Venezuela Campaign: the seized means of production

Since the election of Chavez, and the ‘Bolivarian Revolution’ that continues under Maduro, the Venezuelan private sector has been heavily damaged. Twenty years ago, there were more than 650,000 private companies in Venezuela. Today, there are just 140,000, a loss of almost 80%.

The companies that remain are working at less than a quarter of their capacity. In terms of absolute production, only 6% remains of what there was in 1999. Juan Pablo Olalquiaga, President of industry body Conindustria, has described this as “a very important destruction process” and predicted that production will continue to decline while describing the Maduro regime as one “anchored in feudalism.”

The crisis in Venezuela isn’t abating. If anything, it is getting worse. Companies are closing week after week. Colgate Palmolive have halted production at its detergent plant due to a lack of cardboard packaging. Cardboard shortages were directly caused by the government seizure of the Smurfitt Kappa cardboard plant. After the seizure, production ceased.

When plants stop production, they are usually taken over by the government which claims that it will continue operations. But time after time, they fail to keep producing the goods. Earlier this year the Government took over the Kellogs cereal plant after it announced its closure due to “the current economic and social deterioration in the country”. Under Chavista management, the factory has produced no cereal.

The regime’s policies have made it next to impossible for private companies to operate. They can’t freely import raw materials or components. Any products they do make are subject to price controls, often meaning if they did operate they’d make a loss. Businesses have to sell any currency they gain from exports to the Central Bank, and they are subject to a mass of regulations backed by an aggressive and corrupt inspection regime. This is all part of a Chavista plan to substitute private property with state property. In the 2007-2013 National Plan had the explicit aim of “the progressive development of social property over the means of production and the implementation of fair, equitable and solidary exchange systems that are contrary to capitalism.”

But there is nothing “fair or equitable” in the shortages this has produced. Nor in the state’s harassment of private companies, their take over, and shut downs.

The 2014 ‘Law on Organic Prices’ created the National Superintendency for the Defence of Socioeconomic Rights (Sundde) which is tasked with the “consolidation of the Socialist economic order.” With inflation approaching 60,000%, prices have to change constantly if a business wants to survive. But under Article 39 of the law, an inspector can immediately occupy or shutdown an establishment if he accuses it of non-compliance. In 2017 alone, there were 9,341 inspections which resulted in 3 outright expropriations, 12 shutdowns, 10 occupations, 186 confiscations, and 1,189 cases of state-encouraged looting.

The right to private property is a fundamental human right, but the Chavista regime has tried as hard as it can to abolish it. Even now, millions of Venezuelans do not have legal rights to their homes, allowing the regime to do what they like to homeowners. The economic results of all this are not surprising, but still the regime maintains its destructive policies.

There was a telling exchange at an “economic recuperation” conference in Venezuela this week. A Venezuelan Minister said that the key to increased productivity was more state control. Yu Bin, head of the Chinese Government delegation, replied that had not been China’s experience. He stressed that 90% of companies in China are private and that the aim of government policy should be to help them improve their productivity and efficiency. It is a huge shame that the Venezuelan government refuses to take this advice.

More information on the Venezuela Campaign can be found on their website

Why assume altruism is the important part of organ transplants?

If you start out with an incorrect assumption then all that follows is going to be in error. As with The Guardian here on the subject of organ transplants:

The altruistic character of organ donation is what makes it valuable – and also what makes it fragile. It is a deeply personal gift, which cannot be compelled.

Why must, or even should, we assume that altruism is the important thing here? It’s entirely true that the basic British assumption is that it is. That money should never sully the transfer of body parts. Which is why people die on dialysis waiting for a kidney, the IVF services float on rivers of Danish sperm. Because it is not just assumed but encoded into law that no one may receive payment for the provision of organs or bodily fluids, gametes and the rest.

It is possible to, as we do, take a different view. To be rather more utilitarian. We wish to save lives - possibly create them - as efficiently as we can. As always, still subject to that do no third party harm caveat. So, why not pay for organs. Iran does, it being the only place that does for kidneys. Iran is also, and not by coincidence, the only place where people do not die upon dialysis waiting for one. The US offers good money for eggs for IVF, they not having as a result a shortage of eggs for IVF.

Incentives do work, that most basic lesson of economics.

The real problems and difficulties are not in the regulations. Individuals and their families must be inspired with a vision of what organ donation can do: it is a way to make both life and death more valuable. Transmitting this vision is a process that takes time and demands commitment and understanding from the frontline staff of the NHS. The change in the law is welcome, but it should not be taken as a substitute for the real work that remains to be done.

Rather than working with the humanity we’ve got The Guardian would rather change the humanity. That’s the New Soviet Man delusion and as with the earlier version people die while we wait for the improved version to turn up.

Sure, gain what we can from altruism but if the supply needs topping up with market incentives then why not? Aren’t we actually trying to save and create lives here? Or is moral stance - posturing - more important?

And do note the moral impertinence here. Those defining the current law are imposing their moral visions on those who get to die of them. Well done, most ethical.

