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What Happened to Brazil? April 1, 2017

Posted by intellectualgridiron in Politics.
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What happened to Brazil (economically-speaking)?  In previous articles, I have already spelled out the problem in so many words.  Brazil did enjoy economic growth for a while, which made them appear as though they were ready to join the grown-ups table of commerce-oriented countries.

But then Brazil hit an economic downturn from which it has failed to recover.  Even in 2009, it was still able to display a facade of prosperity, and thus successfully sold the International Olympic Committee on the idea of becoming the first country and city [Rio de Janeiro] to host the Olympic Games.  All those sports venues, built by government money, are now vacant and deteriorating, by the way.  So much for governmnent “stimulus”.

But do not take my word for it.  Now, Felipe Moura Brasil, a native Brazilian, offers his perspective on the systemic problems that have brought Brazil to this sorry pass (video at the top of the article).  Watch, listen, and learn.

Among the points he cites are:

  • Government transferring money from the rich to the poor.  Funny who the poor never got any richer as a result.
  • Those who did get richer by the aforementioned government actions of legalized theft were — surprise, surprise — Lula da Silva (Brazil’s then-president) and his corporate cronies.
  • The Socialists increased government spending, deficits, and debts, calling it “Stimulus” (e.g., all the Olympic venues that are now abandoned).
  • The same Socialists also increased the salary and retirement benefits of those in the civil service, euphemistically calling it “investing in the future”.
  • Handed out thousands of jobs in state-owned companies to political allies, euphemistically spinning such corruption as “good governance”.
  • Government spending kept going up, causing the economic growth to eventually collapse.

Fortunately, the Brazilian journalist in question cites some good news in the wake of this government-begotten economic wreckage.

One is that, according to Brasil, more Brazilians are starting to see capitalism and limited government as the way out of their national malaise.  As we have already pointed out on this blog, da Silva’s successor, Dilma Rousseff — also a Socialist — has been impeached and removed from office.  Her successor, Michel Temer, has already been leading some important economic reforms.

As Brasil himself points out at the end of this video, it will take a long time for his native country to recover economically from the havoc wrought by the Socialists.  This is to be expected for a country that was still on the upper end of the “developing country” spectrum, and whose corrupt government policies preempted it from being able to fully emerge as one of the truly grown-up, commerce-oriented nations (e.g., the United States, Canada, Australia, Great Britain, Germany, Japan, South Korea, Australia, etc.).  Brazil’s only hope to be able to recover so as to emerge as one in the future is through, again, limited government and free enterprise.

Just as socialism wrecked Brazil’s economy and continues to wreak apocalyptic havoc in Venezuela, it can also cause America’s prosperity and social order to also collapse.  Bernie Sanders supporters, take note.

On the Fundamental Problem of Brazil August 5, 2016

Posted by intellectualgridiron in Politics.
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There is an old saying that Brazil is the nation of the future, and it will always be.  Despite the myriads of problems posed by hosting the Olympic Games in Rio de Janeiro, I am still looking forward to the commencement of said Games.  But, the reservations cannot go ignored, and indeed, I have chronicled most of them in a recent article.

The shorthand laundry list of issues includes the notorious favelas, a local term given to the many slums that are part of this megacity;

Riots in Brazil over the past few months; protests that have disrupted the Olympic torch relay, even extinguishing the flame;

-Fears, possibly exaggerated, of the spread of the Zika virus;

The murder rate in Rio is on the rise, up 7.5% in the first six months of the calendar year;

-Let us not forget the raw sewage contaminating the local waterways;

The government is embroiled in a massive scandal of political corruption, with the state-owned oil company, Petrobas, at its epicenter;

The corruption in turn has led to the impeachment of its current president, Dilma Rousseff.  Her predecessor, Luiz Lula da Silva, is also charged with corruption.

