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What Can Hong Kong And Cuba Teach Us About Economic Policy?
Early this year, I shared an amusing but accurate image that showed an important difference between capitalism and socialism.
And in 2012, I posted a comparison of Detroit and Hiroshima to illustrate the damage of big government.
Well, if you combine those concepts, you get this very pointed look at the evolution of Cuban socialism and Hong Kong capitalism.
Some might dismiss these photos as being unrepresentative, and it’s reasonable to be skeptical. After all, I’m sure it would be easy to put together a series of photos that make it seem as if the United States is suffering from decay while France is enjoying a boom.
So let’s go to the data. In previous posts, I’ve shared comparisons of long-run economic performance in market-oriented nations and statist countries. Examples include Chile vs. Argentina vs. Venezuela, North Korea vs. South Korea, Cuba vs. Chile, Ukraine vs. Poland, Hong Kong vs. Argentina, Singapore vs. Jamaica, and the United States vs. Hong Kong and Singapore.
Now let’s add Cuba vs. Hong Kong to the mix.
Wow, this is amazing. Through much of the 1950s, Hong Kong and Cuba were economically similar, and both were very close to the world average.
Then Hong Kong became a poster child for capitalism while Cuba became an outpost of Soviet communism. And, as you might expect, the people of Hong Kong prospered.
What about the Cubans? Well, I suppose a leftist could argue that they’re all equally poor and that universal deprivation somehow makes Cuban society better Hong Kong, where not everybody gets rich at the same rate.
But even that would be a lie since Cuba’s communist elite doubtlessly enjoys a very comfortable lifestyle. So while the rest of the country endures hardships such as a toilet paper shortage, the party bosses presumably drink champagne and eat caviar.
The bottom line is that statists still don’t have an acceptable answer for my two-part challenge.
1. Can you name a nation that became rich with statist policies?
Before you say Sweden, or even France, note that I asked you to name a nation that became rich during a period when it followed policies of interventionism and big government. Countries in Western Europe became rich during the 1800s and early 1900s when government was very small. 
Indeed, government spending consumed only about 10 percent of economic output in Western Europe prior to World War I and there was almost no redistribution. That’s more libertarian than what you find today in places such as Hong Kong and Singapore.
Speaking of which, what I’m really asking my leftist friends is that they give me the left-wing versions of Hong Kong and Singapore. These jurisdictions were relatively impoverished at the end of World War II, but they are now both very rich by global standards. And libertarians and other advocates of small government and free markets can make a very strong case that good policy played a role in their amazing rise to prosperity.
So where’s the role model for statists? What nation can they put forth as a successful example?
I won’t hold my breath waiting for an accurate answer.
Now for the other part of the challenge.
2. Can you name a nation that with interventionism and big government that is out-performing a similar nation with free markets and small government?
Before you embarrass yourself by asserting that, say, Denmark is richer than Paraguay because of statism, you need to look at the data. Denmark has a bigger welfare state than Paraguay, but it’s much more pro-market in other respects. Indeed, it is ranked #14 in the Economic Freedom of the World, compared to #89 for Paraguay. You’d be more clever to ask why, for example, #42 Belgium is richer than #6 Mauritius.
But this is why I asked for a comparison of similar nations. In other words, find two countries that are, or were, roughly equal in terms of demographics, economic development, resource endowments, and other factors. And then I want an example of a nation with statist policy that has out-performed a nation that instead chose small government and free markets. Or the jurisdictions don’t even need to be that similar. Just show me a statist nation that grows faster, over a meaningful period of time, than a pro-market jurisdiction.
From a libertarian perspective, I can cite lots of examples, such as Chile vs. Argentina vs. Venezuela. Or North Korea vs. South Korea. Or Ukraine vs. Poland. Or Hong Kong vs. Argentina. Or Singapore vs. Jamaica. Or the United States vs. Hong Kong and Singapore. Or even Sweden vs. Greece. I could continue, but I think you get the point.
I will patiently wait for my left-wing friends to provide examples that support their perspective, but cobwebs will form before they fulfill my challenge.
