Feb 13 2010

The Pending Implosion Of Liberal Socialism

Marxist, socialist, liberal, progressive – it does not matter what minor distinctions you wish to use, all of them are heading for world-wide implosion as the decay that is built into their public policies finally start rippling through world markets. Left wing ideologies all suppose the government is superior to the market and the individuals operating freely and adapting to change. There policies naturally attempt to stifle the very mechanism used by leading economies to survive tough times, which is why the fail so spectacularly and painfully.

For people who believe in Darwin’s evolutionary processes and forces, lefties seem to forget that they too exist within evolution’s flows. (Note: and those free market, libertarians who shun that branch of science are just as incoherent, given the fact free market competition is the human version of evolution at work).

In the last century, from World War II to the end of the Cold War, the extremes of left wing societies were all defeated in full and open competition with the West’s free market states. The only remnants of these pathetic social experiments are Cuba and North Korea (China is some weird hybrid that is sustained by sheer volume of the human race). Both of which are frozen in poverty and the early 20th century technically, icons of left wing success.

However, the utter destruction of left wing social madness did not die off with the end of the Cold War. It’s robotic followers (incapable of thinking outside dear leader’s box) have been attempting incremental changes to the western societies that so outperformed their state edifices of so-called superior thinking.

This last gasp of the left wing cancer has spread into many countries to varying degrees – including the US. This cancer did serious damage as countries allowed the facade of good intentions to destroy the foundation of their solid economies, which in turn were the underpinnings of the good life so many states provided their people.

Strong economies are the sources of a growth, security – of life, liberty and the pursuit of happiness. Government programs are not. It’s that simple.

For America the financial collapse caused by runaway liberal social engineering (you too can own a home, even if you really can’t!) was our wake up call that things had gone too far. Sadly, we had also just elected the most left wing government in decades, one unfettered by the clash of East and West. The fact this government’s left wing policies failed and will result in a strong repudiation of said policies is pretty much set in stone. Better late than never.

But we are just one piece of the world in the pending implosion of left wing craziness. Over in the European Union the cancer grew deeper and farther, and so the decay it created was much more severe. Now the left wing destruction of Europe’s economies is becoming glaringly evident:

The European single currency is facing an ‘inevitable break-up’ a leading French bank claimed yesterday.

Strategists at Paris-based Société Générale said that any bailout of the stricken Greek economy would only provide ‘sticking plasters’ to cover the deep- seated flaws in the eurozone bloc.

The stark warning came as the euro slipped further on the currency markets and dire growth figures raised the prospect of a ‘double-dip’ recession in the embattled zone.

I read this (and other stories I will link below) with a bit of a startle. Could the Euro really be in that much trouble? It makes sense, too many European economies have been running unsustainable social programs on top of economic engines that are under powered for such largess. It’s easy to buy votes with extravagant promises using other people’s money – until  the check comes do and those same voters are handed the tab. And we all knew this was where left wing European societies were headed.

But the fall may be more spectacular than the crippling collapse of the American left wing social experiments were. We may have passed a tipping point:

The issues for troubled euro zone countries are straightforward: Portugal, Ireland, Italy, Greece and Spain (known to the financial markets, and not in a polite way, as the PIIGS) had varying degrees of foreign- and bank credit-financed rapid expansions over the past decade. In fall 2008, these bubbles collapsed.

As custodian of their shared currency, the European Central Bank responded by quietly opening lifelines to all these countries, effectively buying government bonds through special credit windows. Europe’s periphery was fragile but surviving on this intravenous line of credit from the ECB until a few weeks ago, when it suddenly became apparent that Jean-Claude Trichet, president of the ECB, and his German backers were finally lining up to cut Greece off from that implicit subsidy. The Germans have become tired of supporting countries that do not, to their minds, try hard enough. Investors naturally flew from Greek debt—Greece’s debt yields rose, and its banking system verged near collapse as investors and savers ran from the country.

But it’s not just about Greece any more. Thursday’s European Union summit ended with vague assurances of mutual support but did not fundamentally change the financial markets’ assessment. Other countries can also be cut off from easy ECB funding, so worries have spread through the euro zone to Spain and Portugal. Ireland and Italy are also up for hostile reconsideration by the markets, and Austria and Belgium may not be far behind.

