Blogroll Category: Current Affairs
I read blogs, as well as write one. The 'blogroll' on this site reproduces some posts from some of the people I enjoy reading. There are currently 499 posts from the category 'Current Affairs.'
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The Senate’s vote to acquit Donald Trump on both articles of impeachment this month brought a much-needed end to the tiring impeachment saga America has been subject to in the last few months.
The impeachment controversy arose when President Donald Trump initially withheld military aid from Ukraine unless President Volodymyr Zelensky provided revelatory information about political rivals such as presidential candidate Joe Biden and his son Hunter Biden’s business dealings. After a whistleblower alleged that Trump may have abused power, the managerial class was off to the races to launch an impeachment inquiry against him. For the past few months, DC pundits have yammered on about the implications of impeachment while the rest of the country has been busy getting on with their lives the way that normal people not living off government largesse do.
Now that the impeachment trial is over, maybe we can actually talk about more relevant issues like foreign aid. For more than seventy-five years, foreign assistance has played an integral role in American foreign policy. In 2019, a total of $39.2 billion was spent on foreign assistance, and at a quick glance it has left a lot to be desired.
School textbooks tend to make foreign aid look like a simple process, but as with anything the government runs, foreign aid has its obligatory share of red tape. Fergus Hodgson of Econ Americas noted that “Little of the development funds trickle down to the target communities,” in explaining why countries like Ethiopia and Haiti remain backwards. More importantly, Hodgson provided an unpleasant depiction of where foreign aid money generally goes:
A confiscatory portion goes to the pockets of federal bureaucrats and U.S. contractors, and another sizable chunk goes to urban, middle-class, or affluent partners in recipient countries. Further, one-fifth of U.S. aid goes through local governments, which tend to be corrupt and incompetent.
As far as the countries where the bulk of foreign aid is going, they’re not necessarily the most institutionally sound. War-ravaged countries such as Afghanistan ($5.1 billion), Iraq ($880 million), and Yemen ($565 million) received substantial aid in the fiscal year of 2018—be it in economic or military form. The first two countries have been subject to US invasions, in which the US government may have spent more than $5 trillion trying to turn them into Western-style democracies. In the case of Yemen, the US has been dragged into a proxy war all thanks to its “special relationship” with the Kingdom of Saudi Arabia. After nearly two decades of nation building, there appears to be no end in sight to American involvement in the region.
Thanks to the ruling class’s Russophobia, Ukraine was easy to side with in the Crimean conflict after Russia ramped up its intervention in the Crimean Peninsula. This resulted in the US disbursing a total of $559 million in aid to Ukraine in 2018. Foreign aid to Ukraine was at the center of the now concluded impeachment charade.
None of the aforementioned countries are exemplars of clean governance. Transparency International’s 2018 Corruption Perceptions Index revealed that Afghanistan, Iraq, Ukraine, and Yemen have putrid corruption rankings of 172nd, 168th, 120th, and 176th place, respectively.Foreign Aid Encourages Bad Behavior
Foreign aid is not a get-rich-quick scheme for developing countries. Instead of building wealth, it comes with some not-so-pleasant consequences for the recipient nation. Also, such programs aren’t free. Someone ultimately has to pay for them. At the 2011 Conservative Political Action Conference, former congressman Ron Paul famously declared that
Foreign aid is taking money from the poor people of a rich country and giving it to the rich people of a poor country.
Thanks to a steady flow of outside funding, governments receiving aid no longer have to be accountable to their citizens. Knowing that US taxpayers will bail them out, some governments have no incentive whatsoever to innovate or keep corruption in check. Like subsidizing American banks making bad decisions at the domestic level, giving foreign aid to corrupt governments or factions within a country only encourages bad behavior.
DC has become so detached from the concept of rational economics that it treats the blood and sweat of taxpayers as malleable inputs that can be squeezed out of the population and sent abroad on a legislative whim. All of this is done with complete disregard for the unforeseen consequences that these policies inevitably produce.
Economist Frédéric Bastiat’s essay "That Which is Seen, and That Which is Not Seen" offers various points to consider when approaching the subject of government transfers such as foreign aid. What is seen is the recipient government being propped up thanks to the aid injection, which pleases both the recipient country’s elites and US foreign policy wonks.
However, what is not seen are the potential reform movements that would emerge under normal political circumstances. These movements often hold the key to breaking free of the cycle of corruption and poverty that many of these countries find themselves in. But when foreign aid enters the equation, the establishment government is artificially propped up at reformist factions’ expense. Domestically speaking, foreign aid money is clearly coming from American taxpayers. In an ideal world, this money would be in the hands of American taxpayers and put to use in the private sector. Sadly, most political leaders will never take these concerns into consideration. The signing ceremonies of foreign aid agreements and the subsequent ego boosts are too irresistible to DC do-gooders, so they’ll work diligently to keep the foreign aid gravy train in place.
Let’s not kid ourselves. It is the height of naivete to believe that developing countries will magically become rich via wealth transfers from First World countries. It ignores many of the institutions of freedom—private property and federalism—that enabled countries like the US to become the most prosperous societies in human history. Policymakers will have to think outside the box if they want to see more nations join the ranks of the developed world.Some Alternatives to Consider
Indeed, there are more practical alternatives to using heavy-handed state measures to help developing countires. First off, bilateral free trade is a much better way to handle the issue of economic development. Expanding trade relations makes sense with regions such as Central America, which stand to benefit from the inflow of North American capital. Increased trade and investment will raise living standards in these capital-starved regions while also providing American consumers and entrepreneurs access to a new market of goods and services.
Another foreign aid alternative to consider is the revival of exchange programs such as the renowned collaboration between the University of Chicago and the Pontifical Catholic University of Chile in the 1950s. This program helped create a new generation of free market economists who would craft the very policies that catapulted Chile into the highest echelons of economic development in Latin America. The exchange program between the two universities still exists, but these efforts could be replicated and expanded to other countries without much state sponsorship.
Neither of these solutions involve dumping foreign aid into these regions or using military intervention to help them. The key to beating poverty from Santiago de Chile to Kinshasa (in the Congo) is still to increase these countries’ capital stock, not confiscate Americans’ wealth and ship it off in the form of foreign aid packages. The only serious way to do this is through policies which reduce regulatory barriers, respect property rights, expand commerce, and otherwise facilitate capital formation.
But this may be too much to ask of Western politicians who are fixated on using the government to solve every conceivable socioeconomic problem they encounter.
A quite startling piece of prestigitation here, we have proof that less is more. True, this is about the “science” of climate change so perhaps not all that remarkable given the manipulations that take place here.
The claim from the WWF’s Global Futures report is that the effects of climate change will cause significant damage to the global economy:
Loss of nature will wipe £368bn a year off global economic growth by 2050 and the UK will be the third-worst hit, with a £16bn annual loss, according to a study by the World Wildlife Fund.
Without urgent action to protect nature, the environmental charity warned that the worldwide impact of coastal erosion, species loss and the decline of natural assets from forests to fisheries could cost a total of almost £8tn over the next 30 years.
It said the loss appeared to be modest at just 0.67% of global income in 2050, but the estimate was conservative and the total was likely to be much higher should areas like the Antarctic deteriorate at a faster pace, causing greater warming and higher-than-forecast sea levels across the world.
The problem with the claim is that it’s nonsense.
The paper is here. Here is actually what they’ve done.
One possible future is called SSP5. This has high economic growth and also high future emissions. Another is SSP1, this has lower economic growth and also emissions.
We’re fine so far. They also say that higher emissions will cause more damage than lower. We’re fine with that as a logical assumption, something internal to the case being built. Then they say that higher emissions will cause damage to ecosystem services, these damages will lead to a reduction of GDP from what it would be in the absence of those emissions/damages. All of this is equally fine as a chain of logic. Sure, it may or may not be true but it’s logically valid.
Then they do something absurd. Remember that SSP5 gives higher GDP growth in the first place. That’s the bit they don’t account for. The thing they never do tell us is whether that final, net, outcome of more growth and more emissions is higher or lower than the slower growth and no emissions damage pathway.
It’s necessary to do that calculation ourselves. And the result is that - working from here and page 13 is the important part - the higher growth hugely outweighs the damages. That is, if we’re to work with the idea that higher GDP is a better thing then the pathway that leads to the damages is better, as it produces a higher end GDP. Or, the damages aren’t in fact damages at all, they’re reductions in benefits.
The actual end result of the calculation is that humanity is better off, overall, having the growth and the emissions. Which absolutely isn’t what the WWF is saying to us, not at all. Something that rather calls into question the credibility of the report and the people doing it, doesn’t it?
The overall point here being that climate change is important. So it would be rather better if we were all presented with the true facts about it instead of being fed near casuistry in the form of propaganda.
Summarizing insights from Mises, Hume, and La Boetie, Bob Murphy argues that even the worst tyrants ultimately stay in power because people obey them. If the people withdraw their support from a regime, it will fall.
