Communism WILL FAIL.

Communism WILL FAIL.

by tonytran2015 (Melbourne, Australia).

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(Blog No.20x).

#Tuân Tử, #Xunzi, #Karl Marx, #work according to ability, #get according to needs, #pretend work, #pretend to have satisfied all needs, #Russia, #Soviet Union, #China, #Venezuela

1. Tuân Tử (Xunzi)’s teaching and Karl Marx’ theory.

Tuân Tử (荀子; 313 BC – 238 BC; Xunzi = Xun Kuang (/ˈʃʊn ˈkwɑːŋ/; Chinese: 荀況; pinyin: Xún Kuàng [ɕy̌n kʰwâŋ]; c. 310 – c. 235 BC, alt. c. 314 – c. 217 BC) [1, 1b] was an Oriental philosopher during the Warring State Period of ancient China, he said more than 2200 years ago: “Human beings are instinctively cruel, selfish” (Xunzi believed that humanity’s inborn tendencies were evil, Tuân Tử: “Nhân chi sơ tính bản ác”).

Karl Marx advocated a Communist World led by proletariat,

Marx predicted the demise of capitalism through a workers’ revolution that would lead to a utopian “classless society” where, according to Marx, “people work according to their ability and get according to their needs” and “in which the free development of each is the condition for the free development of all.” [2]

2. Karl Marx’ societies in practice.

2a- The Russian communist revolution led by Stalin wanted to set up that World. Here are some of the results:

Trotsky [3] got assassinated by his former comrade.

Communist cadres deposed the small capitalists, took their privileged positions and enjoyed the positions themselves, the lower classes are still not better off [4].

Current Russian President Vladimir Putin has delivered a strong criticism of communism at Davos World economic forum:

The flip side of the anti-crisis measures in almost every country is the concentration of the excessive assets in the hands of the state.

During the time of the Soviet Union the role of the state in economy was made absolute, which eventually lead to the total non-competitiveness of the economy. That lesson cost us very dearly. I am sure nobody would want history to repeat itself.

We should also be aware that … we have been witnessing the washout of the entrepreneurship spirit. That includes the principle of the personal responsibility – of a businessman, an investor or a share-holder – for his or her own decisions. There are no grounds to suggest that by putting the responsibility over to the state, one can achieve better results.

Another thing – handling crisis must not turn into financial populism, into rejecting a responsible macro-economic policy. Unreasonable expansion of the budget deficit, accumulation of the national debt – are as destructive as an adventurous stock market game.

(https://www.rt.com/russia/official-word/putin-s-speech-davos-world-economic-forum/)

2b- In “Communist” China, the students espousing Karl Marx’ theory and practice are paradoxically arrested for preaching Karl Marx’s theory to poor workers ! [5, 6, 7].

There is also a criticism about the states of the poor workers:

“During the Mao Zedong years, China was a poor socialist country. Now China is a poor capitalist country. Overall, the average Chinese did not get the benefit,” he said. [7b, 7c]

3. Deficiency of Karl Marx’ theory

Karl Marx’ teaching could not address one of human long known characteristics of being cruel and selfish.

This unaddressed issue has turned Karl Marx’ dream society into one where people pretend to work, the state pretends to have satisfied all their needs. and power pampers, corrupts officials while neglecting low level workers.

4. Even attempting to look Marxist had made Venezuela bankrupt.

Venezuela is an oil rich country. It wanted to set up a “Socialist” political system. Its inflation is now rampant and its people are running around for food.

The recovery of oil prices in the early 2000s gave Venezuela oil funds not seen since the 1980s. The government then established populist social welfare policies that initially boosted the economy and increased social spending reducing economic inequality and poverty. However, such… policies later became inadequate, causing the nation’s collapse as their excesses—including a uniquely extreme fossil fuel subsidy—are widely blamed for destabilizing the … economy.

The destabilized economy led to a crisis resulting in hyperinflation, an economic depression, shortages of basic goods and drastic increases in unemployment, poverty, disease, child mortality, malnutrition and crime.

By 2017, Venezuela was declared to be in default In 2018, the country’s economic policies led to extreme hyperinflation, with estimates expecting an inflation rate of 1,370,000% by the end of the year. [8]

5. Conclusion.

Karl Marx’s theory cannot be applied to any nation on this earth.

