Alejandro A. Tagliavini *
In Venezuela, which has lost 90% of its GDP in recent years and where the average monthly salary, according to MendozaOnline, is about USD 40, the reopening in Caracas of a dealership of the awfully expensive Ferrari’s cars has caused much outrage since it is obviously aimed at the new rich “revolutionaries” close to the government.
But not only in socialist countries are exaggerated fortunes and such great unevenness produced, also in “capitalist” societies there are those who take advantage of the action of the State for their own benefit at the cost of impoverishing the rest.
A typical case is that of Warren Buffet, whose image of a good capitalist grandfather hides a “businessman” who has made a large part of his fortune based on government privileges, at the expense of citizens in general. And, to top it all, in a report in the Financial Times, he assured that the gap between rich and poor is a “consequence of the market” so that “the government… has to… modify the market system”.
His style of doing business became clear when, for example, years ago he invested millions in a campaign for a referendum, which he won, for the government to uphold the electricity monopoly of his company, NV Energy, against the liberalization that would lower tariffs for the common citizen given the competition.
According to TransCanada, the Keystone XL pipeline, which would transfer oil from the Canadian province of Alberta to Nebraska in the US, would be built with the utmost care for the environment. But Joe Biden, as one of his first acts of government, plans to cancel the permit for the $ 9 billion project, which is already under advanced construction. Many claim that Buffet is receiving a repayment for his generous lobbying expenses within Biden’s party, since the oil would continue to be transported quasi-monopolistically by his trains.
Right and left, politicians and ideologues in general, sell the idea that socialism levels and capitalism uneven people. Personally, I am not very fond of the word “capitalism”, because it is not very precise. I prefer to refer to the natural market, a “free” market in the sense that its nature is not distorted by artificial, coercive -violent- government police interference.
It is the other way around; socialism is more uneven the more coercive – more violent – it is while the natural market tends to level people. The theory is simple, the more a business that some advanced guy has discovered -almost always by chance- yields, if it is not violently impeded, the more people will dedicate themselves to it, tending to level up, to earn more money and increasing competition as possible. That will cause better goods and services to be offered, benefiting the whole of society.
On the contrary, the more the government interferes in a coercive, violent way, the more this process is interrupted and then the more unevenness occurs. Thus, socialism – the government’s exaggerated intervention in the market – elevates politicians who take advantage of the state at the expense of citizens. And while wealth is a healthy incentive within the market, exaggerated fortunes – such as Bill Gates’s made based on a monopoly granted by state copyright laws – are not usually a natural product but the result of state privilege.
* Senior Advisor at The Cedar Portfolio and Member of the Advisory Council of the Center on Global Prosperity, de Oakland, California