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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 Problems with the Rio Olympics July 27, 2016

Posted by intellectualgridiron in Sports.
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Does this look like a venue fit for Olympic sailing and swimming?

Has the IOC learned its lesson yet (I’ll pause for laughter)?  Frankly, I would not hold out hope for this.  This is, after all, the same IOC that gave the Olympics to Nazi Germany in 1936 (both Winter and Summer Games).  That awarded the 1980 Summer Games to Moscow, the epicenter of the slave society bent on taking over the entire world (I mean Communism, of course).  They also awarded the 2008 Summer Olympics to Beijing despite the decades-long, grotesque train of human rights abuses on the part of Red China.

Then there was the disaster that was Sochi in 2014.  Leave aside the fact that Vladimir Putin has made every effort to cast himself in the mold of a Soviet Premier.

Focus instead on the grossly inadequate lodging; the issues with the available food; the $51 Billion overall boondoggle of hosting the Games; the subtropical climate (keep in mind these were Winter Olympics); the putrid water supply; the state-sanctioned killing of stray dogs, and, not to mention, the state-sanctioned doping of the Russian athletes (no wonder Russia came out of nowhere to win so many medals after so many mediocre performances in recent Winter Games).

Now the world is turning its attention to the Summer Olympics in Rio de Janeiro in Brazil, and the train wreck it is rapidly becoming.  Granted, Rio holds a special mystique for people all over the world:  a megacity in beautiful, tropical surroundings, and miles of warm, sexy beaches.  Sounds great to host the Olympics there, right?  That is, it all sounds great until reality is considered. To wit:

Economically, the Brazil is in its worst recession since the 1930s, partly because of the declining oil prices on the world market.  Locally, Rio de Janeiro has declared a financial state of emergency.  Falling oil prices alone cannot be totally blamed for this crisis.  Indeed, a much larger factor is government corruption, a hallmark of Third World politics.  To that point, a major investigation into the state-controlled oil corporation Petrobas has already forced several government officials to step down.  That is good, but will their replacements be reform-minded?  The cynical side of me says, “don’t hold your breath.”  Still, the political corruption scandals leading up to the Games have already had considerable fallout, for even Brazil’s president, Dilma Rousseff, faces impeachment.  That may be good for justice, but not good timing for a country to have a political crisis when it is about to host something as mammoth as the Summer Olympic Games.

As a side note, why does an oil company need to be state-controlled in the first place?  The free market, coupled with sensible regulation, has proven to be an effective means of governing, say, Chevron and ExxonMobil.  But this is what helps make the developed world the developed world.

In any case, health-wise, things are no better.  Yes, the tropics are lush and beautiful, with nice, sunny weather and gorgeous palm trees swaying to and fro.  The bad news is that all that nice weather helps breed pathogens and vectors thereof that are non-existent in the non-tropical latitudes of the developed world.  Yellow fever and malaria are two classic examples, but what has recently made news is the presence of the Zika virus in Brazil.  Did the IOC consider this when they awarded the Games to a country that is A) tropical, and B), still mostly Third World?

But that’s not the half of it.  Another hallmark of Third World countries is a much greater degree of pollution than in the developed world.  Outdoor aquatic venues for sailing and open water swimming are contaminated with trash and (drum roll, please) raw sewage.  Let that sink in for a moment or two.

Violence, of course, is another Third World problem (spare me the talk about developed world exceptions like Chicago and other inner cities where bad, warped values in those locales rule the day so as to provide Third World situations in an otherwise developed region).  A human foot and other body parts have recently washed up on a beach at Rio.  That’s bad enough.  Worse is that this particular beach is the same venue slated for beach volleyball events.  Speaking of violence, armed robberies on the street are up 24 percent.  Some athletes who have already shown up in preparation for the Olympics have sadly experienced this first-hand.  In May, an Olympic gold medalist from Spain and two other fellow member of their sailing team were robbed at gunpoint in Rio.  More recently, the same thing happened to two Australian paralympians.  Oh, and recently, a group of armed men stormed a hospital.

This rise in violence coincides at the same time with city police resources in Rio being strained to the breaking point.  They are so cash-poor that they have had to beg for basic office supplies and toilet paper.  Because of the lack of resources brought on by Brazil’s economic crisis, the police have had to ground their helicopters and have had to park half of their fleet of cars to save fuel.  Not what you want when hundreds of thousands of visitors, athletes and spectators alike, are about to count on police protection in that city.  Some policemen in Rio have threatened to shirk their duties on account of their paychecks being delayed as well.

The athletes themselves, many of whom have been gradually filing into the Olympic village in advance of the Games, have also borne the brunt of Rio’s many problems.  The village, which consists of 31 17-storey towers, has been plagued with leaky pipes, exposed wires, and blocked toilets.  Keep in mind that this is brand-new construction, not some dilapidated public housing tower.  Gotta love those Third World construction standards.  Already the Australian, Italian, and even Argentinian teams have rented hotels and/or apartments until the contractors can fix these issues.

