Tag: impunity

Discourse: Nationalization, Private Companies and Crony Capitalism

The neoliberal (a.k.a. crony capitalism) ruling of the world during the last 50 years is usually generalized as a “big fish eats small fish” relationship. The story continues, with the big fish in Washington, Brussels and Moscow fed themselves with the riches of the world and profited from globalization.  Meanwhile, the small fish continued breeding and feeding the always hungry lords.  This general discourse is repeated in most if not all the academic papers dealing with postcoloniality and globalization.

The impact of the ideas of these intellectuals is widespread and not easily observable for the ignorant masses.  As such, when you read the newspapers in Latin America or Africa in regard to the “new” nationalizations being undertaken by the “new” socialist/anti-neoliberal governments in Argentina, Bolivia, Brazil, Greece, Lithuania, and Sri Lanka since 2011 people usually ignores that there is nothing “new” in these actions.

These nationalizations of privately owned assets have been in many of the cases actual renationalizations of companies that were not owned by the principles of free market ideas, but that had been privatized by corrupt social democratic governments 50, 40 or 10 years before and who created new privately owned privileged companies.  As a result of these social democrat and socialist governments many privately owned companies emerged as the bastions of crony capitalism, inefficiency and corruption.  The previous, generally increased as closer the national industries were owned by crony private companies that owned single-crop cultive exports and resource rich regions.

To mention short examples of the previous, recently in Argentina Yacimientos Petrolíferos Fiscales (YPF; English: “Treasury Petroleum Fields”) was renationalized (not nationalized) by the government under claims of corruption, inefficiency and negative benefits to their national interests.  In Bolivia, Transportadora de Electricidad (TDE) was nationalized by Evo Morales government.  However, TDE was also a fruit of the neoliberal and crony capitalist deals established in 1952 after a coup d’état that established a military socialist democracy with the party  Revolutionary Nationalist Movement (MNR) which allied into a military-nationalist clique that lasted for 50 years.

Privately owned companies produce always more efficient and better products than state-owned companies.  However, privately owned companies that have benefited from government granted privileges for decades not necessarily will produce more and better services and products than state-owned companies.  The previous is something that few of us dare to identify and explain with a non-contradictory historical and philosophical background.  Meanwhile, the great majority of academics influenced by collectivist philosophies will start writing articles and books applauding the “successful” renationalizations and condemning those free-market authors who will write back and fight.

Indeed, there is a difficult road in defending private property and privately owned businesses in the context of countries and regions that lack respect for individual rights and the rule of law.  As such, to defend the private vs collective in those circles it is necessary that first we identify how the societies are currently organized around the collective inefficient systems of social and economic organization.  In the case of Bolivia and Argentina it is necessary for us to identify how these business and societies are not structured and organized around the principles of free market and individual rights.  By understanding and explaining this clearly there will be a chance to change the discourse of discussion from “why is renationalization good?” to “why laissez faire capitalism is better than the privately owned business of crony capitalism?”

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Occupying Wall Street for the wrong reasons

The group “The 99 percenters” (also known as the 99%) assembled in Wall Street to protest against the corporations of the United States that have benefited from the privileges granted from government through lobbying. They say to be tired of the social and economic inequality in their country.  Somehow, they consider Corporations to be the one’s to blame for this inequalities.

Now, lets hold on for a second and consider what are they protesting against and who’s to blame. Then, lets try to explain what and whom should be really blamed before continuing this protests.

What they say to be protesting against:

What are the really protesting against:

  • Social inequality: Is in fact the cultural and educational differences of those who know more than others.
  • Economic inequality: Is the result of those men who earn a salary that is higher than others; or of those who own a business and make more earnings than others.
  • Lobbying: Is the act of influencing decisions made by officials in the government in favor of some industries, unions, or groups of society.
  • Corporate greed: Is not to be confused with the profit that an entrepreneur earns in his ventures.  Greed should better be understood as the result of living and satisfying one’s wants wants by seizing and consuming the products of the labor of others. Corporations that profit with the privileges granted by government are the only ones to be attacked and denounced; not those entrepreneurs who took risks and invest their savings.

These “99 percenters” are confused.  They think that Corporations are to be blamed for the economic and financial crisis that started in 2008 in the U.S.  However, it is their government and their bureaucrats that through Congress ad the FED enabled for the crisis to happen.  This protests should have been taking place in front of the White House and the Senate instead of Wall Street. (Check this video of some of the protests in Wall Street agains the FED)

It is not all the rich and wealthy who benefit from government privileges.  The ones who did are to be blamed. But more so, the one’s to be blamed and taken to justice are the the government officials who created the legislation that ensures that corruption and impunity continue without being punished.

As Fréderic Bastiat, the journalist and philosopher from the 19th. Century, once said:

The law has placed the collective force at the disposal of the unscrupulous who wish, without risk, to exploit the person, liberty, and property of others. It has converted plunder into a right, in order to protect plunder. And it has converted lawful defense into a crime, in order to punish lawful defense.

How has this perversion of the law been accomplished? And what have been the results?

The law has been perverted by the influence of two entirely different causes: stupid greed and false philanthropy. (…)

But, generally, the law is made by one man or one class of men. And since law cannot operate without the sanction and support of a dominating force, this force must be entrusted to those who make the laws.

This fact, combined with the fatal tendency that exists in the heart of man to satisfy his wants with the least possible effort, explains the almost universal perversion of the law. Thus it is easy to understand how law, instead of checking injustice, becomes the invincible weapon of injustice. It is easy to understand why the law is used by the legislator to destroy in varying degrees among the rest of the people, their personal independence by slavery, their liberty by oppression, and their property by plunder. This is done for the benefit of the person who makes the law, and in proportion to the power that he holds.

I invite you to continue reading Bastiat’s wonderful book “The Law” online. I am myself, have read it for dozens of times and consider it one of the most enlightening works ever written. Spanish versión: La ley por Frédéric Bastiat [PDF¨]