All this in turn has led to a political crisis just when Brazil would desperately want to put its best foot forward, so to speak, as the world descends upon Rio for the Olympics.  Instead, the country itself is descending into chaos.

But at the heart of the majority of these problems is the economic turmoil.  Brazil is in its worst economy since the 1930s.  No, really.  For a while, it seemed as though Brazil’s economy was becoming increasingly robust, so much so that it was about to join the grownups’ table of world affairs.  The acronym “BRIC” (Brazil, Russia, India, and China) became a trendy term to use in economic and geopolitical contexts.  Brazil certainly took advantage of a strongly emerging economy to the utmost, and played on that image to help persuade the International Olympic Committee to grant them the coveted hosting of the Summer Olympic Games for 2016.  Surely the IOC was more than willing to be persuaded, as political correctness no doubt took hold of the organization, and they were more than receptive to the PC siren’s song that it was South America’s turn to finally host the Games instead of proven successful locales in Europe, North America, Australia, or even east Asia.

Then the economic downturn took place in the several years that followed.  The key question becomes, why?  The short answer: Socialism.  This defective ideology/macroeconomic policy, a watered-down version of its monstrous brother Communism, has proven to wreck economies worldwide.  One need only see Brazil’s neighbor to the north, Venezuela, to see how Socialism has brought that country to absolute ruin.  Keep in mind that Venezuela was, for a long time, one of the wealthiest countries on the South American continent what with its robust oil industry.  Not anymore.  After the notorious dictator Hugo Chavez forced socialism on his country, he stifled the people’s incentive to be productive.  When that happens, the every-day exchanges that keep an economy running become stifled as a result.  It does not take a rocket scientist to figure out that when the incentive to be productive is taken away and business exchanges continue to dwindle to nothing, eventually real-world shortages ensue, such as the chronically empty shelves in grocery stores all over that country, and the general chaos that follows as a result of that.  Lest you think that the Venezuelan government has come to its senses, instead of allowing people to keep more of their hard-earned money and to free up regulation for free commercial exchange, its solution is to this chaos is to enslave its citizens (a Draconian way of doubling down on its failed leftist policies).

Did Brazil learn from the mistakes of its neighbor to its north?  Apparently not.  It’s “Worker’s Party” (any political party with the word “worker” attached to it is going to be very hard-Left) has been in power since 2003.  Like other socialist counties, the Brazilian government owns a large percentage of the means of economic production, including the oil company Petrobas, part of the major political scandal embroiling that country right now.  Which begs the question:  why does the Brazilian government need to own such a large company in the first place?  Here in America, ExxonMobil and Chevron are privately owned, and are producing petroleum products quite well.  Grousing about gas prices usually makes companies like these the undue scapegoats, but that only exposes the ignorance of the complainers.  When gas prices spike, it is largely due to crude oil prices spiking on the commodities market.  The other major reason is constricting the supply on the refining end due to government over-regulation.  But more on that at a different time.

What led Brazil to its current economic collapse was the socialist party in power spending too much money on too many things.  It did not happen immediately.  Indeed, for a while, the Workers Party was popular because the economy was on the rise due to the commodities supercycle.  Because commodities prices were spiking for a long period of time, there was lots of extra cash to engage in vote-buying via cash transfers.  Yes, the current crop of crook politicos in Brazil came to power by basically promising voters free stuff, paid for by taking money from people who already earned theirs.  Then, the commodities prices fell, and there was no more cash to throw around.

In other words, to give a nod to the late Margaret Thatcher, the Brazilian government ran out of other people’s money.  Governments with spending problems always do.

So what is the solution to Brazil’s systemic economic problem?  Start by privatizing Petrobas and other state-owned companies.  Governments are horribly inefficient when it comes to managing the means of economic production.  Part of the reason is that normal market forces that incentivize both efficiency and effectiveness for firms in the private sector do not apply in the public sector.  For example, when was the last time you saw the U.S. Postal Service turn a profit?