From the very beginnings of the socialist movement and the endeavors to revive the interventionist policies of the precapitalistic ages, both socialism and interventionism were utterly discredited in the eyes of those conversant with economic theory. But the ideas of the revolutionaries and reformers found approval with the immense majority of ignorant people exclusively driven by the most powerful human passions of envy and hatred.
The social philosophy of the Enlightenment that paved the way for the realization of the liberal program—economic freedom, consummated in the market economy (capitalism), and its constitutional corollary, representative government—did not suggest the annihilation of the three old powers: the monarchy, the aristocracy, and the churches. The European liberals aimed at the substitution of the parliamentary monarchy for royal absolutism, not at the establishment of republican government. They wanted to abolish the privileges of the aristocrats, but not to deprive them of their titles, their escutcheons, and their estates. They were eager to grant to everybody freedom of conscience and to put an end to the persecution of dissenters and heretics, but they were anxious to give to all churches and denominations perfect freedom in the pursuit of their spiritual objectives. Thus the three great powers of the ancien régime were preserved. One might have expected that princes, aristocrats, and clergymen who indefatigably professed their conservatism would be prepared to oppose the socialist attack upon the essentials of Western civilization. After all, the harbingers of socialism did not shrink from disclosing that under socialist totalitarianism no room would be left for what they called the remnants of tyranny, privilege, and superstition.
However, even with these privileged groups resentment and envy were more intense than cool reasoning. They virtually joined hands with the socialists, disregarding the fact that socialism aimed also at the confiscation of their holdings and that there cannot be any religious freedom under a totalitarian system. The Hohenzollern in Germany inaugurated a policy that an American observer called monarchical socialism.1 The autocratic Romanoffs of Russia toyed with labor unionism as a weapon to fight the “bourgeois” endeavors to establish representative government.2 In every European country the aristocrats were virtually cooperating with the enemies of capitalism. Everywhere eminent theologians tried to discredit the free enterprise system and thus, by implication, to support either socialism or radical interventionism. Some of the outstanding leaders of present-day Protestantism—Barth and Brunner in Switzerland, Niebuhr and Tillich in the United States, and the late Archbishop of Canterbury, William Temple—openly condemn capitalism and even charge the alleged failures of capitalism with the responsibility for all the excesses of Russian Bolshevism.
One may wonder whether Sir William Harcourt was right when, more than sixty years ago, he proclaimed: We are all socialists now. But today governments, political parties, teachers and writers, militant antitheists as well as Christian theologians are almost unanimous in passionately rejecting the market economy and praising the alleged benefits of state omnipotence. The rising generation is brought up in an environment that is engrossed in socialist ideas.
The influence of the prosocialist ideology comes to light in the way in which public opinion, almost without any exception, explains the reasons that induce people to join the socialist or communist parties. In dealing with domestic politics, one assumes that, “naturally and necessarily,” those who are not rich favor the radical programs—planning, socialism, communism—while only the rich have reason to vote for the preservation of the market economy. This assumption takes for granted the fundamental socialist idea that the economic interests of the masses are hurt by the operation of capitalism for the sole benefit of the “exploiters” and that socialism will improve the common man’s standard of living.
However, people do not ask for socialism because they know that socialism will improve their conditions, and they do not reject capitalism because they know that it is a system prejudicial to their interests. They are socialists because they believe that socialism will improve their conditions, and they hate capitalism because they believe that it harms them. They are socialists because they are blinded by envy and ignorance. They stubbornly refuse to study economics and spurn the economists’ devastating critique of the socialist plans because, in their eyes, economics, being an abstract theory, is simply nonsense. They pretend to trust only in experience. But they no less stubbornly refuse to take cognizance of the undeniable facts of experience, viz., that the common man’s standard of living is incomparably higher in capitalistic America than in the socialist paradise of the Soviets.
In dealing with conditions in the economically backward countries people display the same faulty reasoning. They think that these peoples must “naturally” sympathize with communism because they are poverty stricken. Now it is obvious that the poor nations want to get rid of their penury. Aiming at an improvement of their unsatisfactory conditions, they ought therefore to adopt that system of society’s economic organization which best warrants the attainment of this end; they ought to decide in favor of capitalism. But, deluded by spurious anti-capitalistic ideas, they are favorably disposed to communism. It is paradoxical indeed that the leaders of these Oriental peoples, while casting longing glances at the prosperity of the Western nations, reject the methods that made the West prosperous and are enraptured by Russian communism that is instrumental in keeping the Russians and their satellites poor. It is still more paradoxical that Americans, enjoying the products of capitalistic big business, exalt the Soviet system and consider it quite “natural” that the poor nations of Asia and Africa should prefer communism to capitalism.
People may disagree on the question of whether everybody ought to study economics seriously. But one thing is certain. A man who publicly talks or writes about the opposition between capitalism and socialism without having fully familiarized himself with all that economics has to say about these issues is an irresponsible babbler.
[Excerpted from The Anti-Capitalist Mentality]
Every time there is a budget debate, politicians from both parties will discuss the deficit and spending as if the first one did not matter and the latter could only increase. However, the main problem of the US budget in the past four decades is that total outlays rise significantly faster than receipts no matter what the economic growth or revenue stream does. For example, in fiscal years 2018 and 2019, total outlays rose mostly due to mandatory expenses in Social Security, Medicare, and Medicaid. No tax revenue measure would have covered that amount.
Total outlays were $4,447 billion in 2019, $339 billion above those in FY 2018, an 8.2 percent increase. No serious economist can believe that any tax increase would have generated more than $300 billion in additional revenues every year.
The idea that eliminating the tax cuts would have solved the deficit has been clearly debunked by history and mathematics. There is no way that any form of revenue measure would have covered a $339 billion spending increase.
No serious economist can believe that keeping uncompetitive tax rates, well above the average of the Organisation for Economic Co-operation and Development (OECD), would have generated more revenue in a global slowdown. If anything, a combination of higher taxes and weaker growth would have made the deficit even worse. How do we know that? Because it is exactly what has happened in the eurozone countries that decided to raise taxes in a slowdown, and because it is also what all of us witnessed in the United States when revenue measures were implemented.
The US was maintaining a completely uncompetitive and disproportionately high corporate income tax rate (one of the highest in the world), and all it did was make it similar to other countries, such as Sweden and Denmark, which have corporate income tax rates of 21.4 percent and 22 percent, respectively.
What happened to corporate tax receipts before the tax cut? The evidence shows a weakening operating profit environment: corporate tax receipts fell 1 percent in 2017 and 13 percent in 2016. The manufacturing and operating profit recessions were already evident before the tax cuts. If anything, reducing the corporate rate helped companies hire more and recover, which in turn allowed total fiscal revenues to rise by $13 billion to $3,328 billion in fiscal year 2018, and by $133 billion to $3,462 billion in 2019, both above budget, according to the Congressional Budget Office (CBO). Remember also that critics of the tax cuts expected total receipts to fall, not increase.
Mandatory spending is now at $2 trillion out of $4.45 trillion in total outlays for the fiscal year 2019. This figure is projected to increase to $3.3 trillion by 2023. So, even if discretionary spending stays flat, total outlays are still estimated to increase by more than $1 trillion, significantly above any measure of tax revenues, and that is without considering a possible recession.
Any politician should understand that it is simply impossible to collect an additional $1 trillion per year over and above what are already record-high receipts.
For 2020, tax receipts are estimated to be $3,472 billion compared to $4,473 billion in outlays, which means that there is a $1,001 billion deficit. With outlays consistently above 20 percent of GDP and tax receipts at 16.5 percent on average, anyone can understand that any recession will widen the gap and make deficits even higher.
Deficits mean more taxes or more inflation in the future. Both hurt the middle class the most. More government spending means more deficit, more debt, and less growth.
When candidates promise more “real money” for higher spending, they are not talking of real money. They are talking about real debt, which means less real money going into future schools, future housing, and future healthcare at the expense of our grandchildren’s salaries and wealth. More government and more debt mean less prosperity.
Anyone who thinks that this gap can be reduced by massively hiking taxes is not understanding the US economy and the global situation. It would lead to job destruction, corporate relocation to other countries and lower investment. However, even in the most optimistic estimates of tax revenues coming from some politicians, the revenue-spending gap is not even closed, let alone showing a net reduction in debt. The proof that the US problem is a spending one is in the fact that even those who propose massive tax hikes are not expecting to eliminate the deficit, let alone reduce debt. That is why they add mass money printing to their magic solutions.
Now, let us ask ourselves one question: if the solution to the US debt and deficit is to print masses of money, why do are increased taxes proposed? If printing money was the solution, the Democrats should have massive tax cuts in their program. The reality is that neither tax hikes nor monetary insanity will curb the deficit trend.
No tax hike will solve the deficit problem. Those tax hikes will help even less when they are supposed to finance even more expenses. No amount of money printing will solve the financial imbalances of the US; they will only worsen the problem. If money printing was the solution, Argentina would be the highest-growing economy in the world.
