Belarus ("White Russia") may be better than you think


Belarus and Poland

Some Russian friends of mine who still have relatives throughout the former Soviet Empire and who live well there speak favorably of Belrarus.  And I have myself noted some desirable aspects of Belarus in previous postings. That all becomes of particular interest at the moment as the world is noting protests in Belarus against dubious elections maintaining despot Alexander Lukashenko in power

So it is interesting that Economic historian Martin Hutchinson (below) says Belarus is much more capitalistic than either California or China.

Matin makes two points that many would jib at. He likes it that  Belarus has no lockdowns against the coronavirus.  That however is pretty close to becoming the informed medical opinion now

He likes that Belarus has much higher interest rates than Western countries.  That may seem perverse but history is on the side of Belarus.  Past great capitalistic flourishings worldwide have been accompanied by similar rates.  And present historically low rates in the West have mainly sufficed to create the punishingy high real estate prices we see in the USA and elsewhere.

Something he does not note that many people might like is that the roads are good but traffic jams are few. Belarus has an extremely good and comprehensive public transport system. So people get more exercise by walking and can do so without wading through vehicular pollution. It's a Greenie dream in action. Greenies would also like that over 40% of its 207,600 square kilometres (80,200 sq mi) is forested.

Many conservatives would like that Belarus is also the only country in Europe officially using the death penalty.  It is a Christian country.

Climate skeptics would like that most of its electricity is thermal generated and that they have a nuclear power station under construction.

The population of Belarus is almost wholly white so there is no disgruntled black minority to go on city-wrecking sprees, something of interest in the current American context.

See my previous comments on Belarus here


The world economy has come a very long way from the small-government, unregulated free-market model so celebrated by Adam Smith and other classical economists. Today, even in countries that claim to be committed to capitalism, taxes, monetary policy, regulations and state spending have produced huge distortions. To illustrate how huge, I thought I would compare the economic models of three jurisdictions: California, the high-tech Mecca supposedly a beacon of freedom, China, the state-controlled behemoth that claims to have a new and better economic model, and the universally despised “Communist” dictatorship of Belarus.

It must be very difficult to be a true capitalist in California. Yes, you have a support system of a myriad of other capitalists around you, and if you start with a remotely plausible business plan venture capitalists will throw money at you, but actually running a business, as distinct from merely financing losses, is extremely difficult. Real estate costs, both corporate and personal are extremely high if you are in the San Francisco Bay area, so you begin with a huge cost disadvantage against those of your competitors who are located somewhere else. The most important cost disadvantage, of course, is that you must pay people far more money than they may be worth so they can live in the Bay area.

High accommodation and staff costs are a natural economic disadvantage, but California also abounds in unnatural ones, entirely contrary to free market principles. For a start, the state has the highest tax rates in the United States, with a top income tax rate of 13% on top of the Federal 37% plus a Medicare tax of a maximum 3.8%, for a total of 53.8% marginal income tax rate. The state is in the process of voting to increasing the state income tax further to 16%, which would give a top marginal tax rate of 56.8%, a level at which it becomes barely worth working at all (I speak from experience of the high British marginal rates in the 1970s and 1980s). With the state keeping more than half its richest citizens’ marginal earnings, California’s claim to be a capitalist economy is already quite weak.

It becomes weaker still, when you realize that the state is also likely to introduce a wealth tax at 0.4% per annum, payable on all wealth above $30 million. Now you may think that $30 million is “riches beyond the dreams of avarice” but you are out of date, at least if you live around San Francisco. $30 million just about buys you an upper-middle-class house in that area, and then you must pay the state property taxes on the damn thing. In any normal jurisdiction, $30 million would be enough to retire on in considerable luxury, but not around San Francisco. Moreover, 0.4% per annum may not sound like much, but I would remind you that today 10-year U.S. Treasuries yield only 0.67%. That leaves you only 0.39% after Federal income tax (oh bliss, no state income tax) so your California wealth tax is robbing you of 105% of your remaining income – even before you account for inflation’s effect on your capital. Yes, you could put your money in riskier, higher-yielding assets, but those Argentine bonds and Neiman Marcus private equity investments did not turn out so well, did they?

