Bolivian Gas Nationalization OK According to The New York Times
A truly Orwellian op-ed piece in The New York Times of May 6, says of Bolivia’s nationalization of the natural gas industry in its territory:
Nor is this a classic nationalization in the sense of the confiscations that took place in the region in the 50's and 70's. In those days, Latin American governments expropriated everything and kicked out the companies the next day. This time Bolivia will exert greater control over the companies, including significantly higher taxes and 50 percent-plus-one state ownership, but Mr. Morales has pledged to create an environment conducive to private profit-making, and the government has repeatedly stated that it is a “nationalization without confiscation,� with no expulsion of foreign companies nor expropriation of their assets.
So, raising taxes and grabbing 51 percent ownership, in return for nothing, is not confiscation. No. It’s a policy “to create an environment conducive to private profit-making.�
To the Times’ writer, these mind-boggling contradictions are so self-evident and reassuring that he feels a need to explain why the Bolivian army was used to impose this "nationalization without confiscation" that is profitable to its victims. Not being a real confiscation, but a source of profit to its victims, the use of the army and the presence of its deadly weapons was necessary merely as a show “to placate masses of radicalized Bolivians who demand `confiscation without compensation’ to the companies.� This last, of course, is a policy very different from that of Mr. Morales, who merely takes property in exchange for nothing.
This article is copyright © 2006, 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.
Comments (62)
boubon
Theft is theft. This move will undoubtedly harm Bolivia in the future as companies will be reluctant to make large invstments in the country's economy for fear of nationalization.
Published: May 8, 2006 5:57 PM
David K.Meller
Another nationalization in Latin America? You MUST be kidding. One of the main reasons for the Chronic poverty and underdevelopment which characterises Bolivia,( and many other places) is precisely the absence of widely recognised, legally and socially enforceable property rights, especially from overseas investors.
The only possible result, in Bolivia, as in everywhere else, will be the appalling mismanagement of the property concerned, the worsening of corruption of any government officials involved in the nationalization and any of those business and banking interests dealing with them, and, most tragically of all, the further impoverishment of citizenry, already nearing starvation because of the greed and irresponsibility of previous governments, as the capital that went into the installation, the maintainance, and the insurance of the ex-property is consumed or destroyed by rapacious bureaucrats, army officers, and loan repayments to altogether parasitic Globalist entities like the World Bank extorted from the hapless taxpayers in affected countries. That these "loans" will be repaid with drastically devalued and inflated currency issued by the corrupt and nationalizing government also should be mentioned.
To the Overseas Businesses affected by the nationalization--You should certainly have known better!
To the Bolivian Government--I'm not disappointed because I didn't expect anything better from any of you.
To the naive, ignorant, and demagogic supporters of the Bolivian government's actions, both there and overseas, and their counterparts in other countries---Give us an opportunity to say 'I told you so' for the ten thousanth time.
Frankly, I am getting a little tired of it, especially when I hear the "free market" unfairly blamed for the resulting famine, civil war, or other catastrophe!
PEACE AND FREEDOM!!
David K. Meller
Published: May 8, 2006 7:05 PM
Manuel Lora
Evo Morales is now set to nationalize land.
Published: May 8, 2006 9:43 PM
TokyoTom
I'm not happy about this, but the situation is more complicated than Prof. Reisman indicates, precisely because in third world countries such as Bolivia (i) the "rule of law" and the institutions of the state mainly serve the interests of a ruling elite (generally of a different ethnic background than the poor masses), and there is very little true middle or professiomal classes and (ii) there are too many "government-owned" or "national" resources that are managed for the benefit of the elites.
This is precisely one of the points made in the NY Times's piece (which, by the way, as an op-ed should not be attributed to the Times):
"Add this to resentment on the street over Bolivia's Transparency International corruption ranking last year (placing its leaders among the world's most dishonest) and a long history of swindles where natural resources like gold, silver, timber and petroleum have been "privatized" into the global economy to the sole benefit of a few very wealthy Bolivians."
While I would agree that the long-term solution is to establish the rule of law and to limit the economic role of the state, these are not easily accomplished, especially where ethnic or class tensions are festering due to huge wealth disparities. Some of these issues are addressed by Amy Chua in "World On Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability" - http://dir.salon.com/story/books/review/2003/01/13/democracy/index.html
Her fundamental arguments are that:
"1) Human beings, and by extension the ethnic groups which they compose, have profoundly different levels of access to economic resources -- i.e., different levels of skills, different family influences and connections, differing familiarity with free markets, differing levels of personal drive, etc.
2) Globalization, the extension of free trade and markets worldwide, progresses against this very uneven human geography of skills.
3) Globalism and international free trade tend to exaggerate, not reduce, the economic differences between people, and between ethnic groups.
4) When these differences are clearly aligned with ethnicity, pogroms/holocausts must inevitably follow as the only means available to eliminate the influence of an increasingly rich and isolated minority over an increasingly disenfranchised and destitute majority."
http://www.swans.com/library/art9/salber01.html.
These are difficult issues that underline various global conflicts, including those between the West and Islamic cultures. In this context, I cannot be so quick to pass judgment against the actions by Morales.
Published: May 8, 2006 10:25 PM
George Reisman
You quote the following statement and implicitly endorse it by offering it as part of a legitimate explanation of events in Bolivia:
"`4) When these differences are clearly aligned with ethnicity, pogroms/holocausts must inevitably follow as the only means available to eliminate the influence of an increasingly rich and isolated minority over an increasingly disenfranchised and destitute majority.'"
This leaves me no choice but to conclude that you, along with the author you approvingly quote, are justifying pogroms/holocausts. This is in addition to your excuses for nationalization and theft. Excuse me for not taking time to point out the utter ignorance on which your underlying economic analysis rests.
No reply is necessary.
Published: May 8, 2006 11:14 PM
Francisco Torres
These are difficult issues that underline various global conflicts, including those between the West and Islamic cultures. In this context, I cannot be so quick to pass judgment against the actions by Morales.
