Month: May 2017

In Dickens’s Tale of Two Cities, the cities are London and Paris.  London is stable and relatively safe and prosperous.  Paris is embroiled in violence and mob rule.  The contrast is the backdrop for the meat of the story.

The technique of juxtaposing opposing things sheds light on the consequences of divergent courses of action.  One thing is commonly a formula for disaster while the other, even as it may be heartily resisted in real time, is the only path to betterment.  For example, let’s take two people who are known for their ideas: Bernie Sanders, U.S. senator from  Vermont,  and Jose Pinera, Chilean economist.

I cling to the notion that the ideas rolling around in a person’s head is far more important for governance than personality traits like affability.  A person may be pleasant and genial but horribly disastrous if their ideo-philosophy was ever put into practice.  Conversely, the irascible and altogether disagreeable sort may be spot-on  with their ideas and beliefs.  Not to say that these archetypes of the psyche apply to Sanders or Pinera, but it makes clear the preeminence of ideas over the window dressing of personality.

What is it about the ideas and beliefs of these two people that makes such a clear contrast?  Well, Sanders is an intellectual fossil from the fellow-traveler collectivism of the 1930s or the SDS activism of the 1960s.  The guy is stuck in a time warp.  Pinera represents the renaissance of the liberty-loving economics of Milton Friedman, Ludwig von Mises, and Friedrich Hayek from the 1970s to the present.  The Sanders path is the socialist road to “immanentizing the eschaton” (heaven-on-earth wish fufillment), as Eric Voegelin or William F. Buckley would have said.  Pinera presents a different fork in the road.

The gallery of contrasts:

Watch Bernie Sanders, in a 1985 radio interview, expound as an apologist of the Nicaraguan Sandinistas as the Sandinistas worked to build a Central American sequel to Castro’s Cuba.

 

Watch Milton Friedman get heckled by a left wing activist at his 1976 Nobel ceremony, an all-too-familiar scene on today’s college campuses.

 

Sanders came onto his socialism honestly.  He wasn’t a late bloomer.  At the University of Chicago as a student in the early 1960s, he joined the Young People’s Socialist League, the youth affiliate of the Socialist Party of America.  It’s a commitment that he’d carry into doddering old age and a near miss for the nomination of the Democratic Party in 2016.

As mayor of Burlington, Vt., 1981-1989, Sanders was running a small New England town with its own foreign policy.  It’s hotly debated whether he actually “honeymooned” in Yaroslavl in the Soviet Union in 1988.  No doubt he wedded in 1988 and, with his new bride, jetted off to the Soviet Union as part of a delegation.  The sequence is enticing: he wedded, flew off to Yaroslavl the next day, and vacationed while there.  Sounds like a “honeymoon” to me.  Call it a “working” honeymoon.

The infatuation with “workers’ paradises” extended to an attempt at establishing a Burlington embassy in Havana (I’m kidding … I think).  One’s activities can be expected to follow one’s beliefs, I suppose.

In the run-up to the Democratic Convention in June of 2016, Bernie Sanders refused to endorse Hillary while regurgitating through a scroll of freebies for every conceivable victims’ group and a limitless demand for crusades against almost any and all disparities that may rear their heads in the course of human existence.  It’s the stock and trade of all leftists going back to Karl Marx brooding away in the British Museum in 1873.  Read the speech for yourself.  The transcript source is below in the Bibliography.

The first paragraph sets the tone and the rest is the laundry list.

“Election days come and go. But political and social revolutions that attempt to transform our society never end. They continue every day, every week and every month in the fight to create a nation of social and economic justice. That’s what the trade union movement is about. That’s what the civil rights movement is about. That’s what the women’s movement is about. That’s what the gay rights movement is about. That’s what the environmental movement is about.”

For Sanders, government is super mommy.  Leaving aside it’s a gas chamber to prosperity, it stands in stark contrast to the ideas of the “Chicago Boys” in Chile, of whom Jose Pinera was considered a member, even though he was from Harvard and not the University of Chicago.

The story begins with the coup to remove Marxist President Salvador Allende of Chile in 1973.

The country was facing economic collapse and opposition intensified, particularly in the Chamber of Deputies, the country’s legislature.  In August of 1973, the Chamber of Deputies invited the military to remove Allende.  In a resolution they asked all responsible leaders, including the military, “… to put an immediate end to all situations herein … that breach the Constitution and the laws of the land …”.

Allende was cornered in the presidential palace.  Rather than face arrest and exile, he shot himself with the AK-47 that was a gift from Castro.

Of the coup leaders, Augusto Pinochet emerged as the new president.

In the beginning, the junta seemed just as incapable of dealing with the country’s economic problems as Allende.  Inflation reached an annual rate of 900%.  Long before the coup there existed a pipeline for bright Chilean students to the University of Chicago, including its Economics Department.  Milton Friedman had many of those students.  They would prove to be the ones to show the way out of the morass.

The Chicago Boys, as they were called, were University of Chicago trained economists who were associated with the various governmental ministries in the new Pinochet regime.  They invited Friedman to Chile and a short audience with Pinochet in 1975.

Shortly after his return to Chicago, Friedman wrote a letter to Pinochet to state that Chile’s inflation problem arose “from trends toward socialism that started forty years ago, and reached their logical – and terrible – climax in the Allende regime”.  Shortly following he would say, “… their difficulties were due almost entirely to the forty-year trend toward collectivism, socialism, and the welfare state.”

