Tag: socialism

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free trade & free markets international affairs repeal

The Milei Option

Argentina, socialism, communism, Milei, president, economy

Argentina’s new president promised to take a chainsaw to the high taxes and controls that have been killing the country’s freedom and prosperity.

He has had successes. One of his decrees removed rent controls, and as a result the supply of rentals has jumped and rents have dropped.

But Milei cannot simply issue decrees to free up markets. He’s got to go through the legislature. And Argentina’s Senate recently rejected a mammoth Milei-​issued emergency decree to deregulate the economy apparently in one fell swoop — revising or killing some 300 regulations.

The Financial Times reports that Milei’s coalition, La Libertad Avanza, “controls less than 10 per cent of Senate seats.” Many of the “centrist” senators could have helped pass Milei’s reforms over the objections of the adamantly leftist members. But these centrists profess to have constitutional reservations about the decree.

The real problem is probably that there is still a very large constituency for the subsidies and grift that have impoverished so many Argentinians.

The decree remains in effect until the House votes on it too. Milei’s administration is negotiating with the lawmakers of that chamber and with others who may have an impact on their vote.

If President Milei loses this fight in the near term, he must keep reminding voters why he can’t do more to lift them out of poverty and serfdom. His election to the presidency was a huge political change. But it’s not the only one Argentina needs.

This is Common Sense. I’m Paul Jacob.

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Accountability general freedom

The S‑Word in California

California, immigration, socialism, spending

Frédéric Bastiat called it “spoliation”; California’s Democratic politicians call it social justice.

A bill went into effect last week, offering complete medical coverage to an estimated 700,000 undocumented — illegal — immigrants.  The price tag? 3.1 billion dollars.

Well, not “price tag”: call it a subsidy tag.

California taxpayers will pay for it. Or perhaps U.S. taxpayers will end up with the bill, as Dagen McDowell insisted on Fox News, prophesying that the program “will turn into a national issue” that will, inevitably, “swamp the federal budget.” 

Ms. McDowell also noted that the state’s targeted sugar daddies, the wealthy, “are going to other states, so much that they’ve lost a congressional seat,” all of which must lead to insolvency.

Indeed, the state is running far into the red — the color of the ink on budget columns, not voting columns. The state faces not merely annual deficits and a huge debt, there is also this looming trillion-​dollar debt implied by the unfunded liabilities of the state employee pensions.

There is an old pattern here, which is why I brought up an old author in the first sentence.

First we subsidize the poor. Then we extend the subsidies up the income ladder. Now we give huge subsidies to those who enter the country illegally.

It’s as if Californians have forgotten the nature of income redistribution: you have to have income to redistribute. At some point the wealth being taken from the productive vanishes, as society becomes unproductive and descends into ruin.

There are two meanings of Bastiat’s “spoliation”:

noun
1 the action of ruining or destroying something.
2 the action of taking goods or property from somewhere by illegal or unethical means.

The two are linked. 

This is Common Sense. I’m Paul Jacob.

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folly free trade & free markets too much government

Make Them Pay

California, Commiefornia, socialism, electricity

Thanks to renewable-​energy mandates and other regulations, California muddles along with crippled power markets in which rolling blackouts are routine when demand for electricity is high and sun and wind are unavailable.

Apparently, this and other burdens on energy usage in the Brownout State are insufficient to fully immobilize everybody who relies on things that need to function. So the state’s utilities are preparing to also impose socialist billing on its customers.

Pacific Gas & Electric, San Diego Gas & Electric, and Southern California Edison are proposing that the flat-​rate component of power bills be based on income. Once regulators sign off, there is to be an ongoing transfer of wealth from richer to poorer.

The utilities aren’t acting independently. 

They’re obeying a legislative mandate.

In addition to a flat-​rate component of utility bills that would be $15 for the poorest customers and $85 for the wealthiest customers, there would still be a component based on power consumption. So the impending looting of nonpoor customers could be worse.

