Posts tagged Portugal

Column on Greece in America

Greece in America

Tibor R. Machan

Most of us who are aware of world financial trends know that earlier this year thousands of Greeks took to the street and mercilessly engaged in destruction of property around Athens. They were upset about having to tighten their belts in the wake of the possibility that some of their entitlements will have to be cut and their retirement postponed past age 57. In short, they were upset that the freebies they had come to take for granted may have to be reduced, even completely cut. Few of them seemed to have a clue about how one cannot get blood out of a turnip. After decades of living off the work and incomes of other people and future generations — via borrowed funds — the gravy train is very likely to reach its termination point.

In much of Europe the attitudes of these Greeks is routine. They have welfare states in spades and few have ever warned them about the hazards of living in such systems. These last few years may finally have produced such a warning but only by creating hardship for those who have become completely dependent on the system. Greece, Portugal, Italy, and Spain are just the more drastic examples. But the entire continent is experiencing the consequences of decades of profligacy. Instead of testing a truly revolutionary alternative to socialism — which of course crashed with the demise of the old USSR and its colonies — namely a consistent free market, capitalist economic order (with a proper constitutional framework) — what most Western European politicians chose to do is to turn toward socialism with a human face, of the democratic kind (i.e., without outright police state policies).

This has been a strategy adopted in America as well. Promoters of more and more entitlement programs and top down federal and state government economic regulations have been clamoring for America to become a so called compassionate system (and throwing around accusations that adversaries and critics of government profligacy are mean, lack heart, etc.). These and similar ways were meant to accommodate the moral and political sentiments of the former Soviet system. The only difference is that while the Soviets realized that their planned economy requires the police state and met their demise by applying police state policies, the Western welfare states try to square the circle by preaching compassion and kindness while enacting laws and regulations that in fact require a firm hand by the government.

So after it is becoming clear enough that no system can survive with the reckless economic policies of the welfare state, what is left? We see the answer on the streets of New York and elsewhere with the attacks on Wall Street. Just as the Germans turned upon Jews, whom they irrationally held responsible for their economic wows, the Wall Street protesters are scapegoating a segment of the American population that not only does not deserve this but may actually be the last hope of the American and even world economy. “We don’t much like our situation, so let’s pick on Wall Street traders and companies and blame them for it.” What these people are calling for is just a bit short of stringing up or liquidating the very people who are mostly hard at work trying to earn a living for themselves and their clients.

Yet given the mainly mindless commentaries on the Greek, Portuguese, and Italian economic situations, given how so very few mainstream observers pick the correct culprit — namely, the welfare state and its coercive wealth redistribution and punishment of productivity — it is not all that surprising that young Americans tend to turn on those who are managing to make it in this economy. They feel, having been so urged to feel, that they are owed a living — they have gotten free education and most of them are still getting one (protesting vociferously every time tuition is raised) as an object lesson and now that this can no longer be sustained they are picking on precisely those who carry very little of the responsibility for their circumstances.

Why are so many surprised with this? Almost all of the teachers, from elementary to graduate schools, have preached the welfare statist mantra that we all have a right to be taken care of. So what is one to expect?

Column on Protesting Austerity Measures

Protesting Austerity Measures

Tibor R. Machan

Throughout Europe it is now routine–but it is not unfamiliar by now in the US either–for people to march and otherwise protest (sometimes with out and out reckless violence) austerity measures the government officials have decided to deploy so as to cope with the enormous debt they have amassed, mostly from committing to paying out huge entitlements that are not covered by funds either present or promised.

This is happening in Greece, Portugal, Spain, and other countries and only a few are somewhat prepared to handle them internally, without depending on getting funds from other countries. Of course, many in those other countries are themselves protesting these efforts to rectify profligacy by raiding the treasuries, with EU sanction, of the better managed ones. (Not that any of these welfare states have escaped completely their considerable financial malpractice!) But a substantial portion of the citizenry of Germany, for example, does not view this public wealth redistribution with enthusiasm. And while such welfare states as Germany may have numerous citizens who favor wealth redistribution within their societies, most stop at the border (which goes to show you what kind of “generosity” and “compassion” is involved in welfare statism).

The puzzle is that so many people seem to be aghast at the fact that when the politicians and bureaucrats, most often with substantial support from large segments of the citizenry, accumulate enormous debts, the country not only runs out of funds but looses its credit rating so that borrowing becomes more and more troublesome. Yes, and this is something the USA faces as do Greece, Portugal, Spain, etc.

But why are people protesting? Isn’t it a plain fact of public–not to mention private–finance that one cannot get blood out of a turnip? Aren’t people aware of all this form their own personal economic situations? When one maxes out one’s credit cards, is no longer able to refinance one’s home, and experiences all sorts of economic setbacks–caused, usually, by a smorgasbord of malpractice throughout the economy (which is nearly impossible to sort out so that it might be possible to tell the guilty from the innocent)–why is it that folks insist that somehow, anyhow, all this just get papered over or simply overlooked and that their hefty entitlements based on the fantasy of eternal welfare statism keep being undisturbed?

