Tag: crony capitalists

Travel Diary: Prices, Unions and Freedom in one of the richest countries of the World

Prices in a capitalist economy reflect the relative scarcity of a good or service as well as the amount and intensity of consumer demand. Free-market prices are the only viable means of rational economic calculation. If a good or service becomes in shorter supply, for whatever reason, its price will rise, all other things being equal. The higher price will give consumers the proper incentive to do what is needed whenever anything becomes scarcer: conserve, or cut back on consumption. DiLorenzo in “How Capitalism Saved America“

Last weekend I had the pleasure of attending the Oslo Objectivist Conference 2012 in Oslo, Norway in which I enjoyed a weekend of Philosophy, Objectivity and a celebration of Individual Rights.  On Monday before returning to my base in Leipzig, I decided to spend the day enjoying the parks and streets of the city (one of my favorites) and during lunch I went to eat buffalo wings in front of the City Hall Park.

That noon I was reading the last pages of the book “How Capitalism Saved America” by Thomas DiLorenzo and was writing extensive notes in my notebook criticizing many of his arguments in favor of capitalism due to lack of consistency and integration.  Leaving those morality issues aside, I was very interested in his historical explanation on the role that Unions (and privileged groups of interest) have had in destroying the foundations (principles) of capitalism in the United States since the foundation of the country.  Curiously, that same day the Farmers Union of Norway gathered in front of the park to do a countrywide protest (news).

As DiLorenzo writes, Unions have claimed for decades to be representatives of the “interests” of society, workers, middle class, proletarians and et. al. However, it has been actually only in the interests of the Union’s leadership and their pursuit of cronyism that they have actually worked by being concerned only in “their own membership rolls and dues revenues”. Examples from the Unions intervention in the destruction of the most successful industries of the  United States are explained by DiLorenzo’s book.

On Monday, the disgruntled Norwegian farmers decided to take the streets against the recent decisions of the government in April, 2012 to subsidy of Agriculture by granting only 625 million Norwegian Kroner instead of the 2.2 billion they asked.  The Norwegian Farmers’ Union (NFU) decided to take their trucks and cows and occupy the doors of the City Hall in Oslo; in other cities and towns the mayors were even kidnapped by the unionists.

This protest arise after the Parliament decided that that food prices should rise 20 percent in the next 20 years in line with expected population growth, providing sufficient income to both achieve this and ensure continued recruitment to farming (this reminds me of Hayek’s ideas on the Fatal Conceit). The NFU doesn’t agree.  They consider that the average annual incomes are under 300,000 kroner per man-labour year, whilst it is 469,000 on average in other sectors.  They also claim to represent the “interests” of 100,000 jobs in agriculture and food industry and not only to be seeking for more money for farmers (yeah, right).

Norway is one of the richest countries in the world and its society lives in very comfortable conditions.  The Leviathan in government charges immense amounts of taxes and inflation is incredible.  Just to illustrate the size of Leviathan: The buffalo wings and a beer cost me the high price of 250 krone (aprox. 33 euro or US$41.00 in T.G.I. Friday’s) That same meal would have cost me much less if bought in the U.S. or anywhere else in the world .

How can they afford it? The population earns artificial higher incomes due to the government interventions in the economy and disrupts the economy of the country.  How did the country reached such a condition can only be understood by taking a close and detailed attention to the role interventionism has in a country’s economy.  The effect: high prices, unstoppable high taxes and widespread limitation of liberties behind the power that Unions, groups of interests, politicians and bureacrats have had in the economy for decades.

Slowly but consistently, the Unions and crony capitalists in the bureaucracy of the Norwegian country have made it impossible to be free to exchange products in the country without any type of government intervention.  While Norwegians seem to be free, their daily lives are unconsciously been managed and controlled by a gigantic government that regulated every instant of their lives.

As DiLorenzo described, “Ludwig von Mises initially explained back in the 50s in this theory of government interventionism: one intervention (such as subsidies for railroads) leads to market distortions, which create problems for which the public “demands” solutions. Government responds with even more interventions, usually in the form of more regulation of business activities, which cause even more problems, which lead to more intervention, and on and on. The end result is that free-market capitalism is more and more heavily stifled by regulation. And on top of that, usually the free market, not government intervention, gets the blame.”

I would love to go back to Oslo and if possibilities arise to settle and live there for a couple years. I wish that my passion for buffalo wings will bring me to experience a story to write about and meditate again.  As for now, I return to write about Capitalism while sitting in a desk in Leipzig, Germany.

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Syria on the road to chaos?

Last night I attended a lecture titled “Syria on the Road to Democracy or Chaos?” by Ph.D. Candidate Mohammad Maghout hosted by the Institute of Oriental Studies in Leipzig University.  The lecture was an overview of the last 20 years of political oppression and autocrat government in Syria.  The speaker emphasized how Bashar al-Asad was an exact continuation of the government his father, Hafiz al-Asad held in Syria from 1970 to 2001.

Maghout explained that in Syria the government was not only feared but that a cult of reverence toward the al-Asad regime had being built.  He explained that in the 40 years of autocratic regime the regime had amassed its power upon a pyramidal network of tribal, religious and economic leaders that belonged to different ethnic groups and tribes.  In Maghout’s reasoning, it was these ethnic and tribal differences one of the key elements that allowed for the Syrian government to control the population while confronting them every time political tensions appeared.  Indeed, these confrontations were evident after the the 2011 Syrian uprising (from January 26th to March 15th of 2011) and as Salman Shaikh wrote yesterday in the NYTimes (Preventing a Syrian Civil War. NYT. October 12th, 2011), it is these ethnic confrontations and sectarianism that could bring Syria into chaos.

One thing was left without a clear answer from Maghout’s lecture.  It was the question on “why didn’t Syrians react to all the lies, political oppression and corruption of the al-Asad regime previously”.  Maghout explained that Syrians were not only divided in ethnic groups that conflicted within their understanding on “Who Syrians really are”, but that it had passed already too many years of fear for government’s power that brought the population to fear political activity and the use of freedom of speech to protest against government.  While this is true, I consider it not to be sufficient reason.

It may be necessary to understand which was the role (or lack of it) of the economic leaders during the unrest.  I am sure that understanding how crony capitalism works could bring some interesting tools to understand what is the effect of privileges in a society. And as such, could be a valuable tool to understand how can the results of these social movements be differentiated.  The participation of crony capitalists protecting corrupt governments and the participation of entrepreneurs is psycho-epistemological different because of the goals they aim to achieve.  It is entrepreneurs who most often support (economically and logistically) social movements that demand freedom of speech, equality of rights, an end to corruption and the respect of private property.

Photograph: AFP/Getty Images