In the meantime, here’s a video that explains the simple recipe that countries should follow if they want to enjoy growth and prosperity.
You’ll notice that the video heavily borrows from Economic Freedom of the World.
That’s no surprise. There’s no better source for making apples-to-apples comparisons to see whether countries are following good policy.
The bad news is that the United States has taken a dive in the wrong direction in these rankings.
When Bill Clinton left office, the United States had the world’s 3rd-freest economy. Today, thanks to years of statism under both Bush and Obama, we’ve dropped to #17.
This Lisa Benson cartoon is a very painful illustration of what’s happening.
America is copying the nations that are in deep trouble because of excessive government.
Which is the same message you find in this Glenn Foden cartoon and this Michael Ramirez cartoon.
But maybe some leftist can answer one or both of the questions above and we can stop worrying about the ever-expanding welfare state.
* * *
P.S. If you prefer stories rather than images or data, this updated version of the fable of the ant and the grasshopper makes a key point about incentives and redistribution. And you get a similar message from the PC version of the Little Red Hen.
P.P.S. Cuba’s system is so wretched that even Fidel Castro confessed it is a failure. So maybe there’s hope that Obama will have a similar epiphany about American-style statism!
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Yeah, Jonathan, I did, decades ago.
I distinguish between the relatively good early Marxism, which was scientific (within the limits of 19th Century science) versus the state religion, messianic Marxism, which became criminally insane hypocrisy! My view is that messianic Marxism became another example of controlled opposition, due to Russian Revolution actually being funded by the international banksters.
Since human beings operate as entropic pumps of energy, engaged in organized lies and robberies, the use of language ends up as much as a tool to deceive as to enable cooperation, especially since backing up deceits with destruction make the lies become more meaningful. The language of political science that almost everyone uses is almost totally dominated by the biggest bullies' bullshit world view. That is the context in which words like socialism and capitalism are bandied about, when the actual facts have barely any relationship to the idealized dictionary definitions of those words.
The political debates are mostly engaged in by professional liars and immaculate hypocrites, whose rhetoric is to persuade, not to enlighten. It is practically impossible to have any more genuinely scientific discussions, as demonstrated over and over again on Zero Hedge, where bullshit is predominant. Of course, the mass media are way worse, but still, the basic paradox is that human beings act as entropic pumps of energy, which deliberately "understand" the concept of entropy in as backward a way as they possibly can!
Human realities are always organized lies operating robberies. Labels like socialism or capitalism are idealized, while then misused or abused, to conceal rather than reveal, the basic realities, which are lies backed by violence controlling civilization. Furthermore, on Zero Hedge, it is more typical for more people to understand that, but then, STILL continue to promote the impossible ideals that it should not be so.
I maintain that militarism is the supreme ideology, which is sublimely consistent by being the most deceitful. All of real economics is a subset of militarism, while terms like socialism or capitalism are idealized labels whose actual use is primarily to mislead and misrepresent what is actually happening.
The original Marxism was slightly more scientific, in some genuine ways. However, that soon was perverted and inverted to become messianic Marxism, or another criminally insane state religion of organized lies and robberies, which became too criminally insane to survive. Unfortunately, only those ideologies which serve the interests of the biggest bullies tend to become socially significant. Radical truths struggle to survive, since almost nobody wants those, since, at present, more radical truths about how the systems of lies and robbery operate does not benefit those who are most successful within the established systems of lies and robberies.
Whether or not human beings are able and willing to become more genuinely scientific about themselves is an open question. Right now, it is clear that most people are already too criminally insane to be able to face the more radical truths about themselves. Therefore, we are in a runaway situation of having electronic monkey money, backed by apes with atomic bombs, wherein the monkey/ape nature mostly refuses to come to terms with the electronic/atomic nature.
Although the mass media are way worse than the level of discourse on Zero Hedge, most of those here too, of course, are predominately promoting old-fashioned religions and ideologies, that are approved of by the old monkey/ape nature, while mostly continuing to deliberately ignore the new radical truths about the electronic/atomic nature, (except to use those capabilities and powers to do what our monkey/ape nature wants to do!)
