Venezuela's Directive 10-289
I have written before that the best way to read Ayn Rand's Atlas Shrugged is not as a character-based novel, but as an extended exposition taking socialism to its logical conclusion. That ultimate conclusion in the novel is directive 10-289, whose first two points are these:
Point One. All workers, wage earners and employees of any kind whatsoever shall henceforth be attached to their jobs and shall not leave nor be dismissed nor change employment, under penalty of a term in jail. The penalty shall be determined by the Unification Board, such Board to be appointed by the Bureau of Economic Planning and National Resources. All persons reaching the age of twenty-one shall report to the Unification Board, which shall assign them to where, in its opinion, their services will best serve the interests of the nation.
Point Two. All industrial, commercial, manufacturing and business establishments of any nature whatsoever shall henceforth remain in operation, and the owners of such establishments shall not quit nor leave nor retire, nor close, sell or transfer their business, under penalty of the nationalization of their establishment and of any and all of their property.
When I first read this at age 18, I thought this was a bit over the top. But I have seen similar things in my lifetime, even in the US. I remember years ago a law in Oregon where companies could not go out of business without the state's permission.
More recently, Atlas Shrugged has started to become redundant -- we don't need it to see the logical conclusion of socialism, we can just watch Venezuela. Here is a brief dispatch from that country via Glen Reynold's, showing that Venezuela has gone full 10-289
This is not a joke nor even an exaggeration. I just found out that my sister in law’s other brother-in-law was arrested in Venezuela at the airport while trying to leave the country. His crime, he was an employee for a company that went out of business. Waiting for more? There isn’t any. Maduro has decreed that any business that goes out of business has committed economic treason and its employees are subject to arrest. They had already arrested numerous owners and managers but this is the first time they went after rank and file worker bees.
Feel the Bern, suckers.
SamWah:
Well, Maduro's just not smart enough to do socialism RIGHT.
August 5, 2016, 9:24 amMJ:
Oh, and forced labor too. That's quite the two-fer.
August 5, 2016, 9:53 amCC:
How a company is supposed to stay open with no money and no raw materials...
August 5, 2016, 12:01 pmTo be safe, these companies should not declare that they are closed until all their employees have left...for training, yeah, that's it, training.
Maximum Liberty:
Warren:
The original directive was during the Roman Empire. It was intended to stabilize tax revenues. It tied people working the land to their land -- i.e. created the legal basis of serfdom. This kind of directive is on the most well-established road to serfdom.
Generally see https://en.wikipedia.org/wiki/Diocletian#Economic. Diocletian was a villain.
Max
August 5, 2016, 12:24 pmAnn_In_Illinois:
I remember a couple of years ago when an American who was part of a joint venture between an American and a Chinese company, in China, was kidnapped by the Chinese partner after the American company gave them notice that they wanted to leave. People who knew China were shocked that the idiot Americans would tell them they wanted out before evacuating all of their employees from the country. What the heck were they thinking? Kidnapping is a well-established business resolution method in China.
When China was putting together the rules for IPOs in the 1990s (when many State Owned Enterprises wanted to list to get cash, but a board got to choose who could and couldn't list), one of the rules was that the firm applying for a listing should not bribe or threaten members of the listing committee. In other words, none of the traditional 'approve my listing and your son will be released unharmed'.
August 5, 2016, 12:42 pmmlhouse:
ANd the CIA is the real cause of all the problems.
August 5, 2016, 12:48 pmmk:
Cough - this is a great example of the excesses of attempts to run a planned economy, and thank you for reporting it!
It is, however, bordering on insanity to equate the actions of an authoritarian extreme socialist government to the presumed future state desired by a left leaning political movement in the US that wouldn't even make it past moderate status in most other countries. Seriously, other than the stupid idea of higher minimum wages, most of their platform was reasonable (can we haz healthcare, education and simpler taxes?)