Indeed, the Olympics themselves are part of the problem, in this case.  What do Athens, Beijing, and Rio all have in common?  They all hurt their local economies by excessive, wasteful government spending on sports venues that have turned into, at least in the case of the first two cities, abandoned money pits instead of profitable enterprises.  Even Beijing’s famous “Birdsnest” stadium has deteriorated some from its 2008 glory.  When American cities host the Games, they rely much more heavily on private corporate sponsorship, and the cities’ economies were actually given a temporary boost in the process (see: Ueberroth, Peter, and Romney, Mitt).

Even if a government-owned corporation like Petrobas in Brazil is profitable, that can lead to other problems.  One, it can conceal possible government mismanagement, at least temporarily.  But more importantly, the revenue from that corporation seduces politicians with too powerful a temptation to spend that money, thus begetting further corruption.  Rampant spending, after all, encourages what economists describe as “rent-seeking behavior” from otherwise private citizens.

Let us not forget that these exact same failed policies of government taking over whole industries is exactly what the so-called “Bernie bros” and their demented, septuagenarian Dear Leader in Vermont currently champion.  But as we have seen in South America and elsewhere in the world, these policies only lead to ruin and government-induced suffering.

The best way to stem corruption in government is to curtail its spending, and one can do that by restricting its means for revenue.  Privatizing Petrobas would be an important start.

Given that there is some important degree of democracy in Brazil, one can hope that these market reforms will be able to eventually take hold so as to avoid the mistakes and further catastrophes that we are witnessing in its next-door neighbor, Venezuela.  If Brazil’s government fails to implement such reforms, however, then their current crises, both political and economic, are but a prelude of worse things to come.

On the Future of the Olympic Games July 28, 2016

Posted by intellectualgridiron in Sports.
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Athens2004ruins1

One example of the ruins of the Olympic venues in Athens from the 2004 Summer Games.  This is what happens when the hosting of the Olympics are awarded to countries that are not First World/commerce-oriented.

The train wreck in Rio de Janeiro that continues to unfold as the Summer Olympics are but days away has exposed two large, systemic problems.  The obvious one is with Brazil itself.  Its economy may have been on the rise in 2009 to the point where it gave enough people the impression that it was becoming part of the developed world.  Not long afterwards, political corruption, lack of infrastructure, and a glaring lack of sanitation exposed Brazil as still being Third World and still having a long way to go before it deserves to sit at the grownups table of world affairs (along with the United States, Great Britain, Germany, Japan, Canada, Israel, Australia, possibly France, and the like).

The other systemic issue at play is with the Olympic Games themselves.  Simply put, they are huge, and very expensive to stage.  Even 40 years ago, things almost reached a tipping point.  The city of Montreal hosted the 1976 Summer Olympics, only to be $1.5 Billion in debt afterwards. It took that city almost 30 years to pay it off.  Indeed, few cities wanted to host the Games after that.  Sure, Moscow jumped at the chance four years later, because to a Communist nation, money is no object when it comes to propaganda.

Peter Ueberroth and the Los Angeles organizing committee for 1984 revolutionized how the Games were financed when he persuaded the International Olympic Committee to allow corporate sponsorship.  It saved the Games for another 30 years.

Now, the Games have grown even bigger still, to the point where they are too expensive for new cities to host the Games.  Sure, Putin and the Russian government seemed more than willing to turn Sochi into a $51 Billion (with a ‘B’) boondoggle, because, again, at what price propaganda?

Beijing was the only viable city that wanted to host the Winter Olympics for 2022.  The IOC was certainly were not going to give the Winter Games to Kazakhstan, for goodness sake.  It is a sad commentary on the susceptibility of the IOC to a bribe that so few viable countries and cities thereof even put in bids for the 2022 Winter Games in the first place.

That aside, one thing is for certain:  the Olympics are so huge and such a big deal that only commerce-oriented (read:  First World, developed) countries are built and, indeed, fit to host the Games.