I can - I do not justify theft just because "times are dire". Theft IS theft. I seriously question Mr. Morales' motivations, since he indulges in a purely criminal move for political reasons. Know them by what they do, not by what you believe to be their intentions.
Published: May 8, 2006 11:14 PM
quincunx
"1) Human beings, and by extension the ethnic groups which they compose, have profoundly different levels of access to economic resources -- i.e., different levels of skills, different family influences and connections, differing familiarity with free markets, differing levels of personal drive, etc. "
Right, and those human beings are perfectly free to purchase things from their own ethnic groups, or their own local markets. No one is forcing them to, unless there is a state.
"Globalization, the extension of free trade and markets worldwide, progresses against this very uneven human geography of skills."
No one is forced to globalize - if their is some psychic profit to be made in your local area, then you will not buy global goods. If others in that area, do engage in global trade - well that will only serve as proof that Chua is wrong (mainly because she has a collectivist outlook).
Published: May 8, 2006 11:16 PM
Vanmind
Morales pledged, eh? Well, I'm always satisfied when politicians give their word.
Published: May 8, 2006 11:19 PM
Ohh Henry
The invention of euphemisms to describe the socialization of national resources is a fine old tradition. In Canada, the creation of the government entity Petro Canada was called "opening a window on the energy industry". What is little more than theft is disguised behind images of sunshine and fresh air. Even after it was once again privatized, that which is the opposite of theft, the operation of the free market, is described as "hostile", to be feared and to be prevented by force of law:
A spokesman for [former Canadian Minister of Finance Ralph] Goodale said the government will retain the Petro-Canada Public Participation Act, which prevents anyone from owning more than 20 percent of the company and is seen as effectively a poison pill to block any hostile bid.
Most Canadians would deny it, but unfortunately their country is becoming more and more just another Latin American banana republic.
Published: May 8, 2006 11:59 PM
flix
Talk about the victim's consent!
The reason the bolivian gvt. doesn't kick the oil companies out is because they still need their expertise and resources to actually run the oil fields.
Published: May 9, 2006 1:57 AM
Wild Pegasus
Who justly owns the resources? I find it hard to believe that either the state or the international corporations justly own them. It seems to me that this just shuffles a few papers among the ruling class of Bolivia, with little bearing on the welfare of individual Bolivians.
- Josh
Published: May 9, 2006 5:54 AM
Peter
Who justly owns the resources? Whoever first brought them into use (which is presumably the oil company that discovered them there), or whoever that owner sold (or gave) them to. The "ruling class of Bolivia" obviously doesn't have valid claim to a single drop of oil.
Published: May 9, 2006 6:39 AM
Wild Pegasus
I think what you're missing is that the ruling class of Bolivia includes these corporations.
- Josh
Published: May 9, 2006 7:42 AM
TokyoTom
Dear Prof. Reisman:
I appreciate the back-handed compliments that you pay me by your comment, which starkly illustrates your lack of balance and perspective, and your tendency to cast aside nuance in order to fit reality into your rather Manicheaen weltanschauung.
In other words, you prove my points for me.
With a little more balance, you might take me not as an ideological opponent, but as someone sympathetic but with concerns that reality and ideology are not at all times consistent, and that the effort to understand is plagued with difficulties.
Since you choose to misinterpret me and Ms. Chua rather than to take the effort to look at the links I provided, let me help you by quoting the book review I linked to, which makes it clear that neither Ms. Chua nor I by implication, "justif[ies] pogroms/holocausts":
You may disagree with this explanation of the interaction between ethnic frictions, democraticization and capitalism, but it is wrong to assert that I or Ms. Chua condone any ethnic violence that we instead seek to comprehend.
Further, I have made no "excuses for nationalization and theft" in Bolivia, contrary to your assertion. Rather, I have noted that there is an ethnic component that must be discussed.
Finally, you ask me to "Excuse [you] for not taking time to point out the utter ignorance on which [my] underlying economic analysis rests." I excuse you, while noting that you have in fact pointed out "the utter ignorance" of my underlying economic analysis. It goes without saying that I would prefer that you honor me with a deeper analysis of my ignorance - particularly as I am trying to approach the issue from the perspective of establishing effective property rights as a basis for increasing wealth.
Sincerely,
Tom (or, as you know me, "An environmentalist who hides under the name TokyoTom")
Published: May 9, 2006 8:35 AM
Yancey Ward
As with Venezuela, if the Bolivian government were really serious about giving equal ownership of the natural resources of the country to the citizens, then it would simply give equal shares in the ownership of the oil/gas rights, for example, to the citizens, and create a countrywide corporation. That this is never done is a clear indication that the goal is not nationalization for the people, but confiscation for the governing elites.
Published: May 9, 2006 8:45 AM
Joe Calhoun
Yancey nails it with that last comment. None of these unreformed leftists are interested in distributing assets to their citizens because then they would lose a measure of control they are not willing to concede. I could almost support the taking of these assets if they were distributed equitably. While I certainly don't agree with much that TokyoTom has to say, it is certainly true that the elite minority in many of these countries have run things for their own benefit for a long time.
Published: May 9, 2006 11:45 AM
Vince Daliessio
Yancey and Joe nailed it - what Tokyo Tom extols and Amy Chua explicates is most decidedly NOT an egalitarian distribution of the income from the country's natural resource rights, but simply a ruse, using Marxist rhetoric, perpetrated to redistribute the profits from the resource to a slightly different set of wealthy power-brokers. If Morales, or any other pretend egalitarian really meant their rhetoric, they would grant every citizen a share in the national oil royalty pool with full property rights that could be bought, sold, or traded. That Morales, Chavez, et al do not do so reveals that their alleged democracy is simply window-dressing for a theft from one oligarchy by another.
Published: May 9, 2006 12:11 PM
Bill
Be careful about what you nationalize. You may be paying the previous owners to take it back later. It seems like a smart idea to steal the property(investments) of a foreign corporation when prices are peaking. There are two issues with the "smartness" of this idea:
1. The oil or natural gas does not get out of the ground itself nor does it transport itself to a user nor does it price itself. These tasks and the maintenance of all this stuff has real costs. Oil companies tend to be good at these things(able to do them at the lowest costs) while bureaucrats on average are not so good.