Anybody with a healthy dose of common sense would quickly point out that when you give something as huge and important as the Olympic Games to a Third World country, even one as borderline and emerging as Brazil, that issues like these are par for the course.  So how did the IOC foolishly decide to let Rio de Janeiro host the Summer Games anyhow?

Three possible reasons:  One possibility is that the IOC is corrupt itself.  How else does one surmise that it gave the Winter Games to Sochi?  How else does one explain Russia not being entirely banned from these Olympics despite proven state-sanctioned doping at those Games?  Over the past decade, one thing I have learned is to never underestimate the IOC’s susceptibility to bribes.  The same thing could have happened in the Rio case.

A second reason is that political correctness clearly played a part in tainting the IOC’s collective judgment.  There is this politically correct mentality out there that every major city/major region deserves to host the Games.  Giving the Olympics to a South American country for the first time ever helped the IOC solidify their PC bona fides and thus they felt very good about themselves in the process for being so “inclusive”.

Third is that the International Olympic Committee was sold a bill of goods.  Brazil’s economy was on the rise in 2009.  Some observers at that time naively thought that Brazil’s economy would eventually surpass those of Britain and France.  The folks from the Rio organizing committee played on that, as well as the sexiness of the city, along with the beauty of the geographical surroundings.  Christine Brennan of USA Today, in an interview with Colin Cowherd on his FS1 radio and TV show The Herd, pointed out that this combination clearly played a factor when the IOC made their decision seven years ago.  All that was before Brazil’s Third World hang-ups helped cause its economy to crash and is now behind those of Italy and even India.

Solutions to avoiding issues like these in the future shall be explored in another article shortly come.  But for the time being, the economic crisis, the political crisis, the construction and infrastructural issues, the rampant pollution and the rising crime add up to a train wreck-in-the-making for these upcoming Olympic Games.  Maybe it will take such a disaster for the aristocratic-wannabes in Lausanne, Switzerland to finally wake up and use better judgment to avoid such disasters in the future.

‘Sochi Da’? More Like ‘Sochi, Nyet!’! February 5, 2014

Posted by intellectualgridiron in Politics, Sports.
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Does this look like a winter sports destination to you? Can one think of anything more antithetical to the Winter Olympics than palm trees? Yet this only scratches the surface regarding all the things wrong with Sochi, and it calls the collective judgment of the IOC into serious question.

As a life-long fan of the Olympics, I must concede that I am very excited for the Winter Games to commence this Friday evening.  But this time I am excited with reservations, namely on the very choice of the city and country to host these Games.  It is painfully clear to me that the judgement of the leadership of the International Olympic Committee (henceforth the IOC) was, to put it mildly, severely compromised.

What’s wrong with Sochi?  Let us count the ways.  Start with the fact that it is out-of-the-way.  For the previous three Winter Olympics in a row (Salt Lake City, Torino, and Vancouver), the IOC got it mostly right.  The United States and Canada are commerce-oriented, and have first-rate infrastructures, not to mention the population bases in the bookend cities dictate the size and quantity of hotel rooms to accommodate massive influxes of spectators for gigantic events, like, say, the Olympics.  Torino was not a terrible choice in that they had a solid population base to handle the Games and the many myriads of people.  It’s just that Italy is not exactly commerce-oriented, not when compared to the Anglosphere or even Germany, for that matter.

Another huge problem with Sochi is the geography itself, and in more ways than one.  The most obvious problem is that fact that Sochi is a subtropical resort, hardly the ideal spot for the designated hub of winter sports championship events.  At least the nearby mountains are snowy, though.  The size of the town is not quite up to what is needed for the Winter Games of this modern size.  Gone are the days when a tiny ski resort town like Lake Placid (population:  less than 4,000) could handle the Winter Olympics.  It was fine when you had only 19 countries competing, with a total of about 200 total athletes (as was the case in 1932), and they barely, just barely pulled it off in 1980.  Calgary turned out to be a great choice in 1988, but then small town problems persisted again with Albertville (whose 1992 population was only about 35,000), and also with Nagano (1998:  just too far out of the way), which brings us back to Sochi.  At only about 340,000, it’s not as big as metro Salt Lake City, let alone Calgary, Torino or Vancouver.

Isolation is another issue.  It is located on the eastern end of the Black Sea, way too out-of-the-way compared to major population centers of countries with a sufficient degree of commerce-orientation.  That isolation makes it unduly taxing on the kind of nations that will make the most substantial contributions athletically and in terms of medal counts.

This does not even take into consideration the issue of sticker shock for families trying to make it to Sochi to cheer on their sons or daughters in person as they compete.  Unlike commerce-oriented locales like Calgary, Salt Lake or Vancouver, which have plenty of hotel rooms all over their respective metro areas, Sochi has yet to build up the hotel space designed to handle the major crush of people about to descend on it.   Combine high demand for hotel rooms and low supply thereof, and out-of-the-way air travel, and you have a prohibitively expensive combination that will keep the vast majority of families away, period.

