Ecnomics of Ruin 101

Toro

Toro

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May 24, 2005
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runningofthebulls.typepad.com
Great article.

Economics of Ruin 101

"Poverty, not economic growth, is the real miracle today," explains Leon Louw, Executive Director of the Free Market Foundation of Southern Africa. Louw's insight is that in the modern world governments have to work hard to make and keep people poor.

In his wonderful book The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, the Peruvian economist Hernando De Soto notes: "The cities of the Third World and the former communist countries are teeming with entrepreneurs. You cannot walk through a Middle Eastern market, hike up to a Latin American village, or climb into a taxicab in Moscow without someone trying to make a deal with you. The inhabitants of these countries possess talent, enthusiasm, and an astonishing ability to wring profit out of practically nothing." It's possible to keep such people down only if governments dedicate themselves to the pursuit of really bad policies for decades at a time.

Most notorious, of course, was the grinding poverty sustained for seven decades in the communist bloc. The phrase “rich communist country” has always been an oxymoron. We still have illustrations of communism's brilliance at sustaining poverty in Cuba and North Korea. Policies don't have to be as bad as totalitarian communism to make people poor. Consider the case of Argentina. In the 1920s Argentina's was one of the largest economies in the world, with an average income about the same as France's. Rich as an Argentine was, a catch phrase often used in Paris cafés to describe an especially wealthy person. Since the 1940s Argentina has embarked on a series of policies—nationalization of industries, expansion of state services, and vast overseas borrowing—that has eroded its rank in the world.

Just as bad policies can ensure poverty, good policies spark wealth creation. As De Soto points out, in the late 19th century tens of thousands of Japanese emigrated from their impoverished country to Peru in search of a better life. In the 1950s South Korean politicians said they hoped their country's citizens would some day be as rich as Jamaicans. Clearly Japan and South Korea have done something right, while Peru and Jamaica have not.

African politicians have embraced at one time or another policy prescription for poverty that has led to drastic drop in per capita incomes for three decades. In between, they have fought numerous civil wars and engaged in various bloody tribal pogroms. Some recipes guaranteed to get lean results.

Here, then, is a short guide for kleptocrats and egalitarians who want to keep their countries poor. All of these policies have stood the test of time as techniques for creating and maintaining poverty. The list is by no means exhaustive, but it will give would-be political leaders a good idea of how to start their countries on the road to ruin.

First, make sure that your country's money is no good. Print money like there's no tomorrow. Hyperinflation is one of the easiest and most popular ways to dismantle an economy. Another popular monetary gambit is to make sure your currency is not convertible. This guarantees that no one will ever want to invest in your country. To further discourage investment, be sure to nationalize all major Industries. Nationalization has additional poverty-enhancing benefits. For example, it will ensure that the nationalized industries never improve technologically or become more efficient, and it makes workers pathetically dependent on their political masters, namely you. Of course, you may find it too tiresome to nationalize everything, in which case it is very important that you establish high tariffs that insulate your country's remaining private industries (usually owned by your cronies anyway) from competition. In addition, your legal system should make it nearly impossible for anyone to license a new business, however small. This will offer opportunities for your bureaucrats to make a living through corruption and will protect your cronies from domestic competition. An added advantage is that most commerce will be made illegal and subject to arbitrary enforcement.

This leads to the point that property is critical. Once people start to own something, they invest in it and improve it, leading inexorably to the creation of wealth. Again, the legal system can help to make it impossible to issue clear titles so that your citizens can't buy, sell, or borrow against their "property." Also, force your farmers to sell their crops to government commodity boards at below-market rates. This will discourage them from investing in anything more advanced than subsistence agriculture, and you will be able to sell whatever crops you do seize at low prices to keep the urban populations quiet. Another popular policy is confiscatory taxes. This strategy, which allows you to claim that you are soaking the rich in the name of equity, has long been fashionable among the genteelly stagnating economies of Europe.