If the US wants to curb its debt before it generates a eurozone-type crisis leading to stagnation and high unemployment, the government needs to really cut spending, because deficits are soaring due to ballooning mandatory outlays, not due to tax cuts.Originally published at dlacalle.com
We know two things about the NHS: albeit not comparing like with like, acute hospitals and other secondary providers are much less good value for money than the primary sector and we have a critical shortage of GPs. The two are linked. Many go to A&E because they cannot see their local doctor in less than two weeks or out of business hours. Far more money has been pumped into the secondary sector than the primary, at a cost, some would say, to the health provision overall. “A year’s worth of GP care per patient costs less than two A&E visits, and we spend less on general practice than on hospital outpatients. For the past decade funding for hospitals has been growing around twice as fast as for family doctor services.”
The shortage of GPs is attributable to three factors: too few being trained, too many working part-time, often very part-time, and early retirement. The Blair government ensured that GPs are well paid, so that is not the problem. Too many are reducing their commitment: they do not want to see patients they hardly recognise every ten minutes, or discuss their health choices (diet, alcohol, smoking, exercise, weight etc) as decreed by the Department of Health and Social Care (DHSC) before asking what the problem is, and, least of all deal, cope with the mountain of paperwork, meetings and bureaucracy also demanded by the DHSC.
Last week, the DHSC published their response to this crisis with its “Update to the GP contract agreement 2020/21 - 2023/24”. To be fair, the DHSC consulted widely on the draft and amended it in response to the feedback. The question though is whether it addresses the problem above.
It claims 6,000 staff will be added to the primary sector at a cost, over the next four years, of over £1bn with a big expansion of the funding of ancillary roles (26,000). Coincidentally, there will also be 6,000 more GPs. To see how this comes about it is worth quoting the whole section: “GP trainee numbers increase from 3,500 to 4,000 a year from 2021. 24 months of the 36 month training period will be spent in general practice, from 2022. Together with the increase in trainees, this change will contribute over half of the 6,000 extra doctors working in general practice. The Targeted Enhanced Recruitment Scheme (TERs) will be expanded: from 276 places now, to 500 in 2021, and 800 in 2022, encouraging GP trainees to work in under-doctored areas.
A two-year Fellowship in General Practice will now be offered as a guaranteed right to all GP trainees on completion of their training. It will automatically be offered as part of signing up to GP training. Our shared goal is to achieve as close to 100% participation as possible.” (p.4)
There are various other good bits, bobs and motherhood (like supporting “good employment practices and seeing if they might do something about bureaucracy) and the big increase in ancillary staff will probably add to the pressures on GPs. They have to be managed by GPs and will refer many of their patients to those GPs. The quickest way to get to see a GP in my practice is to see a nurse.
Some of additional measures may be counter-productive: trainees (registrars) in general practice work at a much slower pace and need considerable supervision from GP trainers. Putting one extra trainee into General Practice is not equivalent to putting in a trained GP. Likewise the mentoring scheme: the senior and junior GPs chatting together will keep both of them away from seeing patients.
This contract revision is well intentioned but timid. Even if the NHS could identify future GPs on their first day at university, a decision doctors make after they have qualified, it would take 12 years, i.e. 2034, for the 500 new trainees a year to become 3,000 additional GPs. Importantly the updated contract does not indicate the total GP shortfall in England, nor how that deficit will be bridged. In short, it is not going to change theavailability of GPs in a hurry if at all.
Kevin Kallsen, George Conger, and Gavin Ashenden talk about the chaos coming out the other CofE General Synod as Bishops trip over themselves to be the first to apologize for the Civil Partnership statement released last week. The future of the Church of England looks dismal as best.
In his State of the Union Address—February 4, 2020—President Trump outlined his reasons for punishing nations that manipulate their economies in order to achieve some internal policy goal, such as China. The president claimed that such manipulation was unfair and harmful to its trading partners. His main concern is that by manipulating its economy China "steals" jobs. It does this in several ways:
- By keeping the yuan at a lower exchange rate against other currencies—meaning that the People's Bank of China gives more yuan for each dollar than would occur in a free currency market—Chinese goods are cheaper in terms of foreign currency than they would be otherwise.
- By subsidizing its industries, Chinese goods can be offered at a lower price.
- By erecting tariffs against some imported goods, China prevents foreign companies from producing more and employing more people than they would otherwise.
The president claimed that his policies were working, that manufacturing jobs were returning to the US and have created a "Blue Collar Boom," with unemployment statistics at very low levels for many politically sensitive segments of the labor market.
I agree with the president in his desire that China cease manipulating its economy, but my reasons are not the same as his. More importantly, I would not recommend reciprocal interventions to punish China. Instead, I would follow the Barron maxim of "minding our own business and setting a good example." I would point out the following consequences of Chinese economic interventions:
- China itself pays for the interventions, not its trading partners. In fact, Chinese economic interventions constitute a transfer of wealth from China to its customers overseas. Goods that previously cost X in the US market now cost less than X. Americans pocket the difference, which increases our wealth. The Chinese people pay high taxes or higher prices. China's subsidies to business distort the Chinese economy away from producing more desirable products. (If this were not the case, there would be no need for subsidies.) Its tariffs on imported goods reduce the supply of them within China, leading to higher prices and/or shortages within China. In other words, Americans and the rest of the world benefit at the expense of the Chinese people.
- This is good for Americans, so why should we complain? That Chinese economic interventions are good for Americans is true in the short run, but what about the long run? By intervening in its economy, China weakens its productive capital base. It is this capital base that will pump out the many things that Americans will desire in the future. Anything that weakens a trading partner's capacity to generate wealth means that its trading partners will be less wealthy too. Therefore, even loyal Americans should advise China to eschew economic manipulations that benefit them in the short run.
No one has ever explained this phenomenon better than Frederic Bastiat in his classic essay "That Which Is Seen, and That Which Is Not Seen." Henry Hazlitt brought Bastiat's insights up to date in Economics in One Lesson. There are actually two lessons: the first is that one must consider the consequences of an economic act not only for those who will benefit but also those for who will be harmed. Of course, it is usually easy to point out those who will benefit. It is difficult if not impossible to quantify those who are harmed, especially if the harm constitutes benefits that never occurred but would have absent the intervention. Hazlitt's second lesson is that one must look not only to the short-term benefit of an economic act but also to its long-term costs. For example, steel import restrictions may result in a boom for the US steel industry with no apparent short-term consequences. But if US steel were already competitive in terms of price, quality, and service, there would be no need for import restrictions. We can conclude through economic logic that steel prices, quality, and/or service will deteriorate with the restrictions in place, harming Americans in the long run.Conclusion
The president measures economic progress in terms of increase in employment (or decrease in unemployment) rather than an increase in wealth. Laboring more is not necessarily a sign of economic progress. Communist countries, such as the former Soviet Union, had zero unemployment! The state chose a job for everyone. But no one would claim that decades of full employment made the unfortunate citizens of the Soviet Union wealthier. The opposite occurred. In a free market economy without the burden of onerous labor laws, high taxes, and other interventions, there is no barrier to full employment for the simple reason that there is no limit to economic satisfaction. Even a frugal person who desired no additional economic goods certainly would be pleased that he need labor less to achieve and maintain his current level of economic satisfaction.
The greater China's capital base, the greater the potential for a further expansion of the division of labor to employ this additional capital more productively. We Americans should wish that the entire world were free market capitalist economies so that we would have access to cheaper, better, and more varied products and services. China's integration into the world economy has benefited Americans tremendously. So, Mr. President, I also want China to end its economic interventions, but I do not want to punish China through tariffs and other means for doing so. Our response should be to declare unilateral free trade. Let's lead the world by setting a good example and look forward to a world of peace and prosperity.
When most people think of Medellín horror stories come to mind. The presence of the infamous Medellín cartel of the 1970s, 1980s and 1990s, an image of a Robin Hood style city with Escobar inflicting his own sense of justice over its citizens, the homicide rate of 266 murders per 100,000 residents of 1991. For many, with the exception of Narcos fans on Netflix, Medellín will have all but fallen off the map. This is a shame because Medellín has made great leaps forward and is now a great example of progress.
This development is thanks, in part, to the city’s cable cars. Medellín is mountainous, much of the crime took place in more remote areas so in 2004, overseen by the mayor Sergio Fajardo, a project began to connect these hard to reach areas with the city centre. The theory behind the project was to promote movement between areas and to encourage firms to set up shop in cheaper parts of Medellín.
This meant adults now had viable routes into the city enabling them to take up jobs that would have otherwise been off limits, preventing them from having to resort to crime for a livelihood. A 2014 report found that employment opportunities have doubled for the Metrocable users. The project also enabled students to travel into the city and receive better education. They were no longer isolated in an area in which crime was more profitable than all else. It meant that gangs were starved of their cash and their workforces. No more lawless areas in once-lawless Medellín.
