Thursday, August 31, 2006

Strangled by Socialism

Socialism strangles. I just ran across two interesting illustrations of that in the news. The first is from Germany.

Aug. 29 (Bloomberg) -- Thomas Koerber, an engineering technician from Viernheim, Germany, was looking for a new job. He found it -- 4,700 miles away, in Canada.

"I looked around, found a job I liked in Canada, and left Germany within two months," Koerber, 39, said in a telephone interview from Calgary. "If I can get a better job abroad, and if I'm being treated better, I'm gone."

Koerber is one of 145,000 Germans who fled the fatherland last year amid record postwar unemployment, pushing emigration to its highest level since 1954, Federal Statistics Office figures show. Last year was also the first since the late 1960s that emigrants outnumbered Germans returning home from living abroad, the statistics office said.
Note that for the last few years the world economy has been booming, despite the on going wars and terrorist threats. Yet the German economy faces record unemployment in the number of unemployed with an unemployment rate od 8.2%.
"People say things aren't getting better in Germany, and nothing's going to change any time soon," said historian Simone Eick, director of the German Emigration Center in the northern port city of Bremerhaven. Indeed, "some indicators suggest that this may be the start of mass emigration."

That's reflected by the 630 postings recorded since Aug. 10 on an Internet forum on emigration hosted by Germany's Spiegel magazine. Germany doesn't have much of a future, a 40 year-old German teacher who moved to France said Aug. 26 in a typical posting. The teacher, writing under the alias "Kritischer Leser," meaning Critical Reader, said he's working fewer hours and making more money than his sister, a doctor in Germany.

For Koerber, the decision to leave was largely one of taxes. In Germany, where the highest tax bracket starts at 52,152 euros ($66,600), he would have to pay 42 percent of every euro above that level. In addition, the German value-added tax -- a kind of national sales levy -- is 16 percent, which is scheduled to rise three percentage points next year.
So there you have it. High taxes are bad for workers. Why? Well there is competition.
"I only get 25 percent deducted from my salary and that includes everything," said Koerber of his pay packet in Canada. "And I'm in the highest tax bracket!" The goods and services tax in Alberta is 6 percent, cut from 7 percent in July, he said.
If America doesn't watch out we could start losing skilled workers (the highest paid workers) to Canada as well.

Germany has other problems besides high taxes. They have lots and lots of regulations.
Other German expatriates cite what they say is the over- regimentation of the labor force. "Life in Germany is totally over-regulated,'' said Christian Kaestner, 38, an attorney who moved from Munich to Cape Town, South Africa, in 1997. "There are hardly any freedoms left, and you keep bumping into regulations and prohibitions."
Every regulation adds cost and friction to the economy. Just another thing to pay attention to. Considering that attention is probably the most expensive commodity in the universe, the cost is high indeed. In fact I tell my kids that the hardest thing to pay in the world is attention.

The second story is via the Sand Monkey. He discusses what is happening to the oil industry in Bolivia since populist/communist Evo Morales got elected.
Bolivia's move to nationalize their oil reserves and make the state control it has been failing miserably, once again proving that such socialist moves never work, as I have said here before. The reasons why the program is failing? Well, where to begin? First, there is that whole thing with Brazil being mad at its assets and investments being nationalized by a neighboring country's government, to the degree that it slashed its future investments in Bolivia from 2 Billion US dollars to a measly 90 million. This of course will lead other Oil investors to follow suit, like European Repsol, which announced that it had enough of the Persecution of Bolivian authorities and will cut investment in Bolivia. More companies will surely follow suit.
Morales' response:
Bolivian President Evo Morales said yesterday in a speech
that the country never planned to throw out foreign companies or expropriate their assets “but they can't act likes bosses or owners, they need to be partners," newspaper El Pais reported today.
Geez people who own stuff acting like owners. What a surprise. Bolivian economist Hernando DeSoto says the the protection of private property for the rich and the poor is the most essential element required to bring the third world out of poverty. I discuss that and DeSoto in Property.

The Sand Monkey goes on:
Of course you can't have socialism without corruption or mismanagment, and both are present here. The Bolivian Oil minister -a political appointee by Morales- just got censured for his managment of the nationalization plan , which was his idea in the first place, and therefore resigned. And the head of the Bolivian Oil state company-also appointed by Morales- has been mired by allegation of corruption for so long that he finally quit today. Morales, of course, can't figure out what went wrong. Socialism happend dude. Maybe looking at Venezeula's state of oil production, which y'all look up to as a great example of socialism done right, might give you a hint of what is going wrong.
The Sand Monkey has hit the nail squarely on the head. The more socialism the quicker the destruction of the economy, not just mismanagement, but also corruption. He goes on to discuss the Venezeula example in more detail. Plus his text is loaded with links. RTWT.

Hat tip: Instapundit for the Germany story.

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