The CONTRADICTIONS between our basic monkey/ape nature, and the progress in science and technology developing the potential of the electronic/atomic nature, are getting BIGGER! However, by and large, most of the money/apes continue to indulge in bullshit old-fashioned religions and ideologies, like the article and its embedded video above did!
My previous comment above attempted to point that out, and therefore, WHY WE NEED INTELLECTUAL SCIENTIFIC REVOLUTIONS IN THE PHILOSOPHY OF SCIENCE, THAT APPLY TO POLITICAL SCIENCE, AND THEREFORE, TO THE COMBINED MONEY/MURDER SYSTEMS.
This may come as a shock to some, but during the past decade, Hong Kong's economy has been proped up mightily by The People's Republic of China, a paradise of modern capitalism.
Whereas Europe has essentially been proped up by the Federal Reserve Bank.
I have one question for Mr Mitchell: How many of these places that you like to compare have you actually been to, let alone lived in?
Hong Kong's economy has been proped up mightily by The People's Republic of China...
By the same logic can we say Cuba has been the benificiary of Russia's cold war policies?
Just wonderin' because like most fat happy mericans, I've never been to any of the places being discussed.
Check out the International Man website to get some answers on that.
Viva Cuba libre !
One day the people of Cuba decided they'd rather not be slaves in their own land and sent the parisitistas, the overlords, packing.
They paid a high price to be free and continue to pay a high price, but when you consider the alternative, too let the blood sucking "capitalists" return, what
other choice is there ?
Perhaps one day the people who live in the land which has oppressed the people of Cuba for decades will understand this and cast off their own masters.
Then we too can live in an oppressive Stalinist one-party dictatorship. What joy.
!984 clearly showed the way. Dictators do not ban the concept of liberty, they just redefinie it so that the term represents life under the benevolent dictator and leaves dissidents bereft of any adequate method of expressing their thoughts. Truly scary stuff..
A better distinction than economic system terms such as capitalism or socialism is that between a philosophy of collectivism vs the individual as brlliantly discussed by Ayn Rand in her numerous essays and books. The collective is artificial, false, relies on top down centralilzed power and so-called experts. Hayak pointed out how such a top down system, sometimes called correctly the nanny state, (since it knows whats good for you) destroys freedom and is fundamentally inefficient. By concentrating power a single big mistake (e.g. the great society programs or the new deal) can wreak havoc destroying freedom and individual responsibility and motivation without providing any of the falsely promised security. By dispersing power you acknowledge true human nature-namely people will sometimes make very serious mistakes, but they can be self-correcting is a dispersed system. You start a business, it fails due to bad luck or some incompetence or lack of experience on your part. You learn and correct your mistakes mostly importantly accepting personal responsibility. This is the histroy of almost all sucessful enterprises. Everything occurs on a small scale and minimizes harm to others who took no risk. Such non-expert driven systems are in Nissem Taleb's terms, anti-fragile. They have more upside than downside. That's what you must seek in an economic and political system-maximum freedom, tinkering and individual initiative. Its the opposite of what we have currently in the financial sector-anticompetitive, centralized power where a single large mistake will destroy the entire fragile system.
This is BS. I grow up and ply my trades in this part of the World (HK/Singapore/China).
HK is not a country. It is a Special Administrative Region of China officially. Unlike a nation, it has no need to pay for defense etc. In reality, its economy is allowed to thrive or wither under the whims of China Mainland Govt.
Singapore is a state capitalist economy with controls that even China wants. Lookk beneath the glitters and you find a "one trick pony" economy of rent seekers from construction dominated by the Govt and increasingly by its cronies. (Go look at the Gini-coefficient as bad as everywhere else. Per capita GDP is a myth if not distributed).
dt
So you have two places with many, many different characteristics, you single out the economic system, and attribute all the difference in wealth to that factor. Not taking into account geography, history, culture and religion, language, population, and most importantly the geopolitics. There is an argument for capitalism, but as somebody said here, you could have taken picture of Detroit as well. Itt would also be interesting to know where people are happier, in Cuba or in Hong Kong ? ( I do not know the answer ).
