Economics

Didn’t ever expect I’d personally experience Soviet Union and Venezuelan style grocery stores.

Chaika 3 (on redscale film) – Queue by Jaroslav A. Polak is in the public domain (CC0 1.0). Lines like this outside a grocery store were normative in the Soviet Union.

In the Soviet Union and Venezuela, grocery shopping involved/involves listening for rumors of which store got a shipment overnight, standing in line for hours, looking at lots of empty shelves, and going to the store daily to see if what you need might actually be on the shelf today.

If you have been awake the last seven days, you know that is what grocery shopping looks like in the U.S. today.

The difference between the Evil Empire and the worker’s paradise of Venezuela on one hand and the United States on the other hand is that the supply chain in the U.S. is still stocking the shelves and in a week or two or three will have them filled up.

(more…)

By Jim Ulvog, ago

The 2010’s: best decade in history.

Image courtesy of Adobe Stock.

Matt Ridley explains the best improvement in living standards for us humans over a single decade is the decade that ends today, 12/31/19.

He explained his point from multiple directions on 12/21/19 in Spectator: We’ve just had the best decade in human history. Seriously.

A few of his points that caught my interest:

The rate of extreme poverty in the world has dropped from 60% when he was born to under 10% in this decade. If you ache to seek less people in dirt eating poverty that is a wonderful thing.

(more…)

By Jim Ulvog, ago

Yet another consequence of central planning: systemic sexism

Empty store shelves. Image courtesy of Adobe Stock.

Central planning is one of the major features of socialism. A major consequence of central planning is shortages. The widespread shortages are even more severe in the purest variation of central planning: communism.

Chelsea Follett points out The Shocking Sexism of Central Planning in Human Progress back on 12/6/17. She reports on a book How We Survived Communism and Even Laughed which explains that central planners in the Soviet Union placed low priority on many products that women needed.

Oh, Frederick Engels considered housework unmanly, so the burden of no washing machine, dryers, or other time saving devices fell on women. Severe shortages of makeup, hair dye, and even sanitary napkins (yes, you read that right, basic hygiene was not a production priority in the worker’s paradise) made for a harsh life for women.

(more…)

By Jim Ulvog, ago

What could possibly have caused the increase of income per person over last 200 years?

(Article cross-posted from Outrun Change because a few of the factors necessary for these changes to happen are property rights, economic freedom, and political freedom. In addition, it is capitalism, not socialism or communism that made these changes happen.)

Here is an approximation of annual per capita GDP from 1 AD through 1913:

I’ve long been amazed at the radical growth in per capita wealth over the last 200 years. That means since the Industrial Revolution.

Living in dirt-eating poverty as the normal way of life for essentially every person on the planet changed about 200 years ago, give or take.

(more…)

By Jim Ulvog, ago

While on a long road trip, what economic system provided the goods and services I needed, when and where I wanted them?

How is it that services are available on the interstate highway system when and where I need them? Image courtesy of Adobe Stock.

I took a road trip from the Los Angeles area to Williston last week. My wife and I drove there with our son and his family.

A few questions came to mind on the trip

Questions

1. What economic system provides a gas station within a few miles of the point that we decided we wanted to fill up the tank?

With four drivers in the car,  we were planning to drive on through the night. We were too tired to do that so we decided to stop for the night.

2. What economic system provides multiple hotels and motels half an hour down the road from where we changed our mind?

3. Furthermore, when we wanted to stop, what economic system provided motels at multiple price points so we could pick the one that fit our price range and taste?

4. Why is it that the motel we choose included a full breakfast for all of us in the price?

5. Why did the motel even have two upgraded lamps on the night stands each with 2 USB charging points and two electrical outlets on the base of each lamp?

Answers

(more…)

By Jim Ulvog, ago

Bleak outlook for Venezuela

Image courtesy of Adobe Stock.

With the supreme court compromised, the president outmaneuvering the congress, all members of the military under the watchful eye of Cuban zampolits (political officers), and the most loyal members of the military allowed to enjoy the spoils, there doesn’t appear to be much hope for either a peaceful solution or near-term end to the massive, intentionally caused humanitarian suffering in Venezuela.

Here are two short comments on the escalating violence and a long discussion of a feature article on the collapse of democracy and the economy.