The response from Greece is one of left wing robotic thinking, and is stunning in its depravity:

George Papandreou, Greek prime minister, said that, in the eurozone’s first big test, Greece had become “a laboratory animal in the battle between Europe and the markets”.

His outburst is likely to infuriate the very leaders whose help Mr Papandreou needs. It came as it emerged there would be no more talk of financial assistance until Athens had persuaded the EU that it had a sustainable austerity programme in place.

Emphasis mine. For too long, too many have seen government as superior or in competition with ‘the markets’ – in other words the rest of us outside government. Government should be the servant of the people and their markets, not the enemy. We have let government use the bogey of ‘big business’ to ally with ‘big business’ to keep the average people constrained and stagnant. These power brokers set up barriers to personal success, tax us into oblivion and require legions of lawyers to maneuver byzantine and useless laws, policies, reports, etc. We have been boxed in and cannot save ourselves, let alone work with others.

And it comes to this – Greece feels it is in a battle with the very markets it needs to survive. The only saving grace seems to be level heads in Germany:

Officials in Paris said Ms Merkel’s insistence on additional efforts by Greece to cut its budget deficit came close to thwarting agreement at the summit. According to sources in Athens, she called for a rise in Greek value-added tax of 1 per cent, in addition to extra spending cuts. Herman Van Rompuy, EU president, drafted a compromise before the summit started.

Ms Merkel’s tough stance has overwhelming political and popular support in Germany.

The idea that government needs to live within its means and stop throwing money down waste holes (owned by cronies of the political caste who become rich running these waste holes) is a trend in thinking sweeping the US and now possibly the EU. Living within its means and not making promises it cannot keep. Whodathunkit.

To me politicians promising government solutions (if you just hand over your bank account number for the tax withdrawals) are no better than telephone scammers stealing from the naive. They all make incredible promises and then take your money without making good on the promise.

This has been the modus operandi of the left wing for years and has crippled the free markets, all the while they threw down more and more restrictions on individual creativity, restricting any options for economies to find a way out of the down turn.

It seemed inevitable in the last few decades that the West would have to learn a harsh lesson about the do-good-sounding failures which are left wing policy disasters. At points it seemed we could avoid this, as when Clinton and the GOP succeeded in destroying the addiction of generational welfare here in the US. But the left has been busy on many fronts trying to constrict free choice and insert their vision of proper and improper through command-control dictates. The markets naturally collapsed.

If the dominos start to fall then the left wing will have suffered another global defeat, this time inside the belly of the beast that are free market economies. As long as the voting booths are open, the people will make the proper adjustment. They allowed the left wing to over experiment and now they will trim them back.

It is the give and take of society evolving, learning, growing. It will never be pain free because survival is a fight, not a cruise. But if you believe in the power of the individual and the wisdom of of societies run on individual initiative and choice, then we will work our  way out of this by throwing off the chains of left wing policies.

28 responses so far

28 Responses to “The Pending Implosion Of Liberal Socialism”

  1. cj_thespook says:

    Okay, i have two closing..ignore the first one and remind me to proof read before hitting the enter key.

  2. Redteam says:

    After the election in November, hopey-changey will be pretty much dead. Spending practices will be changed. The US econ will not collapse. It will be close, but it is the standard and standard’s will change, but it will all be based on the US. China will not be the leader, it’s entire econ is based on the US econ. So they will do all they can to ensure it’s survival. But this totally unqualified guy occupying the White House will get a few lessons in humility.

  3. WWS says:

    Redteam – read this report on where we are with the budget. Under even the rosiest economic scenarios, the debt levels are going to rise inexorably.

    http://townhall.com/news/business/2010/02/14/us_debt_will_keep_growing_even_with_recovery?page=full&comments=true

    Here’s the catch – it would seem that the obvious answer is to cut spending, but doing that has to unemploy a large number of people depending on that government dollar. Since the cuts have to come before any recovery in the situation, this means accepting the idea that we must intentionally drive unemployment to around 15% before we can even start to recover. Will even a Republican Congress accept that? I don’t think so, which is why I think eventual default on the all US obligations is where we will end up. No matter who is in charge.

    We are already in the position where we have to borrow money just to pay interest on the money we have already borrowed. We are past the point of no return.

