Friday, September 2, 2016

Venezuela’s Road to Literal Serfdom

This is a country that had every opportunity to get it right.  It even had huge oil income with which to support an aggressive build out of modernism.  Yet we are presented with the present situation which compares to the destruction of the German Mark in 1923 or the Soviet collapse.

Add in a Latin mindset of using government employment to profiteer and it is almost impossible to see a road back from our distant perspective.

In the end the soldiers will take control and  the people will sort things out as best they can. A generation at least will be lost and in fairness we add that to the last two generations already lost..

Venezuela’s Road to Literal Serfdom

Monday, August 15, 2016

his classic 1841 book on financial bubbles, Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay observed, “Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”

Mackay covered religious and political delusions, too. “We see one nation suddenly seized, from its highest to its lowest members, with a fierce desire of military glory; another as suddenly becoming crazed upon a religious scruple," he recounts, "and neither of them recovering its senses until it has shed rivers of blood and sowed a harvest of groans and tears, to be reaped by its posterity.”

Venezuela is sowing its harvest of “groans and tears." Due to the breakdown of civil society in the country, even war-plagued Syrians feel more safe in their homes than do Venezuelans. Venezuelans are so hungry that they cried at the sight of food in Columbia. Recently the hungry broke into a zoo to kill a horse for its meat. Literally, they have become serfs that may be required to work 60 days or more in agricultural fields.

Venezuela has the world's worst rate of economic growth, and the worst inflation rate. It has become like "a gangster state that doesn't know how to do anything other than sell drugs and steal money for itself." Socialism has virtually destroyed civilization in Venezuela making it seem like a "hurricane [has] swept things away."

When the history of this tragic period in Venezuela is written, the population will have plenty of “culprits” to blame. In blaming many will eschew their own responsibility. Some will blame Chavez; others will blame Maduro. Some will follow their beloved leaders and continue to blame the "elite" and the capitalists. The true believers will continue to insist there is no inherent flaw in socialism; they will simply say mistakes were made that will not be made again.

We are not the victims of the world we see. Our delusions, our beliefs have consequences. The fact that our delusions are often invisible to us does not make them any less powerful or any less consequential. Again, Mackay observed that a population subject to delusions “only recover their senses slowly, and one by one.”

Venezuelans have not yet recovered their “senses.” Caracas radio host Glen Martinez stubbornly insists that the “reforms” that Chavez instituted will never be reversed. “We are not the same people we were before 1999,” Martinez said. Many share Martinez's sentiments; daily the true believers still march nd promise to spill their blood in support of the government. 

There is no better book than Friedrich Hayek’s classic The Road to Serfdom to explain the popular delusions that helped to virtually eliminate the market economy and civil society in Venezuela.

Writing during the depths of World War II, Hayek intended his book as a warning “to the socialists of all parties.” What happened in Venezuela can happen wherever a critical mass of the population begins to hold certain delusionary beliefs.

Popular Delusion 1: Freedom Means Freedom from Necessity

Hayek points out that freedom in Western countries traditionally meant “freedom from coercion, freedom from the arbitrary power of other men.”

Socialists point to a “new freedom” which is “freedom from necessity” which releases us “from the compulsion of the circumstances which inevitably limit the range of choice of all of us.” 

Hayek adds, “the demand for the new freedom was thus only another name for the old demand for an equal distribution of wealth.”

Believing that these two types of freedom can be combined is delusional. Hayek points out that the new idea of freedom “gave the socialists another word in common with the liberals and they exploited it to the full....Few people noticed [that the word freedom was being used differently] and still fewer asked themselves whether the two kinds of freedom promised really could be combined.”

Popular Delusion 2. Only Coercive Planning Can Coordinate Activity

Almost every individual and organization plans. Writes Hayek, there is no “dispute about whether we ought to employ foresight and systematic thinking and planning our common affairs.” 

Hayek thought that to plan or not to plan is not “the real question.” Instead, we should ask if “the holder of coercive power should confine himself in general to creating conditions under which the knowledge and initiative of individuals is given the best scope so that they can plan most successfully; or whether a rational utilization of our resources requires central direction and organization of all our activities according to some consciously constructed ‘blueprint.’”

The humanitarian disaster in Venezuela has been a long time in the making. In 2010, the hungry waited while "2,340 shipping containers with more than 120,000 tons of rotting food (estimated to feed 17 million people for one month)" sat at the government run port of Puerto Cabello.

Believing that the “coercive or arbitrary intervention of authority,” can coordinate and adjust our individual activities is delusional. With this delusion comes disbelief that a market economy can solve problems and advance society. Those who cherish such delusions may find themselves hungry.

Popular Delusion 3: Economic Choice is Not Necessary

Hayek enumerates the warning signs that a society is on the road to socialism. On the road to socialism, people blame “the system” for their troubles and “wish to be relieved of the bitter choice which hard facts often impose upon them.” They “are only too ready to believe that the choice is not really necessary, that it is imposed upon them merely by the particular economic system under which we live.”