2. The price of energy is at a historic high. This is not a permanent condition. When the eventual drop comes will your friends running this facility be able to continue making a profit?
Published: May 9, 2006 2:15 PM
Andrew
So Russia, the Philippines, Sierra Leone, Indonesia, and Zimbabwe are Ms. Chua's idea of FREE-MARKET democracies. Democracies they may be, but free market? A quick look at the economic systems of any of those nations will dispel any notion of labeling those nations as having free-market economies. Economic freedom, and certainly not political systems, is what improves the quality of life for the masses.
Published: May 9, 2006 3:37 PM
Albatroz
I have stated this before, but I think it is worthwhile to point out that in a democratic society the state legitimately represents the people, and therefore not only they may make decisions that affect the whole society but are entitled to run assets for the common good. If the state does NOT represent the people is because the institutions are not democratic, and we should strive to make them so. So, the problem is not state interference - they are entitled to interfere for the common good - but lack of democracy. Libertarians should spend more time trying to legitimize political institutions, and less time fighting them. As it is libertarians actually often seem to be promoting an oligarchy of the rich and powerful.
Published: May 9, 2006 3:47 PM
Yancey Ward
Albatroz,
You do not understand libertarians, and you seem not to understand the nature of democracy.
Libertarians do not recognize the natural authority of majority rule; and they will point out that oligarcharchies of the rich and powerful depend on state power for their maintainance.
In other words, if a majority of the population wants communism and state control of all activity, economic and otherwise, is it a valid expression of freedom?
Published: May 9, 2006 4:00 PM
Yancey Ward
Oops, that should be "oligarchies".
Published: May 9, 2006 4:01 PM
Francisco Torres
TokioTom quotes:
" Chua builds on this argument in an essential way, showing how expanding markets exacerbate the problem by enriching already-dominant minority groups even as democracy empowers angry majorities."
I believe Chua puts the cart before the horse. It is not expanding markets which exacerbate the problem, but money supply - inflation. The rich get richer by anticipating the money supply and protecting their assets accordinggly. The poor many times cannot do this especially if their savings are in the form of paper money.
"World On Fire" is about a phenomenon Chua calls "market-dominant minorities," groups like the Chinese in Southeast Asia, Jews in Russia, whites in Zimbabwe and Indians in East Africa and Fiji. Market-dominant minorities control hugely disproportionate[Uh???] percentages of their countries' resources.
Market-dominant minorities? Seems like double-speak for "dude, those guys sure work hard!" It is envy-centered scholarship. And what is Chua talking about when saying "countries resources"? Many of these ethnic minorities are mostly involved in selling stuff or lending money. There is no reason to put the blame on hard working individuals for what amonts to the results of a government's ill-advised economic policy.
Rather, I have noted that there is an ethnic component that must be discussed.
Uh, no, there is none. There was none back when a leftist general expropriated all oil companies in Mexico in 1936, and there is none in Bolivia. Evo just needs money, that is all.
Published: May 9, 2006 4:53 PM
TokyoTom
Yancey says:
I agree, except with the final sentence. Shares of national corporations SHOULD be distributed to citizens, but that this is not done may reflect both a paternalist impulse (reflecting a lack of familiarity among citizens with financial instruments) and the bureaucratic and rent-seeking tendencies displayed even in the US and other developed countries where resources are owned by the government.
Arguably the US federal and state governments should pursue privatization initiatives along the lines you suggest. Perhaps that this is never done is an indication that the goal is not nationalization for the people, but confiscation for the governing elites?
Published: May 9, 2006 9:51 PM
TokyoTom
Vince, what have I extolled? I actually agree with you; I don't approve of state confiscations. Too bad that you, like Reisman, prefer to see attempts at a fuller understanding as being efforts to justify the actions of others. I have not said that what Morales has done is justified.
Loosen up, man.
Published: May 9, 2006 10:08 PM
TokyoTom
Andrew, I think you misunderstand Chua's point, which is simply that in multi-ethnic countries without broad middle classes and economic opportunity, a small ethnic group may disproportionately benefit and exacerbate ethnic tensions. I think that this phenomenon is clearly visible around the world.
Published: May 9, 2006 10:16 PM
TokyoTom
Albatroz:
I share much of your viewpoint that libertarians here actually often seem to be promoting an oligarchy of the rich and powerful.
However, I recognize that state ownership of resources leads inevitably to increasing bureaucratization and temptations towards rent-seeking. This is clearly apparent in the US today, where Republican control of the Presidency and both houses of Congress has led to an orgy of corruption and rent-seeking. [In this, I find it ironic that libertarians here condemn "enviros" for engaging in the same rent-seeking behavior, by lobbying to hold off resource development of public lands or to prevent the government from granting sweet deals to favored indutries/campaign donors, but do not condemn the rent-seeking activities by corporations with respect to public resources and laws/regulations.]
If there is a "public good" aspect to resources, I would prefer to see resources held by corporations whose shares are distributed to citizens, and to take other measures to get the government out of resource management, in which it cannot be impartial. Where there are evident externality problems due to lack of clear property rights, I see a limited role for government in helping to establish such rights - like those proposed by PERC concerning fisheries.
Published: May 9, 2006 10:35 PM
TokyoTom
Francisco, meet Joe Calhoun. Yes, there is definitely ethnic envy in Latin America and other places. Sometimes it is simply that, as the ethnic minority that is better off simply worked harder and knew how to save and invest. But we cannot ignore the ethnic tensions that are compounded as a result. But in other cases, the ethnic minority was an occupier and oppressor, as in Latin America - where a Spanish, caucasian elite has long run the system and common/public resources for its own benefit. This is why Chavez and Morales are so popular, despite the fact that their policies are likely to be economically ruinous.
Amy Chua, by the way (if you'd bother to read before dismissing her thesis) is ethnically Chinese from the Phillipines, where the ethnic Chinese are economically dominant and resented (and murdered, in the case of Chua's aunt) by the native Phillipinos), so her scholarship is hardly "envy-centered". She also has first-hand experience in privatizations in Mexico.