References:

Tuân Khanh cho rằng Bản tính con người là ác, căm ghét mê tín, coi trọng giáo dục, đề cao các tiên vương đời Hạ, Thương, Chu mà xem nhẹ Nghiêu Thuấn là mẫu mực của Khổng Tử.

[1]. https://vi.m.wikipedia.org/wiki/Tu%C3%A2n_T%E1%BB%AD

Xunzi believed that humanity’s inborn tendencies were evil and that ethical norms had been invented to rectify people.

[1b]. https://en.m.wikipedia.org/wiki/Xun_Kuang

[1c]. https://en.wikiquote.org/wiki/Laozi

[2]. http://www.newworldencyclopedia.org/entry/Karl_Marx

[3]. https://en.wikipedia.org/wiki/Leon_Trotsky

[4]. https://en.wikipedia.org/wiki/Soviet_Union

[4b]. https://www.rt.com/russia/official-word/putin-s-speech-davos-world-economic-forum/

[5]. https://edition.cnn.com/2018/11/13/asia/china-student-marxist-missing-intl/index.html

[6]. https://www.npr.org/2018/11/21/669509554/in-china-the-communist-partys-latest-unlikely-target-young-marxists

[7]. https://www.reuters.com/article/us-china-students-protests/chinese-students-assaulted-at-pro-marxist-society-protest-idUSKCN1N718W

[7b]. https://www.hongkongfp.com/2018/12/03/china-going-backwards-xi-jinping-say-veteran-democracy-activist-wei-jingsheng/

[7c].https://johnib.wordpress.com/2018/12/03/china-is-going-further-backwards-under-xi-jinping-chinese-people-do-not-benefit-from-his-rule/

[8]. https://en.m.wikipedia.org/wiki/Venezuela

Authors, activists, and politicians alike are asking the question: what has America learned from one hundred years of communism?…The answer? Apparently, not much.

[9]. https://www.victimsofcommunism.org/witnessblog/2018/4/19/forty-four-percent-of-millennials-prefer-socialism-do-they-know-what-it-means?rq=survey

[10]. https://straightlinelogic.com/2018/12/05/miseducated-or-stupid-by-walter-e-williams/

Added after 2019 April 10:

[11]. https://danieljmitchell.wordpress.com/2019/04/10/the-heavy-cost-of-czechoslovakian-socialism/

[12]. https://justice4poland.com/2019/09/05/confidential-meeting-at-which-directives-were-laid-down-on-how-to-play-the-bolshevik-revolution/

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Real life lessons on national economics.

Real life lessons on national economics.

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No. 167 ).

The current time is quite interesting as it allows the testing of many economic theories. After that, some theories will gain credential while others may get forgotten.

#inflation, #economy, #Venezuela, #Argentina, #Turkey, #dollar,#currency #yuan, #gold based, #oil based

Real life lessons on national economics.

1. Venezuela and its wealth from oil.

Venezuela was a wealthy country living from its sale of oil. The 1998 Venezuelan government by Hugo Chavez then played with the game of commanding the economy and sent its economy crashing and then into hyperinflation.[1]

“Chavez used the abundant income stream to go on a spending spree as he instituted a large number of entitlement programs using the oil revenues. A strike in 2003 interrupted Chavez’s plans and caused the GDP to crash by 27 percent in just four months. Chavez began nationalizing industries and instituting price controls, which was the beginning on Venezuela’s inflationary spiral as Venezuelans developed a reliance on their government for products and services.” [2]

Once hyperinflation has set in, people would avoid using the rapidly depreciating fiat money, and bartering is the only mean for survival.[3, 4]

“If somebody has lots of one thing and too little of another, an arrangement can be made. I’ve exchanged corn meal for rice with friends from high school, eggs for cooking oil with my sister-in-law. Street vendors barter, too, taking, say, a kilo of sugar as payment for one of flour. There are Facebook pages and chat-room groups devoted to the swap-ability of everything from toothpaste to baby formula.” [5]

This should be a lesson to leftists everywhere [6] that even a once rich economy of Venezuela cannot endure the incessant waste of scare resources to FEEL GOOD on everything politicians can dream of.

