While the game of polo teaches the eager student many things, including balance, strategy and how to connect the wide end of a mallet to a ball while galloping at full tilt, there is one lesson above all the novice should learn: How to stop a runaway horse.
Of course, this lesson is valuable not just to the aspiring poloista, but should be learned by anyone planning on climbing on the back of a horse for any purpose. In polo, it is just a bit more urgent because for most of the game, your horse is running in a herd... and if there is one thing that horses running in a herd tend to do, it is to keep on running.
Without a good understanding of the principle of being able to reliably check the forward progress of your horse, the odds that your horse will hit the end of the field and just keep going rise to an alarming degree.
Now, some horse folks will tell you - as someone once told me - that should your horse begin to run away, the trick to stopping it is to pull hard on one rein, forcing its head to turn back toward you. The theory, as I understand it, is that the horse will be discomfited by not being able to see where it is running and so come to a stop.
As is the case with so many things in this world, theory and reality can sometimes diverge. And so it was that I found myself looking into the liquid brown eyes of my dear horse Winston facing back at me... while charging at full speed off the end of the field and up a nearby hill... his pace slowed not even a little by his lack of forward sight. Figuring the situation was unlikely to improve by any measurable amount, I decided to excuse myself from the drama by leaping off.
(Upon landing, I realized that I had learned two new things, the first being that I didn't actually know how to stop a runaway horse. And the other that the body has a remarkable capacity to mask the pain from a fairly serious injury - in this case, a badly fractured arm.)
So, how do you stop a runaway horse?
Answering that question begins with understanding the origins of an old saying, a popular derivation of which is, "He/she sure has the bit in his/her teeth!"
This quip relates to the tendency of people to pull back harder and harder on the reins of a horse beginning to run too fast, resulting in an action not dissimilar to that of a water skier being towed by a boat. The problem is that once the horse has the bit in its teeth (actually at the back of its teeth), all it feels is a steady and somewhat uncomfortable pressure in its mouth, but nothing that is going to cause it to stop. And so off you go to your uncertain fate.
With apologies to card-carrying members of PETA, or more nuanced horse riders who no doubt ride a more polite variety of horse - a horse that would never dream of running away or that would be brought quickly into line with a gentle tug and a "whoa" should it do so - when it comes to runaway polo ponies caught up in their herd-inspired passions, the correct way to get them to stop is to stand up in the stirrups, loosen the reins slightly, then yank back hard. Then stand up and repeat the process again, and again if necessary, until they slow down.
In other words, and I know this sounds a bit cruel, you have to get their attention... in this case, by causing them bursts of pain. Only then will they come to believe that the reward of running full speed to wherever their desire is leading them is not worth the punishment, and they will stop.
As far as any guilt one might feel about inflicting such a stern treatment, the reality is that horses are always dangerous... even when gently nibbling fresh grass from your palm. All it takes is an errant insect landing in an ear or the slamming of a car door, and the beast emerges, panicking and caring not a little who gets trampled. In the case of a runaway horse, serious injury and untimely death are both comfortably within the range of outcomes.
As a consequence, if you are not willing to do what it may take to make a horse stop, then do yourself a favor and don't climb on the back of the horse - any horse - in the first place.
So, what does this have to do with anything?
How to Stop a Runaway Horse
Last weekend, the people of Venezuela once again stepped into the voting booths to return Hugo Chávez to power. This despite tangible, up close and personally observable evidence that the country is descending into the earthly equivalent of the seventh circle of hell.
I have been to Venezuela relatively recently, and I can tell you from first-hand observations that the place is tortured and well on the way to collapse. In an attempt to fool people, Chávez has created a Potemkin Village in downtown Caracas, a small area with modern amenities and clean streets. (A Venezuelan exile recently told me that a relative of his was cornered by police in the sanitized area and told that in order to avoid paying a fine, he had to wear a proper jacket when walking in the for-show part of town.)
Outside of Caracas, however, the situation is positively medieval, with vast hillsides covered in hovels serviced by rutted dirt roads. While the government does its best to hide the muddy masses from tourists, on my trip a key bridge was out between the modern airport and Caracas, so I had to transit into areas Chávez would have preferred tourists didn't see.
