Author Archive
New York Times “Celebrates” the Fall of the Berlin Wall
In a way, I always knew it would happen. I knew that, come November 9, the left-leaning NYT would publish an article focusing on the supposed crisis of capitalism rather than the end of communist dictatorship. Still, I was not prepared for Slavoj Zizek’s op-ed entitled “20 Years of Collapse.”
First, a few words about the author — a Marxist philosopher from Slovenia. Generally ignored or ridiculed in Slovenia, Zizek is considered (by some) to be the new messiah of leftist thought in the West. Why did the NYT chose to celebrate the 20th anniversary of the collapse of communism with Zizek’s call for “socialism with a human face,” rather than an op-ed by someone like Vladimir Bukovsky, a former Soviet political prisoner tormented for years by the communists, is anyone’s guess.
But, it is the substance of Zizek’s article that is so misleading. The article makes absolutely no mention of the economic progress made in Central and Eastern Europe. Yet, as the World Bank and even the United Nations tell us, incomes in the region have substantially increased and so has school enrollment. People live longer and healthier lives; environmental quality has much improved.
Zizek mentions communist oppression, but nowhere does he mention that 100 million people have died in the pursuit of communist utopia. Contemporary Marxists either ignore the astonishingly high number of victims of communism or try to minimize it. That is understandable. No matter what the (real or imagined) problems with capitalism are today, no sane person would be willing to embrace an alternative to capitalism that has a habit of resulting in a mountain of corpses.
The second — and equally risible tactic of contemporary communists (as Paul Hollander mentions in his just released Cato study) — is to try to draw a moral equivalence between socialism and market democracy. Zizek attempts to do exactly that by telling a story of a Soviet defector who became an outspoken critic of McCarthyism in the United States. The idea that there is any but the most superficial similarity between Soviet totalitarianism and the United States in the 1950s is preposterous — unless, of course, you are a modern-day leftist trying to salvage whatever remains of your philosophy from the dustbin of history.
Zizek is right to point out that there is growing disenchantment with capitalism and democracy. But, the recently released Pew and BBC polls have surely been influenced by the current (and likely temporary) economic environment, which, we are told, is the worst since the Great Depression. There are other psychological factors at work. Current problems feature more prominently in the minds of today’s Central and Eastern Europeans than shortages of 20 years ago and the old tend to remember their youth fondly — no matter what the actual political and economic circumstances.
Last, but not least, young people in the region know very little about communism. Learning about communism is by-and-large superficial, because the level of collaboration with communist regimes was very high among the general public. A thorough investigation of communist crimes would open too many wounds, it is claimed. Unfortunately, this collective amnesia means that instead of appreciating the great advances that their societies have made over the past 20 years, young people focus on their societies’ shortcomings vis-à-vis the contemporary West.
I have lived under communism. Although I have never personally experienced its true horrors, I had family members who did. The NYT’s choice of a lead op-ed on the day of an almost miraculous deliverance of hundreds of millions of people from communist slavery is shameful and sickening.
It Is Good to Be the King: Taxpayers Pay $413,000 for French President’s Unused Luxury Shower
Bastien François, a professor of political science at the Sorbonne, writes that “The French political system is incomprehensible to the rest of the world… In France we call it a republican monarchy. That phrase says it all.”
Indeed, according to the press, a £250,000 ($413,000) shower with air conditioning and radio surround sound that was “built to the exact specifications of the French President Nicolas Sarkozy” was paid for by the EU taxpayer during the French Presidency of the European Union in July 2008.
It was “disposed of soon afterwards, unused, together with most of the equipment bought for the £16million ($26 million) conference.” The press also reported “other expenses included £1million ($1.65 million) spent on the opening dinner alone – more than £23,000 ($38,000) for each of the 43 heads of state.”
Czech Support for Klaus at 65%
According to press reports, the most recent opinion poll shows that 65% of Czechs support President Václav Klaus’ refusal to sign the Lisbon Treaty that would take more power from national parliaments and give it to the unelected bureaucracy in Brussels.