The socialism isn’t full bore yet.

But I doubt that initial limits on this redistribution agenda would remain intact were the scheme implemented and to persist.

In addition to other objections, there is also the matter of how utilities will know their customers’ incomes. Will customers be required to report and prove these incomes? The central planners presumably regard this invasion of privacy as not worth fretting about. 

They’re too busy creating perfect equality … of brownouts.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets moral hazard

Is It Still Capitalism?

capitalism, mixed economy, socialism, corporation, bank

Is it still capitalism if the capital is guaranteed?

“The U.S. government will guarantee all customer funds in Silicon Valley Bank (SVB) after a series of bad decisions and a run on deposits led to the bank’s collapse,” explains Elizabeth Nolan Brown in Reason. 

Technically, the bank isn’t being bailed out. Its customers are. And that’s a lot more popular than bailing out banks directly. There are more bank customers who vote than bankers who vote — though there is probably more political donations from banks directly seeking banking policy “correctives” than bank customers doing the same. That’s almost apodictically true.

The most bizarre element? While the FDIC, the federal agency that insures depositors of this and similar banks, is designed to guarantee depositors’ capital up to a certain limited amount ($250,000, more or less), the regulatory triumvirate of Treasury Secretary Janet Yellen, Federal Reserve Board Chair Jerome Powell, and FDIC Chair Martin Gruenberg declare that “all depositors of this institution will be made whole.” 

All.

Even the super-rich.

The key concept, here, is moral hazard — “The decision creates bad incentives for financial institutions and their customers” is how Ms. Brown puts it. We’ve been through all of this before. Is there really any question? The answers are in.

So, to the opening, Is it still capitalism if the capital is guaranteed? — if even Prince Harry’s fortune will be guaranteed — the answer is No.

Sorta. 

It’s a special kind of capitalism. State-​dominated capitalism; Neo-​mercantilism; f***-ism. Use whichever term.

As we contemplate a profit-​and-​loss system without loss, and how the losses will be made up within the financial system, just remember that the federal government playing the role of Savior is not itself costless, and … its debt keeps growing. And the Ultimate Result of all this still looms.

Immoral hazard.

This is Common Sense. I’m Paul Jacob.

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The big stories of the week revolve around big government, which mean big theft, which is not unrelated to socialism:

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general freedom ideological culture media and media people

Showcialism, Schmocialism

Venezuela, socialism, Hugo Chávez

Americans have never gotten into “socialism” like the rest of the world. This places pushers of socialistic ideas in a tricky situation. So they often defend socialism in less than honest ways. 

William Neuman, formerly of the New York Times, is a current example of this. St. Martin’s has just published his Things Are Never So Bad That They Can’t Get Worse: Inside the Collapse of Venezuela, and boy, do we get a story.

Hugo Chávez called himself a socialist, repeatedly, but Neuman won’t accept it. Why? Venezuela was basically ruined by Chávez and his henchmen and successors. So the former New York Times reporter provides excuses. 

Which is not to say I have read his book, or will. I am entirely trusting a review by Jim Epstein, at Reason, and agreeing per a plethora of other examples with Epstien’s critique of Neuman’s denialism.

While Neuman insists that Chávez was, in effect, a SINO (Socialist In Name Only), using the s‑word just as cover — “showcialismo” — Epstein takes us back to reality. “One classic definition of socialism is government control of the means of production. Chávez nationalized banks, oil companies, telecommunications, millions of acres of farmland, supermarkets, stores, the cement industry” and on and on. Now wonder, then, that “nationalization led to deterioration, abandonment, and collapse.”

Neuman cannot blame socialism, oh no. So he lamely argues it was just “bad management.”

But that is what socialism is, and must be. Even when managed by the very best experts, those experts must fail, in the end, because they lack the expertise that counts — the know-​how that is spread out among all participants in society. 

Markets leverage that knowledge best.

This is Common Sense. I’m Paul Jacob.

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