Published: May 9, 2006 10:48 PM
averros
TokyoTom --
I share much of your viewpoint that libertarians here actually often seem to be promoting an oligarchy of the rich and powerful.
Well, in case you're living in a cave, I have some secret knowledge I'd like to share with you: the social democracy we live in is the de facto oligarchy of the rich and powerful.
The main difference is that under libertarian system these rich and powerful get their riches by trading, and if they try to steal the victims have a right to fight them; and under the democratic system they got rich and powerful mostly by means of legalized theft - and their victims can be lawfully killed or thrown into jail for simply refusing to pay the ransom.
That's how it is, in plain words. No need to invoke public goods, prisoner's dilemma, or any other intellectual masturbation aids.
Published: May 9, 2006 10:53 PM
Peter
I think what you're missing is that the ruling class of Bolivia includes these corporations.
Well, if so then the ruling class in Bolivia are (among) the legitimate owners - assuming their ownership interest in the oil companies came about legitimately, of course (which seems unlikely)
As with Venezuela, if the Bolivian government were really serious about giving equal ownership of the natural resources of the country to the citizens, then it would simply give equal shares in the ownership of the oil/gas rights, for example, to the citizens, and create a countrywide corporation
Would still be theft. It's not theirs to give.
Published: May 9, 2006 11:18 PM
Albatroz
Let's disturb the waters a bit further.
If one believes in God one must believe that His creation - namely the planet Earth - was meant for the benefit of all His creatures. If one doesn't believe in God, one still must accept that the planet belongs to all its inhabitants, of all species. Unless one believes that "might is right" one must reach the conclusion that there is no foundation for resource ownership. Risk takers may be legitimate developers of resources, never owners of those resources. Therefore they are entitled to a compensation for the risks taken, for the investments made, for the benefits provided to others, but never to ownership. So one cannot speak of theft when a community decides to take control of resources, as long as risk takers are indemnified for the investments made. In Bolivia nationalization was directed at the resources - oil and gas - not at the developers' property. I fail to see what is wrong with that. Oil and gas companies will still be entitled to participate in the development of those resources, but they will have to share the benefits with the local community. I am all in favour...
Published: May 10, 2006 3:07 AM
TokyoTom
averros,
I agree that "the social democracy we live in is the de facto oligarchy of the rich and powerful." It's always been that way, but it seems to be accelerating.
However, I disagree with your dichotomy between libertarian and democratic systems. I am unaware that there has ever been a true libertarian system, but conceding one in principle, I wonder who would enforce rights to protect personal property against theft - some "state" is needed. As for democratic systems, you are too cynical. Big governments certainly have a tendency to spiral out of control, but even with manipulation of the system by oligarchs, not all increases in wealth is by theft.
It seems to me that, in addition to private, voluntary transactions that create wealth, what we witness domestically, in other nations and at the borders are continuing struggles over property rights (whether to homestead/privatize/exploit formerly "common" or unclaimed reseources, or to wrest control away from others of resources that can no longer be adequately defended) struggles in which both sides try to enlist/hijack government institutions.
The struggles take place on various levels between and among individuals, tribes, ethnic groups, interest groups and nations, and to the victor go the spoils. One may bemoan theft, but should not disregard the theft that precedes it, and no property is secure even with eternal vigilance (as a result of technological change).
Where there is no clear or effective owner, unowned or common resources are privatized at the expense of others; technological progress means an accelerating wresting away of resources from nature, except where private interests desire the preservation of parts of it.
The growth of the state is in part a history of the development of insitutions that most effectively compete in an anarchic, Hobbesian world. In part, history shows that capitalist societies that most respect private property and that are the least rapacious internally are best able to marshal necessary resources when confronting external enemies, but even these societies must continue to confront discontent both internally and in the form of disruption by external groups that have been economically surpassed.
Published: May 10, 2006 5:59 AM
Peter
If one believes in God one must believe that His creation - namely the planet Earth - was meant for the benefit of all His creatures. If one doesn't believe in God, one still must accept that the planet belongs to all its inhabitants, of all species.
Whether or not one believes in god(s), elves, fairies at the bottom of the garden, etc., your claim that "one must accept that the planet belongs to all its inhabitants" is patently false, since (a) a lot of people don't, in fact, believe that, and (b) it's demonstrable though simple logic (see Hoppe) that such a position is at odds with the very existence of the purported-believer. I.e., anybody who does claim to accept that is engaging in a performative contradiction: it would require that the person concerned not consume food, air, etc., which are necessary to that person's life, therefore if he really believed it, he'd already be dead. Things either belong to some identifiable individual, or belong to nobody.
Published: May 10, 2006 6:54 AM
Some dumb academic
If I am an Bolivian Indian who has an unfortunate ability to remember history, and had a long wait, I might argue that since I did not sign a contract to be conquered, nor a contract to not conquer back, the nationalisation is simply a taste of investor medicine, but in a much more "democratic" way. That the targets have not performed an project investment evaluation that included the risk of higher costs indicates their stupidity. Alternatively, it may indicate that they may have become addicted to their ability to "socialise"(that is the correct term right?) these risks in the home country though price differentiation or the mobilisation of political or military capital to reduce these risks.
Whose fault is that??
Published: May 10, 2006 6:59 AM
Paul Marks
Arguments that it is O.K. to steal from people if their skin is less brown than one's own are to be rejected with contempt (as Dr Reisman rightly does) as for the "argument" that it is "inevitable" to murder people if they are of another race and have more money, well words fail me on that matter.
The argument that "X land does not belong to Mr so and so - because a few centuries ago it was stolen and he bought it from someone who bought it from someone who......... bought it from the thief" is really an evasion.
Is anyone really pretending that statists would care if a bit of land had NOT been stolen at any time in history.
Are socialists in Iceland (a country inhabited by people whose forefathers discovered the place) any less keen socialists then their comrades in other countries?
Nor do socialists in Bolivia say "we must find out which Indian is the decendent of the person who lived on this bit of land centuries ago - and give it to them".
Let us be honest in debate. The statists in Bolivia (or any other nation) could not care less which Indian lived on which bit of land.