The results have been spectacular. Since 2004 the murder rate in Medellín has fallen drastically, reaching its lowest point at 19 murders per 100,000 residents in 2017 compared to 266 per 100,000 residents in 1991. As an article from Virgin explains, other improvements such as better air quality and increased tourism have also been enjoyed. The article also cites a study which found that when comparing areas with a cable car to those without: ‘the decline in the homicide rate was 66 per cent greater in intervention areas, and resident reports of violence decreased 75 per cent more’. Although we can’t chalk all of this up to just a cable car, it is important to recognise that this movement towards lower crime rates and other improvements in the area coincided with the introduction of the cable car. For many the cable car is representative of the progress that Medellín has undergone and has encouraged further investment.
The cable car is connected to the metro meaning that it doesn't just leave them at the bottom of the mountain and ensures that the cable car serves routes that people wish to travel. Financed by both the municipality and the publicly-owned Metro de Medellín, the cable car offers a combined ticket with the metro to make onward travel all the more feasible. The first cable car cost around $24m and the second another $47m. But in a country where the economic impact of conflict, terrorism, homicides and sexual assaults still costs around $4,700 per person per year a thirty dollar per person investment by Medellin’s citizens a decade ago seem a prudent crosssubsidy from Medellín’s metro company.
As the areas grow richer and more interconnected, the subsidy can be removed without shutting the area’s people out of economic activity, while crime stays lower forever.
The cable car helped Medellín by both improving social mobility and by inspiring faith in the area and in the government. As Alvarez Correa, a Medellín tour guide put it the cable car serves as ‘a symbol of resurrection or a symbol of hope’. Where formerly the gangs were well unified, the cable car has unified Medellín’s citizens.
Normally advising the Chancellor to have a word with the Sec of State for Health is a muttering that someone should tell the latter to stop spending like a drunken sailor. This time around though it’s that the latter should tell the former that there’s some risk to messing with pensions:
Sajid Javid, the Chancellor, is considering plans to limit tax relief on pension contributions to 20pc, as revealed by The Telegraph.
All taxpayers would only receive a flat rate of tax relief – the current level offered to basic rate taxpayers. This will be instead of some receiving relief at their marginal rate of income tax of 40pc or 45pc.
But how much would higher earners lose? Those earning £50,000 or less would not be affected but those who earn between £50,000 and £150,000 would lose the additional 20pc top-up from the Treasury. Those with annual income above £150,000 would lose an additional 25pc relief on all pensions savings.
The thing is, we’ve tested the outer limits of this sort of thing already. And if we’ve tested it to the point that even The Guardian has noted that marginal tax rates are too high then we’ve really, really, tested it, haven’t we?
Ministers have been sent a dossier demonstrating how a shortage of staff caused by medics working fewer shifts to avoid the NHS pensions “tax trap” is affecting frontline care.
The Academy of Medical Royal Colleges, which represents Britain’s 220,000 doctors, has written to the chancellor, Sajid Javid, and the health secretary, Matt Hancock, calling on them to urgently address the pensions tax issue that is causing many of the UK’s most senior doctors to reduce their overtime or leave the NHS altogether.
Senior doctors in the NHS are reducing their hours, turning down extra work and even retiring early to avoid being hit with huge tax bills on their pensions, a report reveals.
We have this vague idea that Javid and Hancock meet regularly to discuss how the country should be governed. Even, so we understand, sit around the same table once a week to chew through such matters. Perhaps, just occasionally, they’d care to note that world outside the Cabinet Room, pay attention to the lessons the real world is trying to teach them?
After all, we do have that evidence that the taxation of pensions can be too high. You know, actual, direct, real time, experience of this. And wouldn’t government by reality be an interesting concept?
In the wake of the Brexit vote, Scottish nationalists have renewed their calls for a new referendum on Scottish independence. But many remain unconvinced, and many claim Scotland is "too small" to be an independent country. Others claim that Scotland is too poor, since Scotland's GDP per capita is only 90 percent that of England.
But by no measure is Scotland a "poor" country. It may be poorer than England, but Scotland's GDP per capita puts it about halfway down the rankings of all Organisation for Economic Co-operation and Development (OECD) countries. That means it's similar to France and Japan by this measure.
If Scotland is relatively less well off than many other rich Western nations, there is no reason to assume that this is due to its size. With 5.4 million people, Scotland is about the same size as New Zealand and Finland, and only slightly smaller than Denmark. None of these countries are "barely scraping by."
Yet this hasn't stopped critics from claiming that even the United Kingdom is itself small. Scottish pundit George Galloway, for instance, denounced the idea of Scottish independence because it would "break up this small country.” He meant the United Kingdom. The UK, however, is larger than all but twenty countries. If Scotland seceded, the Rump UK would still be the most populous in Europe except for Germany, France, and (of course) Russia.
Calling the UK a "small country" is a bit of a stretch.
Nor would Scottish secession present any existential danger for the Rump UK geopolitically. The UK state would still have access to the country's huge GDP. (Russia has a GDP only 60 percent as large as the UK's.) And the UK would remain the perennial strategic ally of the United States.Bigger Is Not Better
So why this obsession over bigness? There is no evidence that bigger countries are wealthier, happier, or more orderly than small countries.
After all, many of Europe's wealthiest countries have fewer than 10 million people. Luxembourg, Norway, and Switzerland are among the wealthiest places on earth.
If anything, experience suggests that bigness is an impediment to health and wealth.
For instance, in his new book on American secession, F. H. Buckley notes that many small countries such as Finland rank near the top in the World Happiness Report. The measure is largely based on metrics like life expectancy, lack of poverty, and public safety. But the reason it ranks so highly isn't a mystery. Buckely writes:
[Finland is] one of the richest and least corrupt countries in the world. It also has the kind of social cohesion and unity that only small countries can have….If the country were twenty times bigger, it would be more diverse and less unified. Its leaders would be more remote from the people, and their policies more tainted by interest group corruption.
Americans, of course, don't think this way. Living in a huge and diverse country ruled by a distant political elite in a city thousands of miles away might seem normal to many Americans. But it's not normal for most of the world's most well-off populations.
Nevertheless, Buckley writes in the New York Post:
[The United States is] overly big, one of the biggest countries in the world. Smaller countries are happier and less corrupt. They’re less inclined to throw their weight around militarily, and they’re freer. If there are advantages to bigness, the costs exceed the benefits. Bigness is badness.
Buckley employs the usual statistical comparisons popular among social scientists today, and he concludes that bigness is not necessarily an obstacle to relative safety, prosperity, and social cohesion. But it doesn't help. And there are steps that can be taken to lessen the effects of largeness. Decentralization helps, as does the presence of a relatively high degree of economic freedom. But it appears that the US is prosperous in spite of its size rather than because of it.
Doing some simple comparisons, of course, we find that small countries tend to dominate the "best" spots in rankings of crime, happiness, and other criteria.
For example, looking at the top thirty highest-ranking countries in the World Happiness Report, we find that no country with more than 50 million people ranks in the top ten.Source: World Happiness Report 2018 and UN Population estimates.
When it comes to crime, three things can be big factors in low homicide rates: be authoritarian (i.e., Saudi Arabia and Vietnam), be ethnically and culturally uniform (i.e., Japan), or be small. Indeed, countries with remarkably low homicide rates include Luxembourg, Switzerland, and Malta. At the other end of the spectrum are large diverse countries such as Brazil, Mexico, and Colombia.1The Economics of Small Countries
Small countries have been notable for their economic success as well. The authors of a study from the World Bank ("Small States, Small Problems?") conclude that "controlling for location, smaller states are actually richer than other states in per capita GDP." It is true that, because of their small size, these countries can be more susceptible to volatility in times of economic crisis. This is partly driven by the fact that small countries tend to be more interconnected with other countries in terms of trade and investment. But the authors conclude: "their openness pays off in growth."
Research devoted to the issue of smallness as a national economic characteristic has been relatively sparse. Nonetheless, it has been observed that small countries were notable in the days of the Great Depression because they "adjusted better." Small countries have been of interest since the end of the Cold War, because they embraced economic globalization quickly.
For instance, in the 1990s, although many pundits and social theorists warned that the post-Cold-War break-up of large countries into smaller ones posed an economic danger, the empirical evidence suggested otherwise. Economist Gary Becker noted, "since 1950 real per capita GDP has risen somewhat faster in smaller nations than it has in bigger ones." Becker concluded that "the statistics on actual performance show that dire warnings about the economic price suffered by small nations are not all warranted….Smallness can be an asset in the division of labor in the modern world, where economies are linked through international transactions." Of the fourteen countries with populations over 100 million, only the US and Japan are wealthy.
None of this should be shocking. As historian Ralph Raico has shown, Europe's rise to prominence as a world economic power was driven in large part by the smallness of Europe's political jurisdictions in Late Antiquity and the Middle Ages. A lack of large states meant a higher degree of de facto economic freedom. This meant more economic growth. The rise of large states and absolutist regimes during the Renaissance was in many cases an impediment to growth, not a driver of it.The Geopolitical Problem
In spite of their economic and social advantages, small states are nonetheless eschewed by many because they are presumed to be weak in geopolitical and military contests. These concerns often drive the creation of larger states. To state it more precisely: it is assumed that there are advantages of economies of scale in military affairs.