Then there is regulation. Depending on your business, you will have already found out that U.S. regulation, when combined with that of an “activist” state like California, is among the most user-unfriendly in the world. German, British or Japanese regulators are well-organized pussycats by comparison. The recent Uber decision means you cannot employ contractors, they have to be full-time employees, with all the costs involved. And heaven forfend you should be in any business with global warming implications – if you’re an offshore oil driller you’re out of luck, and have been since 1969 in terms of getting new leases on state-controlled waters. And it’s not just the environmental regulations imposed on you, but the effect on you of those imposed on others; California regulations on electric utilities are so severe that the main utility has filed for bankruptcy, and many areas have been subject to brownouts in a recent heat-wave, because the heat-wave happened on a calm night, thus putting all the state’s solar and wind electric capacity out of action. Now I grant you, the early industrialists did not have electricity at all, but if you think California will let you set up a good healthy coal-powered steam engine to solve your energy problem, you’re dreaming!

Then there are the social restrictions. In California, you no longer have free speech, at least not if anyone records you; you will lose your job for even the mildest hate speech – and if you’re self-employed, the Twitterati will still find a way to make your life a misery. You may stay out of prison, but will still destroy years of your life and millions of your dollars in court cases.

Like California, China has restrictions on free speech – you cannot criticize the government, if you want to stay out of jail (in California, you can criticize the government, but there are innumerable other things you cannot say, and it is not always clear in advance what they are). China also has fairly high taxes – a top marginal rate of 45% — though not as high as California.

The main difference is that in China, you must include a committee of Party members in your company, who have the right to second-guess all your business decisions. In California, you do not yet have to do this, but the mandatory “diversity officers” and such are getting ever closer to this level of intrusiveness. Still, there are advantages to China – for one thing, you don’t need to worry about environmental regulation – it’s pretty clear most Chinese companies don’t, as they emit vast quantities of CFCs, for example, a pollutant removed from Western supply chains two decades ago.

In Belarus, you don’t have to employ Party members within your company, though you certainly have to clear management decisions with your local Party boss – who may come expensive. As in China or California, you have no rights of free speech, so there is only a modest differential between the three locations in that respect. Of course, Belarus and China are notoriously not democracies (Belarus has rigged elections, China doesn’t bother having them at all) but then if you’re a Republican living round San Francisco you might as well not have democracy either – none of your local legislators will be dedicated to the things you believe in.

On Covid-19, China has almost certainly falsified its statistics, and given it the opportunity to spread to humanity in the first place, while California has imposed all kinds of niggling restrictions on individual freedoms. On the other hand, Belarus’ president Alexander Lukashenko has suffered from the virus, played ice hockey throughout its prevalence, and recommends sauna baths and vodka as a cure. Advantage: Belarus, I fancy.

Tax-wise Belarus (like its neighbor Russia) is a truly capitalist state; the country has a flat income tax rate of 12%, and even offers a discount to 9% for workers in the tech sector. This is much more important than people think. Both Belarus and Russia are dominated by a few very large companies, mostly in natural resources, with heavy state involvement and part ownership by cronies of the long-term President. They are not very attractive as investments, even where you could invest in them.

However, below the radar screen, where the state is uninvolved beyond local payoffs, there are a large number of small entrepreneurial companies that do well because of the low corporate tax rate (18%) and low individual tax rates on the entrepreneurs who created them. Belarus being deeply unfashionable, there are no Western venture capital companies crawling over the country. What’s more, monetary conditions are more favorable for the creation of truly productive small companies than in either California or China; inflation was 5.2% in the last 12 months and the National Bank of Belarus’ refinancing rate is 7.75% — healthy levels and relationships between the two that we have not seen in the U.S. since the early 1990s.

Since Belarus has a highly educated workforce, especially in technical areas, and very low costs indeed – far below those of even China, let alone California – it is potentially a highly attractive place to start a business, if you can tolerate the local political system and its corruption. Oh, and the power grid works, at least better than California’s.

Belarus is a nasty dictatorship. But so is China; on balance, rather nastier (I prefer rigged elections to none at all). Even California these days is hardly the land of the free that it used to be. However, in terms of economic climate for a local business there is really no comparison. None of the three countries is a truly attractive free-market environment, but by far the closest to that ideal is Belarus.

