with a scrap of moldy bread launched at them by a perma-pissed cashier. And they have nothing to wipe their *ss with (we used newspaper. Preferably the part with Brezhnev's face on it since they no longer jailed you for doing that. I think).

Nothing spells "quality of life" and "wealth" like wiling away the hours in queues under the hot sun to obtain the basic necessities of daily life and becoming the occasional victim of Chavez's expropriation binges and muzzling attempts. And don't forget the joys of a poop shoot rubbed raw and black with the Chavez Dispatch (How do you say "Pravda" in Espanol?). Good times!

I see that after 13 years in office he was able to expropriate his way to a poverty reduction from 50% of the population to just under 50%. HOOORAY!!! I'm ready to throw him a parade.

Any day now, I'm expecting immigrants from all over the world to flock to Venusuela.

 
At 4/23/2012 5:41 PM, Blogger Methinks said...

Blah blah blah....Chomsky was banned. And? You keep bringing that up like it's supposed to mean something. Chomsky is a tired old capitalist hypocrite, dear. I have his number. Unfortunately you don't.

The reason I would like to send you there, my dear boy, is that there is a vast difference between how your socialist Utopia plays out in your mind and how it actually happens in reality. You should experience the reality so that your head is not so filled with fantasy.

That's why.

 
At 4/23/2012 5:50 PM, Blogger Methinks said...

Health care in Russia is a constitutional right. It cannot be denied no matter what. That was true in the Soviet Union and is true now. What is different is the number of doctors. The number of doctors in Russia now is significantly lower than in the Soviet Union. That's because, since the Fall, the barriers to emigration have dropped.

That's officially true, but it's not reality, JM. No doctor would treat you without a bribe - sure for bandaging or giving you headache powder, you would have access. if you were seriously ill - and I was in and out of hospital for about four years - you had to pay up. They wouldn't even give me an adrenaline shot as I suffocated to death before my parents paid. In the end, I survived because my uncle was a high ranking army surgeon and he had had buddies who did him a favour by saving my life.

The care that you were "entitled" to is not care you would subject your dog to, JM. It was appalling. No westerner would recognize it as health care - and no Westerner who was ever unfortunate enough to require hospitalization in Russia did.

My mother's side of the family were all in medicine. The stories would make your hair stand on end.

Today, care is available and you still have to pay for it. But, modern care is available and Russians are richer, so people are fixing their teeth, getting real medical attention. It's better. Much better. And now you can leave the country to get care too. That was impossible during the Soviet era.

 
At 4/23/2012 6:33 PM, Blogger Jon Murphy said...

Very true Methinks.

I still wouldn't classify Russia as a free enterprise country, what with all their state-run organizations, price controls, and other Soviet relics. What Russia really needs before the transition can complete is to get a fully democratic government rather than this oligarchy thing they got going with the Kremlin Four.

Now, on to inflation:

One of the classic things anti-capitalists like to point out is when a price-control regime collapses, you get inflation. My typical reaction to this is "no shit, Sherlock." The whole idea of price controls is the price is "too high" and must be lowered. When they are removed, of course the prices will rise. Then, as producers who were before barred from the market, either because of de jure or de facto, the price will stabilize.

Another complaint is when economies move from central planning to free market is the economy goes into recession. This is true. As the economy purges itself of the bad companies who were artificially propped up, the economy will be in a recession. However, newer, better companies and enterprises replace those old dinosaurs and the new economy is more dynamic, flexible, and productive.

As I mentioned before, look at Poland. Since the fall of the Soviet Union, Poland's economy has grown by about 750%. Poland is one of the top producers in the EU and the fastest growing economy in the Union.

A good comparison to Poland is Belarus. Similar natural resources, similar size. However, Belarus is an impoverished relic of the Soviet Era and Poland has fully embraced free enterprise.

 
At 4/23/2012 6:50 PM, Blogger Methinks said...

JM,

Russia is a mess and I'm not sure democracy has much to do with it. There's a lot of cottage industry in Russia. My aunt and uncle run a small business I help them with occasionally. It's unofficial. Nobody knows about it and their bank accounts are in another country. Those banks don't send mail for fear of interception. It's a disaster.

But, I will say this...it's getting better every year. Even luxuries are widely available, the range of products can't even be compared. There aren't shortages and people live a materially superior life by orders or magnitude. The difference between my first trip back to Moscow in 1995 and now are just astonishing.

So, no, it's not what I would call a free enterprise country either. So, I guess what we can say is that ANYTHING is superior to socialist hell.