August 5, 2016, 3:51 pmNot Sure:
Healthcare and education, brought to you by the people who gave you the DMV? Be careful what you wish for.
August 5, 2016, 7:07 pmAgammamon:
Reasonable? You've seen what we *already* have for public education and you want MORE of that? You've seen the 80% nationalization of the health insurance industry alongside the performance of the completely socialized VA medical structure, and you want MORE of that?
Simpler taxes? I don't get where you think Sanders, Clinton or any of the 'social democrat' types are planning on simplifying taxes. That's a libertarian thing. Both SD's and more traditional statists love a complicated tax regime as it allows them to pick and choose winners and losers by adjusting tax policies, blame problems on 'people exploiting loopholes', and generally increase the power of the state (and by extension, themselves). Ask them. They'll tell you straight up that any tax regime *must* be progressive and that, because it increases the percentage of tax taken based on income, throws 'simpler taxes' right out the window.
The rich just need to 'pay their fair share', right? Then we'd have enough money for chocolate sprinkles for everyone's ice cream.
August 5, 2016, 9:08 pmAnn_In_Illinois:
Have you been watching how Chavez took a strong economy that exported all kinds of products and turned it into one where people cannot get basic foodstuffs? He did it step by step, largely through promising "free stuff".
He'd take one product - say, powdered milk - and promise people that it would be cheaper from then on, because he was setting a maximum price it could be sold at. That was fun for a while, as long as existing stock lasted, but then it got hard to find powdered milk. Time to promise the next category of free stuff! Set a maximum price for coffee, and suddenly it's cheaper as well, and the supply doesn't dry up instantly because farmers have plants that continue to produce. Of course, the local coffee industry doesn't have reinvestment, since growers have to slash costs every way they can, so supply shrinks over time. Time to promise another category! And when supply plummets because the maximum price is set below the cost of production, well, it's time to nationalize the industry! If stores aren't selling those goods below cost, just take the stores! Blame all problems on hoarders and the black market. And if producers try to export because the maximum price in the country is too low, just make that illegal, or put them in jail and give their production facilities to your buddies.
Step by step, the Venezuelan economy has been dismantled, and it was through the policy of "free stuff". It was all based on the "you didn't build that" approach that wealth just happens, so the important thing is to grab and redirect it, not to create or produce. It takes time, but once you establish the philosophy that the legitimate role of government is to grab and redistribute, the path is pretty easy to follow. Zimbabwe did it, Venezuela did it, and Bernie would take us along the same route if he could. I don't think Bernie would be nearly as corrupt about it as Mugabe or Chavez, so it would take longer if he was doing it (he doesn't have that much time left), but Hillary is more than qualified to add the corruption aspect that would speed the decline.
Hopefully our laws and institutions would stop us before we went too far, but the steps Bernie would like to take are very, very consistent with Chavez's 21st century socialism.
August 6, 2016, 9:20 amHRIT:
Did you happen to hear the NPR story about food shortages in Venezuela? It was infuriating. They found commentators who simply refused to acknowledge the role of centralized pricing in creating the tragedy. He said something like, "Well, people on the other side politically would probably also point to the government's efforts to set prices centrally," while insisting the problem was solely the combination of too much government growth combined with dropping oil prices.
Later in the story, the reporter asked why people weren't protesting. The local color commentator said that they were afraid, because students who had protested several years ago are still in jail. Nope, couldn't be a problem with a corrupt, failed system at all, now could it?
August 6, 2016, 11:38 amjames:
haven't read Atlas Shrugged. Is it an instruction manual or an operating manual?
August 6, 2016, 2:27 pmmx:
Well said. There's a big difference between proposing health care and education policies that work quite well in countries like, say, Germany and converting the country to a planned economy where grocery shelves sit empty and employees are subject to arrest in the event of bankruptcy. It's perfectly fine not to like those proposals or think they aren't right for our country, but nobody is trying to turn the US into Venezuela.
