Reagan Worship

Speaking of Facebook, a few months back there seemed to have been some sort of flare up of Reagan worship. It may have been due to the Republican nomination process. Probably the candidates invoke Reagan as if he's some sort of hero. People post pictures like the one to the left with talk of all of his "freedom" promotion.

This is a bitter pill to swallow because Reagan is nothing but a mass murderer. And I'm an argumentative guy. I want to try and dispel these completely false notions that my friends and family have. But as many people already know, friends and family don't always react positively to this sort of thing.

I've gone through stages on Facebook. Sometimes I argue a bit, but I generally don't post controversial claims myself. If others take it upon themselves to post something political I take that as a sign that they are interested in some critical feedback. Well, that has proved to be mistaken. I've done that and I think many are ready to disown/disfriend me, if they haven't already. I'm compelled to just take out my frustrations here.

Reagan is nothing short of purveryor of genocide. I say that not to be inflammatory, but in the legal sense. Genocide is generally understood to be the mass extermination of peoples of a particular race or culture. But as originally understood in legal documentation it included extermination of groups that shared a political ideology. Stalin through political maneuvering was able to alter the law so that genocide didn't include extermination due to political ideology because if that qualified as genocide Stalin would be guilty. The political ideology qualification was excised from the law, and so as the law stands today Reagan may not be guilty of genocide. But this Stalin modification is illegitimate in the eyes of some legal scholars and also I think the the eyes of most normal, non sociopaths.

To take just one of a myriad of Reagan's horrors look into the El Mozote massacre. The peoples of Latin America didn't prefer Reagan's (and prior administration's) so called free market economic policies. The US government has been determined to implement them in any case. When the people are informed and oppose the system you want to impose the only way to sustain it is through violence and repression. At El Mozote in El Salvador a US trained death squade entered the village, tortured and murdered all the men, raped and murderd all the women, including girls as young as 10, and then bludgeoned and burned up the children that had just watched their parents get murdered. When news of this broke Reagan denounced the reporters as liars and the rest of the right wing machine proceeded with a smear campaign. Reporters were treated as Communists. The NY Times felt the pressure and demoted the man that had reported on the massacre, Raymond Bonner. He subsequently left the paper. All of the reporting was later confirmed as true. The death squad went on to continue to rape and murder with Reagan's backing, including the murder of six priests along with a housekeeper and her daugter.

Tell friends and family that and they'll immediately become very defensive and hostile. And I understand that. I used to be a Reagan worshiper as well. People should not feel guilty that they are unaware of this stuff or that they worship a mass murderer. There is an intensive propaganda effort in the US that normal people are subjected to, and this is difficult to overcome.

The Lazy and The Hard Working

Who else on Facebook sees a lot of these posts from right wing friends that make jokes about how Obama wants to take from the hard working and give to the lazy?

I assume it's usually referring to Obama Care, the only major monetary redistribution scheme that I can think of from Obama. Poor people can't afford to go to the doctor. So Obama has some government subsidy for them. And that has to be paid for. Obviously the poor wouldn't be able to pay. So the rich would pay more. The rich are paying the least amount in taxes as a % of their income than they have since prior to the Great Depression. But it's still not fair. The rich are hard working.

Working poor would enjoy this wealth transfer. Facebook friends and family object. OK. But let's just take a look at these lazy people. According to your right wing friends the following people are lazy:



Now we will look at some rich people who are also doing what you would expect them to be doing as part of their job.

Intuit CEO Steve Bennett lines up a birdie putt

David Koch attends a gala

Some poor people are lazy and have nobody to blame but themselves. And many many rich people worked very hard and in even my view deserve their riches. But by and large what we are talking about when we say that the poor should be afforded the luxury of a doctor visit, and since they can't pay the rich should, we are talking about people that work very hard.

For all I know the Intuit CEO may work very hard. But it's also true that a lot people in super high income groups do what is easy compared to picking peppers. And there are many capitalists that make more money than typical CEO's and they earn there money by doing nothing but cashing dividend checks that result from the work done by others. Today Mitt Romney falls into this category.

In many cases the poor are working harder than the rich. Anybody that works works harder than Mitt Romney. So let's remember who we are talking about when we talk about the lazy poor. Let's also remember that not all rich people work.

Which Countries Have Low Taxes?