I guess you could look at how many people have left Cuba over the years to escape repressive conditions, vs. how many left Hong Kong for the same reason.
Based on that metric happier in Hong Kong, yes.
Add a picture of Detroit to represent Cronyism!
Most people in western world today are "Cubans" with credit cards and do not know it.
Yet, that is.
As for the Capitalism, we are not living in 50's any more. ZH other posts provide pretty good picture where we are today.
While the US is quite skilled at providing "Operation Kill Brown People in ..........", Cuba has taken a different slant providing Operation Miracle....
http://themudreport.blogspot.com/2010/01/cubaoperation-miracle.html
the pic is about
US sanctions
vs
US aid
Compare Detroit if you think "capitalism" is so great.
Good point. Capitalism's has many "sacrifice zones" - Latvia, Greece, Central America to name a few (de-industrialized, big importers, debt slaves). And if we want to be fair, there are socialist success stories too, like the Scandinavian countries. But each side keeps comparing their best to the other side's worst. Only a few places on Earth have managed to take the best elements of Capitalism and Socialism:
- Singapore, Denmark, Sweden, Finland, Norway, Switzerland - all brilliant places to be.
Unless you happen to be a Jew in Malmo...
http://www.washingtontimes.com/news/2010/mar/29/hate-crimes-force-jews-o...
haha good one the poor joos you neglected to mention thats its the jews promoting multiculturalism to destroy western countries , so it's okay for the west to be overflooded with third world savages while the kikes refuse to accept them in israhell. check out the evil jew barbara spectre who is activuly encouraging multucultuaralism in sweden even stating that europe has to accept it and that the jews are playing a leading role in this
Detroit has not had anything to do with capitalism for 50 years. That's like sending the top wolf out in the pack to hunt with a 50 pound ball and chain on its leg.
Cuba has been under economic blockade for decades, so the comparison is kind of silly. A better one would be Hong Kong to Shanghai and Singapore (the latter non-Capitalist, large percent of publicly-owned enterprises). All immensely wealthy societies regardless of the system they are under. Why are they wealthy? My guess is not because they're capitalist or socialist, but:
- do they produce stuff?
- do they trade and export stuff?
- does the government invest in education, science and social investments?
The US is starting to suck because it's falling behind in all three.
First, a challenge of my own. Can you name a nation that does not have statist policies?
I am amazed that the fascist (merger of corporate monopoly with government) in Washington spend $22 BILLION a year to propagandize and brainwash Americans into thinking that we are a capitalist nation that flourishes in democracy (government of, for and by the People).
The reason the fascist spend 22 billion a year to propagandize and brainwash Americans is because the Free Enterprise System (free from corporate monopoly) of capitalism, our democracy and rule of law have been overthrown and replaced with the fascist multinational corporate monopoly global Empire. You can still see the last remains of America’s Main Street Capitalism of Free Enterprise.
The terms “Free Market” and “Free Trade” are not capitalism and democracy as you may have been brainwashed to think, but rather, corporate monopoly fascist that are Free to steal whatever they want, from whomever they want and do it legally with fascist secret trade agreements.
Everytime intelligent people use the word Capitalism, Free Trade, Free Markets to describe fascist corporate monopoly global Empire, instead of the Free enterprise System of Capitalism and Fair Trade, they are unjust to themselves and their readers; refuse to be brainwashed.
You forgot to mention the US embargo and the toll of the financial war that the US wages against all those who refuse to succumb to the empire.
I also read your comparison between Poland and Ukraine. How interesting that you visited Kiew at the time of the US empires putsch. Oh, and you are soooo right, Ukraine's problem is Putanism. Bwaaaaaaaa. How about meddling "shining city on a hill" interventionalists like yourself.
PS: Love the selfie with you next to the APC. Yes, Every flag waving American patriot like yourself should have one.
Some thought provoking comments here - Thank you.