August 6, 2016, 4:34 pmGoneWithTheWind:
It's more like Revelations and biblical predictions.
August 6, 2016, 7:09 pmsteve:
Yea, socialism need not devolve (at least not quickly) into Venezuela. But it is nevertheless a perfect example of the effects of socialism, ruining 10% of the economy by socializing medicine (more) isn't as bad as ruining the whole economy by socializing everything but it still destroys 10% of your economy. It doesn't go from being "good" to being "bad" at some magic tipping point. Even small amounts of socialism are bad for the economy albeit in small ways. The worst mistake repeated over and over again is socializing food production which results in food shortages and eventually if not corrected starvation. Yet, somehow even mass starvation where socialization of food production is tried is not enough evidence that socialism doesn't work for some people.
August 7, 2016, 5:33 amsteve:
It is a rather hard to read and preachy novel on the dystopia of socialism. Unfortunately, it could very well be read as an instruction manual for politicians on what to say and who to blame in order to turn a prosperous country into Venezuela.
August 7, 2016, 5:49 ammesaeconoguy:
The presumed future state of US leftists is no different than actual results of Venezuela, or any other socialist regime.
The fact that some (note: some) US leftists may not want total destruction of the economy is irrelevant; it will happen and is happening anyway, in spite of that desire. The outcome is the same irrespective of intent.
If you actually believe that platforms incorporating fully socialized medicine and increased state power beyond what we already have are “reasonable,” then you have a gigantic comprehension problem.
August 7, 2016, 1:42 pmJ_W_W:
Yep. Hillary is already running her "I'll solve all problems by taxing the rich and those evil corporations" ads.
The Progressives know but never admit that the rich (people or companies) do not have enough money to satiate the government's voracious appetite for taxes.
August 7, 2016, 2:22 pmFifty Ville:
It's a documentary.
August 8, 2016, 12:23 pmAnn_In_Illinois:
Wow, that's sad. People on the left like to claim that they're the party of science and evidence, but how could anyone look at the evidence on planned economies and still support them? Venezuela couldn't possibly have laid out the inevitable process any more clearly for us, but most people will just close their eyes and pretend it all didn't happen.
August 8, 2016, 2:26 pmmk:
This attitude of "I can with certainty predict the future fifty years from now based on rudimentary similarities" is exactly what I was criticizing. Nobody can.
And because I feel charitable, some counterexamples: Germany, France and Britain have for decades had far more left leaning parties and presidents, often running the government for eight to twelve years, with no such outcomes.
August 8, 2016, 4:29 pmmesaeconoguy:
Wrong.
I can predict with 100% certainty that Britain’s NHS – fully socialized medicine – will collapse, mostly because it is collapsing right now. But that was the inevitable outcome; it was predestined at inception.
France has failed economically, in large part thanks to its absurd social welfare programs and corrupt labor laws that would make a South Side Chicago Alderman blush, and Germany, with its many problems and now sole leadership of the European Economic Community is not far behind.
You suffer from the fatal conceit that slightly milder forms of collectivism as practiced by (for example) European nations are somehow “successful” simply because none of them have imploded yet. In fact, Greece has, and Italy is very close to collapse as well, thanks to its nonexistent banking sector, which has imploded.
So you need to come up with far better examples than France, Britain or Germany. The problem is, you can’t, because there aren’t any.
Your argument boils down to “You can’t predict the future (wrong), and the right people might get it right/have gotten it right this time/next time (also wrong).”
Apparently you do have a massive comprehension problem, coupled with an historical ignorance problem.
August 8, 2016, 6:28 pmBryan Patterson:
Mesaeconoguy,
My opinions and conclusions are pretty much in line with your comment.
However, I feel the need to point out that your tone and personal remarks are probably counterproductive. Particularly if your intent is to convince mk or other third parties of the reasonableness of your arguments.