Yet, there is this politically-correct mantra out there, saying that everyone deserves a chance, but grownups will tell you that is pure poppycock.  The truth is, most nations and even whole continents are not built to handle and host the Olympics.  That includes Africa (with the possible exception of Johannesburg), South America (as we are currently seeing now), the Middle East (outside of Israel), and central and Southeast Asia.

Even some countries in otherwise developed regions are more than suspect.  Remember Athens in 2004?  The Greeks built all those state-of-the-art facilities only to let them go to ruin a decade later.  Yes, it sounded wonderful for the Olympics to be hosted in the ancient birthplace of the Games themselves, but the huge problem was that Greece is anything but commerce-oriented, which speaks to a culturally systemic problem in Greece itself.

One aspect of this systemic issue is that a city that wants to host the Games for the first time has to spend billions of dollars to build new facilities from scratch.  In this day and age, even with corporate sponsorship and in some cases, state-supported funding, that is no longer economically viable.

The solution is to start cycling the Games around to cities that meet certain criteria.  They are:

1.) Be situated in a commerce-oriented country (i.e., one of the aforementioned “grownup” countries).  Not all cultures are equal.  Some cultures are superior to others.  A hallmark of this cultural supremacy is a culture that itself is commerce-oriented, that respects the rule of law and property rights of the individual, that frowns on black markets, and puts a premium on democratic governments and transparency within.  Not to mention, superior cultures minimize corruption in government, at least compared to more corrupt Third World nations.  These sorts of countries also have free presses (to varying extents; France is suspect in this regard) that can call wayward politicians into account for any malfeasance.

Commerce-oriented countries also have the necessary infrastructure for such massive undertakings as the Games.  This includes transportation (e.g., airports and expressways), not to mention a sufficient amount of clean, comfortable, available hotel rooms to handle the crush of spectators attending said Games.

2.) Be a city big enough that it already has the aforementioned infrastructure in place.  This applies to cities that have never hosted a previous Olympics.

3.) This is the big one:  ideally, be a city that has already hosted the Games, and has proven to do so exceptionally well.

Indeed, for the Olympics to remain doable in the future, the way to go is to starting cycling them around to cities (and, by extension, their countries) that have proven capable of hosting the Olympics well.  The IOC seems to be inching towards this already, however gradually.  London just hosted its Olympic Games for the third time, most recently in 2012.  Tokyo — another excellent choice on the part of the IOC — will host the 2020 Summer Games.  Los Angeles is currently bidding to host the Summer Games for 2024.

For these cities, the venues/facilities are already built.  Maybe a little renovation or generally sprucing up might be in place, but such expenditures pale in comparison to building everything from scratch.  Los Angeles, for example, has but one additional facility to build (for rowing and kayaking) and it’s all set.

Think about it from the Winter Games perspective.  Sure, a nearby, mountainous ski resort town can handle the alpine skiing events (Salt Lake had Park City, Vancouver had Whistler), but you still need to build a sliding sports track.  That alone costs between $50-100 Million, and then there is the necessary ski jumping tower, etc., etc.  Economically, it makes sense to host the Games in cities have already hosted them, and hosted them well.

One could cycle the Winter Games from Salt Lake City to, say, Munich (they have a sliding sports track at nearby Koenigssee), then Calgary and/or Vancouver.  What’s not to love?

Similarly, a Summer Games cycle of Los Angeles, London, Sydney, Atlanta, Tokyo, and Munich/Berlin would work just fine.  Seoul would be a viable cycle candidate as well.

Either we start doing this, or we encourage cities to continue to engage in multi-billion-dollar boondoggles to build athletic venues that rarely get used again, like those in Athens (indeed, what shall become of Rio’s many facilities after these upcoming Games are concluded?).

So, which is it going to be?  Cycling the Games around to proven cities/countries, or more wasteful boondoggles?