Tag Archives: Central Planning

Poverty of the Perfect

By Michael J. Lewinski 12/31/13

A life of poverty is not the legacy any parent would willfully choose for their offspring. Yet, for our generation, such an outcome has become the default option. With the deliberate exporting of U. S. industry and the financialization of the economy, our national economy has been transformed into a business model that is detrimental to the well-being of working and middle class Americans.

Discarding the moral restraints of an ethical approach to business while embracing an indifference to the diminished standard of living and loss of economic opportunities for average Americans, an ever growing class of Crony Capitalists and incompetent politicians have sucked the life out of main-street. Enabled by government and its’ attendant institutions, the too big to fail unjustly prosper while the real creators of wealth suffer. Funneling wealth to the well connected through the Federal Reserve, an amoral oligarchy could care less about the destruction of the American economy.

Beyond the damage Crony Capitalists have been inflicting on the economy, our youth’s future is continuously being imperiled by wrong headed government policies that discourage the creation of the nation’s wealth. Through a stifling regulatory regime, capital diminishing taxes, and dependency generating social policies, a Progressive elite of central planners destroy jobs and undermine the entrepreneurial spirit in the name of an elusive, unattainable economic and social justice.

In a mad dash for the perfect, central planners, devoid of any practical experience in the world of business, and often in life itself, seeks to micro-manage the economy and the national life with a vast bureaucracy charged with every manner of idealistic goals and objectives while completely ignoring the expansion and growth of the economy. Harboring a great disdain for the common man, and loathing the results of free markets responding to the independent choices and actions of free people, Progressives are rapidly transforming a formerly productive, vibrant economy into a barren wasteland of reduced sustenance and opportunity for this generation, and even more-so, for the next.

Such is the default option for a distracted citizenry no longer behaving like Americans.

Moving Left Isn’t Right

Written in a time filled with the gasps and death of the Soviet Union, and its satellites’ declarations of their independence, I found Alvin Rabushka’s “The Failure of Socialism in China” capturing my attention. In it, the author mentions the method that Mao Zedong attempted to use to incite the communist Chinese economy to grow – namely central planning. The author also illustrates why the planning did little to anything at all on its own in the way of economy-building or growth.

As many economists critical of socialist governments point out, central planning heavily relies on a number of measures, so that it can claim to function better than alternative forms of economies. Among the measures are: constant inflows of information to allow tweaking of quotas, difficulties in procuring that data, lack of a labor market, little or no incentives to produce, little or no entrepreneurship, wasted resources, and political interference in the economy. These measures were to blame for the anemia and failures of so many socialist countries in the late 20th century.

While at times, the failed states may have appeared healthy, much of the time it was due to support from other socialist patron states, like the Soviet Union and China. Although the patrons may have propped up the subordinate states, the goods provided were sub-standard quality and in lesser quantity than those produced in the west. Once the patron states collapsed (like the Soviet Union), countries like Cuba found themselves in dire situations.

China was a bit of an anomaly, however. Despite the numerous five-year plans, and massive instruction directed by Mao, the Chinese economy did not really begin to grow until 1979 – after Mao’s death. What finally jump started the Chinese economy, and led to growth never seen before in the period from 1957 until then, were economic reforms, led by Deng Xiaoping.

So, what were these reforms that led to so much growth? Deng modified regulations after he witnessed what occurred in his home province with modified rules. Allowing Chinese peasants more input and freedom in carrying out measures and surpassing their quotas, produced increases in production, foreign investment, and per capita income. How was that possible? What were these “magic” modifications?

Simply, the communist party, and Deng in particular, saw that providing incentives for work led to: harder working peasants, peasants who were more engaged in their work, and peasants who cared more about meeting the quotas and exceeding them. Simply put, the Chinese system changed from the stick as a simple cudgel, to a stick with a carrot on the end of it.

Those who ignore history…

Now, the part that the American government, and Obama and his administration in particular, should pay close attention to, are the measures that Deng found worked to create an energetic and engaged citizenry. Allow the people to strive to meet their potentials. Do not be so unwise to think that a leader, who believes he sits above his people to delegate the actions of those people.

Deng lowered taxes (in some cases on livestock to nothing), set quotas for the citizens (but refused to dictate how they should be met), and retreated from the heavy hand of government, allowing goods/crops produced above the quota to be sold for the peasants’ own income. The land leased to peasants was also made inheritable, building trust in the peasants, that the central planners would not arbitrarily confiscate lands. Even the urban citizens saw benefits – real urban per capita incomes grew by 40%! Overall, the new policies of the central planners in China led to more growth between 1979 and 1985, than the country had seen between 1957 and 1979!