Militarists, of course, tend to come down on the side of presuming that one can never be too safe in terms of building up a huge military apparatus. Among the worst offenders in this case have been American conservatives, whose intellectual godfather William F. Buckley once insisted "we have got to accept Big Government for the duration—for neither an offensive nor a defensive war can be waged…except through the instrumentality of a totalitarian bureaucracy within our shores."
More level-headed theorists, however, have recognized the downside of this sort of paranoia, and the fact remains that large states—although assumed by some to be militarily safer—often underperform in economic and social indicators. In the long term, this will negatively impact a state's ability to project power and to maintain stable alliances. Rich countries have greater access to the best military hardware, and they can wield soft power more easily than less rich ones.
For these reasons, even where defensive military coalitions are necessary, it is best to avoid centrally managed political and economic unity. After all, the presence of large and diverse populations within a single jurisdiction—a problem encountered by nearly every large country—comes with considerable costs. As noted in this study of the political economy of large countries, democratization drives populations in large diverse countries toward secession. That is, unless a state becomes dictatorial, largeness eventually leads to more instability—and presumably, greater geopolitical weakness.
The solution, not surprisingly, is decentralization, and the authors conclude, "rather than thinking about the division of the world into different countries, think about the division of a country into autonomous regions." If there is a need for "economies of scale" in terms of defensive capability, the need for social, economic, and political autonomy at a smaller scale remains of great importance.
The world, unfortunately, is moving for now very much in the opposite direction. Although the United States is clearly headed down the road of political and social disunity, the central state has only become more aggressive in asserting both economic and political control. Meanwhile, in Europe the EU—with the exception of the United Kingdom—asserts ever greater regulatory and unifying force. Promises of a liberalized China are as yet illusory.
This isn't to say that movements for greater decentralization and independence aren't bubbling under the surface. Those trends are there, but the machinery of the modern nation-states has yet to show much willingness to acknowledge the benefits of smallness and political independence.
- 1. China's official crime statistics point toward low homicide rates, but China is notorious for manipulating metrics of this sort. However, given that it is one of the world's more intrusive surveillance states, it is possible that homicide rates are quite low, as reported. India—nominally a "democracy" has become increasingly authoritarian and prone to ethnic and religious strife. It's homicide rate—not even counting terrorist-related killings—is a matter of dispute. As noted by Shoban Sexena at The Wire, India's official homicide statistics are well below what is estimated by outside sources. Sexena concludes "India doesn’t fall into the category of hyper-violent societies, but the sheer high number of murders make it one of the most dangerous countries."
In his salient book Capitalism, Socialism and Democracy, Joseph A. Schumpeter explained that introducing new methods of production and new commodities to the market is inconceivable under perfect competition. But the reality of real-world competition is that some individuals capture opportunity and others miss it. Some entrepreneurs have more knowledge about market conditions, and others have less knowledge. Some react and move quickly, and others react slowly. Businesses do not just fail—they miss entrepreneurial opportunities in the market, failing to react just in time to consumer changes.
Because Austrians conceive of the market as a process and of competition as inspired by market participants, entrepreneurial innovation is the only way for a firm to survive. The notion of missed opportunities is rooted in Friedrich Hayek’s focus on knowledge and in Israel Kirzner’s idea of the interaction between the nature of the market and discovery. The fact is, you don’t know what you don’t know until you do know. Then what do you do with the new knowledge?
In an era of constant change in consumer preferences—from conventional retail to omnichannel retail, for example—many firms will undoubtedly miss entrepreneurial market opportunities, because they are not learning from market signals. The question is: what did you learn, and when did you learn it—after conventional consumers turned into omnichannel consumers and you realized what they want most?
Many businesses do not just fizzle out—they do not learn from the Austrian view of markets, competition, and knowledge, and therefore miss market opportunities. Chains and established firms used old methods in a new competitive market and disregarded the metamorphosis of consumers from conventional to omnichannel—from ones who go to a brick-and-mortar to ones who access multiple channels (i.e., website, social media, your brick-and-mortar via phone, etc.) to purchase what they want. These businesses did not learn from past experience how to improve their market position. They did not heed the market signals that the consumer gave them to cater to their newly emerging preferences.
We are now living in the Schumpeterian era of innovation and quick-to-market activity, which is the consequence of omnichannel consumerism. For entrepreneurs who are not on this innovation wave, providing goods and services at the time and in the manner the consumer wants them, it is an era of missed opportunities.
Moreover, as Schumpeter notes,
the function of entrepreneurs is to reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry and so on.
Ludwig von Mises, Kirzner, and Schumpeter agreed that market adjustments are based on consumers’ perceptions, taste, and preferences. These changes might account for why many firms close their doors and discontinue their services. What does this mean for existing market players who may otherwise miss opportunities during these rapid market adjustments? The panacea is to follow the market changes so that you do not miss entrepreneurial market opportunities.
Market distortions and economic interventionist policies created by the government can make these market opportunity signals foggy and unclear, which is why entrepreneurs must fine tune their ability to follow the adjustments created by consumer valuations. To improve your reception and eliminate the fog, consider the following reasons why entrepreneurial leaders miss market opportunities:
- Entrepreneurs fail to see what consumers want.
- Entrepreneurs do not co-create with their consumers.
- Entrepreneurs do not foresee consumer transitions (from conventional to omnichannel, for example).
- Entrepreneurs have not developed feedback loops between themselves and their customers (i.e., business to consumer or business to business).
- Entrepreneurs have not learned from previous experience new ways of bundling products and services in new market conditions.
- Entrepreneurs do not combine and recombine resources in a timely manner.
- Entrepreneurs cease searching for discoveries within and between new or existing markets.
- Entrepreneurs have not acknowledged that entrepreneurs and consumers have incomplete and sometimes error-prone knowledge.
- Entrepreneurs remain sticky about what works and neglect consumer-oriented just-in-time opportunities.
- Entrepreneurs miss relationships with consumers; they do not ask questions, learn, and respond appropriately.
The correct timing of innovation is never clearly signaled. Entrepreneurs do not know the future of the market, so they can’t act “just in time.” Why? Because, according to Kirzner, other entrepreneurs are consistently making entrepreneurial errors as they pursue various ends, consequently changing others’ plans. That is, every market participant has error-prone knowledge and is subject to missed innovations and opportunities.
How can entrepreneurs rid themselves of knowledge that contains errors and avoid foggy market signals? Little bits of knowledge are scattered everywhere, making it possible for some entrepreneurs to get it right and adjust. Successful entrepreneurs judge the market correctly, as Kirzner reminded us. But numerous others judge the market incorrectly. They do not clearly anticipate what is going on in the fog. It is errors in judgment and the inability to see what is ahead that leads to missed entrepreneurial market opportunities.
That knowledge is prone to error and that the market sends distorted signals to entrepreneurs (through no fault of their own) is not the result of market failure but of market adjustments that result in missed opportunities. The idea of missed market opportunities is not the same as opportunity costs. Missed market opportunities occur after learning something new, adjusting to consumer valuations, and applying the new knowledge. The omnichannel consumer is changing the market. Entrepreneurs—the disrupters/innovators—must alter their market approach. Those who lag behind market changes will miss market opportunities. Remember, the consumer is entrepreneurial, too!
Entrepreneurs, in the Austrian sense of the term, must find the innovative wave and jump in just in time to reap the benefits of market activity from missed market opportunities based on previous consumer interactions. Market-oriented entrepreneurs realize that they have a small window during which to adjust, employ innovations, and capture conventional consumer valuation and simultaneously reach the omnichannel consumer—just in time.
Hunter Hastings and Mark Schaefer discuss how human-centered marketing can fix a business function that has lost its way.Key Takeaways and Actionable Insights
Marketing has lost its way — in its current state, it’s no longer a useful business growth tool for entrepreneurs.
- An obsession with technology has eclipsed the focus on people and human values.
- A mania for measurement has obscured emotional connections with customers.
- “Marketers hide behind their dashboards” and are not conducting conversations with customers.
The solution, says Mark Schaefer, lies in the principles of Human-Centered Marketing. Austrians can easily recognize these principles as our own.Austrian EconomicsHuman-Centered MarketingPrincipleCustomer sovereigntyThe Customer does the marketingMechanismEmpathic diagnosisLive in their homes / offices / factoriesInsightSupport the customer’s highest valuesFind core human truths – deep, deep needs
The customer-sovereignty perspective yields actionable truths.
- Customers don’t need ads — they don’t see them, they don’t hear them, they block them.
- Customers are rebelling against the interrupt-and-annoy approach of marketers.
- The customer is in charge.
What do customers want from marketers? The answer for Mark Schaefer lies in Core Human Truths — what Austrians call Highest Values.