Klaus, who has been at the pinnacle of Czech politics for the last 20 years (as minister of finance, prime minister, speaker of the house and now as president), has an unmatched understanding of the Czech people. Clearly, once again, he was able to discern the public mood better than others. That includes his successor as the leader of the center-right Civic Democratic Party (ODS), Mirek Topolanek, who once opposed the Lisbon Treaty but now supports it. It seems that the ODS is in a state of revolt against him and may unseat him at the ODS Party Congress in November.
Klaus will be much encouraged by the above poll. As a consequence, it is less likely that he will give way under pressure and sign the Lisbon Treaty anytime soon. If he can hold out until the likely British referendum on the Lisbon Treaty midway through 2010, he will likely be remembered as the man who put an end to the most ambitious attempt to create a centralized European super-state in modern history.
The Czechs Adopt a Flat Tax
The lower house of the Czech parliament passed legislation earlier today implementing a 15 percent flat tax on personal income. The new tax system will take effect on January 1, 2008, and the rate is then scheduled to drop to 12.5 percent in 2009. The legislation also reduces the corporate tax rate from 24 percent today to 19 percent by 2010.
The reform, which was narrowly passed by 101 members of the 200-member parliament, now goes to the upper house, where the government has a massive majority and no obstacles are expected. Once the reform clears that hurdle, it will then be signed into law by the Czech President Vaclav Klaus, who is a free-market economist. That act would make the Czech Republic the 20th country to adopt a flat tax. (The Bulgarian government has agreed to introduce a flat tax by January 2008, but the measure has not yet passed through the Bulgarian parliament.)
The opposition socialists have stated that they will repeal the law if or when they return to power and may even raise constitutional objections to it. For now it seems, however, that the legislation will come into force.
The Czech flat tax is a big step in the right direction, and another sign that tax competition is having a positive effect. But the legislation is not perfect. One of the salient features of a pure flat tax is the elimination of tax exemptions, deductions and loopholes. The Czech legislation is less ambitious and many of the bad features of the current system will remain in force. Also, the 15 percent tax rate will be levied on gross income, including payroll taxes. This means the tax rate is not directly comparable to nations that impose the flat tax only on net income, such as Slovakia.
Filed under: International Economics and Development; Tax and Budget Policy
The Czechs (Finally) Have a New Government
The 7-months-long political stalemate in the Czech Republic ended this morning. The Czech Parliament approved a coalition government consisting of the liberal Civic Democrats, conservative Christian Democrats and centrist Greens. The new government is committed to a flat individual and corporate tax rate of between 17 percent and 19 percent (to be determined during pre-budget negotiations), and slashing regulation and state expenditure.
A last-minute desertion of two MPs from the socialist opposition enabled the government to squeak through, but the government remains in a precarious position. With only a 100 seats in a 200 seat Parliament, the government’s reform program will be difficult to push through.
Venezuela: Plus ça Change, Plus C’est la Même Chose
Hugo Chavez came one step closer to becoming a full-fledged dictator last night, as “Venezuelan lawmakers gave initial approval to a bill granting … [him] the power to rule by decree for 18 months so that he can impose sweeping economic, social and political change.” The vote in the National Assembly was unanimous — as befits a budding communist country.
Not that Chavez’s powers were much constrained prior to yesterday, but his soon-to-be official recognition as Venezuela’s dictator serves as an important reminder that state control of the economy and dictatorship go hand in hand.
Since the collapse of the Soviet empire, many defenders of socialism have argued that dictators, including Mao, Stalin, and Pol Pot, were aberrations; they took Marx’s ideas in the wrong direction. They claim that nationalization of the means of production (call it communism, socialism, or Marxism) and democracy can be compatible. In The Road to Serfdom, Hayek showed that it cannot. Some 50 years later, Hayek’s argument holds. Every socialist regime tends toward authoritarianism of some sort.
Chavez reminds us of the anti-democratic nature of socialism. As such, he is turning into a major embarrassment for many on the Left who supported him. Unfortunately, what the proponents of socialism again and again fail to realize is that it is the message, not the messenger, that is embarrassing.
