Topic category:  Other/General

I love listening to people of the Left -- people like Bernie Sanders, Hillary Clinton, Bill de Blasio, and their international counterparts like Chavez and Maduro of Venezuela, Rousseff and da Silva of Brazil, the Castros of Cuba, or many others -- as they talk about the terrible income inequality under capitalism and the perfect justice and fairness soon to be achieved through government-enforced redistribution programs (run by them, of course). Many of these people march under the banner of "socialism," while others use different labels ranging from Communism for the Castros, to Chavismo for the Venezuelans, to the Democratic Party for Clinton. I'll use the catch-all term of "progressivism" for the overall concept of government-enforced redistribution as the appropriate route to justice and fairness among people.

A few days ago, in a post titled "Progressive Policies Increase Income Inequality," I noted what is to me the obvious fact that implementation of progressive policies, on whatever scale, increases rather than decreases income inequality as it is measured by the commonly-used statistics. Today, I thought I'd take a closer look at how those policies affect the people at the very top and at the very bottom of the societies in question.

First, let's consider a few of the international examples. Venezuela is the country where Hugo Chavez and his successor Nicolas Maduro have used a combination of attacks on the rich and redistributionist programs to keep themselves in power for going on two decades. Many companies have been nationalized; products like gasoline, food, and common household products are steeply subsidized; and for several years the government has pursued a blowout program of construction of subsidized public housing. Then, late last summer, it emerged that Chavez's daughter Maria had some $4.2 billion in bank accounts in the United States and Andorra. How did she happen to come into that kind of money? In a considerable amount of looking, I haven't been able to find any clue. Nor have I seen any suggestion of any kind of government investigation of possible wrongdoing. Hey, maybe she just found it in the back yard! And anyway, Maria hadn't amassed anywhere near the fortune of Chavez's former treasury secretary Alejandro Andrade:

Alejandro Andrade, who served as Venezuela’s treasury minister from 2007 to 2010 and was reportedly a close associate of Chavez, was discovered to have $11.2billion in his name sitting in HSBC accounts in Switzerland. . . .

But at least the lives of those at the bottom have been improved, right? It certainly doesn't appear that way from any evidence that I can find. Of course, all of the deeply subsidized products have disappeared from store shelves. GDP is shrinking at a rapid rate. The Economist calls the situation a "mounting economic crisis." Oh, and did I mention that the government has said that it will turn off the electricity for all of next week and shut the whole country down. They blame a drought, and a resulting lack of water for the hydroelectric system. But don't they have the world's largest oil reserves? Hey, this is socialism! Anyway, do you think that despite the crisis Mr. Maduro might somehow have operating electricity in his palace next week?

Cuba? Don't know if you caught the 2014 memoir by former Castro security guard Juan Reinaldo Sanchez titled "The Hidden Life of Fidel Castro." In case you missed it, here's a summary from Britain's Daily Mail. Palaces, yachts, servants by the dozens. Lots of details in the article, but the long headline says all you need to know:

Castro the commie hypocrite who lives like a billionaire: He's posed as a man of the people. But a new book reveals Cuba's leader has led a life of pampered hedonism and a fortune as big as the Queen's

And the ordinary people? Of course the Cubans don't publish any usable statistics. But maybe you can get an idea of how they live from the ration system. From the Guardian (no enemies of the Castros) in April 2015:

Every Cuban family registers with a local supply store, where they can use a libreta or ration book. This typically provides about 10kg (22lb) of rice, 6kg of white sugar, 2kg of brown sugar, 250 millilitres (1 cup) of cooking oil, five eggs and a packet of coffee per person per month, along with 2kg of meat (usually chicken) every 10 days, a bun every day and a bag of salt every three months. Milk is provided for pregnant women and children under seven years of age. The basic libreta products are guaranteed, but they are not enough – so people often have to travel to several places on several different days to make up the shortfall.

Well, if you like milk, I certainly hope you are pregnant!

In Brazil the leftist Workers Party came to power in 2002, and has been much more moderate in its redistributionist ambitions than its counterparts in Venezuela and Cuba. But somehow, once taking property from some and passing it around to others is legitimized, it's just not possible for the humans at the top of the redistributionist game to resist taking a big cut for themselves. And thus it seems that for many years the top pols in Brazil have been conspiring with the top execs at the state-owned oil company Petrobras to overpay for major contracts and have the excess passed back as kickbacks and divided up among the favored. From Time magazine yesterday:

Prosecutors believe businesses paid almost $3 billion in bribes to state officials for rigged, overpriced construction contracts; those officials then funneled much of the cash to political parties, including the PT, to fund election campaigns.

Impeachment proceedings have recently begun against current President Dilma Rousseff. Some million or more people took part in protest demonstrations on Tuesday. And just in the past couple of weeks the investigation has turned to former President and Rousseff mentor "Lula" da Silva. Da Silva claims he didn't take any "cash bribes"; but then there's that three-story beach house, and the millions to finance the political campaigns.

Fortunately, here in the U.S. we are not nearly so coarse and crude as those Latin American caudillos. Here we have the Yale Law School to teach budding redistributionist pols how to cash in on their government positions and get personally rich in a much more sophisticated and high-minded way. And don't forget, tax deductible! I'm referring, of course, to the Clinton Foundation. CNN here calculates Bill and Hill's "speaking fees" since 2001 at $153 million. Now, on how much of that do you think they paid ordinary income taxes? CNN doesn't tell us, but then why have a Clinton Foundation if it's not going to take a good chunk of the fees as tax deductible "contributions" and then fund the lifestyle of private jets and top hotels as part of the "charitable works"?

Bill de Blasio? Remember that he was Hillary's campaign manager when she first ran for the Senate in 2000 -- he learned at the feet of the mistress! He literally hadn't been mayor for a week before he set up his own not-for-profit called Campaign for One New York and started raising slush fund money from nice guys like the teachers unions in multi-hundred-thousand dollar chunks. $5 million later, today's news says that he is shutting down the "charity." He doesn't want the "ethical distractions" in connection with his upcoming campaign for re-election. Really! No word though on whether he's giving any of the money back.

Well, at least our U.S. progressives take care of those at the bottom. Actually, it depends on what you mean by "take care." They can "take care" to double or triple your price of electricity and gasoline through the war on fossil fuels (in which all of Clinton, Sanders, and de Blasio are participants). Or they can "take care" to "put a lot of coal miners and coal companies out of business," as Hillary put it a couple of days ago. Or they can "take care" to make the very least-skilled workers unemployable through a big hike in the minimum wage.

Well, you say, at least Bernie Sanders has not used his government offices to personally enrich himself. My answer is that he hasn't held executive office yet. I don't believe anyone is immune to the temptation to redistribute to himself once he gets control of the redistribution game. Maybe Bernie would be the exception. Fortunately, we'll probably never get a chance to find out.

Francis Menton
Manhattan Contrarian (Editor, Author, Publisher)

Biography - Francis Menton

Francis Menton is a retired partner in the New York law firm of Willkie Farr & Gallagher LLP. He lives in a West Village neighborhood in Manhattan. For more, go to Francis Menton.