  4. OBloodyhell says:

    > I always wonder why leftists, who are always environmentalists, never seem to learn the most basic lesson from life.

    Norm, I have made this point in many other places, and I will share it here:

    If you seek a single, solitary quality which all leftists, liberals, and greens share, it is a singular lack of Wisdom — the ability to learn from experience.

    They often have Intellect — the ability to learn from books, memorize facts, and such — but Wisdom is a different form of intelligence, and the lefties are innately lacking in it. If you were to come up with a “WQ” to match up with IQ, then the Left would uniformly, almost to a man, rank in the bottom half, and preponderously in the bottom third of all people (the more “left”, the lower they’d rate).

    It’s how so many of them can be so smart, yet so abysmally stupid at the same time — they are IQ smart, but WQ stupid.

    And this is why they never learn lessons from life, as you put it — that is “experiential learning”, which is a quality they “lack in spades”.

    This explains their love of Marxism and Collectivist policies. No matter how many times it screws up, no matter how much death and misery and ruin it causes, “it just hasn’t been done right” (which is correct only if “doing it right” equals “not doing it at all”).

    Fools say that they learn by experience. I prefer to profit by others’ experience.
    – Bismarck -

  5. OBloodyhell says:

    If I may offer an overall economic opinion, we are well along at the moment in transiting from an Industrial Economy to an IP & Services economy. As a matter of fact, we’re at the same point now in that process as we were towards the end of the 1920s in the transition from an Agricultural Economy to an Industrial Economy. The Depression was a large chunk of the result as the resulting mess of economic misallocations got sorted out. I will not be amazed to see history once more rhyme.

    We currently don’t have a good feel for actually valuing IP at this point — it does not share even as many similarities with Mfg Goods that Mfg Goods did with Ag Goods — that is, there are intrinsic properties associated with IP which make its behavior radically different from that of Mfg Goods. This makes assigning a value to a software, or an idea, or a creation, much different from that of assigning a value to a widget.

    Some key examples:
    1) All the expense of creating IP is front-loaded. It’s all in creating that “first item” — after that, it’s almost free to distribute and disseminate however many there is a demand for. This is in contrast with MGs, which have an extensive overhead for each additional item. In a sense, IP has “infinite” economy of scale.
    2) When I sell you my IP, I don’t lose my IP, I simply lose my ability to sell it to you (though even this can be tweaked somewhat). Unlike MG, where I sell you a widget, I no longer possess that widget. This is a key distinction between “Theft” and “Piracy”. When someone pirates IP, the “owner” of the IP nominally loses only the ability to sell it to that person, they don’t actually lose the thing itself. That’s still relevant, but it’s an important distinction between piracy and outright theft — if I steal your widget, you not only can’t sell it to me, you can’t sell it to anyone else, either. If I pirate your IP, you still retain possession of it and the capacity to sell it to others. (I make a distinction here between personal piracy and commercial piracy, mind you… the latter does qualify as theft, since the commercial pirate does deny the IP “owner” the power to sell it to others).
    3) All current copyright law is flat out wrongheaded. It attempts to control the uncontrollable. Consider — It is usually accepted as a truism that “The internet treats censorship as noise and routes around it”. Then:
    Censorship is someone saying “This we deem dangerous, therefore, you may not access it.”
    Copyright-as-is is someone saying “This you have not paid for, therefore, you may not access it.”
    Copyright-as-is and censorship are the same action — attempting to constrain access. So the result of attempting to enforce copyright-as-is will be the same as censorship — the copyright enforcement will be treated as noise and routed around.
    (Note: This is most emphatically not “information should be free” — information is someone’s hard work organizing data into a specific viewpoint unique to that individual — be that data musical notes, images and words, or concepts and ideas. People who create must be rewarded for releasing those creations to people. Copyright-as-is must morph from being based on controlling access to some other form which rewards people without attempting to provide control. Those few creators who also demand control will be welcome to keep their creations hidden in a closet for none to see, while the rest of us revel in the creations of the many who are happy getting a penny each from a hundred million people.