Bryan
August 9, 2016, 9:41 ammesaeconoguy:
I’m uninterested in converting the stupid, Bryan.
I am interested in correcting their economic misconceptions and misstatements.
What they (and others) choose to do with that information is not my concern.
August 9, 2016, 3:21 pmfotini901:
It's almost like predicting that free-market libertarianism leads to Somalia.
August 10, 2016, 11:48 amKurt:
Think in thirds; a third of the people are like you and will oppose the power and money grabbing politicians, a third will cheer on any effort to seize more of others people money by taxes and regulation (as long as they get a share), and roughly a third sit on the fence. They feel that some programs are worth being supported by 'seized' money and some regulation at the Federal level is a necessary evil for the common good.
You need to think about building bridges to the third that you can reach, and persuasion is more necessary than it used to be thanks to the horrible state of American public education.
I would suggest people look at how good things were in Venezuela prior to Chavez and how quickly the rot took hold. It took Chavez less than fourteen years to doom his country, eight years of Obama has made a good start on the same road for the US.
August 11, 2016, 8:00 amNot Sure:
"but nobody is trying to turn the US into Venezuela."
And nobody is saying that anybody is trying to do that. What they are saying is that is where socialism leads.
August 11, 2016, 2:17 pmmesaeconoguy:
I used to think that way, but now am convinced that most people lack the comprehension level needed to process information correctly, and I’m seeing this not just in the economic arena.
I now write off 5/8 – 2/3 of the voting public as deeply ignorant morons, which they have shown themselves to be. We’re working towards ¾ of the population succumbing to the repeat historical failure of collectivism, thanks in large part to failed, leftist-run public education. The fact that Bernie Sanders was a viable candidate at all speaks volumes of the total ignorance of the left about economics and economic history.
I provide information that most of these people are not aware of, and much of which they cannot understand. Call it a Sisyphean task, but they will learn economics principles either from my refutations of their ignorance, or through real world experience. The laws of economics cannot be repealed, as Venezuela is learning.
Excellent point about Venezuela, and here’s additional color –
https://mises.org/blog/venezuela-has-one-choice-capitalism-or-chaos
Unfortunately, I do not believe bridges are even possible anymore. We are substantially on our way to collectivist collapse. The left have essentially won (with a lot of help from the right), as it is extremely difficult to unwind gargantuan constructs like Obamascare, and bankrupt Socialist Insecurity. And more people are feeling the Bern, not fewer.
Sadly, it will probably get a lot worse before it gets better.
August 11, 2016, 3:09 pmmk:
While I am a bit late to this discussion, I'd like to point out that the position of "I am right, nothing could convince me that I am not and there is no point in arguing or attempting to convince people who think differently of my position - because I am right" has been around for a while but isn't necessarily the most productive for a public forum.
Ad hominem is fun an righteous, but ultimately not productive.
The left wing/communism/planned market catastrophe argument based on a few hand picked examples works just as poorly as the "any right wing politician will lead to genocide" argument. The interesting observations typically result from looking through the full spectrum.
August 11, 2016, 4:08 pmmesaeconoguy:
You perfectly illustrate my point.
There are things called economics and history of which you are blissfully unaware. The examples are not “hand-picked.” Socialism always fails, for very well-established economic reasons.. Degrees of socialism differ only in their failure rates, and no scheme has ever succeeded.
Slight socialism is no different from full socialism.
Being slightly socialist is like being slightly pregnant. Eventually, either something happens and you go all the way, or you reverse course, as it were.
You can either understand this, or repeat history. You will choose to repeat history.
This is why you have been written off.
August 11, 2016, 7:18 pmKurt:
A little late reading your response, had dinner with my GF and we went to the beach to try and spot the Perseid Meteor Shower. I saw one before the clouds rolled in, she didn't. I'm in trouble.