Rather missing the point about public service broadcasters

Of all the puzzling things to demand:

An influential cross-party group of MPs and peers has called on the government to guarantee parliamentary time to create new laws to ensure shows made by the BBC and other public service broadcasters (PSBs) do not get buried on the streaming services of big tech and pay-TV giants such as Netflix and Sky.

In a rare alliance across the political spectrum, nine MPs and peers – including deputy Labour leader Tom Watson, Liberal Democrat baroness Jane Bonham-Carter and the Scottish National Party’s Hannah Bardell – have written to the culture secretary, Jeremy Wright, arguing that if the government is willing to stand up to the tech giants over tax then it also needs to act to protect Britain’s public service broadcasters.

“The digital revolution has brought greater flexibility and choice but if we are not careful the enormous power of the global internet giants is going to sweep traditional PSB television away,” said the letter, timed to mark the joint birthday of the BBC and Channel 4.

The purpose of public sector broadcasting is to produce and provide what the market unadorned will not. That such production is being “swamped” by that market unadorned production shows that we don’t in fact need that public service broadcasting, doesn’t it? People are already able to gain their fill of uplifting documentary and woke agitprop.

Thus this claim for special protections - hmm, what’s that? You say this is ageing bureaucracies, or series of them, demanding privilege, protection, from the upstart whippersnappers who risk showing they’re now irrelevant? Oh, well, that’s fine then, that all makes sense.

Carry on.

This is quite true and shouldn't this be a possible choice?

It’s possible to make he Lake Wobegon point here, that we can’t all be at or above the average. Rather more seriously, perhaps this is just the choice that we want to make?

The NIESR’s analysis published on Wednesday suggests the UK has usually opted to spend less on public services and bring in less from taxation as a proportion of GDP compared to other major advanced economies.

It does depend upon which major economies we compare ourselves to. We process very much more of everything through government than the United States does, less than say Sweden - although insisting that, with their populations of the order of the size of London, the Nordics are major economies is a bit rich.

To which the correct response is so what? We are indeed n a democracy, we the people get to choose how we;d like things to be run. And our choice seems to be that we run less of everything through government than some other places.

Quite why, well, one place to go look would be the quality of those who claim to run government for us but that would just be rude, wouldn’t it? Perhaps instead we’ve some cultural attachment to the idea that we should run more of our own lives, they less of our lives. But whatever the reason, the observation is indeed true.

The British have never supported nor been happy with the sort of tax rates, percentages of government in GDP, that applies in some other places. Well, this is simply a fact about the British, isn’t it. A constraint to be worked within rather than something to be overcome perhaps.

Medical cannabis is now legal, roll on recreational legalisation

Following relentless campaigning by countless individuals and organisations from across the political spectrum, medical cannabis has today become legal in the UK with overwhelming public backing. It will take time to ensure adequate patient access but it’s heartening that the traditionally prohibitionist Conservative Party is open to change: spurred on by the bravery of the Home Secretary.

The tide is turning on this issue around the world, with solid evidence that medical cannabis reform not only helps hundreds of thousands of potential patients: it also disrupts drug trafficking and reduces opioid and heroin overdose deaths. Today we join Canada, 31 US states, Australia, Israel, and many European countries in taking this important step.

The same shift is happening with legalisation of cannabis for recreational use. Yesterday saw Mexico’s Supreme Court rule that an absolute ban on recreational marijuana use is unconstitutional; now Mexico’s lawmakers will have to go back to the drawing board to devise a sensible system of regulation. Last month, Canada became the first G7 country to legalise and regulate recreational cannabis, following in the wake of nine U.S. states and Uruguay. There’s popular appetite for change here: a Populus poll released this week found that the general public is now almost twice as likely to support the legalisation of cannabis in the UK than they are to oppose it. Support is strongest among young people, who are some of the biggest victims of criminalisation.

In the coming months and years, we’ll be at the forefront of ensuring the momentum towards more sensible drug policy continues. From packed rooms at party conferences and university talks, to newspaper op-eds and in-depth research papers, we’ve been fighting the good fight for decades. We’re confident that recreational cannabis legalisation will be a reality in the UK. Let’s make it sooner rather than later.


A new record for ending the housing crisis?

Within twelve months, the core of one out of two main proposals in our August 2017 YIMBY report with the Adam Smith Institute is in force as national planning policy. That may be a record for a first report by an author.

The YIMBY campaign found several villages who wanted to have affordable housing or cottages on a piece of land. But permission was blocked by a higher authority because the land was technically green belt.

That made no sense. We said local people should be free to approve new homes if they want to.

Clearly the government agreed: the new National Planning Policy Framework now says exactly that. A parish or neighbourhood forum can approve new homes on a piece of green belt, so long as the layout is open, not creating a new town. It’s called a ‘neighbourhood development order’ in paragraph 146(f).

We already know at least one village working to use that rule. We’re looking forward to meeting people in their new homes when they’ve been built. It’s exciting to have achieved change so quickly.

It turns out that if you find popular reforms, it isn’t hard to persuade politicians to adopt them. Who could ever have guessed?

We’re now pushing for the second idea, Better Streets. We say residents of a single street should be able to vote to set a design code and give themselves permission to extend or replace existing homes – with rules to protect the neighbours.