Filed under: International Economics and Development; Political Philosophy; Tax and Budget Policy
Rich and Successful Flee France
Johnny Hallyday, the French singer and actor, has had enough of high taxes in France and decided to move to Switzerland.
According to Hallyday, “Like many people in France, I have had enough of paying these ridiculous taxes we are forced today. That’s it, I’ve made my decision.”
French politicians are reported to be shocked. Jean-François Copé, the Budget Minister, has even said that “Johnny Hallyday was not carrying out his patriotic duty of paying his taxes to his own country.” It appears that no prominent politician in France has even considered the possibility that Hallyday may be right to want to keep more of the money he has earned!
Of course this is not the first time that a French celebrity has opted to live in a country with lower income tax. Some years ago, Laetitia Casta, a French supermodel, got upset over high taxes in her home country and left for London.
There she joined tens of thousands of her compatriots, who find the French taxes too burdensome and job opportunities too scarce. Casta’s flight would have been unremarkable had it not been for the fact that she was cast as the model for the bust of Marianne, symbol of the French Republic, an honor formerly held by Bridgitte Bardot and Catherine Deneuve.
The above stories personify the conflict between the image of France purveyed by the governing elite and the reality. On the one hand, France is portrayed as a strong and confident country, whose people, unlike the Americans, are committed to “social solidarity.” On the other hand, there is the reality of high taxes, high unemployment, uncertainty, and a general feeling of malaise. As more of the young, educated, and successful French move abroad, the welfare state will grow more unsustainable.
The question is, do Nicolas Sarkozy and Segolene Royal recognize the need for deep reforms, or will the victor of this year’s presidential elections turn out to be the younger version of Jacques Chirac?
Filed under: International Economics and Development; Tax and Budget Policy
Slovak Election Update
Much of the world’s media portrayed the victory of the populist socialist party in the Slovak elections as the voters’ rejection of the free market reforms pursued by the center-right government of Prime Minister Mikulas Dzurinda. Not exactly.
First, the election turnout was only 55 percent (down from 70 percent in 2002). It is true that the socialists increased their support from 13.46 percent in 2002 to 29.14 percent in 2006. But the low election turnout means that the socialists had their program endorsed by only about 14 percent of eligible voters – hardly a ringing endorsement of a return to socialism.
Second, Dzurinda’s party did better than last time. It received 15.09 percent in 2002 and 18.35 percent this year. So did its coalition partners. Christian Democrats were up from 8.25 percent to 8.31 percent and the Hungarian minority party was up from 11.16 percent to 11.68 percent.
The real shockers were the reduction in the support for the Movement for Democratic Slovakia of the former Prime Minister Vladimir Meciar, which was down from 19.5 percent to 8.79 percent, and the rise of the Slovak National Party, which was not represented in the last parliament, but managed to get 11.73 percent in this year’s election.
The communists, who got 6.32 percent in 2002, did not make it to parliament. Unfortunately, the liberals who got 8.01 percent in 2002, did not make it to parliament either.
So, what does all of this mean?
As has been predicted, the three parties of the center right can count on 65 seats in the Slovak parliament of 150. They will thus be 11 seats short of a majority. The socialists will have 50 seats, but need 76 to form a government. With their racist, homophobic and socialist policies to the left of the communist party, the Slovak National Party will have 20 seats. That leaves Meciar and his 15 seats in the role of the kingmaker.
Ironically, Meciar’s worst electoral performance coincides with a huge increase of his party’s relevance for the future of Slovakia. If he throws his weight behind the socialist leader Robert Fico, he will, once again, take the country down the wrong path. If he goes into coalition with the center-right, the continuity of the liberal reforms will be assured. (Note: The Christian Democrats stated that they will not be in government with Meciar, because of his past authoritarianism. But, they might agree to give him in a largely symbolic role of the chairman of the Slovak parliament.)
The upshot is that under the Slovak electoral system, elections don’t conclude the process of political horse-trading. They begin that process. True, Fico, the socialist leader, will get the first crack at forming a government, but that does not mean much. Both in 1998 and in 2002, it was the second largest party in parliament that formed the government. In both cases, that party was Dzurinda’s party.
One can only hope that history repeats itself.
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