Lessons From Moldova

I’m an anti-progressive zealot – of that there is no doubt. I do agree that government should do a very few things, those things should be clearly defined and never expanded upon without the will of the people approving it. The Founding Fathers believed that as well, that is why the amendment process of the Constitution exists, is difficult and requires approval of the states. They wanted to assure protection against changes brought about by the flavor of the month.
 
In my personal lexicon, there is little difference between progressivism and socialism, Marxism or communism – they are all forms of involuntary collectivism (collectivism isn’t necessarily bad as long as it is limited and voluntary). Sure, there are significant differences in dictionary definitions and adherents of each will split hairs to defend why their version of collectivism is better (or at least less dangerous) than any of the other “ism’s” – but the fact is that all of them end up at the same place over time. Being a “little socialist/Marxist/communist” is like being a “little pregnant” – neither is physically possible.
 
Here’s an example I have used in the past:
 
Let’s say that a group of Progressive Concerned Activists (PCA’s) – who are not necessarily a majority – decide that all cars should have air conditioning because everyone being cool in the summer is a Good Thing. The PCA’s go to Big Government Dudes (BGD) and say, “Air conditioning is good for all, you need to mandate that all car manufacturers must install air-conditioning!” The BGD’s also hate sweaty peeps and therefor think air conditioning is Good Thing, so they craft a law or regulation and send it out to the Car Dudes (CD’s) stating, “Henceforth and forever, thou Car Dudes must install A/C in all cars thou makest!”
 
Well, let’s say that the CD’s know they have folks who live in the Frozen Tundra and buy cars. They know that these FTP’s (Frozen Tundra Peeps) are a significant percentage of their market and the FTP’s do not want, need or desire air conditioning in their vehicles because they live in a cooler climate – and they also know how to roll down the windows – plus, this clientele doesn’t want to spend the extra 1,000 rubles to have an A/C they will never use. Knowing this the CD’s go back to BGD and say, “Hey, BGD Dudes. This ain’t gonna fly with our FTP’s. What gives?”
 
The BGD Dudes say, “No sweat, Car Dudes. Tell you what – you raise your prices a little on all your cars, skim that difference off to us and we’ll use that to give the Frozen Tundra Peeps a 1,000 ruble subsidy out of what we collect from you so they won’t even feel the pinch. In exchange, you will agree to just freeze your prices at 10,000 rubles go ahead and put A/C in all of your vehicles whether folks want it or not. Deal? Problem solved.”
 
So, the Car Dudes agree and for the first year, all things are copesetic. All cars have A/C, the FTP’s are cool (literally and figuratively) and life is good – but in Year 2, things start to change. The CD’s need to use a material called Moldovan Miracle Gas in their A/C units that has special properties and comes from central Moldova. Problem is the Avengers and Ultron just dropped the Moldovan capital city from altitude and in the process, destroyed 75% of the capacity to mine this material. Plus, in the past year, the Concerned Activists have adopted the beliefs of their high priest, The Goreacle, that Moldovan Miracle Gas is causing climate change and should be tightly controlled. The PCA’s were also successful in getting imports of Moldovan Miracle Gas tightly restricted by BGD and now those tight controls and the scarcity of Moldovan Miracle Gas has driven the price from 10 rubles per liter to 510 rubles per liter…and the price will continue to go up until Moldova rebuilds the capacity to produce. It just costs more to get what they got.
 
The Moldovan Miracle Gas Merchants aren’t price gouging, the deposits are smaller, the digging is harder and more dangerous, the processing has to be done by hand instead of with all the equipment that was destroyed. The Moldovan Miracle Gas miners and processers took a look and said, “We got to get paid to go down in that hole and risk our lives so that peeps can keep cool.” So, to get the material, the Moldovan Miracle Gas Merchants ponied up the cash – because if they didn’t, there would be no Moldovan Miracle Gas to sell.
 
Now the Car Dudes are in a squeeze. Their prices are now frozen but their costs have gone up by 500 rubles for Moldovan Miracle Gas – which is exactly equal to the 5% profit they make on a 10,000 ruble vehicle. By law, they can’t raise their prices, so they go back to the BG Dudes and cry, “Oh great and wise BGD Dudes. Look at what the Avengers and Ultron have wrought! We can’t keep doing this because we are going to lose what little money we are making and next year, it will get worse! You know we can’t go out of business because you told us we were too important to the country and TBTF (Too Big To Fail)!”
 
Also, in the interim, the Non-Frozen Tundra Peeps got wise to the 1,000 ruble subsidy and that they were being charged for it and screamed bloody murder to the BGD Dudes about how unfair it is that the FTP’s are getting rubles the Non-FTP’s were paying for – on top of what the Non-FTP’s were paying for A/C in the first place. Civil unrest ensues.
 
Now the BG Dudes have a real problem. They can’t allow the Car Dudes to raise prices or everyone gets mad at them. They can’t keep giving subsidies to the FTP’s without the Non-FTP’s getting mad and they can’t allow the Car Dudes to go out of business. “WTF do we do”, they think. The think so hard, in flyover country the common peeps can hear the BG brain wheels turning. Soon BG Dude brilliance breaks through. “Eureka!” they shout, “We’ll just 1) increase the tax we skim and extend the subsidies to all people, 2) leave the prices frozen but pay the Car Dudes enough money to make up for the cost of Moldovan Miracle Gas.”
 
So, for a while, everybody cools their jets and chills – until Year 3 and the BG Dudes notice that the Treasury is empty and they are having to borrow money to keep paying the subsidies and the profit replacement to the industry. It is then that WTF moment #2 arrives. “We can’t keep this up”, the BG Dudes say. “We can’t raise taxes any more or the Civil will become unresty again. What can’t go on won’t, it will stop and we will be out on our BG Dude asses if the Non-FTP and the FTP’s get aroused.”
 
So, one BG Dude looks at the other BG Dude and says, “You know what, My Good BG Dude Friend. I have a couple of solutions. We can either 1) freeze all prices in the Car Dudes’ suppler base, add more tax to the selling price and pay profit subsidies to all those suppliers the Car Dudes use (if we raise prices across the board, nobody will bitch because equality, right?) or 2) we can just nationalize the entire industry and ignore the Laws of Economics. Whatever leakage we have, we’ll just tax to make it up. Either way, our fellow Best and Brightest BG Dudes will control the entire supply/value chain through subsidies or direct control and the PCA’s are gonna love it!”
 
BG Dude #1 says, “Well, some will call that unconstitutional and socialist/Marxist/communist.”
 
BG Dude #2 answers, “Like that is a bad thing? It’s just Good Government Looking Out For The People.”
 
BG Dude #1, “Cool. Let’s do it!”
 
And that, My Pretties, is how the slide toward a collectivist, centrally planned and controlled state starts and ends.
 
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