- They want to feel loved.
- They want to be respected
- They want to belong
- They want you to advance their self-interest
- They want proof that a firm or brand is contributing to their community
These are deep human needs that don’t change. Whatever the speed of change in market, these values are constant. Humanism lets marketers hold on to what is not changing, rather than being overwhelmed by change.
Marketing mantras like “loyalty” and “engagement” are false.
- Customers don’t want to be loyal; they want freedom and choice — they like shopping around.
- Engagement does not result from clicking on an e-mail and downloading a white paper or a coupon.
- These are dashboard measurements, not human values.
Mark’s recommendations are grounded in humanism.
- Customers respond to shared meaning and shared values — so long as the sharing is authentic. Businesses must be loyal to consumers, never let them down, always be consistent. Live on their island.
- Seek trust. Marketers have burned through trust. The Edelman Trust Barometer shows trust in business and brands and advertising going down for 11 straight years. Now brands must transcend the public’s mistrust.
- Flip your branding. A brand is not what you tell customers. A brand today is what customers say about you to their friends and peers. People trust other people.
- Let customers create their own value. This is pure Austrian Economics: customer value is an experience that takes place entirely in their domain. Brands and businesses facilitate — but can’t create — the customer’s value experience. Customers hire your brand or business or product or service to help them create value.
Marketing is promise management.
- Choose the promise you make to customers carefully — is it one they really want from you and will they trust you when you make it?
- Ensure that you have the capabilities to deliver on the promise. Don’t over promise.
- Keep your promise every time, with no exceptions ever.
BONUS: Small and medium businesses have the advantage in human-centered marketing.
- The larger the business, the harder it is to connect to customers on an individual, emotional level.
- Small business has an advantage in showing its face, demonstrating its personality and exhibiting trustworthiness.
"The Future of Marketing Is Austrian" (PDF): Mises.org/E4E_52_PDF
"Understanding The Mind of The Customer" (PDF): E4EPod.com/Mind
Mark Schaefer’s "Human-Centered Marketing Manifesto" (JPG): Mises.org/E4E_52_Rebellion
For comparison, "Menger’s Manifesto" from Principles Of Economics (PDF): Mises.org/E4E_52_Menger
Mark’s website is BusinessesGrow.com
The Edge of Democracy, a documentary by Petra Costa produced by Netflix and nominated for an Oscar, has been released to hundreds of millions of unsuspecting viewers who know nothing of recent Brazilian history and have little to no access to the real facts. So, as a Brazilian, I had to say something.
A documentary can look at facts and try to extract an interpretation or view from it. We might agree or disagree. The problem starts when a movie attempts to be a documentary and yet fails to get even basic facts or statistics right.
The documentary attempts to show what happened before, during, and after the impeachment process of Dilma Rouseff. The movie—let’s not call it a documentary anymore—largely ignores the corruption scandals that surrounded Dilma, former president Lula, and their Workers' party, only mentions the economic crisis they caused in passing, makes a straw man of the opposition, underplays the reason Dilma was impeached, misrepresents facts, and even gets basic numbers wrong.Getting the Basics Wrong
The documentary asserts that Lula achieved the lowest unemployment rate in Brazilian history. Wrong. It shows Lula saying that he got into politics because only two congressmen of 443 were working class when there were never exactly 443 congressmen. It claims that Dilma lost her prestige and power because she stood up to banks when in fact banks made enormous profits under her government and high interest rate policies. Guido Mantega, one of her former ministers, has even been charged with selling privileged information to those banks and funneling profits to the party. In her second term, Dilma brought banks into government by appointing Joaquim Levy to what is today the Ministry of the Economy. If that is standing up to the banks, I’d really like to know what it means to be helping them.
The movie claims that Lula created the Bolsa Familia, a policy of basic income for the poor that is one of the staples of his government. The fact is that Bolsa Familia is an amalgamation and expansion of different support programs from previous governments. Lula should know: he’s on record criticizing those programs.
Another quite curious claim is that Michel Temer, Dilma’s vice-president and president after the Impeachment in 2016, was a traitor to her government from day one of the second term. The record shows differently: he took up heavy pro-Dilma negotiations in Congress and that was widely recognized. One of Dilma’s vice-leaders in Congress, Orlando Silva, was on the news saying so.
These are easily checkable—yet incorrect—statements found throughout the movie and are easy for a reader who doesn’t know Brazil to understand. The problem is that these statements are probably the smallest offenders on the list. Explaining the rest requires quite a bit of context and recent Brazilian history.
The most egregious error is the overall narrative: democracy was doing fine championed by Lula and Dilma. They stood up to big interests and got taken down on a coup, and democracy was subverted. None of this is true, and it’s not even a matter of interpretation: it’s something that any speaker of Portuguese can settle with basic googling.
In 2005, a large corruption scandal erupted: Mensalão. Lula and his party—the Workers' Party, PT in Portuguese—were caught embezzling funds to buy support in the National Congress, get nominations, and ensure that they would rule unchecked. That is not only a corruption scandal but a direct attack on democratic institutions and principles.
In 2014 they were again caught in Petrolão. The scheme was the same, and largely organized by the same people: divert funds, buy support, rule unchecked. That makes them repeat offenders in attempting to destroy the separation of powers and gain control by illicit means.Freedom of the Press
The film claims Lula was a friend to journalists. Yet in 2004 Lula sent a bill to congress to create a federal council with powers to regulate and punish journalists. Almost every year Dilma or his party would drum up new efforts to “regulate the media,” and Dilma even tried to conjure a “limited” constitutional assembly—whatever that means—to discuss the media. A relatively minor but symbolically important scandal occurred at the beginning of Lula’s presidency. When an American reporter wrote that Lula had a drinking problem, Lula demanded the cancellation of his visa. When his aides told him it was unconstitutional to deport the journalist since he was married to a Brazilian woman, Lula’s reply was ominous: "F[…] the constitution." Thus, to imply or overtly say that democracy in Brazil was doing fine under the Workers' Party is downright dishonest.
The movie only briefly mentions the Mensalão scandal and treats Petrolão as some made-up charges by Sergio Moro, a judge trained in the US. The film thus implies that the scandals were the result of interventions from foreign powers. But to quote Roy Jones Jr., "They must all have forgotten": in 1992 Dilma took the exact same course that Moro did.
The Edge of Democracy also shows that during his court hearing Lula asks Moro how he feels about having collapsed the construction sector in Brazil. One would think it would be relevant to mention that those construction companies were the ones inside the corruption scandal, but somehow the filmmakers didn’t find it very relevant.
Speaking of construction, Lula was jailed because he received an apartment as a kickback from one of those construction companies. He also is accused of getting a wide-ranging upgrade on a rural property, embezzling millions, overseeing a corruption scheme, and much more. Yet the movie claims that all the judges had on him was the apartment.
That is also why Lula could not run for president in 2018. People convicted of certain crimes—corruption obviously included—cannot run for office for eight years, a provision of the “Clean Record Act,” known in Brazil as “Lei Ficha Limpa,” which Mr. Lula himself sanctioned. Oddly, the movie doesn’t mention that and instead claims that the conviction by Sergio Moro knocked Lula out of the race. Moro couldn’t possibly have done that, since the conviction that counts for the Clean Record Act is through an appeals court, and Moro was one step below that. Three other judges not only affirmed Moro’s sentence, but raised the jail time Lula had to serve.
Lula is only free today, because the Supreme Federal Court voted that you can only go to jail for nonviolent offenses once you lose your case and all appeals at the supreme court. Before this, one could go to jail after being convicted in an appeals court.
It’s worth noting that the president of the supreme court was, and still is, Dias Toffoli. Lula appointed him to the Supreme Court for the shining honor of having never passed a judge test and having been Lula’s campaign lawyer. In fact, seven of the eleven supreme court judges were appointed by Lula or Dilma. Hardly a hostile court attempting to attack democracy or be partisan to a coup.The Economic Record
But it was not only the construction sector that suffered. The entire economy endured its worst crisis in Brazilian history. The economy is only mentioned about an hour into the movie, and even then almost as an aside. The details are omitted, but let's clarify them.
In 2015 GDP shrunk by 3.8 percent and by 3.6 percent the next year. In 2017, unemployment shot up from 6 percent to almost 14 percent until new economic policies under Michel Temer started to knock it back down. Deficits exploded, taking the national debt from 51.5 percent of the GDP in 2013 to over 80 percent today, when we are still making deep reforms to try and tackle deficits and policies still on autopilot from the Dilma years. When pension reforms were approved in 2019, it was clear that if they did not go through Brazil would go bankrupt.
These issues were the result of expansionist and interventionist economic policies, interest rate manipulation, accounting fraud, price controls to control inflation and help Dilma’s reelection, and much more. That brings us to Dilma: why was she impeached?Dilma's Impeachment
The movie attempts to show Dilma's impeachment as a coup, omitting a simple fact: she clearly and widely broke budgetary laws. Not only did she do so in terms of the interpretation of the law, but also in the sense of its original intent.