 
At 4/23/2012 6:53 PM, Blogger Methinks said...

One of the classic things anti-capitalists like to point out is when a price-control regime collapses, you get inflation.

I argue you already have inflation - it's just expressed in terms of deficits of goods.

However, newer, better companies and enterprises replace those old dinosaurs and the new economy is more dynamic, flexible, and productive.

True. And it's even true in crappy Russia.

 
At 4/23/2012 7:05 PM, Blogger Jon Murphy said...

On a completely unrelated note, Methinks, I'm going to be making my first-ever trip to Moscow in June. Are there any places I should go to while I'm there? Any favorite local shops/restruants/parks?

 
At 4/23/2012 7:54 PM, Blogger Methinks said...

Jon, check your facebook.

 
At 4/23/2012 7:57 PM, Blogger NormanB said...

What's the surprise? Chavez said that Cuba was his model. And now he's personally finding out about the lie that is the Cuban health care 'miracle'.

 
At 4/23/2012 7:59 PM, Blogger Abir Mandal said...

We should send Obama to govern there. They could use some hope and change. And we could use some change from this socialist regime.

 
At 4/23/2012 8:01 PM, Blogger Jon Murphy said...

This comment has been removed by the author.

 
At 4/23/2012 8:02 PM, Blogger Abir Mandal said...

Methinks: I wish I could send all the welfare state supporters and Obama cronies to the pre-Reagan Russia. There they can get their socialist Utopia and leave us the hell alone in our free market hell.

 
At 4/23/2012 8:18 PM, Blogger Methinks said...

This comment has been removed by the author.

 
At 4/23/2012 8:21 PM, Blogger Methinks said...

This comment has been removed by the author.

 
At 4/23/2012 8:30 PM, Blogger Methinks said...

Right on, Abir. The problem with Jon (not JM) is that he is probably young, idealistic and inexperienced and susceptible to being taken in by the siren song of the impossible.

Already to make his theoretical world work, he has to suspend logic. In a real world situation, he'll find himself suspended by his head from a noose. But, until that happens, he can still cry that this time it'll be different.

After the iron curtain crumbled, socialists were a little embarrassed. Now, they're over their embarrassment and they have a new excuse - it wasn't socialism and it wasn't communism. Right. Because neither Utopia wil1 come to pass as it won't be able to get past inconvenient realities.

I wonder if Jon lies in a commune. What's stopping him from living the way he wants?

 
At 4/23/2012 8:32 PM, Blogger Jon Murphy said...

This comment has been removed by the author.

 
At 4/23/2012 8:39 PM, Blogger Jon Murphy said...

The problem with Jon (not JM) is that he is probably young, idealistic and inexperienced and susceptible to being taken in by the siren song of the impossible.

You make an interesting point, Methinks.

In my discussions with socialists, big-government types, and those in favor of a "fair market," much of it does come down to idealism. Of course, the same could be said for us, but that is a discussion for another time.

Socialism sounds nice, doesn't it? Fair for everybody. No one is denied simply because they cannot pay. All for one and one for all. The problem is it relies on human charity. That's all well and good on a personal level, but realistically you cannot have a nation run on charity. Someone needs to make money and someone will exploit it. Conversely, capitalism relies on self-interest, a much more realistic expectation.

 
At 4/23/2012 8:45 PM, Blogger Methinks said...

This comment has been removed by the author.

 
At 4/23/2012 8:50 PM, Blogger Jon Murphy said...

clicked through from cafe Hayek. It's totally you. The message is showing up in my messages. I'll try again and for insurance I'm going to send a friend request too (I'll be the unpronounceable name, obviously). You can unfriend me after. My facebook has nothing on it.

That works. I accepted your request. I wonder why the message didn't work earlier. Huh.

Thank goodness we didn't clog up carpe diem with this personal stuff, eh?

Now that we've connected, I'm going to go back and delete the non-relevant messages.

 
At 4/24/2012 7:20 AM, Blogger Methinks said...

great idea. I forgot we could do that here.

 
At 4/24/2012 8:47 AM, Blogger Jon said...

Methinks-Leftists loved the Soviet Union.

Jon-Chomsky's works were banned and so was he. Here's criticism of him from the 80's.

Methinks-The idea that Chomsky would have ran things differently is silly, amiright?

Jon-Since he was banned from the Soviet Union and criticized it at the time, it's safe to say he would have ran things differently. Here are his criticisms once again.