"The poor Indians" is just another excuse for statism.
Statism that has been tried many times in Bolivians history (for example the Tin Mines and the large estates were stolen by the government in 1952 - did that make the Indians wealthy?)
Whilst people in Latin America blame their poverty on the wealth of other folk, these countries will always be very poor.
Private ownership does not work miricles. Only long term security of property (inclunding in ones person - no more kidnapping justified on the basis of "social justice") can gradually develop a nation so that the great majority of the population prosper.
Whilst a rich person has no security in their property (not even in their personal safty there will be no incentive to invest for the long term.
Popularists claiming to rule to "help the poor" have been the curse of Latin America since the fall of Spanish rule (and that rule was statist). Long before Karl Marx was heard of in Latin America there were endless revolutions - and each new ruler claimed to be ruling for good of "the people".
The one true point that the modern Leftists make in Latin America is that the "war on drugs" that the United States demands that they wage is stupid and harmful (it does not destroy the drug cartels - prohibition is the life blood of the drug cartels).
I had hoped that the Mexican government had "shot the fox" (as we used to say in Britain - concernign spoiling a chase) by getting rid of some of the drug laws before the election in July.
But now the United States has demanded that President Fox veto the repeal.
Thus giving the left two issues for July. The prohibition that has filled the the jails of Mexico and corrupted most of government, and the old issue of "American Imperialism".
It looks like we will have another popularist in power soon.
This could have been avoided.
Published: May 10, 2006 8:37 AM
Paul Marks
"If one believes in God who created the world, one must beleive that it belongs to all people in common" (or words to that effect).
Well I believe in such a God (and like Noah Porter and James McCosh in the 19th century I do not believe that one needs to reject any part of modern science to do so), and I do not believe that he gave ownership of the Earth to mankind in general.
This is an interpretation of the book of Genesis that caused John Locke (following Pufendorf) to tie himself into knots (with the "Lockian Proviso" and other stuff). But there is no need to interpret Genesis (a story, not an historical record, in any case) in this way (for example Grotius did not).
The idea that the world is UNOWED till a specific part is claimed by an inhabitant is just as old as the idea that the world is owned in common. Both views have a theological supporters going back centuries.
But (to, I admit, bring a bit of economics into the discussion) the idea that the world is owned in common has the down side that it would lead to economic collapse and mass starvation.
By the way a "community" (like a "society") is not the state. It rests on civil (voluntary) interaction (hence the term "civil society") not force.
The community (or society) is not an entity. To use language like "the community decides" is a basic error.
Published: May 10, 2006 8:49 AM
Paul Marks
I must make clear that "shooting the fox" is a sporting metophor (as I said, concerning spoiling a fox hunt). It does not mean that I support murdering the President of Mexico.
It indeed I would have liked President Fox to have supported "shooting the left's Fox" on the drug issue.
As for "society" - "community". As I said these are not words for an entity (an agent that can think and decide).
A society is the complex web of interactions between agents (it is not an agent itself).
Therefore to use language like "the community decides" is just a mistake.
Published: May 10, 2006 8:58 AM
Francisco Torres
Albatroz,
Following your premise to the T, if we cannot own anything in this world, then what are the oil companies going to receive as just compensation for the expropriation they suffered? You can only use as compensation something you already own.
Published: May 10, 2006 12:38 PM
Francisco Torres
TokyoTom writes:
Yes, there is definitely ethnic envy in Latin America and other places.
Not one said there is not.
Sometimes it is simply that, as the ethnic minority that is better off simply worked harder and knew how to save and invest. But we cannot ignore the ethnic tensions that are compounded as a result.
Not ignoring is one thing. Chua's case calls, however, for redistribution of wealth. You know it and I know it.
But in other cases, the ethnic minority was an occupier and oppressor, as in Latin America - where a Spanish, caucasian elite has long run the system and common/public resources for its own benefit.
The Spanish mixed with the population, TT. There were very few Spanish in Mexico, for example, by the time of the Independence. People in Mexico, however, do not envy the whites - they simply envy the rich.
This is why Chavez and Morales are so popular, despite the fact that their policies are likely to be economically ruinous.
More likely, they are popular because they promise something for nothing. Latin Americans are no more special than anybody else, and people respond to sweet words and demagogery the same way the ancient Greeks once did.
Amy Chua, by the way (if you'd bother to read before dismissing her thesis) is ethnically Chinese from the Phillipines, where the ethnic Chinese are economically dominant and resented (and murdered, in the case of Chua's aunt[,] by the native Phillipinos), so her scholarship is hardly "envy-centered".
Ok, so it is self guilt-centered. Problem is, it arrives to the same conclusions: more theft so everybody feels happy:
"In such conditions, [b]the combined pursuit of free markets[/b] and democratization has repeatedly [b]catalyzed ethnic conflict in highly predictable ways[/b]. This has been the sobering lesson of globalization in the last twenty years."
The sobering lesson? In the first place, DO free markets thrive in such countries? Where I work, a truly global company, we found that the ethnic problems were more a government generated tragedy than one generated by free markets.
She also has first-hand experience in privatizations in Mexico.
Which means, pretty much, nothing. I also have first-hand experience in privatizations in Mexico. What do you want to know?
Published: May 10, 2006 12:52 PM
BillG (not Gates)
Paul Marks wrote:
"the idea that the world is owned in common has the down side that it would lead to economic collapse and mass starvation"
BillG responds:
nothing would change except those that are living off the sweat of others' labor via usury (economic rent, interest, profits) would be forced to fend for themselves...
Published: May 10, 2006 1:19 PM
Yancey Ward
BillG,
I fail to see how geo-libertarianism makes profits impossible, or how it makes interest impossible. Is there something you have not been telling us?
Published: May 10, 2006 1:26 PM
Roger M
I've read Amy Chua's book and found it very interesting. She details how ethnic Chinese have created all of the economic growth in SE Asia for the past half century. But her diagnosis is way off the mark. She blaims the free market, which was only a passerby.
