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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.

The Opinion Index, 11-15-12 November 16, 2012

Posted by intellectualgridiron in Politics.
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The issue of Republicans trying to broaden their base is one that has obviously been on my minds within the ranks of the GOP, specifically, how do we bring in more minorities into our camp?   Many people who just happen to be minorities no doubt share most of our values, but others, namely a large swath of blacks, seem not to.  Many in the black community have kept themselves on Uncle Sam’s Plantation, much to their own peril economically, socially and spiritually.  What must be done, according to Dennis Prager, is to bring more minorities towards our values, meaning that we must get the message to them, make it clear to them, and prove to them that our values are in their best interest, and indeed, in America’s best interest.

At the core of things is a particular challenge.  We as Republicans stand for hard work, self-reliance, free enterprise and individual initiative.  On paper, that seems like an easy sell.  But it becomes a much tougher sell when the other side says “don’t worry, we’ll take care of you,” without regard for who will pay for all the goodies.  This is part of the case that Mona Charen tries to make, along with the chilling reminder that the worse an economy gets, the more lots of people (single women, etc.) cling to government for security.  To overcome this huge obstacle to preserving individual liberty and prosperity, we need to have more brains (and common sense!) and imagination than the Democrats.

One important thing to keep in mind is that some Republicans happen to win in places where they are least expected to, such as the People’s Republic of Massachusetts.  How do they do it?  Jeff Jacoby points out that they won with focusing on grassroots, and champion liberty, limited government, and low taxes.  This, of course, flies in the face of conventional wisdom from campaign consultants, who think that GOP candidates must go wishy-washy and moderate positions.  The message is clear:  clarity, conviction, and the ability to put it in words people can understand wins, even in Massachusetts.

Meanwhile, lots of people within conservative ranks seem to be piling on Romney right now (hasn’t the poor guy taken enough grief?).  Did he make mistakes?  Of course he did.  Taking Rick Perry to task over his stance on the DREAM Act was a fatal blow towards his hopes for attracting Hispanic votes, for example.  But having said all that, it is more than worth pointing out what he did RIGHT.  Who better than Hugh Hewitt to offer a nice, easily digestible list of things Mitt did well which future candidates would be well-served to emulate, and others which have set the GOP up for long-term success?

Finally, one important thing to note is an alternative solution to solving the mess in Washington.  Instead of trying to change Washington — which we ought not to give up anytime soon — let us also devote just as much energy towards helping the Several States wrestle issues back into their sphere of control.  Justin Owen offers a very timely piece on how some states have already challenged the Federal government in key areas such as environmental protection, Medicaid reform, and education.  Let us never forget that we have something called the 10th Amendment.

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

This must be remembered above all else, especially now.

More Questions Raised than Answered November 7, 2012

Posted by intellectualgridiron in Politics.
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When media outlets called for  Ohio narrowly going for Obama within the 11:00 hour Tuesday night, it became quite clear that Obama was to win re-election.  But the electoral results overall seem, at this point to hardly settle anything.  On the contrary:  the results of this election raise more questions than those that are answered.

For one:  given that, on the surface of things, the status quo regarding who controls the presidency and the Congress has not changed (Dems keep the presidency and Senate, Republicans the House), how are major issues facing this country to be effectively resolved, moving, ahem, “Forward?”

Given than Barack Obama won re-election with fewer states than in 2008, how can he consider this re-election is any sort of mandate going, ahem, “Forward?”  (North Carolina and Indiana are back in the red column, while ballots in Virginia and Florida are still being counted).
Credit Mitt Romney for recognizing that the economy was the chief concern among most voters this election cycle.  Indeed, news reports indicated that the exit polling among swing voters revealed that very thing.  Yet those very swing voters that were exit polled still blamed George W. Bush for the economic malaise.  Question:  at what point will Obama own this malaise?

Will stagflation come?  Given the “status quo” result of this election, it seems to be almost a foregone conclusion.  Will Obama then own the ensuing recession-within-a-recession?

What is to be done about the “tax bomb” that is about to come our way?  Once that “bomb” explodes, who is likely to take the political hit?

While it might be a tad too early for a postmortem on the Romney campaign, could it have been that the “October surprise” that many on the right side of the ideological spectrum feared was in fact a freak act of mother nature?  Hurricane Sandy did, after all, allow for Obama to act a bit presidential for once.
In historical perspective, not since Thomas Jefferson, James Madison and James Monroe has America elected presidents to two consecutive terms three times in a row.  I shall leave a competent Psephologist (paging Michael Barone!) to more effectively discern the deep meaning of this development.

These and other questions shall surely be answered as time unfolds.  In the meantime, pray for our great nation, for its duly elected leaders, and especially for the health of the justices on the Supreme Court.

A Time for Choosing November 3, 2012

Posted by intellectualgridiron in Politics.
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For weeks, I was trying to think up the almost-perfect editorial essay explaining why Obama must go and why Mitt Romney is the best guy we have to turn our government and our nation around.  I could have given a whole litany of problems America has experienced under Obama, and just as big a litany of positives in favor of Romney as the real man for the job (as opposed to the narcissistic man-child with which we have saddled ourselves for [almost] the last four years).  And I may yet write such a piece between now and Tuesday.  But as the old saying goes, in the brevity lies the spice, and there is hardly a ‘spicier’ editorial out there in Romney’s favor (and Obama’s consequent disfavor) than Charles Krauthammer’s latest piece.  What makes this particular column so “spicy” is that it gets to the very crux of the matter regarding this upcoming election.  Are we to remain freeborn citizens of unlimited individual potential, or are we to degenerate into serfs, able to do little more than serve an increasingly Leviathan state?  So read that article, then watch Ronald Reagan’s historic speech that he gave 48 years ago.  While you watch it, forget about Goldwater vs. Johnson and imagine Romney vs. Obama, and the speech will seem even more timely today than it was almost five decades ago.