Of course, like so many things in an era of lackey journalism, Western media sources are not to be entirely trusted. Thus, the narrative about Chávez's many failures made his reelection seem in question. Further on in this edition, our own Robert Ross digs a bit deeper into the matter and finds data that helps explain Chávez's popularity among the poor masses.
That said, the data and the experience on the ground also show that the transitory benefits of applying the heavy hand of socialism on the Venezuelan economy - more prominently, nationalizing the oil industry - are quickly dissipating. And, per Dante's seventh-circle reference, violence in the country is running high... in fact, they now have one of the highest murder rates in the world.
Yet, people still voted to keep Chávez and his socialist revolution in the driver's seat.
Unfortunately, this isn't an anomaly. In fact, despite historical example after historical example pointing to the sure failure of centrally controlled economies - and not a single example of a long-term success - people around the world still gravitate to the model.
"From each according to his ability, to each according to their need" should, if recalibrated to reflect historical reality, read as "From each according to what the government can bleed, until everyone is in need."
It is, to a thinking person, a puzzle. After all, it's not like there aren't clear examples available of what makes an economy vibrant. The rise of Hong Kong, for instance. In that case, a tiny country poised on a rock with zero natural resources parlayed laissez-faire economic policies to become the sixth-largest economy in the world at its peak (before being taken back by the Chinese).
Then, no doubt taking stock of Hong Kong's success, China itself adopted economic liberalization and, in doing so, set the stage for an almost unimaginable level of success.
Since Deng's 1978 market reforms, the country's gross domestic product has grown from being the world's 17th largest to where it now stands, the second largest.
The magnitude of that accomplishment can only be fully appreciated by considering that China's population in 1978 represented 22% of the world's total. According to a paper by China scholar John Ross, in 1978, per-capita GDP in China was only 42% of the global median. But by 2010, it has risen to 299% of the median.
In other words, by shifting from a command economy, hundreds of millions of Chinese moved from abject poverty into something approximating a middle class... and did so in just 30 years, a blink of the historical eye.
And yet, in Venezuela and in America and in Europe and in most countries these days, large swaths of the population - a majority, in fact - continue to cling to the notion that socialism is a workable economic model. Specifically, that a cadre of academics can move segments of the economy around like chess pieces and ultimately create some sort of utopia where everyone shares more or less equally in the world's rich bounty.
"But we HAVE to do something for the people who can't look after themselves," my dear friend and golf partner Charlie commented the other day during a drive together to Boston.
"Yes, we do," I concurred. "So how about making sure that first and foremost the economy is robust and humming along, creating jobs and allowing people to save and build capital so that fewer people need help in the first place, and so people can afford to help out those actually in need?"
The problem with Charlie's perspective - a perspective shared by far too many - is that it is just too optimistic. As that statement lends itself to being misinterpreted, let me make it clear that I like to walk on the sunny side of the street. Who doesn't?
But this idea that the world is somehow going to be transformed into a workers' paradise by virtue of bureaucrats tinkering with the markets is just not realistic.
Sorry to say, but the world is what you see: pockets of calm and civility, but also large areas beset by trouble and strife.
"But shouldn't other governments have to pitch in and help the US defeat the bad guys in the world?" asks the well-intentioned Charlie.
"Not if they don't believe it is right to be invading other countries," I answer.
"But there's bad guys, the mad men in Iran, for example. If we don't stop them, they are going to blow up Israel," he says.
"Are you so sure? Have you noticed that almost none, and maybe none, of the Islamic suicide bombers have been old men? So, what makes you think that the gray-bearded mullahs in Iran are going to launch a nuke at Israel when they know beyond a shadow of a doubt that it will lead to their near instantaneous immolation? And why are Israel's problems ours?"
"But what about the way those guys treat their women?"
"Damn shame, but not our damn shame," I reply. "Charlie, you are thinking of some other world than the one we live in. A world that has never existed, and probably never will. But if it is going to exist, it will come about not by the US constantly meddling with - attacking - other countries. It will come about by the government getting out of the business of nation-building and allow the free exchange of goods, services and ideas between nations. Besides, the simple truth is that we can't afford to continue playing Team America, World Police. We're broke."
Charlie, I can assure you, is a stand-up guy. One of my favorite people in this world. But his world view has been so shaped by government propaganda and a biased, indoctrinated media that much of what he believes has next to no basis in reality.