Back quite a ways in Brazilian history, it was normal for governors to create state banks, use them to fund deficits, launch vote-buying schemes and general budgetary responsibility. These banks would then be declared bankrupt. This would be followed by the creation of a new bank, and the process would be repeated eternally. The depositors were left holding the bag, the government washed its hands of the affair, political players got money. Rinse and repeat.
This and many other accounting schemes prompted reforms that created budgetary laws prohibiting the government from taking loans without congressional authorization and mandating better accounting and many other good practices.
Dilma used state-owned banks to finance her policies. In practice, she used the banks’ balances as if they were treasury balances. To emphasize: this wasn’t a week-long snafu of account balancing; this was a policy going back to 2009 with 45 billion reais in open balances. For reference, that is a bit less than half of all federal spending on education in 2015. That constitutes a loan without congressional authorization and budget fraud, as verified by the the Federal Audit Court (TCU).
Now one might wonder: did the Workers Party, Lula, and Dilma defend themselves of those accusations? No. Their responses were similar to what we fing in Edge of Democracy: directly state the opposite of what actually happened. Don’t mention what really happened. Source your arguments with partisan narratives and repeat.
While it is true that there are still many elements on the right and on the left who want to end democracy in Brazil and take control of state power, the fact remains that the largest threat to democracy since it returned to Brazil in 1985 and in 1988 with a new constitution was posed precisely by Lula and the Workers' Party.
Michel Temer was never a threat to democracy. Was he corrupt? Although there are no convictions yet, the consensus in Brazil is a clear yes. He was bought and paid for a long time ago by Lula and his coterie. But there is a difference between a thief and a dictator.
Is Bolsonaro a threat to democracy? Maybe. He has had some concerning ideas but so far has not implemented anything that would constitute a threat. Of course, he has only been in power for one year. Yet trying to compare him with a party that twice tried—and for quite some time succeeded—to subvert the separation of powers and control all the levers is disingenuous. His story has yet to be written, while the story of Lula, Dilma, and the Workers' Party is already written, part of it in the records of many courts, of audits, and of arrests.
Lastly, we have the Hail Mary argument of the movie: for all its faults, the Workers' Party was a hope for the poor, a bastion against inequality. They put up a fight for the common man, and maybe there were mistakes made, but at least inequality was tackled.
Well, again come those pesky statistics to show otherwise.
Inequality was already falling in President Fernando Henrique Cardoso's second term, from 1994 to 1998. It continued to fall at pretty much the same pace during Lula’s presidency, implying that he added little to the mechanisms in play, and it started to rise again after Dilma’s reelection in 2014. Right after her reelection, many state-controlled prices were allowed to go up, inflation crossed 10 percent per year, and many programs were cut.
Yet when we step back and look at the whole picture, the fact is that inequality has hardly budged. The Gini coefficient in Brazil went from a high of fifty-eight to a low of fifty-two during those years. Looking at this over the decades, it almost looks like a straight line. And in the end Dilma failed to maintain what little progress had been made.
It’s easy to hold things together for a while when one can raid the balances of state-owned banks, cook the books, buy support in congress, and win elections with billions of reais in embezzled money. But that can only last so long, and it came to an end with Dilma's impeachment. Brazil, however, did not come to such an end. It will now struggle for a decade or more to clean up the mess and get back on a path to growth and the reduction of poverty.
(These are not the only lies within the documentary, here’s the full list.)
Originally published at Ideias radicais.
The Guardian publishes another of these whines about the language that people use:
It’s not at the top of the list, but a fresh reason to resent Boris Johnson surfaced last week in the course of a news story about old cases of child abuse. Last year the prime minister averred that the pursuit of these cases, from the 1970s and 80s and many involving state institutions, was akin to “spaffing” money up the wall. Last week Labour called on him to apologise for the remark after the publication of new police figures indicating the abuse had been more widespread than assumed. The scandal is Johnson’s attitude, of course, but it might be observed as a side note that the word “spaffing”, which was funny for five minutes, has now been categorically ruled out for usage.
The Guardian also publishes the news that Boris is going to approve HS2:
Boris Johnson will give the final go-ahead to the first phase of the controversial HS2 high speed rail link early this week – despite fears over spiralling costs and strong opposition from at least 60 Tory MPs.
The prime minister is expected to make an announcement to parliament on Tuesday approving construction of the line between London and Birmingham, two days before conducting a wide-ranging reshuffle of his cabinet.
Actions and words - we tend to think that spaffing £100 billion and change on a project that shouldn’t be done in the first place matters more than the use of the word spaffing. But obviously that’s just us and our pickiness.
Although we would suggest a deal. The Prime Minister gets to use whatever language he likes as long as he’s rather more careful with our money. Who knows, could be the latest revolution in politics.
Don Boudreaux is an economist at George Mason University who blogs at Cafe Hayek. He has a long history with the Austrian and Public Choice schools, and is in the trenches daily making the case for free trade.
Bishop of Maidstone’s letter to evangelical parishes in response to the civil partnership statement fallout
Bishop Rod sent this letter on 31st January, 2020 to incumbents of all evangelical resolution churches:
Dear Partners in Ministry
I thought I should write following the statement that was issued after the conclusion of the College of Bishops yesterday. The statement can be found here
My understanding at the College was that the statement was needed for two reasons. First, it was felt that the Pastoral Statement on Civil Partnerships for Opposite Sex Couples which had been released on 22nd January was pastorally insensitive in the way it was framed and released to the press. Secondly, there was concern that as a result, some of the necessary participation in the discussions which will follow the publication of the Living in Love and Faith materials could be jeopardised. Yesterday’s statement therefore apologised for the release of the Pastoral Statement.
However, it was also my clear understanding that nothing in yesterday’s statement should be taken as a retraction of the doctrinal teaching of the Church of England on marriage and sexual relationships. While some of that teaching may well come into question during the discussions about the LLF materials, it remains the current teaching of the Church. The position set out in the Pastoral Statement on Civil Partnerships for Opposite Sex Couples, and which was agreed by the House of Bishops, therefore continues to apply.
While I understand many of the concerns that were expressed at the College, I had the opportunity to say that for many faithful Anglicans the Pastoral Statement of 22nd January came as a great encouragement. I was keen to establish that the apology did not relate to the doctrinal position it articulated.
I am conscious that many of you will remain concerned about these developments. Please be assured that together with other bishops, I will continue to make clear my commitment to the historic, biblical teaching of the Church. I hope most of you know that I don’t take part in social media discussions, but if you want to pursue any of this with me, there will be an opportunity to do so at our forthcoming regional conferences.
With every good wish in Christ
Bishop of Maidstone
Second Church Estates Commissioner apologizes to Parliament for the CoE’s pastoral statement on civil partnerships
Questions to the Second Church Estates Commissioner asked in Parliament on 6 Feb 2020
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
1. To ask the hon. Member for South West Bedfordshire, representing the Church Commissioners, what steps the Church is taking to support equality for LGBT+ Christians in the UK.
The Second Church Estates Commissioner (Andrew Selous): Before I answer the hon. Gentleman, I would like to pay a short tribute to my predecessor, Caroline Spelman, who demonstrated humanity, helpfulness and humour, all qualities I will do my best to emulate in this role.
This is a timely question from the hon. Gentleman, in LGBT history month. The Church has worked with Stonewall to produce the “Valuing all God’s children” guidance, which proactively combats homophobic, biphobic and transphobic bullying in schools.
Stephen Doughty: I thank the hon. Member for his answer and join him in his tribute to the former Member for Meriden, with whom I worked on many issues. I totally agree with the comments he made about her and wish her well for the future; I am sure she has a big role to play in the country. However, the comments that he made do not reflect the pastoral guidance that the Church issued in recent weeks, which the archbishops have apologised for and which suggested that sexual relationships outside heterosexual marriage fall
“short of God’s purpose for human beings.”
Does he recognise the great deal of concern within the Anglican communion that this potentially pre-empts the Living in Love and Faith discussions, which are ongoing, and sends a message of non-inclusivity at the start of LGBT history month, which is greatly regrettable?
Andrew Selous: The hon. Gentleman will probably be aware that the archbishops issued an apology for the way that that pastoral statement was issued. He is aware of the Church of England’s Living in Love and Faith project, which is looking very closely at all these issues and will be reporting later this year.
Mr Ben Bradshaw (Exeter) (Lab): Whether the Commissioners were consulted on recent guidance by the Church on civil partnerships; and if he will make a statement.
Andrew Selous: I am accountable for the Church of England in this place. The Church Commissioners are not consulted on announcements by the College of Bishops. The archbishops have since apologised for the division and hurt caused by the pastoral statement.
Mr Bradshaw: Regardless of that, I think it was discourteous of the bishops not to inform the Second Church Estates Commissioner. The legislation was passed overwhelmingly in this House with all-party support. It is bad enough that the Church still treats its LGBT+ members as second-class Christians, but to say to the child of a heterosexual couple in a civil partnership that they should not exist because their parents should not have had or be having sex is so hurtful. Will he tell the bishops that unless this nonsense stops serious questions will be asked in this place about the legitimacy of the established status of the Church of England?