For those who do have hotel rooms, particularly those in the media, there are plenty of issues to contend with that are non-issues in more civilized parts of the world.  The Russian government has had seven, count ’em, seven years to prepare for these games, yet look at the laundry list of issues that members of the media have to contend with regarding their lodging while covering these Games.

There have been twitter-fed reports from journalists of having to climb out of their windows just to leave their hotels.  Also, there are reports of hotel lobbies have no floors; of having to contend with stray dogs in hotels — you know, the stray dogs that the Russian government is not murdering with typical Bolshevik brutality.  Then there is the glaring lack of water at some hotels, and where there is water, that people are advised not to drink it.

Seven years and 51 Billion (with a ‘B’) dollars later, and this is the best they could do?  Actually, why are we not surprised?  This is, after all, Russia, whose people had to make multiple botched attempts to bump off Rasputin.  Never underestimate the power of Russian incompetence — or corruption, for that matter.

Remember, folks, one thing that separates the developed First World from every place else is a more open, transparent government, and relatively minimized corruption.  It is clear that with $51 Billion wasted in Sochi, somebody got paid off.

Now let us consider the not-so-small issue of athlete and spectator safety.  Did the IOC consider Sochi’s close proximity to Chechnya and the fact that that spot of the world is a hotbed for Moslem terror?  Or did that just slip the IOC’s collective mind as they awarded the hosting of the 2014 Winter Games to Vladimir Putin’s kleptocracy?

The term ‘kleptocrat’ is not used lightly, either.  During a formal reception, New England Patriots owner Robert Kraft happened to bump into Putin.  The latter asked to see Kraft’s Super Bowl ring, and Kraft, ever the gentleman, obliged without hesitation in the interests of both classy conduct and international relations.  If only Putin were as much of a gentleman.  Instead of doing the right thing and returning the ring to Mr. Kraft, after the Pats’ owner so kindly handed over such a precious article of jewelry to the despot for his own close inspection and presumed admiration, Putin just put the ring in his suit pocket and immediately surrounded himself with three KGB agents before leaving the party without delay.  This, ladies and gentlemen, is the leader of the nation that is about to host the Winter Olympics.

I ask yet again:  did the IOC consider that?  Did they consider anything?  If current hindsight is any indication, they did not.  They did not consider the relative lack of commerce-orientation and the necessary infrastructure that it inevitably entails.  They, apparently, did not consider basic geography, be it climate (remember, the whole subtropical resort deal), nor the human side of geography (Chechnya, Islamic terrorism, etc.) and its obvious security risks that imperil athletes and spectators alike.  Neither did the IOC consider geography in terms of fundamental location, and the fact that it is out-of-the-way compared to many other sites in more civilized locales.  Need we mention the IOC’s lack of consideration regarding the human rights violations and the increased authoritarianism of Putin’s regime?  This is to say nothing of the rampant corruption that has left everybody outside of the teams themselves lacking for basic living necessities in their lodging.

There are really only a small handful of countries that are capable of competently handling the Olympics, given the size to which the Games have grown.  And remember, the words ‘competence’ and ‘Russia’ hardly go together!  Again, the importance of the commerce-orientation in a country is that it has the infrastructure (transportation, hotel accommodations, sanitation/cleanliness, etc.) that can handle such an astronomically massive set of events.  But moreover, this same small handful of governments that are sufficiently free/democratic, and have a free press that can call wayward politicians and government officials into proper account (barring left-wing media malpractice, anyway).  Such openness is a symptom of the proper commitment towards first-world living standards and infrastructure in the first place.  The United States, Canada, Great Britain, Germany, Australia and Japan — to an extent — can all pull it off well.  Why roll the dice with some place so isolated, in a dangerous part of the world, with a non-winter sports climate, in a country with an increasingly dictatorial government?

Of course, one plausible explanation for this gross lack of judgment on the part of the IOC is that maybe part the $51 Billion spent on these Games in Russia was dangled in front of the faces of key IOC members to cast the vote in favor of Putin’s regime.  This is Europe, after all, where such corruption is more commonplace than in the Anglosphere, by and large.

The truth of the matter is, as mentioned before, the vast majority  of countries are not built to handle the Olympics.  Contrary to the feel-good, politically-correct mantra, not everybody deserves a chance to host something so huge.  Not all cultures are equal, hence not all countries are properly equipped to handle such a massive undertaking.  The wise approach would be to cycle the Games around in a handful of cities/countries that have proven that they can handle such events without a hitch.  Why not cycle it from Salt Lake to Munich to Vancouver (or Calgary) and repeat the cycle?  Don’t out-think the room, IOC.