"But the government wouldn't lie to us. There were riots in Libya about that movie trailer. Are you saying that it was a terrorist attack? No way, we would have heard about it."
"That's exactly what I am saying. That a US ambassador was killed in an attack that took place on 9/11 is way too much of a coincidence - and the reports coming out are conflicting. No matter what the White House and State Department are saying, it appears it was a terrorist attack." (This was before the current revelations came out.)
"Aw, Dave, I really can't believe that."
Again, I drift.
The point I am making, or at least attempting to make, is that we humans want to believe that a perfect world can exist. Whether it is Venezuela's poor hoping that in his next six-year term Chávez's socialist paradise will finally bear the promised fruit, or my friend Charlie's staunch belief that public officials wouldn't lie and that with just a bit of encouragement (and maybe a few bombs), the rest of the world will fall in line with the American way of life, it's all much the same.
Thus, rather than accepting the world for what it is and making the rational decision to adopt systems that are proven to benefit the greatest number of people, but not benefit all equally because that's not possible, the body politic chases rainbows to the detriment of everyone.
Which brings me full circle to the runaway horse.
You see, the negative consequences of utopianism are apparent wherever we look these days.
- In the United States, in the form of aggressive foreign policy and socialist domestic doctrines. Adding gum to the works is the new religion of utopian environmentalism that is actively wreaking havoc in the energy sector that remains so core to human progress.
- In Europe, you can see it in the parasitic bureaucrats in Brussels trying to control the continent's economy and, in the process, actively destroying the host.
- In Pakistan, utopianism is manifested in social strife and violent religiosity. Trying to force a religious straitjacket onto everyone in a society is, after all, utopianism of the highest order.
I could, of course, go on... and on... and on.
But the point is, I hope, clear. Modern society, like a runaway horse, has got the bit of utopianism in its teeth and is running full speed toward an uncertain future. And, if history offers any guidance, a serious accident.
The "bit in the teeth" metaphor is, I think, a good one. That's because like a runaway horse, people can see the problems and to varying degrees feel the pain. But as the situation has evolved in a slow, long pull, we have grown accustomed to our circumstances, as painful as they may be to many, and so feel no urgency to alter our path even though we can see it is leading toward a precipice.
Instead, we cling to our hopes that the "next guy" will fix the problems, even while encouraging the politicians to vote down any restraints on entitlement programs or, in some segments of the particularly panicked population, even any reduction in bankrupting levels of military spending.
In fact, pick a pocket of public spending, any pocket at all, and you will find an outraged constituency ready to fire up the petitions and pull out the placards to defend it. And right behind them, a politician ready to wheel and deal to keep the spending intact.
Cut PBS! Don't you dare! I mean, what kind of utopian paradise would this world be if I had to be subjected to commercial interruptions in my Masterpiece Theater?
It is what it is. We are locked in the hot pursuit of utopia and will remain so until the sharp pain begins. But, like a runaway horse, it won't take just one episode of sharp pain, but several before "we" finally get it and realize that the closest thing to utopia - but not utopia itself - is only going to come about when we humans are left to pursue our own peaceful interests with the absolute minimum of government interference (or, in a place like Pakistan or most of the Middle East, the maniacal mullahs).
It's All a Matter of Attitudes
Not to go on, but I do think it is helpful when discussing a topic as large as the global failure of human reasoning that we try to understand something of what might be considered the mechanical aspects of the thing. That's because, in order for real change to occur, the detrimental and delusional attitudes discussed to this point ultimately must be changed in a large enough percentage of the population to make a difference.
And so, a quick word about attitudes (at least I hope it's a quick word... I sincerely never know).
I know something about the topic because I spent an hour a day for the better part of two years researching how the mind works, even going so far as writing a very rough draft of (yet another unpublished) book on the topic.
Attitudes play an essential role in creating behaviors. In essence, we have an attitude about everything, attitudes that began being formed pretty much from our first day on this planet. These attitudes are based on life experiences, physical characteristics, socio-economic factors, current priorities, what we read, what we hear, who we know and so on and so forth.
Stating the obvious, the presence of attitudes is persistent and endemic. Yet not all attitudes serve the same function. Daniel Katz, in 1960, identified what he considered the four archetypical attitude functions. In no particular order, they are:
- Utilitarian - these are attitudes that help people maximize rewards and minimize punishments. As an example, a person living in a small town in Pakistan will almost certainly adopt Islamic practices as that will ensure they "fit in" and avoid potential punishments, maybe even being shot in the head.