Finally, you may have missed the golden age of international graft, when the World Bank and even commercial banks showered the governments of poor countries with loans. But if the opportunity arises, you should follow in the footsteps of two deceased leaders whose fortunes are now being divvied up in "Please Help": Zairean dictator Mobutu Sese Seko and Nigerian General Sani Abacha. Take a page from their book by redirecting international loans directly to your Swiss bank accounts, sticking your citizens with the bill. Unlike Mobutu, however, make sure you give up the pleasures of arbitrary power before you're old (or overthrown in a coup), and move to Provence to enjoy your ill-gotten gains. Of course, be sure to invest your purloined riches only in countries with stable money, strong property rights, and honest bureaucracies.

Keeping people poor is hard work, but following the above policies will achieve that goal. Modern poverty is a miracle that only you can make happen.
Click to expand...

African Executive
 
Jay

Jay

Executive Branch Member
Jan 7, 2005
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One important aspect of all of this is to never take responsibility for anything. When anyone doubts the "success" of your practices, blame the Americans or the British or Jews.... anything other than taking responsibility for your actions.
 
M

MMMike

Council Member
Mar 21, 2005
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Thanks Toro... interesting article. You might enjoy a book I'm reading: The End of Poverty by Jeffrey Sachs. It talks about why some countries stay poor and why some countries succeed. It also mentions a lot of the reasons for poverty as outlined in this article.
 
M

MMMike

Council Member
Mar 21, 2005
1,410
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Toronto
Re: RE: Ecnomics of Ruin 101

Jay said:
One important aspect of all of this is to never take responsibility for anything. When anyone doubts the "success" of your practices, blame the Americans or the British or Jews.... anything other than taking responsibility for your actions.
Click to expand...

The West has made a lot of mistakes when it comes to development economics, Jay. It was us who lent these brutal unaccountable dictators billion$ and then turned to the poorest of the poor to repay the debts. It was us that came in with our smug know-it-all attitudes and set up programs such as the Structural Adjustment Programs that gutted the social fabric of the poor countries in the middle of the AIDS epidemic. We do not have clean hands... far from it.
 
the caracal kid

the caracal kid

the clan of the claw
Nov 28, 2005
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www.kdm.ca
Whatever do you mean jay?

Is my grip on how little piggies in their pen, rolling in their muck
little piggies always lining up for their swil?
little piggies saying swil is good, swil is great, just look at all the swil i can take?

if a little piggie has never been out of the pen, a little piggie knows no other way. The little piggie just deludes itself with "i am here, and this got men here, so this system is the bestest in the world".

But when end-time comes for little piggie, its little piggie ways won't seem all so grand if even just for a moment the piggie understands.
 
Jay

Jay

Executive Branch Member
Jan 7, 2005
8,366
3
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Very good CK.... :)


I didn't think you would expand on why I think you need a grip!

:lol:
 
I think not

I think not

Hall of Fame Member
Apr 12, 2005
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Re: RE: Ecnomics of Ruin 101

the caracal kid said:
life from inside the pen must be so comforting to you jay,

that is why it was penned "ignorance is bliss".
Click to expand...

You're always so negative Caracal, think of all the nakid bodies floating around. :D
 
Jay

Jay

Executive Branch Member
Jan 7, 2005
8,366
3
38
Re: RE: Ecnomics of Ruin 101

the caracal kid said:
life from inside the pen must be so comforting to you jay,

that is why it was penned "ignorance is bliss".
Click to expand...


Actually life inside the pen is bloody hell and full of war....trying to fend for our rights against people like you trying to send us off to slaughter.

We aren't ignorant of the deeds and it sure as hell isn't bliss.
 
the caracal kid

the caracal kid

the clan of the claw
Nov 28, 2005
1,947
2
38
www.kdm.ca
it is so bad, then why do you follow the little piggie ways?

you need to look carefully at what is sending you to slaughter. You will find it is those leading you to think freedom comes in the form of material. You will never have rights so long as they already have you so willingly penning yourselves in!
 
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