Open Market Economies or Che Guevarra’s Chimeras

``Ideologies are now served à la carte. Chávez makes common cause with the Cuban Revolution. But he parades under banners of Jesus Christ and calls Christ the “first revolutionary.” So much for Communism’s dismissal of the opium of the people. The Venezuelan leader talks a lot about women’s rights, but abortion remains illegal. Just as Chinese Communism can be capitalist, and Russian democracy look Leninist, Chávez’s Cuban-inspired socialism can be Catholic: what counts is power preservation.”-Roger Cohen, columnist International Herald Tribune

The public, impelled by mainstream media, has been made to believe that the success in a country’s political economy should be driven by “personality based” (rent seeking) politics or the “honesty-charity” model of “socialism”, or the belief that central planning should solve each and every of our daily problems.

This socialistic inclination appears to have diffused into the hoi polloi…do you see the proliferation of Che Guevarra T-shirts on the streets? (Gadzooks! Have mass murders or “democide” now become a paragon for economic salvation?!)

The irony is that while we opt for a political democratic form of government where we “elect” our leaders, we chose to subordinate our economic path to the whims of these leaders who eventually “fail” us by the “unwarranted” imposition of perceived popular themes of “injustice” and “corruption”.

When economic opportunities are determined by politicians then we subject ourselves to centrally planned governance-socialism. Bloated bureaucracy, surging government spending and soaring taxes are symptomatic of such dynamics. And so is the price of getting elected (see our November 18 discussion).

Yes, according to the recent World Bank’s Paying Taxes 2008 Report, the Philippines ranked 135^th of the 178 countries in terms of taxing businesses. This pales in comparison to our neighboring Malaysia, Indonesia, and Thailand which landed in 54^th, 63^rd, and 66^th spots, respectively (Businessworld). High tax rates equal to high costs of doing business. Should it be any wonder why we lack the required investments which contributes to the present economic plight?

Yet, the paradox is that we ask for more government. Why? Because many of our economic elites hide under the skirt of regulations to escape competition and even lobby for more laws to keep the statusquo or retain their competitive advantage.

On the other hand, most serving political officials, the wannabes (opposition) and their affiliates or associates-some in the media, some in the legal profession, and many in the church et. al. -advocate for bleeding heart or “doleout” economics or for more dependence on the government for a variety of purposes-anywhere from wielding the burgeoning public coffers for their self interests to the arrant lack of understanding of the implications thereof.

So in spite of all of the successive changes of leadership over the years, we continue to remonstrate on the actions of the incumbent leadership for exactly the same sins as the past administrations. And since we can’t comprehend on the true picture of what keeps us they way we are, we ask for the wrong cure-more government. As an old adage goes, ``Fool me once shame on you! Fool me twice, shame on me!”

Like a curse, hardly has it been known to us that our socialistic tendencies will continue to benight on us for as long as we chose to do so.

The fundamental problem with the ideals of socialism/communism is that its application has been incompatible with the universal laws of economics such as the law of scarcity, the individual’s sense of marginal utility and most especially economic calculation. Why do you think the USSR collapsed (lack of charity or honesty, perhaps-hahaha!)? Or communist China or statist India has now shifted their economic structures towards market-oriented economies?

Yet faced with every problem is the desire to use of the legitimate structural coercive machinery-government-as political mechanism for dispensation of fairness or justice. Do you ever think that government can ever be just, fair or honest? Our answer: No. Simply because “justice, fairness and or honesty” depends on how an incumbent defines these. Like market prices, which are subjectively valued, so as with the definition of one’s sense of fairness justice or honesty. Che Guevarra’s brand of justice was of public trial and mass execution…of the political opposition…should such be considered as one’s political model?

Anyway, since we are speaking of developmental issues, here is a recent pertinent narrative about Ireland’s transformation according to Dr. Steve Forbes of the eponymous Forbes magazine and his suggestions for Israel (emphasis ours),

``The dispute there between Protestants and Catholics has been bloody and has lasted for more than three centuries. Yet there now seems to be real progress toward peace. Why? Not because diplomats suddenly became more able but because of the profound changes to the south, in the Republic of Ireland, which for centuries had been one of the poorest economies in western Europe.

``Things started to change dramatically in the 1970s. Dublin aggressively courted foreign investment, using tax cuts and tax holidays as bait. Other tax and regulatory changes were made. Result: Ireland today is the most vigorous economy in western Europe. Its per capita income is now larger than that of Britain, France or Germany. The great boom in Ireland did not go unnoticed in the North, and in fact that region has benefited greatly from the Republic's prosperity. A vigorous, new middle class is rising in all of Ireland. As people become more prosperous they tend to focus on bettering their lives more than on blowing up their neighbors…

``Israel has made significant changes--especially under Benjamin Netanyahu, who was finance minister (2003--05)--but it could do a lot more, including instituting a low-rate flat tax. Until recent years, in fact, Israel's economy was grossly overregulated, overtaxed--hardly an inspiring free-enterprise model. The faster it can move to a Hong Kong/Estonia/Switzerland model, the better for its own well-being and security. A free-enterprise boom would be noticed by neighbors--and quietly emulated.”

The lessons are clear enough, the odds of successes for open market driven economies have conspicuously been lopsided than of any statist or socialist models, especially when in comparison to Che Guevarra’s revolutionary paradigm-Cuba. (Wasn’t he booted out by Fidel Castro for either incompetence or for conflict of ideals? And wasn’t all his revolutionary attempts in different countries-Panama, Dominican Republic, Bolivia, Congo-been a failure?).