7 comments

• Pzatchok

  May 16, 2013 at 11:47 am

  Do you mean that a government instituting price controls on something disconnects that something from the demand side of an economy?

  Thus the simple supply and demand concept no longer works to keep bringing the people what they want and need?

  If you remove profit from something then there is no longer a desire to supply it.
• lino

  May 16, 2013 at 12:53 pm

  I thought it meant that Venezuelans were full of fecal matter…..?
• Edward

  May 16, 2013 at 5:59 pm

  Robert, I know that it was a rhetorical question, but here is an answer anyway:

  Venezuelans are learning the hard way that controlled markets do not work efficiently or effectively. When the government controls production, all you get is what the government (the controller) wants produced, which usually includes just enough necessities to avoid a revolution. Government priorities take precedence. Medicines and food, such as butter, sugar, milk, and flour can become scarce.

  The answer to your question: when toilet paper is not a government priority, then the resources are not allocated to make enough.

  The Soviet Union learned this lesson an even harder way. When the government prioritized the withdrawal of military equipment from its “satellite” countries over the distribution of food from its farms, the people revolted, the government fell, and the communist system was replaced there. “No society is more than three meals away from a revolution.” – Unknown

  Free markets work better than controlled markets. When a free market controls production through citizen ownership, the citizen owners have an incentive – profit – to produce what the consumers want and as much of it as they want. When the citizen-owners see a scarcity of a product, they have that incentive to provide more of it until their customers get all that they want.

  I feel sorry for the Venezuelan people but not for their dysfunctional government.
• Robert Zimmerman

  May 16, 2013 at 7:03 pm

  As you noted, it was a rhetorical question, written with a strong measure of sarcasm. However, you express the reasons quite nicely. Too bad there are so many Americans today who don’t understand these basic ideas. As I have written earlier, it is the forgotten word.
• Edward

  May 16, 2013 at 10:18 pm

  Thank you for the compliment. With few exceptions, your linked essay, “Elon Musk and the forgotten word”, is also what I believe. To quantify why freedom is the reason why the US is better, as Coastal Ron (first comment) requested, try referring to Alexis De Tocqueville’s book “Democracy in America.” It took him an entire book to explain America to Europe.

  I like to point out a few things to people:

  1) Within two centuries of the first colonists, the region that became the US went from a backwoods frontier to competing with the millennia-old Europe, the most advanced continent at that time. That rapid development is what fascinated De Tocqueville. A century after that, we had become strong enough to rescue Europe from a continental war. Two, actually. Half a century later, we were the ones to go to the moon. Backwoods to superpower in three and a half centuries – no other country has done anything that impressive. All of that advancement was due to our ability to freely innovate.

  2) When a central government is in control, only a few new ideas are tried out, because the government is limited in imagination, limited in its wants and desires, and limited in the resources necessary for research and development. But when the population is free, just in the US there is the potential for 300 million new ideas. The chances for great things to happen are much better in the latter case.

  3) As you suggested in your essay and as I said above, when government is in charge, you mostly get what the government wants, not what the population wants. The US government went to the moon, but after that was accomplished, there was no follow up. All that effort was wasted. The government chose to go to the moon, not because it wanted its citizens to go there but for reasons of international politics: “not because [it is] easy but because [it is] hard;” too hard for the Soviet Union to accomplish first.

  Elon Musk is quoted as saying that he moved to the US because “It is where great things are possible.” Musk could see that for each of us to be free to try new things allows for the possibility of great things.

  In contrast: for centuries, France did not allow its wine industry to change. Their wines were acknowledged as the best in the world, and the French government did not want any experimentation to change that. However, trying new things – and change – are encouraged in the US. In 1976, a British citizen decided to honor the US wine industry during the bicentennial with an impressive wine tasting challenge at which Napa Valley wines won out over French wines. Freedom to innovate allowed our wines to improve as the French wines remained stagnant. The French wine industry did not learn from De Tocqueville.

  Under free societies, innovations have advanced technologically very quickly. One could argue that instead of freedom it was industrialization or free markets that allowed for such rapid advancement, but looking around the world, it is only the free industrialized countries that advance rapidly. The other industrialized countries tend to obtain their technologies from the free countries. Venezuela, for instance, is worse off now than it was when it was free. Free markets are a subset of freedom.

  The free countries are where the vast majority of Nobel Prizes are awarded. For instance, during its time, there were several US and European universities that, each alone, were credited with more Nobel Prizes than the entire Soviet Union.

  There are many examples of freedom resulting in innovation and lack of freedom stifling it. China, centuries ago, was amazingly advanced, but then their rulers became fearful that innovations might be used against the government, and they reduced the population’s freedoms, discouraging further innovation. Europe later caught up and surpassed China’s technologies and governance system.

  I could and should continue, but this is getting long, perhaps too long to read, and the time is getting late. And perhaps I should have merely read your essay and listened to Musk’s speech without writing this long response. Sometimes I get carried away – or should be carried away.
• Robert Zimmerman

  May 16, 2013 at 11:08 pm

  As I say, the key word is freedom. Everything else just slows things down.
• Dwight Decker

  May 17, 2013 at 3:28 am

  There was a joke in the old Soviet Union that if the Communists took over the Sahara Desert, in a year there would be a shortage of sand.