Amy Chua, as well as most writers, divide the world into socialist and free market nations. But a third system exists that's neither. I call it traditional economics because it was what all nations practiced, from Europe to China, before the advent of capitalism or socialism. In traditionalism, the rulers are above the law and corruption is rampant. People find security primarily in family ties, connections to government officials, and bribes. The courts are just as corrupt as the politicians; anyone can be bought.
Now if you remove government controls of the economy in an environment of traditionalism, and proclaim a free market, you end up with Russia after the collapse of communism, and what Ms. Chua describes in her book. For free markets without the rule of law, honest institutions to enforce the law, and laws to protect private property, you end up with chaos. Those with power steal everything in sight and kill anyone who opposes them.
Bolivia has always been a traditional economy, but it never had free markets because it lacked the laws and institutions to protect property. The country will be no worse for having nationalized the gas industry, but it won't benefit either. It will always be a poor backward country.
Published: May 10, 2006 2:46 PM
Albatroz
Francisco,
"Following your premise to the T, if we cannot own anything in this world, then what are the oil companies going to receive as just compensation for the expropriation they suffered? You can only use as compensation something you already own."
You can own a lot of things: a bycicle, a house, a car, a computer, etc. But not resources which by right belong to all. If oil companies invested in the development of oil fields, they are entitled to a fair return on that investment. But they cannot be expropriated because they never owned any of those resources. If they abusively tried to take possession of those fields, the community is entitled to repossess them. I honestly do not see why you insist on this "property" thing, since that's not relevant. If the oil company gets a 10% - or even a 15% or 20% - return on their investment, wouldn't that be good enough? Why insist on "owning" the oil?
Published: May 10, 2006 6:09 PM
Sione Vatu
Albatroz
It is difficult to explain to you the magnitude of the errors with your ideology or even your approach to analysis and thought. Or the consequences of what you propose.
Anyway, if only the "community" (the leaders of the gang with the power in actual fact) can own resources, then they continue to own all property even after processing, or changes of form, since objects contain resource materials. The bicycle, house, computer etc, contain resources that were never owned by the miner or developer (according to you) hence the ownership of the materials were not able to be legitimately transferred to anyone else. They are available to be repossessed at any time. Same goes for food. That means you can't be the owner of your body either. And so you are about to reintroduce slavery.
Of course you must now argue that the resource becomes privately "owned" once it is taxed, nationalised and then processed into manufactured goods or fuels. The trouble with that approach is it relies on an arbitrary mechanism purported to be controlled by the "community" (in reality the gang with power) to allocate a notional "ownership." Thus the individual's "ownership" is of community controlled property and can be arbitrarily revoked, renationalised, repossessed or otherwise randomly altered at any time.
You indicate, property is not important to you. What you are discussing, it IS important to note, is OTHER people's property. Were I to come over to your place with half a dozen whanau to help ourselves to your stuff (community based ethnic repossession program) you'd be most upset. Albatroz, you shouldn't be. You should remain consistent to your ideals. WE are the majority 6 - 1. We'll vote and we'll take as we see fit. It's democratic the way you like it.
Sione
Published: May 10, 2006 7:01 PM
TokyoTom
Francisco: How do you and others propose to deal with the ethnicity issue, in cases where you admit is a problem? Libertarians tend to overlook the tribal nature of man and its key role in our ongoing wars/disputes.
I think Chua provides a valuable reminder that those who ignore such issues do so at their own peril - even if the income and wealth disparities are the natural results of hard work and investment, and not through exploitation of a power position. Those at the top find themselves resented, and are vulnerable to those who are discontented and envious - don't we see this in part in the West's interaction with the Arabs and Muslims of the ME?
Yes, Chua is suggesting some type of voluntary redistribution - in effect, a payoff to extortionists. Maybe that just won't work - until wealth levels are the same or the ethnic differences dissolve. I think Chua's observation extends to the US as well- we have avoided much difficulty through the melting pot provided by economic opportunity, and by socialist measures deliberately adopted by FDR and the establishment precisely to keep the rabble happy.
As for Mexico, Venezuela and Bolivia, tell me again that there are not vast disparities of income, with most wealth held by a light-skinned elite, and that Indians and those darker-skinned have no sense of ethnic disadvantage?
Yes, I'll concede that demagoguery that promises something for nothing is part of the phenomenon, but another part is trying to settle old scores. How we deal with that is a very difficult thing - are we to simply assume that no takings are allowed from this point on (either by the state or others with the physical power to take), protect the status quo ante, and ignore all prior takings (which is indeed the history of Latin America)? It seems to me that that is quite unrealistic to expect.
At some point, it would be nice if people would put aside their ethnic identities and rivalries, but for now we just have to figure out how to live with them. I think that means that the ethnic groups that have wealth need to figure ways to help those who do not how also to gain wealth - other than by theft - so that envy and ethnic tensions are reduced, and eventually put aside for a shared sense of community.
Published: May 10, 2006 8:37 PM
Sione
Oops
7 - 1. I may as well vote as well.
Sione
Published: May 10, 2006 8:44 PM
TokyoTom
Roger M:
I'm not sure I understand you. Bolivia is a poor nation because the caucasians who have been at the top for centuries (by brutal conquest) chose to run the country for themselves and to keep natives oppressed and poor. For it to become a wealthy nation will require a greater sense of shared identity and greater opportunity for the poor. This may require some redistibution of wealth, in the form of taxation that is invested in education and law enforcement, especially protection of property rights.
Published: May 10, 2006 8:47 PM
TokyoTom
Paul Marks:
I agree with much of what you say, particularly (i) concerning the destructive, corrupting consequences of the "war on drugs" and (ii) the following:
"Only long term security of property (inclunding in ones person - no more kidnapping justified on the basis of "social justice") can gradually develop a nation so that the great majority of the population prosper.
Whilst a rich person has no security in their property (not even in their personal safty there will be no incentive to invest for the long term."
However, I think you are wrong to dismiss the role of colonialism and ethnic divisions in the ongoing problems. These difficulties must be confronted and dealt with.
