What Cues Can South America Take From Europe?


Over the past few years Greece has probably made the news more than ever before. Whether it be protesters in the streets, election results, or the announcement of some new government policy, whatever happens in Greece seems to be written about in all corners of the world. Just recently the fierce rhetoric of a relatively obscure populist left-wing party made international headlines and fueled new speculations about the future of one of the world’s major currencies, if not the world economy and financial markets. The eventual ascent of that same party, Syriza, to Parliament has all eyes both on the Old Continent and across the world focused on its plan of action. Mind you, we are talking here about a country whose GDP represents less than 0.4% of the world economy.

In the meantime, incessant government intervention into the economy has caused major upheaval in several countries in South America. Venezuela is currently experiencing the worst depression in decades, Argentina’s economy is in shambles once again on the heels of its most recent default, and since the World Cup bubble popped Brazil has equally dipped into recession. These countries dwarf Greece in terms of population as well as contribution to world GDP, and some of their resources make them important players in global commodity markets. Yet aside from some news outlets’ reporting on Venezuelans having to stand in line for hours for even the most rudimentary items or the mysterious death of a federal prosecutor in Argentina, major media are hardly paying attention.

The latter, far from being the result of a massive media cover-up, reflects a general sentiment in South America. Here in Chile, for instance, nobody in their right mind would dream up some theory about the aforementioned woes causing a spillover effect that might bring the entire continent to its economic knees. Unlike in Europe, xenophobia has not been on the rise here, nor have there been any incidences of heads of state being compared to blood-thirsty dictators. As much as some populist leaders like to speak of a “Latin American brotherhood”, in truth the misery even in neighboring countries is hardly discussed except in case of any personal ties.

While it would clearly not be a fair comparison to put the South American economy on equal footing with that of Europe, the events that have unfolded in recent decades can certainly serve as valuable lessonsEurope-SouthAmerica for the continent. The mere suggestion that one day, Europe’s economic fate would seemingly come to hinge on the outcome of Greek elections would have seemed outright preposterous as recent as the nineties or even in the early 2000s. Indeed it would be like predicting that two decades from now, all of South America would be trembling at the prospect of a severe recession in Guyana.

Still, a lot more can be drawn from European history than simply a long list of don’ts. Going further back just a few centuries can literally provide a blueprint for sustainable growth and pave the way for prosperity on a continent too long haunted by the destructive and backward forces of socialism. Historians and other scholars have written extensively on “the European miracle” and its foundations. As it turns out, the terminology belies an astonishingly simple recipe; defense of property rights and decentralized power structures limited by competing jurisdictions in their ability to intervene in and expropriate resources out of the market.

Whilst academia and politicians would have us believe economics is an incredibly complex field of study that should be left safely and exclusively in the hands of the “experts”, historical evidence proves them utterly wrong. In fact, the more power is centralized into the hands of these conmen, the lower the odds of the kind of sustainable economic growth that has permanently lifted millions out of poverty, and continues to do so to this day.

Political leaders and their outdated and misplaced allegations of imperialism cannot be allowed to stand in the way of free people and free markets in South America. In the words of Ron Paul: “An idea whose time has come cannot be stopped by any army or any government”!

Lessons Unlearned From Brazil’s Recession


As she was sworn in for her second term last week Dilma Rousseff publicly stated government spending would have to be cut. Yes, you read that right; the leader of the Workers’ Party just said her own administration is spending too much taxpayer money. It might be a day late and a few billion dollars short, but could it be Brazil’s president just had her Eureka moment?

ReaisYears of spending billions of dollars on stadiums and infrastructure for a 4-week event has left the Brazilian government with little to brag about. While the world has moved on to other things the World Cup’s relics lie mostly unoccupied in a land of poverty, police corruption and gang violence. After the artificial boom created by said event the bubble has definitively burst. Yet to hear one of South America’s most adamant cheerleaders of government intervention admit to it is remarkable to say the least.

Government figures show Brazil’s economy had already fallen into a recession before the World Cup even got underway. This year the central bank expects the economy to grow by a dismal 0.38 percent while inflation hovers north of 6.5 percent, well above the 4.5 percent target rate. Industrial production is forecast to expand by no more than 0.7 percent, with the country’s current account deficit widening to $78 billion. Predictable though the downturn may be, its sheer magnitude is forcing the Dilma administration to consider some rather uncharacteristic measures. Or is it?