Substitute Sanders for Allende, at least for the economic theory.  The shoe fits.

A lesson that never caught on with Bernie was apparent to the young minds in the Chilean ministries having to grapple with the scree of Allende’s concoction of public-treasury giveaways and the attempt at government directorship of everything under the sun – Marx’s favorite nostrum.  Jose Pinera was one of those university-trained economists who served as minister of Labor and Social Security(1978-1980) and later as minister of Mining (1980-1) in the Pinochet government.

As minister of Labor, he moved to guarantee the right to collective bargaining without giving the unions carte blanche to cripple the country.   But he is best known for rescuing Chile’s retirement system with a hybrid of public and private pensions.  What we call “social security”.

Nothing could be further distinct in public policy from Bernie’s desire for government to do most everything through ownership, control, and the forced extractions of taxation.  Pinera’s idea, first implemented in 1980, was to expand personal freedom with individual ownership.  A person could actually own their pension, rather than be at the mercy of a government-run system like our Social Security’s old age pensions.  10% of wages, instead of going to the government, went into an individual’s private investment account.  Older workers could opt to remain in the old government system.  Low and behold, the savings rate ballooned and so did the extent of private ownership of the economy.  It’s a far cry from Bernie’s super mommy.

The reforms helped ignite Chile’s economic miracle.  Democracy was restored in 1990.  The personal retirement accounts have given to workers an annual rate of return of over 10%.  While the poverty rate for Latin America is 40%, it is 15% in Chile.

Charles Dickens begins A Tale of Two Cities with,

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way — in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”

Similarly, we are in a period of both foolishness and wisdom.  The reality of Bernie’s vision is currently playing out on the streets of Caracas, Venezuela.  Shortages, hunger, riots, and repression are the order of the day, as in late-eighteenth century Paris.

For Bernie, no-one should face any risk so the government should insure against all the vicissitudes of life.  The problem is, risk isn’t eliminated; it’s transmogrified into misery.  Bernie refuses to learn from the Soviet Union, the whole eastern bloc behind the ol’ Iron Curtain, Havana, and today’s Caracas.  The production of refugees is the only surplus in such places.

In a choice between an unreconstructed old leftist like Bernie Sanders and a young Jose Pinera (age 24 at the time of his pension proposal), take the young dude.

RogerG

 

Bibliography and sources:

A Tale of Two Cities, Charles Dickens

“Jose Pinera”, Sneha Girap, Ed., Alchetron, https://alchetron.com/Jose-Pinera-330673-W

“Castro Foil:  A quote from a fake news article is frequently circulated as a genuine quote from the Democratic presidential candidate.”, Snopes,   http://www.snopes.com/sanders-america-embrace-socialism/

“The Daily Mail Snopes Story And Fact Checking The Fact Checkers”, Kalev Leetaru, Forbes, 12/22/2016,           https://www.forbes.com/sites/kalevleetaru/2016/12/22/the-daily-mail-snopes-story-and-fact-checking-the-fact-checkers/#6120637a227f.                   I was drawn to this article because of my growing recognition that the fact-checkers need fact-checking.

“EXCLUSIVE: Facebook ‘fact checker’ who will arbitrate on ‘fake news’ is accused of defrauding website to pay for prostitutes – and its staff includes an escort-porn star and ‘Vice Vixen domme'”, Daily Mail,   .                    I was drawn to this article as I was reading the Forbes article above.  While I am not able to determine the veracity of this report, it is inescapable that we must be on our guard to fact-check the fact-checkers.

“Transcript: Bernie Sanders speech in Burlington, Vermont”, Politico, 6/16/16, http://www.politico.com/story/2016/06/transcript-bernie-sanders-speech-in-burlington-vermont-224465.  The speech is about Bernie’s intentions in the run-up to the Democratic Convention in July of 2016.  There was no endorsement for Hillary Clinton.

“Sanders not ending campaign in Thursday’s video speech: spokesman”, John Whitesides, Reuters, 6/15/16, http://www.reuters.com/article/us-usa-election-sanders-idUSKCN0Z126B

A backgrounder on Bernie Sanders can be found in Wikipedia under “Bernie Sanders”.

“George Will describes Bernie Sanders’ Soviet Union honeymoon”, Punditfact, 8/12/15,  http://www.politifact.com/punditfact/statements/2015/aug/12/george-will/george-will-reminds-readers-about-bernie-sanders-u/.  This is a discussion about whether Sanders honeymooned in the Soviet Union.

The Ascent of Money, Niall Ferguson, Penguin Books, 2008.  An account of the coup against the Marxist President Salvador Allende of Chile and the influence of the American economists from the University of Chicago and Harvard on the Pinochet regime can be found on pp. 212-220, “The Big Chill”.

A further account of the coup is available in Wikipedia under “1973 Chilean coup d’état”.

The invitation of the Chamber of Deputies for the military to remove Allende can be found here: “Agreement of the Chamber of Deputies of Chile”, August 22, 1973, https://en.wikisource.org/wiki/Agreement_of_the_Chamber_of_Deputies_of_Chile

“The Chicago Boys now and then”, Rebecca Liu, King’s Review, 9/27/16,   http://kingsreview.co.uk/articles/chicago-boys-now/