No, the percentage of Americans that can be accurately described as 'Stupid' isn't anywhere near that high. Except in regard to politics. I'm very much afraid that until the real bite begins, real want, real fear; these people that can deftly wield a iPhone or capture a virtual pokie-whatever will play with their toys until the SHTF.
However, as long as the basic intelligence is there (somewhere), when the pain gets their attention they can learn.
If we remind ready to accept and help them.
August 11, 2016, 9:23 pmmesaeconoguy:
The only problem with your theory is that the stupidity moniker applies to general knowledge, including and especially economics.
If the voting public were to have an honest accounting of our current fiscal and overall financial status, there would be a libertarian revolution overnight, and all in power on the left and most on the right understand this, which is why they continue to obfuscate the dire straits we now find ourselves trapped within.
But I agree with the rest of your assessment.
The temptation of socialist policies is immense. Unfortunately, people are stupid.
I wish you luck in your quest.
“The state is that great fiction by which everyone tries to live at the expense of everyone else.”
― Frédéric Bastiat
August 12, 2016, 3:41 pmmk:
Had to leave this here: a first hand report of how horribly the NHS is doing compared to the US health system.
https://drjengunter.wordpress.com/2016/08/20/an-american-doctor-experiences-the-nhs-again/
August 21, 2016, 9:32 ammesaeconoguy:
LMFAO.
Lovely story about a tourist with zero economics background, and no, I’m not at all interested that this person claims to be a doctor. Doctors are notoriously stupid when it comes to economics and finance.
Nowhere in this pointless, meandering dispatch about a twisted ankle is there any mention of the multiple underfunded and failed trusts, increasing demands on limited staff (including junior doctors), and poor performance, all results of the universal single payer system.
For what is actually occurring, you will have to read this
http://www.theweek.co.uk/68215/nhs-faces-more-disruption-as-junior-doctors-reject-new-contract
this
https://www.theguardian.com/healthcare-network/2016/may/13/the-nhs-cannot-escape-its-financial-crisis-without-more-money
[naturally, more money]
And of course, this
http://news.sky.com/story/nhs-report-teams-sent-in-to-11-failing-trusts-10440064
The NHS is falling apart, hopelessly underfunded, and failed.
This doctor has the economic understanding of a vole, as do you.
August 21, 2016, 11:35 ammk:
Good point. I am not an economist, so it's not immediately obvious why healthcare that's lower in cost per capita but ensures that the patient is not financially ruined but taken care of is inferior to healthcare that's higher in cost, might financially ruin the patient and might neither help nor be provided quicker. Please explain!
https://www.theguardian.com/society/2015/aug/25/gp-appointment-waiting-times-in-us-worse-than-nhs
August 21, 2016, 5:44 pmmesaeconoguy:
The economic reason why that is the case is that single payer, and with it caps on spending artificially set the price of healthcare services too low (this is an oversimplification, but I’ll keep it simple).
This is economics 101. If the price of something is too low, you get shortages 100% of the time. That is partially what is happening here. That is why waiting times are longer, and access to treatment is worse.
Another factor is overuse: Britain’s guaranteed system induces people to use more healthcare goods and services than they otherwise would. This results in capped delivery, and the administrative trusts running out of money. More people demand healthcare goods and services, but the trusts can only provide so much given their budgets, so they run shortages.
The output of these systems may indeed be lower overall, or per capita. But the actual effect of these systems is lower quality, limited access delivery, with higher mortality rates (this is now the case in Britain, and their rates are rising), and eventual monetary failure and collapse.
(Here is a survey showing how wildly inaccurate healthcare cost estimates are – Britain’s NHS cost 38% more than projections its first year in existence alone. Since then it has become fabulously more expensive.)
For a full exploration of more health care economics issues and how Obamascare makes them worse, see here.
August 21, 2016, 7:56 pmmk:
Couldn't agree more about Obamacare - huge disaster, and a wasted opportunity for reform in the US. I also agree with the prediction of overutilization and cost overruns for the UK healthcare system.