- Ego-defensive - this attitude is adopted as a way of defending one's self-image. Ego-defensive attitudes are exemplified most clearly by prejudicial attitudes towards minorities as such attitudes tend to bolster the holder's self-image (ego) by viewing them as even further down in the pecking order.
- Value-expressive - people tend to get satisfaction from holding and expressing attitudes that reflect their central values and self-image. Someone who sees themselves as a conservative Republican might get satisfaction from supporting a balanced-budget amendment. Someone who seems themselves as a caring liberal, on the other hand, might get satisfaction from mandating that everyone is forced into a government medical scheme.
- Knowledge - this refers to the adoption of attitudes that are useful in organizing and understanding information and events. For example, one way of making sense of complex sociopolitical situations (such as in the Middle East) can be to, in effect, identify the "good guys" and the "bad guys." In this case, the attitude serves as, at least, a superficial mechanism for organizing one's understanding of such situations.
Post-Katz, others have come along with additional sub-sets of attitude, but I think for our purposes, and given the time slipping away, the above attitude functions will suffice.
The question, then, is, how do you actually change an attitude - especially one that is as firmly held as that of the socialists or anyone with a serious case of utopianism? And that brings us to what the researchers in this field term, "Agents of Change."
Following the same line-up as above, here's how the academics say it can be done.
Agents of Change:
- For utilitarian attitudes: Katz suggests that utilitarian attitudes become susceptible to change when the attitude (and related activities) no longer effectively maximizes rewards and minimizes punishments. Or when the existing rewards and punishments are changed. Thus, in the case of the socialists, utilitarian attitudes may finally change when the rewards of voting money out of the public trough begin to be clearly outweighed by the negatives.
In other words, when the bit in your mouth is yanked hard, resulting in acute pain... and it happens again and again, in time all but the insane will realize that something fundamental has to change, and a new utilitarian attitude (one that works) will be formed. You saw this happen when the Berlin Wall came tumbling down.
As far as turning back the tide of utopianism, this is the single most important attitude change that has to occur, but to complete the circle, here's the rest...
- For ego-defensive attitudes: The agent of change would typically involve removing the threat to the ego (thus removing the need for self-defense) or even, according to Katz, giving a person insight into their motivational dynamics. Today roughly half the population looks upon the other half as delusional, and vice versa, and feels morally superior as a result. At the point when everyone comes to the same conclusion - that the problem is not the nature of government, left or right, but its size and reach - I think attitudes will change. But maybe that's just me being utopian.
- For value-expressive attitudes: change is possible when (a) the underlying beliefs and self-images change (e.g., Karl Hess, the die-hard Republican speech writer for Barry Goldw ater who came to understand how morally corrupt Washington was and walked out of Goldwater's office to become a life-long Libertarian with strong anarchist tendencies); or (b) when an alternative, superior means of expressing the values is presented. In the case of the Libertarians, whose political policies seem to me most in sync with a properly functioning economy, they need to do a much better job of leveraging the current political morass into a better understanding of their core values. Of course, their task in changing attitudes might be made easier if their candidate, Gary Johnson, were allowed to participate in the presidential debates... but we don't live in that world.
- For knowledge-related attitudes: The key is to introduce ambiguity, for example by pointing out disconnects when someone thought to be "good" does something bad. Done correctly, a person can come to the realization that the attitude they hold is not functioning well.
Not to stir anyone up, but in my conversation with Charlie, in response to his comment that "we" - meaning the US - had to enter WWII, I begged to differ, quoting Rick Maybury's excellent book on that conflict and pointing out that by the time the US entered the European war, the German army was already in Russia and the snow had begun to fall. In other words, their army was doomed.
(By the way, if you haven't read Maybury's books on WWI and WWII, do yourself a favor and order them. Here's an Amazon link to his WWII book.)
In any event, there is a lot more to how attitudes work and how they can be changed... but I have gone on too long already, and as I am deep into my preparations for the big move to Argentina with family, dogs and all, I will move along.
Before I do, however, I would just briefly restate my core contention that we are on a runaway horse, a horse that has the bit in its teeth and, despite the dull pain from failing policies, will continue in the same direction until the pain becomes acute. At that point, society will regroup and, informed by wrong-headed attitudes, try again to follow the same socialist path, probably even doubling down, until the pain becomes acute again.