6/16/17 – AFP at Yahoo News – Venezuela mobs kick, burn thieves in lynching epidemic – What happens when governments take actions that prevent the economy from working and as a result people are starving? Thieves start robbing people of food at gunpoint (money isn’t worth stealing).

What happens when robberies get out control because there is so much disruption and the government can’t do anything to maintain peace and there is widespread suffering? Mobs start lynching robbers.

There were 20 reported mob driven lynchings in 2015, 126 in 2016, and 60 in the first five months of this year.

In one attack on an armed robber, the police were able to pull the near-unconscious man into a police car as the mob cheered having beaten him. Another reporter filmed a robber being set on fire.

As another indicator of the breakdown in the social contract, Venezuela has one of the highest rates of murder in the world. That merely 6 out of 100 murders results in jail time dangerously wears away at the idea of government being able (or willing) to maintain social order. That contributes to the vigilante justice.

In addition to the massive suffering due to shortages of food, medicine, and electricity, Venezuela is slipping into a life of vigilante justice.

6/22 – Al Jazera – One killed as Venezuelan Troops fire on protesters – Another day of protests.

Another day of protesters getting shot at point-blank range.

One died, two wounded.

Number of dead in the last three months is somewhere around 80.

(Yes, Al Jazera is pointing out the collapse of Venezuela.)

6/23/17 – Wall Street Journal – ”The Last Battle for Democracy in Venezuela” – Article provides an in depth description of the economic collapse, current political direction, how the country got into this horrible disaster, and the bleak prospects for an end to the suffering.

Shrinking opposition

Opposition to the destruction of the country is coming from the Congress and Attorney General. The government is working to get rid of the Atty. Gen. and has a plan to replace the Constitution and Congress.

The government has already taken over control of the Supreme Court. The military was purged in 2002 after an attempted coup and now appears to be completely controlled by the government. The Cubans took over indoctrination and training of the military after the coup.

Path forward to end democracy in the country

(more…)

By Jim Ulvog, ago

Venezuelan government supported with cash from investment bank while support from military is weakening

Image courtesy of Adobe Stock.

A New York investment bank bought bonds from the Venezuelan central bank at a steep discount and got a lot of heat for doing so. The military is applying more violence to protesters as support from the rank and file appears to be shrinking.

5/30 – Wall Street Journal – Goldman Sachs Under Fire for Venezuela Bond Deal – Goldman bought $2.8B of bonds issued by the government-owned oil company for $865M. That is 31% of face. If, and this is a big if, the bonds were to be paid in full, on-time, at face value that would produce a 40% return.

Goldman is in a PR mess because the bonds were held by the Venezuelan central bank, meaning Goldman essentially put almost a billion dollars into the government’s hand.

Article says Goldman has been increasing their holdings of Venezuelan debt over the last few months. Their play is that if government gets its finances in order, the bonds will soar in value and Goldman will make a huge profit.

(more…)

By Jim Ulvog, ago

Why, oh why, did production of oil and food collapse in Venezuela? What could have caused this amount of human suffering?

Shipwreck standing on the beach with the sea in the background. Margarita Island. Venezuela. Photo courtesy of DollarPhotoClub.com

Devastation in the oil industry and food supply chain in Venezuela is due to intentional government policies.

One article sees how the government caused the damage to the oil industry while another article sees the devastation in the food supply but cannot see any direct cause.

(Cross-post from my other blog, Outrun Change.)

5/7/17 – Forbes – How Venezuela Ruined Its Oil Industry – Here is a primer on how to destroy your oil industry when you have the world’s largest proven reserves of oil and are in the top 10 of world oil producers.

If you want to destroy your country, the article provides a how-to-guide, using Venezuela as the road map.

The high point of oil production in Venezuela was 3.5M bopd back in 1998, which not by coincidence was the year Hugo Chavez became president. Production then began to slip. How could that be?

After civil unrest in 2002 and 2003, Chavez fired much of the staff of the national oil company, letting go 19,000 experienced staff.

Let me translate that: 19,000 staff who knew how to produce extra-heavy oil were fired and replaced by people whose primary job skill was loyalty to the president.

Extra heavy oil takes specialized knowledge and is very expensive to produce on top of oil production already being capital-intensive.

To generate more revenue, Venezuela invited five of the oil majors to develop more oil production. The form of investment was a partnership. The five majors invested many billions of dollars in oil production.

(more…)

By Jim Ulvog, ago