Economics

Suffering increases in Venezuela, all as a result of official government policies

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

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

The level of suffering in Venezuela is increasing. All of the blame for the current and future suffering can be laid at the feet of the socialist government.

Previously mentioned Venezuela is in the early stages of hyperinflation:  Instead of reading about hyperinflation and economic collapse in history, you can watch it play out live. Tune in to Venezuela.

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

Some more discussion on the increased suffering:

2/6 – The Economist – The endgame in Venezuela – A few stats from the article:

Government acknowledges that for the 12 months ending 9/2015, inflation was 141% and the economy shrank 7.1%.

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By Jim Ulvog, ago

Instead of reading about hyperinflation and economic collapse in history, you can watch it play out live. Tune in to Venezuela.

ten trillion Zimbabwe dollars. Not the largest currency in circulation, but close.

Ten trillion Zimbabwe dollars. Not the largest currency in circulation, but close. Tragedy of hyperinflation is playing out again, this time in Venezuela.

The hyperinflation in Zimbabwe resulted in a ten trillion Zim note being worth four cents in American dollars. That would be:

  • Zim$10,000,000,000,000  =  US$.04

When that level of financial devastation happens, it is the result of government policy. Usually socialists pull it off, but German also did so before WWII.

Previous posts:

Venezuela

If you are so interested, you can now watch the sad story as it plays out in Venezuela.

2/3 – Wall Street Journal – Inflation-Wrought Venezuela Orders Bank Notes by the Planeload – Usually governments deal with out-of-control inflation by adding two or three zeros to the currency. Instead of the largest bill in circulation being a 100 unit note, the next run of currency is for a 10,000 unit note. In six months or a year there will be a 500,000 or 1,000,000 note in circulation.

Article says the Venezuelan government isn’t doing that because to do so would acknowledge the astronomical inflation. As the saying goes, denial isn’t just a river in Egypt.

Instead of acknowledging that inflation is running out of control, the government of Venezuela is flooding the economy with the same denomination note. In the last several months of 2014, the article says there were three dozen flights of 747s into the country hauling nothing but currency. Over 30 cargo holds filled with currency.

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By Jim Ulvog, ago

Which group pays more in individual income taxes? The top 1% of earners of the bottom 95%?

If you guessed the bottom 95%, you would be right.

Follow-up question: What is the spread between the percentage of taxes paid by each group?

What do you think it is? A multiple? Something like double or triple what the 1% pays?

Maybe just a percentage more? 30%, 50%, 60%?

Actually the spread is thin.

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

Check out the following graph:

taxes by top 1 and bottom 95

 

Used with permission of Prof. Mark Perry at Carpe Diem.

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By Jim Ulvog, ago

Why I am so optimistic – 3

The future is so bright we need sunglasses. Image courtesy of DollarPhotoClub.com

The future is so bright we need sunglasses. Image courtesy of DollarPhotoClub.com

The number of people working in manufacturing has been declining for many years. Those job losses will continue at the same time as technology disrupts other industries causing the loss of more jobs.

This is not a new concept. Technological advances have devastated farm employment over the last 150 years.

(Cross-post from my other blog, Nonprofit Update.)

Prof. Thomas Tunstall pondered Where the New Jobs Will Come From. Sub headline on his 11/4/15 article said:

In 2007 iPhone application developers didn’t exist. By 2011 Apple had $15 billion in mobile-app revenues.

Consider the percentage of the population employed in agriculture over time: (more…)

By Jim Ulvog, ago

Why I am so optimistic – 2

200 years ago subsistence agriculture was the norm across the planet. Photo courtesy of DollarPhotoClub.com

200 years ago brutal poverty was the norm across the planet. Not so today. Photo courtesy of DollarPhotoClub.com

Previously mentioned when I look at long-term economic trends I am incredibly optimistic. When I look at the headlines this morning or news from the political world, I am very discouraged.