While no one can say how much pain we'll have to endure before it's over, if Venezuela is any guide, it can be quite a bit.
But in time, the attitudes of the majority will change - as they must - and the world will be able to find an equilibrium that minimizes the government's meddling and allows free markets to work their magic.
Then again, maybe I'm as much of a utopian as everyone else?
Why Chávez Got Reelected
By Robert Ross, Casey Research
Many people watched Chávez's win in Venezuela with dismay. How could a man who had so obviously ruined the economy still get reelected? While from the outside his flaws seem obvious, he's still considered a crusader for the poor amongst many in Venezuela. Unfortunately, despite that view, Chávez's policies have only impoverished the country more so. Despite years of horrid economic conditions, there is still some misguided rationale among Venezuela's poor that pushes them to turn out in droves to make sure Chávez remains in power.
To explain Chávez's rise to the top of the Venezuelan political food chain and the circumstances that have kept him in office for 14 years, it helps to explain the relationship between Venezuela and oil. The country has the largest crude oil reserves in the Western Hemisphere, and it's been using this to its advantage for decades.
When the 1973 OPEC oil embargo sent petroleum prices skyrocketing to around per barrel, Venezuela's income exploded. This led to the first nationalization of Venezuela's oil industry in 1976, proceeds of which were used to fund massive social programs. However, even extremely high oil prices couldn't completely fund the government's vision, which pushed them to raise external debt as well.
As you can imagine, when oil prices fell by two-thirds during the 1980s oil glut, the government was left with a slew of unsustainable social programs. The Venezuelan government did what most governments do when they can't pay their bills: they devalued their currency. The result was unnerving, as the poorest Venezuelans saw their real standard of living plummet, leading to riots that left hundreds dead.
Of course, this was a perfect time for a coup d'etat as rebel factions twice attempted to overthrow the government during the period. One of the coup's leaders, Hugo Chávez, was imprisoned after the unsuccessful mission but was pardoned after only two years behind bars by then-President Rafael Caldera. Little did Caldera know that in a few short years, Chávez would take over the presidency and eventually take total control of the country.
Political Prominence
Chávez ran on a platform promising widespread social and economic reforms, which won the trust of primarily poor and working-class Venezuelans. Once in power, however, he didn't forget the people who got him there. Following his inauguration, Chávez immediately appointed ruthless rebel leader Jesus Urdaneta to lead the country's secret police, along with appointing confidant Hernan Gruber Odreman to governor of Caracas. Chávez and his cronies quickly earned the nickname "Boliburguesia" or "Bolivarian bourgeoisie," in reference to those who became rich under the guise of socialism during the Chávez administration.
But the nepotism didn't end there. After he rewrote the Venezuelan Constitution in 1999, Chávez held elections to form the new constitutional assembly. Although over 75% of those running were opponents of Chávez, his supporters won in landslide fashion, securing 95% of the seats. He and his newly elected assembly immediately passed a measure that gave the assembly the power to dismiss officials perceived as being corrupt. Opponents argued that this gave Chávez too much power, and that the measure made the assembly a de facto dictatorship.
Although Chávez was gutting the government from the inside out, a rebound in oil prices had made it seem like he was an economic miracle worker. The rise in government revenue via higher oil prices and the nationalization of the country's oil resources allowed him to fund populist social programs, making Chávez increasingly popular with the poor and disenfranchised. This unwavering popularity allowed Chávez to implement certain reforms that not only appeased the poor in the short term but also enriched himself and the politically connected.
Radicalism over Reason
An important facet of Chávez's theory of "new socialism" was the implementation of strict price controls, particularly on food. In 2003, the government - at the behest of Chávez - imposed price ceilings for basic food staples, including milk, meat and coffee. Not surprisingly to those versed in economic theory, the country was subsequently plagued by shortages of the very staples the government was trying to make cheaper. For example, Datanalisis, a polling firm that tracks scarcities, found that powdered milk could not be found in 42% of stores visited by researchers in March of 2012.
Staying true to his anti-capitalist leanings, Chávez blamed "speculators and hoarders" for such scarcities. He also responded by nationalizing large parts of the food industry in a futile attempt to increase production.
But it didn't end there. Chávez started to use military force to crack down on "speculators," which he defined as anyone who sold food products for prices higher than government rates:
- January 2008: Chávez ordered the military to seize 750 tons of food that sellers were illegally trying to smuggle across the border to sell for prices in excess of the government-mandated rate.
- February 2009: Chávez again ordered the military to temporarily seize control of all rice processing plants in the country to force them to run at full capacity. He claimed that companies weren't operating at full capacity because of his price caps.
- March 2009: the Venezuelan government set minimum production quotas for 12 basic food items subject to price controls in an effort to stop food companies from "evading the law." This prompted business leaders and food producers to claim the government was forcing them to produce food at a loss.
- May 2010: Chávez once again ordered the military to seize 120 tons of food from Empresas Polar, a Venezuelan brewer and food processor, after discovering inconsistencies in the company's reports.
- May 2010: during a shortage of beef, at least 40 butchers were detained on charges of speculation for allegedly selling meat above the regulated price.
Chávez's radicalism has also caused him to abandon even the most basic tenets of economic theory: strong private property rights. In 2009, Chávez expropriated and redistributed 5 million acres of farmland from large landowners, claiming, "The land is not private. It is the property of the state ...The land is for those who work it." However, the plan backfired, as a lack of basic resources has made it nearly impossible to make full use of the expropriated land. This led to an overall fall in productivity in spite of a larger land area under cultivation.
Even though there are rampant shortages throughout the country's poorest communities, few blame Chávez. In fact, many actually believe his assertion that speculators are to blame for the shortages. This line of thinking by Venezuela's poor whereby Chávez can do no wrong has allowed him and his government to run the country uninhibited. However, the country is now starting to feel the long-term effects of these policies, and the results are troubling.
Blood in the Streets
The combination of an inexperienced, ill-trained and corrupt police force coupled with increased narcotics trafficking in the region has spurned a wave of violence never before seen in Venezuela. For comparison, let's look at a country with a similar population size: Iraq. Even though the war-torn country had 4,644 violent civilian deaths in 2009, Venezuela nearly tripled that figure with over 16,000 killings. Still not convinced? How about cartel-driven Mexico? Since 2007, Mexico has had 28,000 deaths from drug-related violence. This is dwarfed by the 43,792 homicides in Venezuela over the same time frame. Compared to other Latin American countries, only Honduras and El Salvador have higher murder rates.
Venezuelan Observatory of Violence sociologist Roberto Briceño-Leon puts the blame on the "institutional destruction of the country." He claims that the rule of law in Venezuela is nearly non-existent, as 90% of murders are committed without a single arrest, and many government institutions - including the Venezuelan Supreme Court - have been compromised by Chávez.
One example of this blatant corruption is the government's response to a graphic photo published by El Nacional in 2010, depicting an overcrowded Caracas morgue. The government responded by issuing a court order stating that the paper should stop publishing images of violence. The uptick in violence has also prompted the government to ban private gun ownership. The reasons for the rising murder rate are up for debate, but the lack of a rule of law and little to no property rig hts (unless you have political connections) are certainly contributing to the problem.
Even so, Chávez maintains that Venezuela is not more violent than when he took office, even though official figures show homicides have quadrupled during his presidency.
Despite the overwhelming evidence to the contrary, the poorest of Venezuela are still convinced that Chávez is doing right by them. They perceive his food policy as his attempt to make food more affordable for the poor and their families, not as deleterious economic policy that is actually causing shortages and raising prices. They view his land redistribution policy as giving the poor a new livelihood, even though it raises prices for all by lowering productivity. They even imagine that by banning the sale of guns, he's acting in their best interest, when in actuality he's making them less able to defend themselves against intruders as well as the government.
To them, Chávez brought Venezuela out of the ashes of the early 1990s and into the golden age of new socialism. However, organizations such as the International Monetary Fund forecast a grim future for Venezuela, chock full of slow economic growth, high inflation and high rates of unemployment.
With the threat of violence, nationalization and currency devaluation an ever-present threat, it's difficult to understand how anyone could come to an alternative conclusion. But then again, perhaps looking at our political system, we're often no better at throwing out the politicians who passed disastrous policies. Despite their failures, we place our trust in the promises of their policies rather than the results.
Source: Casey's Daily Dispatch