There can be numerous states of mind that may account for this. One of them is certainly the kind of political shenanigans perpetrated by the likes of those who insist that it is all the fault of the wealthy, who are soaking the treasury somehow–and if so, mostly with the complicity of the self-same politicians–and if only the rich could be soaked back, it would all get fixed. The idea that all this is a zero sum game–so that some are raking in huge gains at the expense of others and it would take but a bit of thorough investigation to sort it all out–is quite prominent in the minds of many, judging by the comments of prominent pundits and media figures on Op Ed pages and talk shows.

Yet there is also the plain delusion on the part of millions of people that one can indeed get blood out of a turnip, a delusion backed by some academic economists’ fancy idea that all it takes to remedy matters is to carry out some kind of magic–like deploying the famous Keynesian multiplier effect whereby the bureaucrats pump a bit of funny money into the economy via artificial money printing and public spending only to have it turn into massive wealth down the road (via the creation of employment based on such phony spending). Still, to make this credible one needs a large portion of the citizenry who all believe in magic to start with, that somehow debts can be wished away, not paid up, for example. That something can come from nothing (and idea that some philosophers actually propose)!

I am sure there are many other sources of the idea that when countries run out of funds, these can be made up by engaging in some imaginative accounting or something, so that there is no need for austerity, certainly for any austerity that will have an impact on the entitlements received by people to whom promises were made based on, well, sheer hope and wishful thinking.

So why aren’t politicians and bureaucrats–and their academic cheerleaders–coming out with some honest explanations, insisting that the citizenry face up to all this and stop throwing hysterical fits when finally the chicken come home to roost? Because most of these public servants are cowards and refuse to make any effort at genuine leadership, statesmanship. So much for their serving the public interest.

Column on Is Capitalism Cruel?

Is Capitalism Cruel?

Tibor R. Machan

Now this issues must always be dealt with comparatively–is capitalism cruel, harsh, heartless compared to what?

Some folks I know have maintained that compared to socialism, capitalism is indeed all these things but I just cannot buy it. Partly it’s because I have lived under at least one kind of socialism, the Soviet version, which, as only someone who has been living in a cave for a hundred years would deny, is brutal, never mind cruel, harsh, and heartless.

But let’s not focus on the worst case scenario of socialism. Let us take socialism “with a human face,” the sort that is usually associated with Sweden, France, Greece or some other country where the government manages much of the society’s economic affairs but doesn’t punish dissidents and ban freedom of speech. Are these bona fide socialist systems and are they gentle and kind to their population?

Again, compared to what? A fully free market, capitalist system in which everyone must live without resorting to extorting their support from others, without getting bailed out by the government with other people’s resources when they have mismanaged their financial affairs–is such a system more cruel than, say, democratic socialism?

Not really, not by a long shot. Any kind of socialism subjects the citizenry to coercive wealth redistribution and makes it impossible to accumulate wealth for oneself, one’s family, one’s enterprise thus impeding investment, savings and economic development. Instead people in socialist systems have to contend with being slowly bled to economic destitution unless they are savvy enough to circumvent all the damaging socialist practices (think here of George Soros). And, yes, there are quite a few people in socialist societies, even the harshest version of them, who manage to game the system. They may not openly attack their fellow citizens but because they game the system at the expense of these fellow citizens, those others are in fact–although sometimes not visibly–being seriously harmed.

These socialist systems with human faces manage to disguise their mistreatment of all those who are made to pay for the mistakes of many who become used to being taken care of, who feel they are entitled to endless help from the government, who don’t want to reach out to people and contend with the fact that generosity and charity must be voluntary whereas being on the dole is coercive but not easily noticed. Who is paying for those food stamps? The minimum wages one receives? The subsidies to farmers and all the rest of the costly welfare measures? No one can tell because it all goes through politicians and bureaucrats and they do not accept responsibility of how they treat the citizenry, for depriving Peter of what belongs to Peter and hand it to Paul (not before they skim a good deal off for themselves). (I develop this idea in my 1970 paper, “Justice and the Welfare State,” The Personalist.)

Moreover, many people judge socialism by the announced intentions of those who support the system, not by the actual consequences it produces throughout a society. All the unseen losses suffered because of the public mismanagement of the economy are overlooked and, instead, people often believe it is “the thought that counts.” But a little serious, disciplined thinking should soon reveal just what is going on and how what appears on superficial sight gentle and sweet becomes, instead, insidious and harmful.

Capitalism is up front about placing responsibility on free men and women and for this it gets a bad rep from those who are duped into thinking that one can tell the full content of a book by its fancy cover. Capitalism, unlike the welfare state, is more like parents who impose discipline and refuse to spoil their children however much they whine about it. Those who think the system is therefore a cruel one are comparable to teens who bellyache about their parents because they are more interested in justice than in mercy (which in exceptional cases is fine but not as a routine).