Methinks-Why do you keep repeating that point?

Because apparently it hasn't sunk in.

Another point that apparently hasn't sunk in is the need to compare, not just talk about problems within a country. Everybody knows the central planning efforts were loaded with difficulties. But pointing out a difficulty tells us nothing. Where was Russia in 1917?

The comparisons between the US and the Soviet Union constantly follow this irrational method. After WWII the US had 6% of the world's population and half the world's wealth. The Soviet Union lost like 60 people for every 1 American lost in WWII. War had devastated the country and the US was virtually unscathed in terms of our infrastructure and country. And people say "The proof that the Soviet Union is much worse than the US is the fact that life is so much better in the US. Would you have wanted to live in the Soviet Union?" No. I'd rather live in the richest country in the world, obviously. Who wouldn't?

But ask a different question. Take two countries that started on roughly equal footing. Say you can live in a country that will soon be dominated by a US economic model in 1952, or you can live in Poland. Let's take Guatemala. It's 1952. Do you want to live in Guatemala or Poland?

Guatemala will take a sharp turn away from public control of industry to private control. Arbenz is about to nationalize some of the fruit industry, but capitalism will be saved by the CIA. They'll retain wage labor and private property relations, the core of Capitalism. To impose that you're going to need genocide. Poland has been devastated by war and has problems. But you're going to get state provided health services. You're going to get an education. And you're going to have to deal with the central planning committee. Where do you want to live? Let's put you in Guatemala instead of Russia. You take a Haitian or Nicaraguan from the 80's and ask them where they want to live, having had US economics imposed on them with force. If they went to sleep and woke up in Russia they'd think they'd died and gone to heaven.

Africa is another place where right wing economic policies have been imposed via the IMF. The IMF's structural adjustment programs, which have been imposed throughout Africa over the last 30 years, are literally a right wing wet dream. How has that been working out? You want to live in Tanzania or Russia? You have to make reasonable comparisons, not compare one country that started super rich and another that started super poor and just say that the rich country is still better than the country that started extremely poor.

 
At 4/24/2012 10:35 AM, Blogger Jon Murphy said...

Ok, so let's begin at the beginning:

Jon, you seem to be using the term "right-wing" and "capitalism" interchangeably. They really are two separate things. Right wing describes a political philosophy which is defined as "accepting a social hierarchy." Capitalism, conversely, is an economic philosophy that is defined as favoring private ownership of the means of production for the creation of goods and services with the intention of creating profit for the producer. The two are not the same. Right wingers may favor capitalism, but to use the two interchangeably is incorrect. There are plenty of left-wing capitalists (Warren Buffet, Paul Krugman, JM Keynes, to name a few)just as there are right-wing socialists.

Now, moving on.

You seem to be stuck on this idea (possibly relating to paragraph one) that anything America does is capitalist. Not true. Supporting dictators is not capitalist. Anything that requires participation is not capitalist. So, right away, you eliminate your Guatemala example (genocide is not an economic philosophy anyway).

But let's even move past that to your comparison. You make a legitimate point to criticize the US-Soviet Union comparison. The USSR was devastated by the war. So was the rest of Europe. So, let's compare apples with apples: East and West Europe.

Both Europes were devastated by the war: Berlin was razed, Dredsen sat in ashes, London was pock marked with bomb craters, lands that once children played in were now mud and blood-red.

Post-War, Western Europe got back on its feet much quicker than the Soviet Union did. The quality of life between the two areas was astounding. This contrast was no more apparent than in Berlin itself.

One may argue "A-ha! I've got you! The Marshal Plan, a government subsidy, rebuilt Europe!" The Soviet Union was spending money, too. The difference is the US gave the money to the countries and said "do as you see best" where as the USSR said "do as Moscow sees best."

If you'd like further comparisons, consider Japan the Russia. Japan suffered far more devastation (in the form of two nuclear bombs) than Russia did. Within a decade of the war (and having little natural resources to speak of) Japan had surpassed their pre-war economy and was the fastest growing economy in the world.

Or, for a non-WWII comparison, consider China under Chairman Mao and the next chairman, Deng Xiaoping.

Open and free markets raise the standard of living of all involved.

I will say this: Capitalism is not perfect, but we've never had to put a wall up to keep our people in.

 
At 4/24/2012 12:03 PM, Blogger Methinks said...

Jon-Since he was banned from the Soviet Union and criticized it at the time, it's safe to say he would have ran things differently.