SOURCE 

***************************************

More evidence that shutdowns are useless

Governments around the world have responded to COVID-19 with more or less harsh (but, of course, never complete) shutdowns of economic and social activity. The costs of these shutdowns have been enormous, obvious and undeniable, while the alleged benefits have been hypothetical and speculative. As experience with the virus accumulates, there is, I think, a growing consensus that the shutdowns have been worthless, or close to worthless.

Dr. Gilbert Berdine, an associate professor of medicine at Texas Tech University’s Health Sciences Center, assembles some revealing information in the form of this chart, which compares daily COVID deaths per million of population in Sweden, New York, Illinois and Texas. First, a note of caution. I don’t know, and I am not sure whether anyone knows, whether different countries (or even states) count “COVID deaths” in the same way. If American states follow CDC guidance, a “COVID death” does not mean that COVID was the cause of death. It means that a person 1) died, and 2) had COVID. Thus, gunshot victims have been counted as COVID deaths. Do European countries follow this extremely misleading practice, and do states follow it uniformly? I don’t know. With that caveat, here is the chart.



Dr. Berdine, writing for the Mises Institute, explains:

Sweden (blue dots) has served as a control group to compare policies intended to decrease deaths from covid-19. Sweden has been unfairly criticized for its policy despite having an outcome more favorable than places with authoritarian lockdown policies. Sweden did not close its schools. Other than stopping gatherings of more than fifty people, the Swedish government left decisions of closing businesses, using masks, and social distancing to the Swedish people.

Hardly anyone has been wearing masks in the Scandinavian countries, according to news reports.

Mortality attributed to covid-19 hit a peak value of 11.38 deaths per day per million population on April 8, 2020. … For all practical purposes, the covid-19 epidemic is over in Sweden. Almost certainly herd immunity has been achieved in Sweden irrespective of any antibody test results. … Whether covid-19 will reappear this next fall or winter remains to be seen.

Sweden has been abused internationally, much as South Dakota has been abused in the U.S., but the outcome in Sweden has been good, and in South Dakota, excellent. How about the American states shown in the chart?

New York (brown dots) has been a catastrophe. On March 20, 2020, a full lockdown was implemented. Nonessential businesses were ordered to close. Workers in nonessential businesses were ordered to work only from home. Pharmacies, grocery stores, liquor stores, and wine stores were deemed to be essential and allowed to remain open. Restaurants and bars could only deliver to homes. In addition to the lockdown, nursing homes were ordered on March 25, 2020, to accept patients positive for the covid-19 virus in transfer from hospitals. … By April 7, 2020, within three weeks of the nursing home order, a daily mortality of over fifty deaths per day per million population had been reached. This daily mortality rate was almost five times the peak rate observed in Sweden, where no lockdown was implemented.

The New York data clearly show that interactions among young and healthy people have a much different risk than interactions between the young and elderly and interactions among the elderly. By facilitating the transmission of the virus from hospitals to nursing homes, the rate of spread within the elderly population was maximized, and any possible benefit from lockdown of the young and healthy population was rendered moot. … The decline of deaths from the peak levels in New York, with its harsh lockdown, has followed roughly the same time course as what has been observed in Sweden without any lockdown. It is unclear whether the lockdown interfered with herd immunity or not. This will not be known until after the economy and schools are completely reopened for at least a month.

What is the conclusion?

The data suggest that lockdowns have not prevented any deaths from covid-19. At best, lockdowns have deferred death for a short time, but they cannot possibly be continued for the long term. It seems likely that one will not have to even compare economic deprivation with loss of life, as the final death toll following authoritarian lockdowns will most likely exceed the deaths from letting people choose how to manage their own risk. After taking the unprecedented economic depression into account, history will likely judge these lockdowns to be the greatest policy error of this generation.

That is what I think, too.

SOURCE 

********************************

For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH,  POLITICAL CORRECTNESS WATCH, AUSTRALIAN POLITICS, and Paralipomena (Occasionally updated), A Coral reef compendium and an IQ compendium. (Both updated as news items come in).  GUN WATCH is now mainly put together by Dean Weingarten. I also put up occasional updates on my Personal blog and each day I gather together my most substantial current writings on THE PSYCHOLOGIST.

Email me  here (Hotmail address). My Home Pages are here (Academic) or  here  (Personal).  My annual picture page is here.  Home page supplement

**************************