According to HP the IMF "Ease of Doing Business Index" is a measure of how neoliberal a country is. The easier it is to do business the more neoliberal a country would presumably be. The IMF prefers low tax rates. So generally speaking it is easier to do business in low tax countries, and so low tax countries would receive a higher ranking in the "Ease of Doing Business Index".

You can get a list of tax rates by country as a % of GDP here. The values were determined by the conservative Heritage Foundation. I've created tables that show African countries as contrasted with 1st world countries, and I've color coded the tax rate. Higher is more intensely green, lower is more intensely yellow.

Compare with the map of rankings for the IMF Index. It's as if the index is measuring the very opposite of what HP suggests. Higher taxes means it's easier to do business. Would you rather do business in the Congo, Chad and Ethiopia or any of your first world nations?

What Socialism Looks Like

Argentina was another country where the Chicago School expirament was attempted. Results were very similar to those in Chile. After the financiers had looted the country and left the banking sector in collapse, many now fired workers took a look at their now empty factories, looked at their hungry children, and had a realization. Who needs owners? These buildings are sitting here empty, rusting. We are the ones that know how to create products. Let's just keep working and we'll run it ourselves.

Take a guess what happened. The former owners came back, and did what they could to get the state to enforce their "property rights." They demanded that the workers leave the factories, and the bought and paid for politicians of course sent in the goons with their tear gas, billy clubs, and guns.

The workers had a reasonable claim to ownership of the factory. The owner built the factory with government subsidies. The owner hadn't compensated them their full wages. The real issue though is owners fear worker control. If workers control and run the factory they quickly realize that the non-working owner is unnecessary. That means the gravy train for the owner is at an end. And since the owner has money today he can buy the influence and through violence reinstate his preferred arrangement.

But in Argentina the workers resisted. The documentary below captures what played out.

The Chicago School: Agree or Die

Whether you agree or disagree with Milton Friedman's brand of Laissez-Faire Capitalism one thing that should be pretty obvious is that major investors can see that if his policies were implemented this would really help their return rates. When Friedman joined the University of Chicago in the 40's his views weren't carrying the day. But when the richest people in the world like what they are hearing your chances of carrying the day improve.

Between 1957 and 1970 about 100 select students from Chile received their education from the University of Chicago under Friedman's tutelage. The Rockefeller Foundation, the US Government, and other groups with major corporate interests provided grants to fund it. These newly trained economists returned to Chile and ran the Economics Departments at their respective schools. They of course advanced Friedman's theories in hopes of changing minds. (Source for these claims is this excellent though lengthy article.)

The election of 1970 though made it appear that this effort was waste. The Socialist Salvador Allende was elected. The first year of his presidency saw a GNP increase of 8.9%. Unemployment fell from above 8% to 3.8%. Even inflation was coming down (scroll to the bottom of this article for my source).

Not only had the Chicago Boys failed to persuade, but Allende, who was their economic opposite, was having a lot of success. So pressure was applied to persuade the Chilean people that an Allende administration was not in their best interest. Nixon's famous orders were to "make the economy scream." Edward Korry, US Ambassador to Chile would say "not a nut or bolt will be allowed to reach Chile under Allende. Once Allende comes to power we shall do all within our power to condemn Chile and the Chileans to utmost deprivation and poverty, a policy designed for a long time to come to accelerate the hard features of a Communist society in Chile." In addition to economic warfare massive propaganda was implemented.

The US and corporate economic warfare did have some effect. Inflation soared. The mid term elections arrived in March 1973. The result? Allende gained seats in the legislature.

Persuasion, even via deception and trickery, still hadn't worked. So the next option was violence. On Septermber 11, 1973 the coup was initiated. Soon Salvador Allende was dead. Thousands of unhappy civilians were herded into the stadium. Military walked throughout the stands with hooded collaborators that would point out the various leftists. These people would be taken away and tortured. Dead bodies were strewn about the stadium. Concentration camps were set up throughout the country. Thousands were murdered.

The "pink" economists at the University of Chile, the ones the Chicago Boys were unable to defeat on the field of ideas, were fired. Andre Gundar Frank was one of the 100 students sent to study at the University of Chicago (**Correction on 4/20/12-Gundar Frank was not a Chilean Chicago Boy, but a German that was schooled at Chicago while Chilean Chicago Boys were being trained, and would later move to Chile to see what all the fuss was about.**), but he would later repudiate Friedman's teachings and write angry letters to his former dissertation superviser (see for instance here). He was fired, and would report that during the coup 6 students were shot on sight at the main entrance to the School of Economics as a lesson to the rest.