What hasn't sunk in for you, Jon, is that Chomsky, your favourite capitalist hypocrite, would not be able to run anything any differently. If he tried, he would have been killed. What? Did you think there was no internal opposition in the party to what was happening?

You are naive, my dear.

 
At 4/24/2012 12:38 PM, Blogger Jon said...

Jon Murphy

What your comparisons prove is that capitalist societies with massive loads of government intervention outperformed the Soviet Union. That's true. The Marshall Plan proceeded to develop Germany and other European economies on the Keynesian model. The same happened in Japan. These states were highly protectionist and blocked foreign investment, precisely what was not permitted in Latin America and Africa where a full tilt neoliberal model was imposed.

South Korea proceeded just as Japan and Germany did. The economy was capitalist with loads of government intervention. Tariffs, limits on capital movement. In South Korea the penalty for a citizen to invest overseas was literally death. Subsidy for favored industries. Companies were simply commanded to pursue various sectors. Hard core industrial policy.

South Korea was basically on par with Haiti around 1950. It was a similar level of economic development. Since then South Korean has followed a Keynesian path and Haiti has followed a neoliberal path. In Haiti you're dealing with starvation and anywhere between 50 and 70% unemployment. South Korea still isn't where the US is. Does that mean that what they've done has failed? No. They've grown tremendously.

Let's not pretend the Western Europe or Japan did anything remotely like what Mark Perry and the rest at AEI would recommend. AEI recommendations were rammed through in the Soviet Union at the fall. And Boris Yeltsin had to end democracy to do it, which he managed thanks to critical US backing. He rammed through privatization and elimination of price controls, and millions would die as a result of that over the next decade. When does anybody around here mention that? All they care about is that Chavez hasn't yet completely eliminated all of Venezuela's problems. The difference between Chavez and Yeltsin is that Chavez has made a very bad situation a little better. Yeltsin made a fairly bad situation much worse.

 
At 4/24/2012 12:50 PM, Blogger Methinks said...

And Boris Yeltsin had to end democracy to do it, which he managed thanks to critical US backing. He rammed through privatization and elimination of price controls, and millions would die as a result of that over the next decade. When does anybody around here mention that?

No because it's bullshit.

 
At 4/24/2012 1:08 PM, Blogger Jon Murphy said...

Well, I'm done here. Jon, all due respect, I don't know what history book you've read, but it ain't one based on facts.

 
At 4/24/2012 3:03 PM, Blogger Jon said...

A lot of what I've written is based on two books. "Bad Samaritans" by Ha Joon Chang and "The Shock Doctrine" by Naomi Klein. If you are interested in evaluating the arguments from the other side those are a good place to start.

 
At 4/24/2012 3:39 PM, Blogger Methinks said...

Well, that explains a lot. I almost sprained my eyeballs reading Bad Samaritans and I can't read anything by Naomi Klein without wondering if she's writing about something happening on another planet.

I will say that they are talented. This much BS is hard to come by without incredible effort on their part.

 
At 4/24/2012 4:34 PM, Blogger Jon Murphy said...

"Bad Samaritans" by Ha Joon Chang and "The Shock Doctrine" by Naomi Klein. If you are interested in evaluating the arguments from the other side those are a good place to start.

Actually, that's legit. I didn't read "Bad Samaritans" but I did read "Kicking Away the Ladder" by Chang, which is worth a read. The economics and history in it is weak, but his analysis is pretty solid. The only problem is he is using bad info at the start so the resulting analysis is tainted.

Klein is a writer I'd put on par with Howard Zinn (People's History of the United States). The writing is interesting, if light on facts. It provides a great counterpoint to the mainstream commentary, but should be taken with a grain of salt.

 
At 4/25/2012 6:42 AM, Blogger Jon said...

I'm sure Klein would take comparisons to Zinn as a major compliment. Her book is packed with footnotes and references. Apparently she had a team of lawyers and research assistance keeping her honest on her claims. She figured she'd better be careful because feathers will be ruffled. Possibly people will try to bring lawsuits. At her website you can read much of the source material. Things like Friedman's letters to Pinochet and the like. So it's pretty rigorous.

Glad to see you've read Chang though. If you have any good critiques I'd be interested to read them. Also for Klein.

 
At 4/25/2012 12:47 PM, Blogger juandos said...

jon murphy says: "Klein is a writer I'd put on par with Howard Zinn (People's History of the United States)"...

Is Klein that bad of a historian that you would put her on par with Howard 'I'm a wretched commie swine and I hate America' Zinn?

 

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