The budgets of a few dozen ministries and some secretariats may be cut by one-third, reportedly amounting to some $700 million in savings, the new Finance Minister Joaquim Levy was quick to add expenses listed in the constitution will be unaffected – a constitution about as thick as Ayn Rand’s novel Atlas Shrugged, by the way. In addition taxes on imports, credit, cosmetics and fuel are set to be raised. To make matters worse, an income tax reduction already approved by Congress was recently vetoed by Dilma herself.

Naturally, the fact that Brazil’s tax burden of 36% of GDP is far higher than that of other middle-income countries cannot be allowed to keep failed economic policies from going full steam ahead. The logic on which excise taxes or protective tariffs on imported goods rest, i.e. that raising prices of certain goods discourages their consumption, suddenly loses all its validity when it comes to such activities as human labor or investment. Can Brazilians really be expected to keep working just as hard despite essentially working two out of five business days just to sustain a giant bureaucracy? Can a society really be expected to achieve any sort of meaningful growth when forty percent of its productivity is sucked out of it?

It is obviously too late to take all of the resources spent on the aforementioned projects and redirect them into the private sector, where they would have contributed to sustainable economic growth. It is not too late, however, to reverse the trend and stop adding fuel to the fire. Besides, imagine how much more expensive that fire will be considering rising fuel taxes!

As the famous quote attributed to Thomas Edison goes, “I have not failed, I’ve just found 10,000 ways that will not work.” The latter can also be said for the idea of taxing and spending one’s way to prosperity. Edison’s point, however, was that making mistakes can be useful if one learns from them. Unfortunately that message does not seem to have reached Brasilia.

Speaking the Language of Liberty


To anyone who has not lived in a cave in recent years it is clear that libertarianism is gathering momentum and becoming more mainstream. Consequently, those of us who care about liberty should expect to get many questions from “outsiders” about what we stand for. Plenty of misconceptions and objections will need to be addressed as well as questions answered. Attending a Liberty Camp organized by the Language of Liberty Institute (LLI) can give you LLI_largethe arrows you’ll need in your quiver to do just that.

Attendees at last week’s Liberty English Camp on the Mediterranean island of Malta can attest to its benefits. Co-organizer Jacek Spendel of the Freedom and Entrepreneurship Foundation helped gather nearly fifty people of thirteen different nationalities, representing a larger than usual turnout for a Liberty Camp. They learned a lot from many different speakers about why liberty matters, the origin of rights, the war on drugs, seasteading, the difference between real and crony capitalism (from a Wall Street insider, no less), why Estonia attracts a lot of foreign investment, starting the revolution, the European Union, and how to set up an independent Civil Society Organization (CSO). Another highlight was hearing from four Ukrainian students about what is currently going on in their country and cities, and how that affects the advancement of the ideas of liberty there. In addition we were entertained by movies and documentaries, not to mention social events and a talent show to top it all off!

Liberty Camps are generally held in the countryside of developing nations all over the world, so the small island of KONICA MINOLTA DIGITAL CAMERAMalta provided a slightly different experience. Compared to most seminars or conferences, though, the common denominator for all LLI events is their informal nature; the speakers lead discussion groups and workshop sessions, and blend in with the others during all social events. Along with stimulating English conversation, this is what makes Liberty Camps uniquely suitable for those that are new to the ideas of liberty. After all, how often does one get the chance to hang out with and ask questions of a speaker at a conference or seminar?

I was invited to make the case against the European Union, to which I added strategies for avoiding the statist paradigm in many different areas. (Look for more about that in the coming weeks here). It was the first time I was able to attend a Liberty Camp and as you can probably tell from the above, I was thoroughly impressed. I’m sure I will attend many more in the future and I will be happy to share my experiences with you here.

The Language of Liberty Institute’s schedule for this year features events in South America, Eastern Europe and Africa, and possibly India. For more information be sure to visit www.languageofliberty.org, give the Facebook page a like at facebook.com/LanguageOfLiberty, and follow LLI on Twitter at twitter.com/LangofLiberty. There might very well be a Liberty Camp near you this year – or perhaps you feel inspired to help organize one in your city or country!

All that remains for me to say is a big thanks to the organizers of the Liberty English Camp in Malta for doing a great job making everything run so smoothly, and to all the attendees for their participation. Your enthusiasm made for an incredibly enriching and memorable Malta Liberty Camp!

 

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[FULL DISCLOSURE: I was not compensated for writing this article and singing the praises of the Language of Liberty Institute or the Liberty Camps. This is my genuine opinion I wanted to share with you for informational purposes and for your enjoyment.]