One small group of planners can in no way successfully guide millions of citizens to reach a satisfactory conclusion. The more the leaders attempt to guide the masses, the more the masses will resist, and the heavier the weight of the planners’ guidance will feel to them. It is unfortunate that the current American administration seems to be moving retrograde to successful outcomes. They continue to plan, and guide, and swear that they know how to fix this economy. Despite their protestations, the proof is in the pudding, and the pudding, so far, has been rotten.

The “Accomplishments” of Central Planners

As America continues to stumble headlong toward more government-directed “solutions”, it struck me how awfully people have fared under such actions with  the guise of help. While having fewer destructive and deathly effects, the current United States leader’s uncritical neglect of many people’s concerns, and unwavering sense of superiority, certainly mirrors the mindsets and machinations of those leaders who created much larger disasters. Throughout the 20th century, there were leaders who were so convinced of their own brilliance, that they did not need any critical thought or feel any need to change their perfect plans.

Convinced that he knew how to increase the grain output from some of the most fertile farmland in the world, a Georgian leader began issuing edicts and laws to increase food production. His agricultural policies led to the deaths of between five and eight million Soviet peasants. This leader used divisive tactics to play one class against another, telling the poorer that the richer were earning more than they ought to on the backs of the poorer.

The false narrative of kulaks taking advantage of peasants, saw reprisals and animus grow against the kulaks. The class warfare eventually grew so bitter, that the farming peasants were content to let the kulaks die where they lay. The Soviets leaders set up numerous laws, which delivered excessive penalties when they were broken. Something so innocent as harvesting spilled grain from the fields could land a person in a gulag for a year.  So terrible were the results of this planning, many of the records concerning it were kept sealed in archives for 60 years.

This “cult of perfect leadership” spread to another Marxist Utopia in the late 1950s. Mao Zedong’s visions for a capable and self-sustaining China met with harsh reality too. Mao followed the same flawed plan that led to the Soviet’s famine in the early 1930s. The “Great Leap Forward” included a period from 1958 to 1961, which saw deaths of between 15 and 43 million Chinese people.

The Chinese leadership simply told the people it would be better for them to eat less – and then attempted to force them to do so. The famine grew so bad in some areas, reports filtered out that people were turning to cannibalism to satiate their hunger (children were reportedly swapped between families, so they would not have to eat their own offspring). Despite the starvation, the Chinese planners kept true to that five-year plan.

Cuba and North Korea are two more centrally planned, dictatorial governments, who fail miserably to deliver on any promises that they make. Stuck in rampant poverty since the 1959 Castro coup, Cuba seems stuck in a time bubble of 1950s technology as well. The Cubans may have seen minor improvements in their economies since the early 1990s, but that could be blamed on forced change, due to the death of their biggest benefactor, the Soviet Union.

Perhaps the biggest event in Cuba was not any economic or humanitarian event, but, due to the closeness of Cuba to the Soviet Union, the near-nuclear war between super powers in 1961. Castro supported missiles in Cuba, and tried to prod Khrushchev into acting against the United States, too.

Xenophobic North Korean leaders rely on boogeymen to instill constant fear into their populace, and keep the people united against anyone but their oppressors (North Korean leaders). North Korea’s military is far more important than their civilians (but leaders have trouble feeding the military too). The government’s response to the disaster was to re-brand it – calling it the “Arduous March”, and attempting to equate lack of food to a willing sacrifice for the betterment of the country. As it stands now, North Korea still is very close to sliding into another famine, their children now suffer retarded growth, and the country relies heavily on grain imports from the U.N. and South Korea to feed its people.

So – these instances of flawed, failed, and fruitless leadership – what should we take away from them? That leadership is not perfect, should go without saying. The takeaway is this: that unquestioned leadership is a very dangerous thing. Whether the leadership uses force or charisma to further its aims matters little. Leaders in echo-chambers, without frequent and legitimate challenges to their authority, who hold a sense of superiority, can lead countries into very bad situations.

While the American media continues to fawn over Obama, and hang on his every word, the people who must live with the results of his executive orders and fellow democrats’  misleading words know better. America still has the checks and balances that the Founders gave us, but it remains more than ever, up to us to use them, despite what the media cheerleaders tell us, and despite what our politicians promise us.

Just do as you're told - it will all be better that way.

“Just do as you are told – it will all be better that way.” The mantra of the left