That said - we are comparing two suboptimal systems. In the US we have a the exact opposite of a free market for an essential service, effectively creating a supply side monopoly.
In my experience the US cost isn't any more accurate and I don't see why it should be the benchmark of care worldwide. What we have here is a vastly overregulated and unfree market, with occasionally insane rent seeking (http://articles.mercola.com/sites/articles/archive/2013/03/16/high-health-care-costs.aspx). Both administrators and doctors have every incentive and the bargaining power to inflate costs artificially. These hugely inflated costs are then passed on to consumers.
I've received and (where required) paid for medical treatment in the France, Germany, Italy, the UK, the US, Costa Rica, Cambodia, Korea and China. In my experience quality of care was neither better nor more prompt for the two order of magnitude price premium compared to the US. FWIW, I've had the worst wait times for a medical procedure in the US and one of the worst incidents of rent seeking by a doctor (Post-nasal drip in Cambodia: $1.30 and 20 minutes for antibiotics, cured; same in the US: three visits for $700 billed, $180 out of pocket), but those are isolated incidents.
August 22, 2016, 8:30 ammesaeconoguy:
The US system is not a monopoly but rather a mishmash of private and public, quasi-governmental systems, thanks to the US government and firms like Kaiser shipbuilders during and post WWII, who shifted to work-based healthcare compensation.
The amount of government involvement and third party payer insulation destroys price transparency and competition in the healthcare space, and both must be removed in order to control cost. Here is an evolution of health care good & service payment profiles over time –
http://www.chcf.org/publications/2015/12/data-viz-hcc-national
More government involvement will drive up costs as it has done everywhere it has been tried, irrespective of what you may have heard about lower per capita costs. And a double whammy is that innovation is being destroyed through most current healthcare policy, resulting in (obviously) less medical innovation and worse outcomes.
The difference in premia you experienced was not necessarily reflective of time convenience; cost spreading is rampant, and again a function of government and third party payer interference.
Try to get advanced cancer care, or heart procedures in any of those countries on what would be considered a reasonable schedule. You can’t.
August 22, 2016, 3:35 pmmk:
Very interesting infographic, thank you!
I agree that the fundamental problem with US healthcare is the complete lack of price transparency - try getting an upfront quote from a US hospital, the person who told me "You have to see the Doctor and once we'll bill you we'll know how much it costs" didn't event think there was anything puzzling about that statement.
As far as regulation is concerned, my position is somewhat different: more regulation is always worse, but the quality of sets of laws makes yet another difference. I'll give you Germany as an example: a country prone to extreme overregulation of anything that could possibly be regulated, including of course the private/public healthcare system. Yet they achieve great outcomes at a fraction of the cost of the US mess, not because there are fewer rules governing healthcare but simply because the ones that are in effect are more suited to solving the problem.
I'd shudder (possibly without justification, but nonetheless) to experience major surgery in Cambodia, Costa Rica or China; that said, the chemotherapy of my friends sister was uncomplicated and when my Dad had his heart attack (living in a rural part of Germany), the first responders where at his door three minutes later and had him on bloodthinners immediately, and in the ER for his stent within half an hour.
The first thing I'd like to see the US system adopt based on what I perceive to be working in Germany would be to have hospitals and doctors publish definitive price lists (in Germany, all this is centralized, which is of course insanity) instead of negotiating different prices with different providers.
The second would be to have every insurance required to have a billing hotline that will answer definitively regarding the price of a procedure before it happens within a reasonable time limit (say, 15 minutes?)
Next in line would be deregulation and opening up of the insurance markets - many ways to slice and dice that one but I'd love to be able to shop for policies just based on premiums and covered procedures.
August 22, 2016, 5:54 pmrr:
Relevant: http://ritholtz.com/2016/08/life-expectancy-vs-health-expenditure-time-1970-2014/
August 24, 2016, 12:30 pm