Your initial positions are simply statements against strawmen that nobody has made, particularly not me. Accordingly, I can tell you that I agree whole-heartedly with the following:
"Arguments that it is O.K. to steal from people if their skin is less brown than one's own are to be rejected with contempt (as Dr Reisman rightly does) as for the "argument" that it is "inevitable" to murder people if they are of another race and have more money, well words fail me on that matter.
The argument that "X land does not belong to Mr so and so - because a few centuries ago it was stolen and he bought it from someone who bought it from someone who......... bought it from the thief" is really an evasion."
Regards,
TT
Published: May 10, 2006 9:00 PM
Francisco Torres
TokyoTom wrote:
How do you and others propose to deal with the ethnicity issue, in cases where you admit is a problem? Libertarians tend to overlook the tribal nature of man and its key role in our ongoing wars/disputes.
It is called COMMERCE, TT. Free and unrestricted. Where I live, people are of all different backgrounds and hues. We freely commerce with each other, minimizing possible conflicts. The marketplace is the most civilized place in my city, and people of all hues and backgrounds receive you with a smile.
And by large, ethnic problems are government creations. Politicians have for years emphasized the "differences" between peoples in order to garner votes. This is why we have an Indigenous People Bureau, a silly bureaucratic nightmare that aims at keeping native people dumb and stupid.
As for Mexico, Venezuela and Bolivia, tell me again that there are not vast disparities of income, with most wealth held by a light-skinned elite, and that Indians and those darker-skinned have no sense of ethnic disadvantage?
I do not know about Venezuela or Bolivia, but wealthy people in Mexico are not necessarily light skinned. The disproportion in some countries is not due to free markets but to interventionist policies and protectionism - people are more politically useful if they remain poor, so the government keeps a disparity out of pure expediency. Nevertheless, people in Mexico are still free enough to produce and obtain wealth despite their skin colour. I do not have much problems with Chua's findings - she's simply not saying anything new. However, her conclusions are silly - like you said, pay the extorsionists.
Published: May 11, 2006 10:08 AM
Francisco Torres
Albatroz wrote:
You can own a lot of things: a bycicle, a house, a car, a computer, etc. But not resources which by right belong to all.
This contradicts your argument:
"Risk takers may be legitimate developers of resources, never owners of those resources."
Resources are anything you can use to fulfill your goals, including air (to breathe) or water, to drink, or your time, or minerals, or animals. Therefore, a bicycle, a car, a computer, they are all resources and come from other resources. So by your argument, not one can own them, if you want to remain logically consistent.
Published: May 11, 2006 10:17 AM
Albatroz
My mistake: I meant NATURAL resources...
Published: May 11, 2006 10:46 AM
Person
Yancey Ward: BillG wrote:
nothing would change except those that are living off the sweat of others' labor via usury (economic rent, interest, profits) would be forced to fend for themselves...
Then you replied:
I fail to see how geo-libertarianism makes profits impossible, or how it makes interest impossible. Is there something you have not been telling us?
I would like to reply. This is a tricky issue. There are many geoists who are genuinely libertarian-leaning and have no problems with profit, interest, and even private renting out of land, as long as owners pay appropriate site rentals (e.g., Harold Kyriazi). On the other hand, there are geoists who are strongly anti-business and see geoism as more of a means to steal profits, usually by attributing most profits to land rent, and the capability of "charging high interest" to "land monopoly". (Nevermind that risk-free interest rates are now, and were a hundred years ago, already pitifully low. I would know -- I'm a saving type.)
Henry George himself, in Progress and Poverty, denied the existence of profit as possible independent of returns to land, labor, and capital. So most geoists today have problems with profit. I've also noticed that under geoism it is possible to extort profits from businesses. All you have to do is tell the government you're making a high bid on their land (enough to just about capture profit), forcing them to revise up the site rental. Even if that business "calls your bluff" and saddle you with your bid, you can just turn around and rent it right back to that business, or for slightly less, to the next highest bidder really intending to use the land. Of course, the business you're extorting probably wouldn't do that, becasue that would mean forfeiting their full investment in any fixed improvement to the site. BillG (based on statemetns, here and on the anti-state and freestateproject.org boards), seems to be of the latter type and thus would few this as a feature rather than a flaw.
Note that many of the same (flawed) arguments against land ownership apply to interest:
"Renting out land isn't real work." -> "Renting out money isn't real work."
"Nobody produced land." -> "Nobody produced money."
"Land rent inhibits investment." -> "Interest charges inhibit investment.
Published: May 11, 2006 11:35 AM
Yancey Ward
Person,
I have also encountered both types of geo-libertarians, and far more of the latter variety you described.
I have asked BillG on more than one occasion if he agreed that the only rational way to actually, and fairly, assess land rent is by open auction of leases (he frequently writes that "markets" will determine the rent). I have never gotten a really straightforward answer from him on the mechanism of assessment, however.
As for the issue of extortion, I am unconvinced that open auctions could be successfully abused in this way, since taking ownership of the lease would still require payment of the bid. One could simply require up-front payment of the entire rent. My main concern with such a system is that it does not really measure the rent of the unimproved land, since the present lessee will have to account for the removal of his improvements, which violates his labor-value rights, which geo-libertarians claim to want to protect.
Published: May 11, 2006 12:38 PM
Roger M
TokyoTom,
That's what I was trying to say. But if the caucasians hadn't don't it, an elite from with the native tribes would have done the same thing. That's the pattern world-wide. But it will require more than education and more police officers. The culture has to change. You must have judges, policemen, civil servants and legislators who for the most part can't be bribed. Then you have to tax property and collect the taxes, so you need honest tax collectors who can't be bribed. Once you have all that in place, the taxes on land will persuade the wealthy to sell unused land, which in Latin America is a lot. Then you need banks that will lend to the poor so they can buy the land and market rates and not have to resort to loan sharks. It's a very difficult problem. Far more difficult than the socialists want to admit.