(Cross-post from my other blog, Nonprofit Update.)

To see one illustration of why I am so optimistic for the long-term, check out a column by Glenn Reynolds at USA Today: Actually, things are pretty good / Free markets and free inquiry have changed the historic ‘norms’ of poverty and violence.

Earlier post summarized in one paragraph what caused this radical improvement.

Here are a final two points from the article I’d like to highlight:

Second, it is possible for us collectively to turn back history.

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By Jim Ulvog, ago

Why I am so optimistic – 1

200 years ago subsistence agriculture was the norm across the planet. Photo courtesy of DollarPhotoClub.com

200 years ago brutal poverty was the norm across the planet. Not so today. Photo courtesy of DollarPhotoClub.com

When I look at the political news or any news in general I get very pessimistic about our future.

In contrast, when I look at the amazing things happening beyond the headlines in today’s newspaper I feel incredibly optimistic.

Consider that private companies are developing the technology for space exploration. Consider the energy revolution created by hydraulic fracturing and horizontal drilling. Consider radical changes in technology that are making so many things easier, faster, and cheaper. Consider that anyone that wants to do so can publish their own book, distribute their own music, or create a feature movie.

As a tiny illustration, look at my company and pastimes. Technology allows me to run a high quality CPA practice without any staff. In my spare time I am a publisher and journalist. Anyone in Europe or North America or most of Asia could easily do the same and at minimal cost.

(Cross post from my other blog, Nonprofit Update.)

When I look at long-term economic trends I am incredibly optimistic.

For yet one more explanation of why that is the case, consider a column by Glenn Reynolds at USA Today: Actually, things are pretty good / Free markets and free inquiry have changed the historic ‘norms’ of poverty and violence.

Until relatively recently, an illness-filled short life of dirt-eating poverty was the normal condition for practically everybody on the planet. In the last 100 or 200 years life has gotten radically better for practically everyone.

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By Jim Ulvog, ago

Intentional federal policies extended Great Depression by seven years

Hunger sculpture at FRR Memorial in Washington DC. How much earlier could hunger have ended with different policies? Photo courtesy of DollarPhotoClub.com.

Hunger sculpture at FDR Memorial in Washington DC. A monument to the man whose policies added extra years to the Depression yet who rarely gets credit for the unnecessary suffering. Photo courtesy of DollarPhotoClub.com.

An extra seven years.

That is the conclusion two economists published back in 2004: intentional policies from FDR added seven years of suffering for the country.

Yes, that analysis was published back in 2004. Sometimes it takes me a while to catch up on the news.

On 8/10/04 the UCLA Newsroom published FDR’s policies prolonged Depression by seven years, UCLA economists calculate.  Update: The analysis is from Professors Harold L. Cole and Lee E. Ohanian

Cause

The cause of extending the Great Depression, according to the economists, was the National Industrial Recovery Act (NIRA) which protected industries from antitrust prosecution in return for adopting collective bargaining agreements. The result was unions drove up wages beyond where the market would have set them, companies were intentionally not prosecuted for collusion, thus companies cooperated in setting prices, which in turn drove up prices to consumers. As a result consumers had much more difficulty affording stuff and therefore actually bought less stuff, which further contracted the economy.

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By Jim Ulvog, ago

Everyone everywhere has gotten far richer in the last 200 years. Hmm. I wonder how that happened?

After you celebrate that the average level of income has increased radically in the last 200 years, ponder how that happened.

10/18 – Max Roser – Economic World History in One Chart – Mr. Roser is superb with data visualization. Tweet from Max Roser ?@MaxCRoser :

  • Economic world history:
  • 1800 Poor & equal
  • 1970 Unequal
  • 2000 Much richer & more equal again.

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

Click here to see the very cool graph. Keep in mind it is on a logarithm scale, roughly meaning that each marked increment on the horizontal axis is an increase of 50% or 100%.

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By Jim Ulvog, ago