Do not think about, write about or deal with human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.
Wherein we see what happens when coercion is mistaken for reality.
These chilling results should serve as a somber warning against arrogance in government
By Laura Hollis
There are two stories getting a good deal of attention at the moment — seemingly unrelated, but in actuality too close for comfort.
The first story is the collapse of the Venezuelan economy under the socialist government originally run by Marxist strongman Hugo Chavez, and now by his successor, Venezuelan President Nicolas Maduro.
Chavez was elected as a center-left reformer, but gradually moved further toward a completely socialized economy, nationalizing oil, agriculture, finance, steel, gold, telecommunications, power, transportation and tourism, among others. Many privately owned companies were forced to depart, leaving inventory and infrastructure in the hands of the Venezuelan government — all done in the name of "the people," of course.
The result has been nothing short of disastrous. Venezuela has one of the planet’s richest oil reserves, but opted to export oil as the nearly exclusive foundation for the country’s economy (upon which the country’s heavy social spending also depended). As oil prices tumbled over the past year-plus, and without any meaningful economic diversification, the Venezuelan economy went into free fall. At this writing, the country is suffering from widespread shortages of food and medicine, basics such as toilet paper, and even power: President Maduro has called for daily outages. Hospitals are without such basic supplies as soap and antibiotics. Government workers are furloughed three days each week. Observers fear civil unrest or even revolution.
The economic collapse in Venezuela was inevitable. It is not because the people running government are less intelligent and more corrupt than the people running private corporations. It is that all people make mistakes. If one company out of many in a thriving economy of robust private enterprise makes a grievous error, that company may go out of business. But its competitors will certainly learn from its mistakes, and consumers will still have other options.
When the government is the sole provider of any good or service, however, and it makes a grievous error, it will take the entire industry down with it. When — as is the case in Venezuela (and as has been the case in countless other command-and-control economies) — the government controls the entire economy, and it makes a grievous error, it will take not only industries but also the whole country down.
Government employees can never run anything more efficiently than those with responsibility. Want higher real price and poorer service? Let the government do it.
How many times do we have to observe this kind of failure before socialists around the globe — including here in the United States — stop trying to shove this failed philosophy down everyone’s throats?
It is arrogance, coupled with a failed ideology, that produces this same result over and over. We should, therefore, be deeply concerned when we see the kind of left-wing arrogance that the Obama administration displays on a regular basis.
Victor Davis Hanson, writing for National Review, nails it this week in his piece titled, "The Pajama Boy White House." Hanson offers a scathing critique of self-important wunderkinds in the Obama administration such as Ben Rhodes, who admitted lying to the American public about the deeply unpopular nuclear deal with Iran. Rhodes is no outlier. Jonathan Gruber, the self-described "architect" of Obamacare, made headlines two years ago when video emerged of him referencing "the stupidity of the American voter," and the verbal contortions that made it possible for the Affordable Care Act to pass.
The only thing more frightening than a government that makes catastrophic mistakes is a government that will penalize those who attempt to point them out. Last month in Venezuela, the Empresas Polar brewery shut down, explaining that the country’s economic situation made it impossible to import the barley needed to brew beer. President Maduro ordered the company’s owners to make beer — or else face arrest and imprisonment.
We see the seeds of the same impulses here. It is not merely that Obama’s favorite domestic policies (like socialized medicine) are demonstrable failures, or that his foreign policy initiatives (like the Iran deal) are laden with threats to global peace. It is that he and his minions refuse to see it, to learn from others’ mistakes, or to listen to anyone but themselves. It is more disturbing still that this administration has politicized inquiry and debate to a degree unheard of in any earlier presidential administration, Republican or Democrat.
"Climate change" is a paragon example. Questioning the left’s party line is forbidden. Scholars with competing research are demonized by their peers, who not only threaten them but also threaten journals that dare to publish them. Attorney General Loretta Lynch has threatened prosecution against companies that oppose the pet theory of man-caused climate change. Similar threats were made by the Department of Health and Human Services when insurance companies dared to warn their customers that Obamacare was going to raise premiums — which, of course, it has (with more still to come).
Venezuela offers a somber warning against this kind of arrogance in government. It won’t be enough to destroy the economy (or significant parts thereof); those who refuse to learn from the past will not stop until they silence those who disagree — especially those who disagree with evidence.
That’s the way gulags get started.
Socialists have the quaint notion that power can change facts. No beer because of no barley–just order brewing to re-commence. No Global Warming because of lack of data–just order people to believe. My predictions are that there will be no beer or no Global Warming no matter how strict the edicts or how harsh the penalties. Reality is not a harsh mistress, but she will be obeyed.
Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.”
Cui Bono–Cherchez les Contingencies