    And herein may lie some real adjustments in America’s benefit. Our IP is pirated around the world. What would happen if we recieved five cents from China for each copy of any of our pirated IP which was to be found there? That’s not all that much for any single Chinaman — what, 10, 20, 50 bucks each man each year? But spread that across a billion people, and it’s going to add the hell up over time, esp. if you go into paying up the backlog… Anyone else think we might wind up in the plus side on the trade imbalance is such a system was implemented worldwide? AND be able to pay off a lot of our foreign debt? Because I’ll argue that, in those terms, there’s one hell of a lot of wealth being produced by America, and there is very, very little real competition for us in some arenas — TV, Movies, and Music, we have a major advantage over every other nation, due to our inherent melting pot, mongrel nature. If it plays here to wide acclaim, then it automatically also appeals to a wide variety of interests around the world. Our culture and our individual nature is such that we encourage free inquiry and challenges to the status quo. This makes for greater innovation and creativity in all fields that few other nations can come close to. China has its own advantages — if it can be solved by throwing a million men at it, they can solve it. India, though, can do the same thing, so there is more competition at using that technique. There is no competition for America. There is no other melting pot with the same degree and history of individualism and dynamism.

    We may be hitting a rough spot, and, no question — in the apocryphal “ancient Chinese curse” sense, “We live in interesting times”. But all is not dark.

  6. OBloodyhell says:

    WWS, there is another solution which isn’t pretty but seems rather obvious — the printing press. I’d like to see a calculation of how long we’d have to endure a substantial inflation, and at what rate, to resolve the overall issues. I’d lay odds that it could be done. Not pretty, but possibly much less painful than some of the alternatives, as it’s a slow, steady bleeder rather than a starvation diet. And as long as it was resolved in such a way that it made a recurrence difficult if not impossible, I think it could be acceptable.

    I think the first thing we need to do is to put the hatchet to the government’s capacity for chicanery by forcing them to use GAAP instead of the comically incompetent accounting practices they currently use. This should be law at all levels — Federal, State, and Local. Books should be open and available to the public (with some limited areas like intel and the military which aren’t open to the public but are “black boxed” expenses).

    The amount of crap that arises from this garbage on all levels is just preposterous, and one of the chief reasons why Fannie and Freddie screwed things up so bad was that they AREN’T held to the same kind of accounting standards that any other equivalent business organization is held to.

  7. OBloodyhell says:

    A key example of the sort of justification for using GAAP comes from New York State —

    New York has a “balanced budget” requirement. One year, they had a shorfall of something like 200 million. Do they cut expenses, like anyone else would? Oh, come now. Let’s be serious. This is a very, very blue state we’re talking about.

    There is a NY state organization — a separate “Fannie Mae”-like bonding agency whose job is to sell debt instruments for the state. It’s not “a state organization”, but, like Fannie and Freddie is “a separate entity”.

    So NY sells Attica Prison to this agency for 200 mil, then rents it back from them so they can keep using it.

    This is as blatant and total a scam as Clinton’s “budget surplus” was. Any business tries to pull this crap, they’ll be shut down and their officers up on charges (can you say “Enron”?) the instant it becomes public knowledge.

    But The State in its various forms doesn’t have to use GAAP like the rest of us, and thus can obfuscate, misdirect, and otherwise abuse any sort of accounting they choose to.

    The first thing to fix is the accounting process.

  8. oldfogey says:

    Re Papandreou’s observations.
    Greece is, in the short term at least, an ungovernable Socialist paradise…
    Greeks are deeply and violently factionalised. In 1944 different andartes (guerilla) groups shot at one another while they were both being engaged by the Wehrmacht. In Crete where I live part-time, seven radar meters were installed a year ago on the western section of the national road. To date, four have been damaged (not accidentally) and the remaining three have not yet been commissioned. They won’t be.
    Almost every adult male has at least one gun, only a handful of them licensed, and I’m talking serious weaponry up to and including assault rifles. A year ago, when a convoy of armed police supported by military tried to enter a village, not an hour’s drive from me, in which the major crop is neither olives nor grapes but marijuana, they were ambushed and driven off with one policeman seriously injured.
    There are no Greek words for organisation, maintenance or civic responsibility. The English-language newspaper Ekathimerini recently commented sadly that the Greeks need only one new law – that everyone should obey the laws they already have. Such a revolution isn’t likely in the foreseeable future.
    I await with keen anticipation the outcome of eurocrats’ attempts to enforce any semblance of budgetary discipline.
    So why am I here? My wife likes it and the temperature yesterday was 28C.