2. Argentina with its policy of excessive protection for domestic industries.

In its pursue of industrial self-sufficiency the government had given excessive protection to domestic industries turning them into non-competitive. This caused a shortfall in the productivity and tax contribution. Subsequently the government had to rely on debt or inflation or both. These are the root cause of its current inflation:

” Successive governments from the 1930s to the 1970s pursued a strategy of import substitution to achieve industrial self-sufficiency, ”
“The era of import substitution ended in 1976, but at the same time growing government spending, large wage increases and inefficient production created a chronic inflation that rose through the 1980s… also contributed to the huge foreign debt by the late 1980s, which became equivalent to three-fourths of the GNP” [7]

Import substitution and industrial self-sufficiency are quite respectable aims for its economic policy. Argentinian economy could have benefited from them even if locally produced substitutions carried higher prices than available imports. However this approach always carry with it the danger of over-pampering domestic industries. The people in charge of domestic industries may decide to take a free ride to enrich themselves by supplying the domestic industries with obsolete or substandard production methods (for kick backs) rather than with best methods for the nation. [8, 9, 10]

When the cronies are in control, they borrow like mad to build everything so that they can get a cut (kick back) on every project. After that the country will be left with mountain of debts and prestigious but substandard or even useless projects [11, 15]. Cronyism is the cause for the backwardness of socialist countries.

“But just after Argentina settled with the “holdouts” in 2016 on defaulted dollar-bonds dating from its last default, it sold new foreign-currency bonds, in all kinds of issuances, including in June last year $2.75 billion of 100-year bonds at a yield of 7.9% and in January this year $9 billion of bonds, composed of five-year bonds at a yield of 4.625%, 10-year bonds at a yield of 6%, and 30-year bonds at a yield of 7%.”[16]

“ET: This shows that the government’s policy is an abject failure: with a peso that devalued fast; with the interest rate set at a high 40% by the Argentine Republic’s Central Bank; with the $ 8 billion reduction in international reserves that keep declining. And with a debt service that has increased by 100% compared to 2017. Faced with a balance sheet of such a nature, undoubtedly it is a total failure. Macri claimed that a high growth level and a viable debt would be ensured by paying the debt – between end-2015 and early-2016 – and by compensating the vulture funds, in keeping with Judge Thomas Griesa’s verdict. He knelt before the vulture funds (see: [17]). But the facts confirm that this plan did not work. Debt rose at a whirling pace and it’s startling to see how fast it snowballed. As a result, it became impossible to convince the creditors that Argentina could repay its debt in the future.” [18]

“Argentina’s currency is in free fall… The slump threatens to spread havoc through the $640 billion economy, rupturing supply chains for businesses and straining the finances of households.” [19]

Australia and Argentina were economically very similar prior to 1970. They then followed different paths from 1980: Senator Button of Keating’s government dismantled the over-protection for the car industry in Australia. That brought forward a wave of modernization. Currently Australia is in much better shape than Argentina [20, 21].

3. Turkish lira versus the US dollar.

Monetary policy is typically implemented by a central bank, while fiscal policy decisions are set by the national government. However, both monetary and fiscal policy may be used to influence the performance of the economy in the short run.

” It helps quantify the effects of the recent economic chaos in Turkey. Turkey’s economic future remains uncertain, but the reality is that their currency has devalued as a result of large fiscal deficits and heavy borrowing used to make up the revenue shortfall. Inflation is not the cause of the problem; it is a symptom. The cause is the dramatic increase in the supply of lira designed to solve the poor fiscal condition.”[22]

Turkey is an interesting case. The country is a bridge between Western countries and Middle East countries and is not far from Russia. That country relied on its membership in NATO to shoot down a stray Russian fighter jet ! It then mended its bad relation with Russia and went on to antagonize USA with its threat of re-polarizing its foreign policy.

Although Russia now allows Russians to have holidays in Turkey and China is courting it with the OBOR plan (“One Belt One Road” or rather “Once Borrowed Only Regret”? [23]), Turkey’s currency lira is now in trouble partially due to US tariffs imposed on Turkey’s goods.

4. US dollars are being pushed back into their national territory by China, Russia and the Silk Road Alliance.

US dollars are only fiat money [24] after Nixon’s removal of their ex-changeability for gold. They are only useful to people who have to pay tax to and pay for service from the American government. They are absolutely useless to foreigners who don’t have to pay tax to or pay for service from the American government. Having US dollars as a medium for international trade is a privilege to USA: There are more holders of that currency, the pool of dollars in circulation is therefore vast. That allows American government to quietly “tax” all its currency holders, domestic and international, through inflation [25].