The military dictator, Pinochet, stocked his ranks with Chicago Boys, who implemented the policies they had learned. Despite the fact that US economic warfare immediately ceased the economy tanked. Friedman was flown in in 1975 with the economy a shambles to try and save them. His advice was to actually apply his free market principles more intensely. And so they did, slashing government expenditures even more and removing government imposed limitations. Unemployment soared, above 20%. Freer capital movements would lead to speculative bubbles not unlike our recent housing bubble. This produced a brief euphoria between 1979 and 1981. But in 1982 the bubble burst and the economy collapsed in ruins and had to be bailed out by the state.

The connection between violence and Friedman's so called "freedom" endorsing economic policies was not lost on many. One such person was Allende's former Ambassador the the US, Orlando Letelier. He made this connection and detailed the state of Chile's economy in this 1976 article for The Nation.

On month later he was assassinated in Washington DC. Three weeks later Friedman's Nobel Prize in Economics would be announced.

Machinery of Freedom: Tedious Work

The Socialist claims that Capitalism produces monotonous, mind destroying work. To this David Friedman replies as follows:

You object that capitalism works too well, that more efficient means of production drive out less efficient, leaving everyone with sterile and repetitive jobs in a soul-killing environment.

More efficient means of production do drive out less efficient means, but your definition of efficiency is too narrow. If under one arrangement a worker produces a dollar an hour more than under another, but the conditions are so much worse that he will gladly accept a wage of two dollars an hour less to work under the other, which is more efficient? For both the employer, who saves more on wages than he loses on production, and for the worker, the 'less productive' arrangement is the more efficient. The efficiency of capitalism takes account of nonmonetary as well as monetary costs and products.

Let's suppose that I build radios on an assembly line. Rather than having a single task on an assembly line, say driving 6 screws to secure a cover, I'd prefer to install the circuit boards, the display, the heat sink, the covers. Everything. Because it's less boring and improves my skills.

That will reduce output. But you can have that in Capitalism, says David Friedman, because if you are willing to accept lower wages profits can be sustained even with the reduced output.

But there's an important question Friedman hasn't asked. How much less in wages are required? Maybe I'd be willing to take a 20% reduction in wages for a 20% reduction in output. What if I had to take a 90% pay cut for a 20% reduction in output? What if the former is the case on Socialism and the later is the case on Capitalism? Then guess what? The Socialist criticism is spot on and Friedman has not rebutted it.

Take a look at Foxconn, which makes your ipad and iphone. Workers make about $17/day working 12 hour shifts. When wages are already a tiny portion of overall expenses it may not matter how much less you are willing to earn with wage labor. You could go from $17 to $0 and still see profits reduce.

Below I offer a hypothetical example under Capitalism. Investors want profits. They'll be happy to alter the work environment as long profits are sustained. So let's suppose we have 100 empolyees and they produce $500 in value each day. Let's assume their total compensation is $90/day. I have an assumed capital expense as well. Under those conditions you see $31K in profit per day. Click to enlarge.

To the right I have the same conditions except the work environment has been altered so the work is more interesting and total output decreases 20%. I assume a 10% reduction in capital expense because fewer material is used. Based on this I calculate the required wage rate in order to sustaine the $31K in profits. The wages must fall to zero. Also if the initial wage was lower than $90 paying $0 would not be low enough wages to sustain the $31K in profit. Capitalism does not permit a less monotonous reduced output work environment under these conditions.

Contrast with Socialism. I have the same initial conditions, but on Socialism there are no investors that are paid. The workers only are paid. Worker wages start much higher since the bulk of the money is not going to the investors. But to permit a 20% reduction in output in order to improve working conditions workers must be prepared to accept 22.5% less in income. Much more than they make even under monotonous Capitalist conditions, but still a sacrifice.


What you find if you increase the initial wage rate on Capitalism is that you don't necessarily have to go all the way down to $0 to sustain the payments to investors. But you still must accept a greater % reduction in wages on Capitalism than you would on Socialism.

Education in Finland

One of the reasons I home school is because I'm concerned that testing and competing will cause my children to view learning as a chore. I think when you learn because of external compulsion you can retain some of it, but when you are learning something because you want to learn it that's when real education is occurring. That internal motivation is what really produces achievement.

It looks like Finland takes a similar approach.