Because so many people have found free market capitalism too harsh, too cruel, or too mean, the system has never been allowed to function as it had been meant to by those who considered it best for a society’s economic well being, the likes of Adam Smith, Herbert Spencer, Ludwig von Mises, F. A. Hayek, Milton Friedman and Ayn Rand, among others. (Spencer, especially, got no end of grief because of sentiments like the following: “Sympathy with one in suffering suppresses, for the time being, remembrance of his transgressions….Those whose hardships are set forth in pamphlets and proclamations in sermons and speeches which echo throughout society, are assumed to be all worthy souls, grievously wronged; and none of them are thought of as bearing the penalties of their own misdeeds.” [Man versus the State, p.22].) Instead they followed the lead of John Maynard Keynes and insisted that people who mismanage their economic affairs are entitled to endless bailouts from the government.

Is this actually less cruel, less mean than the alternative, once all the results are considered? I seriously doubt it–just think of Greece, Portugal and, of course, the former Soviet colonies, as well of the members of America’s and many other nations’ future generations!

Column on Beautiful & Bankrupt

Beautiful & Broke

Tibor R. Machan

My favorite place to live in America is California. But don’t get me wrong–one size does not fit all. And how wonderful that is, that people differ so much that they could be quite happy living in very different places, some in Miami, some in Houston, some in Cleveland, and some in the San Francisco Bay area. I love this since it helps to confirm my individualist position about human social life.

On a recent visit to Portugal, near Lisbon and right off the Atlantic Coast, I rediscovered that country after having been away from it for 40 years. And it comes across very different now from what it was back then. Most surprisingly it comes across to me like, well, California. Not only is its coastal weather relatively mild anddry but the place is teeming with attractive neighborhoods–not to mention notable history–of all kinds.

Most noticeably, for someone just there for a few days, is how polished is Portugal’s infrastructure. The roads are spic and span; everything is squeaky clean; trains run on time, more or less, and so forth and so on. All in all Portugal looked to me well cared for, again kind of like much of California. (To know what I mean, one needs to check out the hundreds of California junior and community colleges, most of which are built like architectural wonders.)

And, sadly, Portugal and California share something else that’s not to be lost sight of: they are utterly broke and in deep, deep debt. Children and grandchildren in both lands are at this point on the hook for billions to pay back or must ready themselves for defaulting on the debt and having their credit rating destroyed. Unless some angel shows up to rescue these admittedly attractive, appealing communities, their populations are knee deep in trouble. Businesses will flee and are already doing so in droves.

Countries, communities of all sorts, have gotten themselves into this mess by politicians promising the sky to everyone and making good on their promises by way of phantom resources. We know about this from many of our own experiences andthose of our friends and neighbors. (I am no exception at all, what with having refinanced my home several times so as to fulfill the dreams of some of the members of my family and then ending up “upside down,” so much so that the notion that I might retire some day simply cannot be entertained–I will have to die “in office.”)

In the past the dire predictions of sensible economists could be met by reminding them that people tend to edge up to the brink of economic disaster but then start to contain themselves radically enough so as to avoid plummeting to ruin. But while this holds reasonably surely in most people’s private lives, public finance follows different patterns. The tragedy of the commons kicks in and instead of seriously changing from irrational enthusiasm toward caution prudence, public officials–politicians, their cheerleaders, bureaucrats and the rest–get caught up in the spirit of the ponzi scheme, trying to escape the burden of intolerable debt by way of dumping it on someone else, some other institutions, hoping this will avoid having to face the music at any time.

But it seems this scheme just has run its course in most welfare states, and near andfar off future generations will have to suffer. I do not see a way out unless the citizenry of these countries and communities assumes, voluntarily, a hard line stance in favor of austerity. Is that likely? I do not sell people short and very often they do get it right in a pinch but it could also turn out that the financially failed states such as California and Portugal–and a whole lot of others–will have to undergo some very hard times and perhaps the rule of some dictator who will distribute the burdens according to his or her lights, never mind fairness or justice resources. We know about this from many of our own experiences and those of our friends and neighbors. (I am no exception at all, what with having refinanced my home several times so as to fulfill the dreams of some of the members of my family and then ending up “upside down,” so much so that the notion that I might retire some day simply cannot be entertained–I will have to die “in office.”)

In the past the dire predictions of sensible economists could be met by reminding them that people tend to edge up to the brink of economic disaster but then start to contain themselves radically enough so as to avoid plummeting to ruin. But while this holds reasonably surely in most people’s private lives, public finance follows different patterns. The tragedy of the commons kicks in and instead of seriously changing from irrational enthusiasm toward caution prudence, public officials–politicians, their cheerleaders, bureaucrats and the rest–get caught up in the spirit of the ponzi scheme, trying to escape the burden of intolerable debt by way of dumping it on someone else, some other institutions, hoping this will avoid having to face the music at any time.

But it seems this scheme just has run its course in most welfare states, and near and far off future generations will have to suffer. I do not see a way out unless the citizenry of these countries and communities assumes, voluntarily, a hard line stance in favor of austerity. Is that likely? I do not sell people short and very often they do get it right in a pinch but it could also turn out that the financially failed states such as California and Portugal–and a whole lot of others–will have to undergo some very hard times and perhaps the rule of some dictator who will distribute the burdens according to his or her lights, never mind fairness or justice.