American exploitation of this privilege position [26] with its imposition of banking sanctions against many countries has led to the (irreversible ?) push for using gold or oil as exchange medium in international trade [27, 28, 29, 30].

5. Conclusions

This is an interesting time for studying economics. Most theories can be tested and sorted out during this short time. Blind belief in fiat currency is now questioned everywhere.

The leaders of nations have to learn now that there is always a reaction to every of their actions.

References

[1]. http://www.dailymail.co.uk/news/article-6032367/Venezuela-price-chaos-gasoline-costs-just-one-Bolivar-egg-costs-200-000-times-much.html

[2]. https://straightlinelogic.com/2018/09/05/paper-money-eventually-returns-to-its-intrinsic-value-zero-by-alex-deluce/

[3]. https://survivaltricks.wordpress.com/2016/12/05/preparing-for-%e2%80%8bcashless-trading/

[4]. https://survivaltricks.wordpress.com/2017/02/20/cashless-bartering-for-survival/

[5]. https://www.bloomberg.com/news/articles/2018-05-04/in-caracus-venezuela-a-haircut-costs-five-bananas-and-two-eggs

[6]. https://abackwoodsconservative.wordpress.com/2018/09/09/obama-claims-the-current-economy-as-his-and-yet/

[7]. https://en.m.wikipedia.org/wiki/Economic_history_of_Argentina

[8]. http://nomadcapitalist.com/2016/05/30/the-5-worst-countries-for-crony-capitalism/

[9]. https://en.wikipedia.org/wiki/Crony-capitalism_index

[10]. https://www.heritage.org/international-economies/report/cronyism-and-corruption-are-killing-economic-freedom-argentina

[11]. https://www.bbc.com/news/world-latin-america-31639768

[12]. https://www.afr.com/news/world/south-america/china-on-the-march-in-latin-america-with-new-space-station-in-argentina-20180730-h13c95

[13]. https://uk.reuters.com/article/argentina-china-idUKL2N0PT0IK20140718

[14]. https://www.ft.com/content/2d264e78-8cf9-11e5-a549-b89a1dfede9b

[15]. https://www.dw.com/en/chinese-loans-helping-latin-america-amid-oil-price-slump/a-18284605

[16]. https://www.businessinsider.com/the-imf-could-push-argentina-from-a-currency-crisis-into-a-debt-crisis-2018-5/?r=AU&IR=T

[17]. http://www.cadtm.org/Reject-the-Imminent-Agreement-with

[18]. http://www.cadtm.org/The-IMF-is-back-in-Argentina-an-economic-and-social-crisis-even-more-serious

[19]. https://us-issues.com/2018/09/04/argentina-currency-crisis-pain-is-spreading/

[20]. https://en.m.wikipedia.org/wiki/Economy_of_Australia

[21]. https://en.m.wikipedia.org/wiki/Economy_of_Argentina

[22]. https://straightlinelogic.com/2018/09/06/what-turkey-can-teach-us-about-gold-by-michael-lebowitz/

[23]. https://survivaltricks.wordpress.com/2018/06/17/expansion-by-predatory-loans/

[24]. https://survivaltricks.wordpress.com/2017/01/12/your-fiat-money-part-2/

[25]. https://survivaltricks.wordpress.com/2017/03/29/inflation-is-vicious-to-fiat-money-users/

[26]. https://en.wikipedia.org/wiki/Exorbitant_privilege

[27]. https://www.reuters.com/article/us-global-dollar-analysis/dollar-decline-rekindles-reserve-currency-worries-idUSKCN1GJ2XW

[28]. https://www.forbes.com/sites/nathanlewis/2016/05/05/china-is-laying-the-foundation-for-the-next-world-gold-standard-system/#305670a7689e

[29]. https://www.zerohedge.com/news/2018-03-30/yuan-oil-futures-contract-gold

[30]. https://www.rt.com/business/438162-us-dollar-crash-jim-rogers/

Added after 2018 Oct 10:

Dedolarization
[31]. http://www.alt-market.com/articles/3544-the-world-is-quietly-decoupling-from-the-us–and-no-one-is-paying-attention

[32]. https://www.presstv.com/Detail/2018/10/26/578126/Russia-China-Swift-Alternative

[33]. https://www.rt.com/business/442410-gold-demand-up-dollar/

[34]. https://socioecohistory.wordpress.com/2018/10/27/gold-demand-up-42-as-countries-abandon-us-dollar-in-expectation-of-geopolitical-shift/

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