Published: May 11, 2006 12:40 PM
Roger M
TokyoTom,
That's what I was trying to say. But if the caucasians hadn't done it, an elite from with the native tribes would have done the same thing. That's the pattern world-wide. But it will require more than education and policemen. The culture has to change. You must have judges, policemen, civil servants and legislators who, for the most part, can't be bribed. Then you have to tax property and collect the taxes, so you need honest tax collectors who can't be bribed. Once you have all that in place, the taxes on land will persuade the wealthy to sell unused land, which in Latin America is huge. Then you need banks that will lend to the poor so they can buy the land at market interest rates and not have to resort to loan sharks. It's a very difficult problem. Far more difficult than the socialists want to admit.
Published: May 11, 2006 12:42 PM
Francisco Torres
Albatroz, uh, do you really want to imply there are UNnatural resources? All resources are natural, meaning they exist in a natural universe. If what you mean is raw materials, then so be it, but if so then I do not know why would it be ethical to consider these communal and not anything derived from them, which is what you imply with your argument. If minerals are communal, then the very same minerals found in cars and bicycles would have to remain communal.
If you answer that labour or effort was applied to them, then it begs the question since it would mean any labour applied would privatize previously untouched materials. For example, my landscaper would thereby OWN my lawn.
Published: May 11, 2006 1:42 PM
Francisco Torres
TokyoTom wrote:
I'm not sure I understand you. Bolivia is a poor nation because the caucasians who have been at the top for centuries (by brutal conquest) chose to run the country for themselves and to keep natives oppressed and poor.
Well, Chile has a large native population and it is run by mostly "caucasians", yet that country is much more wealthy than Bolivia, even without owning gas or oil. The reason Bolivia is poor is not because the caucasians choose to govern, but because of statist, protectionist policies - it would have mattered little whether Bolivia is run by caucasians, or anatolians or datians.
For it to become a wealthy nation will require a greater sense of shared identity and greater opportunity for the poor.
Whenever someone says the poor need more opportunities, my guess is that he or she means they need more access to free money or free something. Opportunities are always there - what people suffer is the many ways the government extorts from entrepreneurs via regulation.
This may require some redistibution of wealth, in the form of taxation that is invested in education and law enforcement, especially protection of property rights.
Interesting how you have to conflicting ethical issues in the same sentence - you argue that an attack on property be used to protect property, that is, wealth distribution (stealing) to finance the protection of property. Investment in education does not require wealth distribution, just requires that governments do not restrict the efforts of entrepreneuring teachers and investors. It is not like I am describing a dream: it is happening right now in Africa and India, where totally private schools (managed by one or more teachers) are creating better educated individuals than what the public schools (financed with wealth "distribution) can even hope to accomplish.
Published: May 11, 2006 2:12 PM
Francisco Torres
Sorry, I meant TWO conflicting ethical issues... not "to"
Published: May 11, 2006 2:14 PM
TokyoTom
Francisco:
You say that "Well, Chile has a large native population and it is run by mostly "caucasians", yet that country is much more wealthy than Bolivia, even without owning gas or oil. The reason Bolivia is poor is not because the caucasians choose to govern, but because of statist, protectionist policies - it would have mattered little whether Bolivia is run by caucasians, or anatolians or datians." Your observation is important, but doesn`t it also lead to the conclusion that Bolivia is poorer because the caucasians chose to manage it that way - by theft and then measures to keep the natives boxed in by policies that don`t allow them to accumulate wealth?
You are right that I think there are ethical conflicts involved - I don`t think there are easy answers. The simplest solutions are to reduce the role of government, avoid confiscatory policies, allow more freedom of commerce, while clarifying and protecting property. But that conveniently ignores that the status quo may not have been fairly gained, and the disruptive resentment that remains - resentment that builds if the government has frustrated individual liberty and economic freedom to date. Isn`t that one of the main reasons why native demagogues who cry for redistribution have appeal? Sometimes old scores have to be settled, at least partially, in order to move ahead, especially if ethnic differences have been heightened - at least the pressure to do so cannot be ignored, which is why Chua advocates paying off the extorionist in some way. But that does pose ethical conflicts, as you suggest.
Published: May 11, 2006 8:00 PM
some dumb historian
So what is Bolivian history like?
Just two links as a starter open to dispute:
http://bolivia.area51.ipupdater.com/
http://www.country-data.com/frd/cs/botoc.html#bo0015
http://www.country-data.com/cgi-bin/query/r-1538.html
Gotta get myself en edjucashen
Published: May 12, 2006 6:04 AM
Yancey Ward
TokyoTom,
I agree, there are no easy solutions to the poverty and the dysfunction of Latin American countries. The problem with such confiscations of property, even if the property was expropriated by past generations, is that such actions do not fix the dysfunctions, but only reinforce them. For example, the Bolivian government has now reinforced the concept that all industries in Bolivia are now in danger of such action. Were I an investor in Bolivia, I would now be looking to liquidate and leave, and would not make any further investments in the country. Almost every government in Latin America, Africa, and the bleeding hearts in the West are trying to eradicate the poverty with self-destructive, but seemingly "easy" solutions.
The only path out of poverty is to institute strong property protection, with low government taxes, and little government power outside that concerned with criminal control. However, even with this, the progress to the present western levels of affluence would take generations.
As I wrote in a previous comment, if you are going to resort to confiscation from affluent elites, then the government must turn these properties over the the citizenry in equal shares, and it must also institute strong property protections. Keeping the properties in the state's hands will not solve the problem, and will ultimately make the problem worse. It is easy to predict what the outcomes will be for Bolivia and Venezuela. Both will be poorer countries 40 years from now than they even are today.
Published: May 12, 2006 9:47 AM
TokyoTom
Yancey, thanks for your response. I agree with much of what you have said - they solutions are in protecting private property, market transactions and allowing stable long-term investment expectations.
There are many obstacles to that, including a history of enthically-based class distinctions and management for the benefit of elites, and a cycle of nationalizations and other paybacks to try to settles scores is counterproductive. But we can still understand what drives them. I think Chua has a point in that long-term growth also requires a development of a confident middle class.
I agree with you that a huge problem is government ownership of resources. The government should try to devolve these resources to its citizens - and should not leave out tribal/community ownership and management by Indians of tracts of land traditionally managed and utilzed by them.
Published: May 14, 2006 3:45 AM