Chavez was a master blamer; for many years, the population found their own hatreds nourished by his. Capitalism was a frequent target of Chavez’s lies: “[Capitalism is] an infernal machine that produces every minute an impressive amount of poor, 26 million poor in 10 years are 2.6 million per year of new poor, this is the road, well, the road to hell."

Like other tyrants, Chavez didn't neglect the old, reliable villain of the Jewish people. He railed, “The descendants of those who crucified Christ... have taken ownership of the riches of the world, a minority has taken ownership of the gold of the world, the silver, the minerals, water, the good lands, petrol, well, the riches, and they have concentrated the riches in a small number of hands.”

In blaming "the system," Hayek observes that even well-meaning people ask, “If it be necessary to achieve important ends," why shouldn't the system "be run by decent people for the good of the community as a whole?”

As Jeffrey Tucker has observed, “socialists are scarcity deniers.” Socialists exploit the fact that, in Hayek’s words, “we all find it difficult to bear to see things left undone which everybody must admit are both desirable and possible." In societies turning to socialism, there is no appreciation of scarcity. There is no appreciation that “things cannot all be done at the same time, that anyone of them can be achieved only at the sacrifice of others.”

Thus, there is support for coercive planning, because individuals “feel confident that they will be able to instill into the directors of such a society their sense of the value of the particular objective.” In other words, there is the delusion that planners will follow their wishes and they will receive more of the goods that they want, sparing them from the necessity of making a choice. Why choose between spending your own savings on housing or education if you've been assured that you are entitled to both at society’s expense?

It is delusional to assume that the role of an effective political leader is to control the uncontrollable. To believe that scarcity can be eliminated and hard choices averted is delusional.

Popular Delusion 4: There is a “Common Purpose”

It is essential to understand why there can be no such thing as the “common purpose.” All coercive plans will be win-lose, benefiting some and harming others. Hayek explains, “The welfare and happiness of millions cannot be measured on a single scale of less or more. The welfare of the people, like the happiness of a man, depends upon a great many things that can be provided in an infinite variety of combinations.”

The hard to give up delusion of socialists is that there are coercive plans that will benefit all. Venezuelans have seen the means of production nationalized in the name of the common good and with every intervention their standard of living fell further.

Nothing can be done for its own sake in a totalitarian state. “Every activity must derive its justification from a conscious social purpose” determined by the totalitarian rulers. “There must be no spontaneous, unguided activity, because it might produce results which cannot be foreseen and for which the plan does not provide. It might produce something new, undreamt of in the philosophy of the planner.”

Popular Delusion 5: The Ends Justify the Means

Those who would coerce believe they know what is best for you. If a few eggs have to be broken, that’s a small price to pay for the socialist omelet. Hayek warns that the idea of "the ends justify the means" leads to amoral totalitarianism: “There is literally nothing which the consistent collectivist must not be prepared to do if it serves ‘the good of the whole’ because ‘the good of the whole’ is to him the only criterion of what ought to be done.”

Since there is no majority to agree on a specific plan of action to promote a nonexistent “common good,” the worst get on top in a centrally planned economy.

The “worst” will take advantage of the fact that agreement can be more readily forged by focusing on a “negative program.” This negative program revolves around stirring up primitive hatred contrasting “us and “them.” If Venezuelans were not susceptible to the stirring of delusional passions, Chavez and Maduro would’ve been unsuccessful in obtaining “the unreserved allegiance of huge masses.”

The “masses” that the “worst” seek to mobilize will include those who themselves are not grounded on principles. Hayek cautions that those having “imperfectly formed ideas are easily swayed;” their “passions and emotions are readily aroused.”

The End of the Road

“To make a totalitarian system function efficiently,” Hayek observed, “it is not enough that everybody should be forced to work for the same ends. It is essential that the people should come to regard them as their own ends.” 

The end game is a population that doesn’t realize it is on the road to literal serfdom. Hayek writes: “If the feeling of oppression in totalitarian countries is in general much less acute than most people in liberal countries imagine, this is because the totalitarian governments succeed to a high degree in making people think as they want them to.”
This is why a totalitarian state seeks to eliminate private schools and socialize education.

In 2012 the Chavez government implemented"Resolución 058." “The resolution states that all decisions in every school — public or private — must involve parents, teachers, students, workers, and the community” in order to "construct a new model of socialist society." This model includes the belief that the State is the source of well-being.

Venezuelans will have to recover from their delusions “one by one.” A point in time will come that, due to their suffering, a critical mass of Venezuelans will no longer think as the government wants them to think. In the meantime, let us remember that Hayek wrote The Road to Serfdom to warn that the descent into socialism can happen anywhere. Let us have empathy for the suffering of the Venezuelans; and as Hayek would have hoped, let us also watch and learn. 

Barry Brownstein

No comments: