In bad economic times, nothing is more easily rationalized than a welfare check from the government.
COUNTRY: North Korea (24.5 million)
BELOW POVERTY LINE: Not available
WELFARE COSTS: Not available
NATIONAL DEBT: $12.5 billion (2001 estimate)
STORY: By all standards of measurement, North Korea is the most oppressed nation on earth. Its government is a dictatorship that controls every part of a person’s life, including how much weeping was sufficient when the late Kim Jong Il died in 2011 (replaced by his son, Kim Jong Un). Television cameras swept past farcical staged mourners in orderly lines all weeping in unison.
The government operates 450,000 “Revolutionary Research Centers” where citizens are indoctrinated on a weekly basis to believe the new leader. Kim Jong Un has all power, supernatural power, with other mystical traits worthy of the people’s worship.
The citizens are divided into 51 social castes710 based on their loyalty to the Dear Leader. The general caste is three levels deep—trustworthy loyalists are called “core,” followed by the “wavering,” and then the “hostile.” The hostile group are all those the regime doesn’t trust or like. They are denied employment and food.
People are required to spy on each other. If someone is arrested for disobeying the Dear Leader’s dictates, he or she goes to one of 210 detention centers, 210 labor camps, 27 holding facilities, 23 prisons, 6 political prison camps, or 5 indoctrination camps. There they join an estimated 200,000-250,000 prisoners held indefinitely for torture or execution.711 The casualty rate at the roughest concentration camps is estimated at 25 percent per year.712
Malnutrition is an ongoing problem. In the 1990s, some 3.5 million starved to death. The average 7-year-old is about 2 inches shorter than a South Korean child the same age.713
All media outlets, from print to electronic to church sermons, are controlled by the regime, and all messages must praise Dear Leader. Listening to foreign broadcasts or traveling outside the proscribed boundaries can result in a trip to the concentration camp.714
North Korea is desperately dependent on trade with China to keep the economy going. In 2010, the trade between the two nations was estimated to be at $3.5 billion, up from $2.5 billion in 2009.
In the capital city, nervous escorts guard visiting foreigners so they see only what is meant to be seen. The air is unpolluted, but that is for lack of industry and automobiles in the barren city. Photos of Dear Leader are everywhere. Sparsely placed dim lights illuminate the ghost-town feel of what once was a large metropolis. Under communism, North Korea is dying. But at least they have their 1.3 million-man army to protect their ruins.
Historical Perspective: In 1994, R.J. Rummel estimated the body count from socialism’s tyranny in North Korea to be about 3,163,000 since 1948.715 The U.S. Committee for Human Rights in North Korea estimated in 2006 that socialist policies caused the starvation deaths of about 2,500,000 between 1995-1998.716
COUNTRY: Peru (29.3 million)
BELOW POVERTY LINE: 10.2 million (34.8 percent)
WELFARE COSTS: not available
NATIONAL DEBT: $38 billion
STORY: After decades of extreme totalitarian governments and ruthless insurgencies, such as the Shining Path, positive changes came to Peru. The economy was freed to promote business and the government was finally decentralized. This triggered a wave of sustained economic growth.
From 2003-2011, the country averaged a 7 percent growth rate, one of the fastest in the world. At the same time, Peru cut its poverty rate in half. The economy was also booming, thanks to the country’s rich mineral wealth in gold, silver, tin, iron, zinc, and copper. People in the interior where such resources were found finally gained some wealth and a voice in national affairs.
Taxes on those mines rose to 30 percent in recent years, but the money went to regional governments instead of Lima. That was a good sign—proof the country was finally pulling down barriers and decentralizing the socialist government.
China is Peru’s biggest customer for raw resources. The trade became so rich, Peru embarked on a massive road construction project to link its Pacific coast with Brazil. The road made transporting exports to the east coast easier and cheaper. The Peruvians predicted the road would not only bypass the Panama Canal, but replace it as the shortcut of choice.
Peru gave credit for its economic turnaround to a political choice: Instead of following its neighbors—Venezuela, Ecuador, and Bolivia—into socialism, a dark place it admits was its worst modern-day nightmare, the country instead chose freedom. “We’ve learned from our mistakes,” says Francisco Sagasti, an analyst in Lima. “No one is pushing for nationalization here. Everyone here knows that you have to have sensible economic policies from top to bottom.”717 Peruvians hate socialism.
COUNTRY: Portugal (10.8 million)
BELOW POVERTY LINE: 1.95 million (18 percent)
WELFARE COSTS: 21.2 percent of GDP (#15 in world)
NATIONAL DEBT: $548 billion
STORY: Resisting austerity measures to save the economy was handled much more peacefully among Portugal’s 10.6 million people in 2011. Instead of rioting in the streets, they were content with a 24-hour general strike—and then got back to business.
But the ruling socialist party didn’t fare so well. It was kicked out of office in 2011 and replaced by the Social Democrats. The new leaders were faced with the daunting task of cutting wages in an already depressed economy, forcing the laborers to work longer hours, and slashing retirement benefits. Unemployment in 2011 climbed to over 12 percent with signs the trend would continue for the near term.
Fernanda Lopes, 60, who ran a fruit and vegetable stand in Porto, told CNN, “We are from a generation that has been through a lot before. We’ve been through a dictatorship when the country was very poor. The younger people haven’t been through so much, they are not used to this type of impoverishment.”718
COUNTRY: Russia (138 million people)
BELOW POVERTY LINE: 18 million (13.1 percent)
WELFARE COSTS: not available
NATIONAL DEBT: $519 billion
STORY: The motherland continued to suffer from the remnants of its abandoned socialistic heritage long into the new millennium. With reforms more than two decades in the making, the basics of property rights and protections continued to elude the nation.
People expecting protection of individual rights found the judicial system sadly unpredictable, corrupt, and unable to handle sophisticated cases. Foreigners arriving to create business contracts couldn’t get them enforced. Borrowing to buy a home was a massive exercise in bureaucracy, and any kind of intellectual property was thinly protected from piracy.
After all those years of climbing out of the shadow of Communist dictatorship, Prime Minister Vladimir Putin started turning back the clock in 1999. He retained the undercover forces of secret police to run things. He was accused of enriching his inner circle with profits from oil revenues. Most of the industry was privatized in the 1990s, but some were re-nationalized later.
Russia has enormous energy resources. In 2011, it became the world’s leading oil producer, passing Saudi Arabia, and is the world’s second largest producer of natural gas and has the world’s second largest coal reserves. The country pushes manufacturing, and is the world’s third-largest exporter of steel and primary aluminum. To insulate itself from the boom and bust cycles of world demand, Russia is focusing on high technology. For a decade, the economy averaged 7 percent growth until the 2008-09 world economic crisis. 719
Russia has reduced its unemployment and rate of inflation, but its shrinking labor force, high levels of corruption, and aging infrastructure are remnants of its old ways that need urgent attention.
Historical Perspective: In 1994, R.J. Rummel estimated the body count from socialism’s tyranny for all of the Soviet Union, not just Ru
ssia, to be about 58,627,000 from 1922-1991. An earlier confederation called the Russian Soviet Federated Socialist Republic killed 3,284,000 from 1918-1922. This does not count at least 6,210,000 killed in the civil war of 1918-1920.720 Robert Conquest, a Stalin biographer, estimated that Stalin’s administration killed 18 million with famines, executions, imprisonment, show trials, purges, and forced collectivization. Victor Kravchenko, author of I Chose Freedom (1946), said 19.8 million “enemies of the people” were arrested. Of these, 7,000,000 were shot in prison and untold thousands of others died in camp. Stalin killed most of the Soviet military officer corps and almost all of his inner circle. He was preparing an anti-Semitic purge, but died before it got underway.721
COUNTRY: Spain (46.7 million)
BELOW POVERTY LINE: 9.2 million (19.8 percent)
WELFARE COSTS: 19.6 of GDP (#20 in world)
NATIONAL DEBT: $2.57 trillion
STORY: Unemployment was Spain’s biggest problem in 2011, where it stood at 21 percent—the highest in Europe. Unemployment among the youth was at 46 percent. When bailout money was offered to restart the economy, along with many austerity requirements to cut back on spending, the people got mad. The rich were angry for the higher taxes, the population was mad because overall spending was cut by 8 percent, employees were mad because salaries were frozen, and other measures were met with widespread mobs and riots. The Spaniards also love socialism.
* * *
710 The Economist, Deprive and Rule, Why does North Korea’s dictatorship remain so entrenched despite causing such hunger and misery?, September 17, 2011.
711 The Chosunilbo, 200,000 Political Prisoners Held in N. Korean Camps, 1/21/2010.
712 The Korea Times, NK Defector Testifies to Horrors at Concentration Camp, 3/16/2011.
713 Economics & Human Biology, The biological standard of living in the two Koreas, Vol. 2, Issue 3, December 2004, pp 511-521.
714 Oppression in North Korea, http://jeresearchtopics.blogspot.com/2011/01/oppression-in-north-korea.html.
715 Rummel, R.J. Death by Government, New Brunswick, NJ: Transaction Publishers, 1994.
716 U.S. Committee for Human Rights in North Korea, Failure to Protect, A Call for the U.N. Security Council to Act in North Korea, DLA Piper U.S. LLP, 2006.
717 Matthew Clark, Latin America’s surprise rising economic star: Peru, The Christian Science Monitor, January 5, 2010.
718 Laura Smith-Spark, Portugal: When there’s no light at the end of the tunnel, CNN, December 20, 2011.
719 CIA, The World Factbook, Russia, 2012.
720 Rummel, R.J. Death by Government, New Brunswick, NJ: Transaction Publishers, 1994.
721 Victor A. Kravchenko, I Chose Freedom, Angell Press, 2007.
Chapter 90: A Snapshot of World Socialism, conclusion
—Sweden, U.K., U.S., Venezuela, Vietnam, Zimbabwe—
In bad economic times, nothing is more easily rationalized than a welfare check from the government.
COUNTRY: Sweden (9.1 million)
BELOW POVERTY LINE: Not available
WELFARE COSTS: 28.9 percent of GDP (#2 in world)
NATIONAL DEBT: $1.02 trillion
STORY: This nation of nine million enjoys a degree of prosperity but at a huge personal cost. The county owes an enormous debt of $1.02 trillion (15th highest in the world),722 and its people carry a load of taxes that consumes up to 60 percent of the average income. Add to this the sales tax of 25 percent built into the price of consumer goods (VAT—Value Added Tax), plus 1/5th of the working-age people on welfare, a third of everyone working for the government, and a population growth rate almost flat (.163 percent), and Sweden is headed for trouble.723
Sweden is often celebrated as an example of how socialism can create prosperity. Closer to the truth is the fact that a small, homogeneous society of hard-working, law-abiding and well-educated people can overcome the drags of socialistic controls.
Sweden was an impoverished nation before the 1870s, losing many of its citizens who began migrating to the United States. The country persevered by adopting principles of the free market—protecting property rights, establishing a clean set of laws, and focusing hard on expanding education of the work force. The result was a nation growing richer into the early 1900s. During that time period, world-respected companies were created, such as Volvo, IKEA, Electrolux, Ericsson, and Alfa Laval, among others.724 Up until 1936, Sweden had the world’s highest economic growth rate among the industrialized nations. And then came the socialists.
Between about 1936 to 2008, the effects of the welfare state—larger government, more promises, higher taxes—began to slow Sweden’s growth. By 2008, it had dropped to 18th among 28 industrialized nations.
The cultural differences that helped Sweden do so well were reflected in their successes in other countries. The 4.5 million Swedes in America725 in 2008 earned on average $10,000 more than the average American.726 The poverty rate among American Swedes was about 6.7 percent in 2010, and in Sweden, also about 6.7 percent.727
Starting in the 1990s, Sweden began scaling back its socialist government from the oppressive heavy-handedness of the 1960s. The results were outstanding. School vouchers created competition among educators to improve quality. Health care and pensions became partially private, giving flexibility to people’s choices for when they could retire. The public transportation systems were returned to the private sector, including the rail lines. The center-right government that came to power in 2006 was reelected in 2010 with goals to continue privatization and reduce taxes.
A majority of Swedes still love socialism, but with each move toward economic liberty, the country grows stronger.
COUNTRY: United Kingdom (62.7 million)
BELOW POVERTY LINE: 8.8 million (14 percent)
WELFARE COSTS: 21.8 percent of GDP (#14 in world)
NATIONAL DEBT: $9.8 trillion
STORY: In 2010, Britain worked to reduce its yearly welfare costs of £190 billion ($300 billion). With 1.4 million receiving jobseekers’ allowance, the new plan required that each welfare recipient perform at least 30 hours a week in mandatory work activity for a month. If they didn’t put in the hours, they would risk having their welfare checks stopped for at least 3 months.
By 2011, conditions worsened and Britain planned to cut 490,000 government jobs, cut about 20 percent from government departments, and raise the retirement age to 66 by 2020.
Slashing the disability living allowances and other welfare payments was expected to push 400,000 back to work. Another 200,000 whose housing benefits would be capped were expected to leave their pricey subsidized homes for the suburbs. Housing benefits cost taxpayers more than £21 billion ($33 billion) in 2010.
Said one Labour MP, “It is tantamount to cleansing the poor out of rich areas—a brutal and shocking piece of social engineering.”728 Spoken like a true socialist.
Public uproar to the proposed cuts was huge—demonstrations numbering 250,000 people or more broke out in London and elsewhere, proving that the English love socialism.
COUNTRY: United States (313.2 million)
BELOW POVERTY LINE: 47.3 million (15.1 percent)
WELFARE COSTS: 14.8 percent of GDP (#26 in world)
NATIONAL DEBT: $16 trillion
STORY: America’s welfare system is enormous. It involves six top-level departments that run more than 70 programs. Many recipients of welfare receive funds from several departments at the same time.
Welfare in the U.S. has become an enormous drain. Plan after plan offering huge cash payments to the jobless was forced on the American people in 2008-2011—to the tune of hundreds of billions of borrowed dollars. This reckless abandonment of sound economic principle gave scholars ample opportunity to study the impact of historically unprecedented incentives for pe
ople to remain on the dole. Their findings showed:
Incentive to Find a Job: The average unemployed American spends 41 minutes a day looking for work, compared with 12 minutes for Europeans. Why? Because unemployment insurance runs out quicker in the U.S. than overseas.729 Therefore, an American’s hunt for a job remained more intense.
Procrastination Woes: Efforts to find a job peaked just about when that last unemployment check arrived at week 26. At week 27, after the benefits stopped rolling in, job-search efforts dropped off dramatically. Scholars supposed that people became discouraged, and if no job was found after increased searching in weeks 22-26, what’s the point of trying in week 27 and beyond?730 When benefits were extended to 79 and then 99 weeks, people procrastinated in the same fashion, putting off until the end their best efforts to find a job.
Benefits Destroy Good Incentives: Why did unemployment suddenly rise in 2009 from 7.2 percent to 10.2 percent in just ten months? Because in February of that year, another of those “stimulus bills” of $40 billion in benefits was handed over at no cost to the states. Suddenly, the unemployed could afford to stay unemployed that much longer—hundreds of thousands of them re-enrolled for benefits. Before that rescue package was passed by Congress, the average length people remained unemployed was 10 weeks. After the extension, the average length of unemployment grew to 18.7 weeks.731
Benefits Create Bad Incentives: Unemployment benefits give incentives to stay unemployed. At least 2 percent of the U.S. unemployment figures are blamed on bailouts or extensions of unemployment benefits. Study after study, expert after expert, all said the same: When people are paid not to work, that’s exactly what they’ll do.732 COUNTRY: Venezuela (27.6 million)
BELOW POVERTY LINE: 10.5 million (38 percent)
WELFARE COSTS: Not available
NATIONAL DEBT: $90 billion
The Naked Socialist Page 55