That would add more homes, make housing more affordable overall and make those homeowners better off, while creating more attractive, more walkable places with more people to support local shops and pubs.

Most people love it, and we still haven’t found anyone who strongly objects. People are mainly affected by building work on their own street. Why not let them approve it if they want to? That could add millions more homes over time, while boosting wages, fairness and growth.

How soon will it be adopted? Encouragingly, the new consultation on building upwards launched with the Budget cited our report.

The biggest obstacle to fixing housing is politics. That’s why we’re promoting popular solutions that get support from local communities.

John Myers is co-founder of London YIMBY and the national YIMBY Alliance, grassroots campaigns to end the housing crisis with the support of local people.

It's not capitalism that fails from its own internal contradictions

So, what does happen to the euro if Italy continues it’s decades long no economic growth, something rather caused by the inability to have the correct monetary policy for that economy? As with the Spanish and Irish property booms, the desperate slumps there and elsewhere when monetary policy was again inappropriate for the varied economies?

ECB heading for 'Titanic iceberg' as Italy crumbles and eurozone slows to five-year low

That might be a little dramatic as a mental image but there’s an underlying truth there. As Herb Stein pointed out, things that can’t go on forever won’t.

The euro is, by definition, the imposition of a single monetary policy upon the varied economies of the eurozone. We can mutter about benefits of such but there are also costs to it. This is what the subject of optimal currency areas is all about. That the peoples of one village use the same currency to transact has obvious benefits, subjecting the entire world to one monetary policy has equally obvious costs. Where’s the sweet spot inbetween?

Obviously, we can all argue about where the euro is on that spectrum. But we’re interested in a rather deeper point.

Marx told us that capitalism would fail because of its own internal contradictions. We’re, to be mild, unconvinced of this. But we do agree that many socio-economic systems do indeed fail for exactly this reason or reasons. The Latin Monetary Union perhaps, the gold standard if you like, the Soviet ruble post there being no Soviet nor Union and so on.

The unifying factor behind those failed systems appearing to us to be when constraints are placed upon that capitalism and free markets. That being what fails, those internal contradictions. When the law, or “the system” imposes too binding a set of constraints upon economic activity then it will be the law, or the system, that eventually breaks.

That is, it’s not capitalism that falls over, it’s those attempts to constrain it too rigidly.

We’d hesitate to insist that this is a law or anything, just an observation. Human behaviour will out and if the State or bureaucratic constraints upon it cannot go on for ever then they won’t.

Blaming capitalism for the failures of the state

They say that an economist is someone who has had human beings described to them but has never actually met one. In which case an Oxbridge economist must be someone who has had capitalism described to them but has never actually experienced it. One such is Oxford economist Sir Paul Collier, who in a recent book aims to instruct us on The Future Of Capitalism. It’s hard to figure why someone who’s never worked outside the state sector is qualified to pontificate on that subject. But having kissed the ring of Oxford, one is apparently entitled to deliver ex cathedra statements on any subject.

Collier has plenty of complaints about capitalism—or about what he thinks capitalism is—that should really be laid at the feet of state interventionism, of the sort that he favours. To him, 1945-70 was a ‘glorious period’ with the creation of the NHS, state welfare, etc., etc. No mention of the strikes, the crippling losses and dismal public service in the nationalised industries, the inflation, the dependency, the taxes, or the economic failure that threw us sobbing into the arms of the European Community.

To him, again, Milton Friedman’s rabid free-marketism, insisting that firms exist only to make profits, eroded the civic responsibility of companies, robbing managers of a social purpose and making them focused on short-term, selfish incentives rather than doing good; and globalisation has made businesses rootless, reducing their civic responsibility even more. No mention again of all the corporate law that drained power from business owners and, perversely, put it into the hands of executives—the ‘principal agent’ problem. No mention of the fact that these days, most businesses are small and SMEs deliver create most of our national product and employ most of our workers. They have a keen sense of responsibility to their community, suppliers, employees and customers. What gets in the way of that is state regulations telling them how to run their businesses and state taxes eating into their ability to generate wealth for all those groups.

London, thinks the prof, absorb too much of the national product; they should be taxed more so that capital is shifted to the regions. One reason for this spatial disparity, he suggests, is rent-seeking by the City and big business. No mention that the bigger the state has grown, the more opportunities for rent-seeking there are. No mention of the fact that the state itself is a centralising force—only praise for ‘state investment’. And that government towns, like London, never suffer economic downturns, but just grow and grow—at taxpayers’ expense.

As for benefits, Collier is shocked that the good old universal benefits created in the ‘glorious’ postwar period have become replaced by targeted benefits, and the idea of whether people deserve (and can benefit from) state help or not has been lost. No mention of the point that while Beveridge had a clear and quite liberal view on such subjects, the politicians who turned his blueprint into deliverable laws did not; nor that state welfare utterly eclipsed charities and friendly societies, working class welfare systems that were highly focused on delivering help to those who really needed it, rather than those who ticked bureaucratic boxes.

Yes, there are a lot of unjustifiable inequalities and unfairnesses around. But is more state intervention and ‘maternalism’ the answer? No, sadly it has been the cause.