Andrew Selous: I will certainly feed back the right hon. Gentleman’s strongly felt concern on this issue to the College of Bishops. In their apology, the archbishops did recognise that the pastoral statement had jeopardised the trust that has been built up as part of the Living in Love and Faith project, which is intended to discern the way forward for the Church of England on this issue.
10 February 2020
The House of Bishops Pastoral Statement:
the journey to date and my reflections on how we may go forward
Archbishop Justin and Archbishop Sentamu issued an apology at the end of January, taking responsibility for releasing a pastoral statement from the House of Bishops concerning Civil Partnerships.The pastoral statement attracted significant press interest, and it immediately became a source of considerable distress for many within and outside the Church. The statement also drew praise from some quarters for ‘upholding the orthodox and historic teaching of the Church of England’.I hope that this, necessarily long, letter goes some way to explaining what happened and my thinking on the matter. It also comes with news of two major new developments in the Diocese.
What was the purpose of the pastoral statement?
Commenting on the statement, the Revd Canon John Rees, Diocesan Registrar, explains:“the pastoral statement was prompted by a significant change in the law brought in by the last Parliament, as one of its last acts before Dissolution. The legislation itself followed a Supreme Court decision in 2018, which sought to address the inadequacy of the legal rights and remedies available to committed cohabitants, bringing them essentially into line with the rights and remedies available to couples who go through a secular or religious ceremony of marriage. Many lawyers, myself included, consider this to be a welcome reform in place of the previous rag-bag of historic legal remedies.”In short, the change in legislation meant that, for the first time, Civil Partnerships became legally possible for heterosexual couples. It seems clear that the reasons for the judgement were a matter of justice, and not because the State wished to change the legal position of marriage. However, it did, and does, raise technical questions for the Church that the statement responded to, though in a pastorally insensitive way.
How was the statement approved, and how did it come about?
The document came to the House of Bishops in December as a deemed paper; interpreted by bishops at the time as an “if needed” policy, should there be enquiries concerning the Civil Partnerships legislation outlined above. The House discussed the statement very briefly, but not its publication.The first thing we knew about the publication of the pastoral statement was when the Guardian got in touch with the national church towards the end of January. An open letter to the Archbishops quickly followed from three General Synod members, which garnered over 3,700 signatures from across a broad spectrum of the Church. Almost three weeks on, the pastoral statement continues to draw criticism.
How did you respond?
I wrote at the time to share my sorrow and that of my brother and sister bishops in Oxford for the upset that the pastoral statement caused:“A number of you have written or commented on social media about the statement published by the House of Bishops last week. Yesterday’s piece by Libby Purves in The Times sums up the mood of many within and outside the Church. Together with +Steven, +Olivia and +Alan, I am sorry for the distress that the statement has caused… there will be further discussion at the College of Bishops tomorrow and, we hope, something more fitting may emerge. The Oxford bishops’ pastoral letter, Clothe yourselves with love tried to strike a better note.”
Why did so many Bishops speak out?
Although the statement reiterated the legal and doctrinal position of the Church of England, I, together with many other bishops, felt that its release was wrong-headed and pastorally inept. Read through the eyes of anyone fostering/adopting children, single parents or those supporting LGBTI+ family and friends, the statement was, as Bishop Olivia said before the College of Bishops meeting, ‘cold, legalistic, and loveless’.
Bishop Steven, along with others, was keen that the statement should be withdrawn or sent back to the House of Bishops for further work, but that was not the will of the College of Bishops meeting.
In recent days, Professor Helen King and the Revd Canon Dr Judith Maltby have questioned the content of the statement as well as the tone, pointing out that it presents the teaching of the Church on these matters as static and immovable, despite the Church (I paraphrase) ‘…accepting clerical heterosexual marriage, accepting contraception, and allowing marriage in church of divorcees.’ I’m inclined to agree with that analysis.
But are you listening to other voices?
The responses of the bishops and many others have disturbed some people. We have had clergy in this Diocese, who are loved, respected and valued, write to say that they affirmed the pastoral statement. They are concerned to know that we will continue to honour and pastor to those who uphold the historic teaching of the Church of England on marriage.
We continue to listen carefully to voices from across the Church about these matters. As we stated in our December 2018 letter to members of ODEF, neither I nor my fellow bishops have any intention or desire to exclude in any way those who hold to the traditional teaching of the Church and our marriage discipline. As bishops, these are things we uphold. We do not permit uncanonical blessings, though we do seek to encourage priests who, in good conscience, want to pray for and with people at significant points of their lives in a spirit of generous hospitality. As bishops, we are always happy to advise clergy on these matters as issues arise.
Living in Love and Faith
As well as the pastoral insensitivity of the statement, the timing of it was problematic. The Church is now coming towards the end of a two-year national programme of listening, prayer and discernment led by the bishops.
Living in Love and Faith will help the Church to learn and explore questions of human identity, relationships, marriage and sexuality. Study guides and resources will be published following the July General Synod. We hope and pray that parishes and deaneries will fully engage with those resources when they are published.
For some, the resources will break new ground. For others, they won’t go far enough. But we must hold firm to that timetable and await what comes next while trusting and praying for the those most closely involved in the process. Do take time to explore the LLF website.
New initiatives in this Diocese
The Church is criticised, often with good cause, for fine words but little discernible action when it comes to matters of human sexuality. I am delighted that this letter comes with news of two substantial new initiatives in our Diocese.
LGBTI+ Chaplaincy Service
In October 2018 the four bishops of this Diocese issued Clothe yourselves with love: a pastoral letter on the inclusion of and care for LGBTI+ people and their families. We committed ourselves to explore the creation of a new LGBTI+ Chaplaincy Service, which launches today.
The new chaplaincy service seeks to provide the best possible care across the whole church in this Diocese and will respect the theological views that people who come to them hold. I ask for your prayers as this provision takes further shape and develops.
Full details about the chaplaincy service have been published today on our website at oxford.anglican.lgbt
LGBTI+ friendly evangelical services
Last week, Christ Church announced that it would host a six-month series of LGBTI+ friendly evangelical services.
Conceived with the full support of Christ Church’s Chapter and College Officers, Sacred will run as a monthly Sunday evening service, with an opportunity to socialise afterwards.
Sacred is very much a grassroots initiative, but I commend it to you, and I hope that you will join me in giving it your prayerful support.
Looking forward and travelling together
It has been an uncomfortable start to the year, but a most valuable one. That people still care about what the Church thinks is important. It’s now up to us to ensure that they continue to do so.
I recognise that ours is a continuing journey in which many people are suffering. Let’s resolve to care for one another along the way. This letter is available online; please feel free to share it with others if that would be helpful.
May God bless you and your family, your parish, chaplaincy, and deanery in the coming months.
Yours in Christ,
The Rt Revd Colin Fletcher
Bishop of Dorchester and Acting Bishop of Oxford
The Rt Revd Dr Steven Croft, Bishop of Oxford, is on sabbatical.
He said: “The Archbishops recently issued an apology (below and here) following the publication of a statement on Civil Partnerships in January. Alongside other bishops I apologise for the hurt the original statement caused within the church and wider society, and deeply regret that this has jeopardised trust. This has been a serious failure to express the beauty of Christian inclusiveness as it should be, and I acknowledge my share in responsibility for this as a member of the House of Bishops.
“Among the bishops, as in the Church, there is a variety of different views on whether or not the present official position of the Church of England on sexuality and relationships is right. Regardless of that, the statement was inappropriate and I am sorry for the pain caused.
“Our Christian vision of holiness in the life of each one of us demands respect for every person. I remain committed as your Bishop that we honour one another in what we say and, even more importantly, in what we do. Actions speak more powerfully than any words in witnessing to what we seek to be as God’s people, seeking to live by Kingdom values, and I urge us to continue to try to model that in this diocese in building friendships and relationships which reflect the Christian qualities of faithfulness, integrity and commitment. As frail and fallen human beings we may fall short but that requires of us repentance and renewal, always aspiring to engage with each other in Christian love.
“Looking forward, I long for us to move away from a narrow focus on sexual activity to encourage relationships which embody God’s love for us so that we can, individually and corporately, share the fullness of God’s love with others.”Statement from the Archbishops, Jan 2020:
We as Archbishops, alongside the bishops of the Church of England, apologise and take responsibility for releasing a statement last week which we acknowledge has jeopardised trust. We are very sorry and recognise the division and hurt this has caused.
At our meeting of the College of Bishops of the Church of England this week we continued our commitment to the Living in Love and Faith project which is about questions of human identity, sexuality and marriage. This process is intended to help us all to build bridges that will enable the difficult conversations that are necessary as, together, we discern the way forward for the Church of England.
Justin Welby, Archbishop of Canterbury
John Sentamu, Archbishop of York
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