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Right Politics

This type of politics is quite difficult to summarize because there are so many different types of “right”. Some are so right that they are actually left.

For example, Hitler’s National Socialism was actually… well… economic socialism. All enterprises (with the exception of the ultra-rich) were under state control. Towards the beginning of WWII, there was total freeze of prices and wages coupled with rampant inflation. As such, these economic policies resembled the Social/Left Politics we described before. We won’t repeat them again.

Mussolini’s fascism in Italy was also more-or-less socialist, economically speaking. We won’t repeat this one either.

To actually understand one type of true Right Politics, we need to go back in time to the old Conservative Parties of the late 1800’s and early 1900’s. These parties believed that people were too stupid to vote and that only an elite group of “selected captains of industry” and “enlighted” politicians  had the smarts that were needed to decide what was good for the rest. As such, their motto was “we first”. This is what is known as an oligarchy. The government of the few.  In economic terms, they believed that if certain industries did well, the country would automatically do well too. Therefore, it was worth to support these industries from the government to everybody’s else expenses.  We will name this type of Right Politics as Classic Conservative.

The other type of true Right Politics is a haphazard combination of dictators, kings and “strong man” who govern with an iron fist. Their economic policies are an unrecognizable mix of unbridled greed, privileges, economic recipes imposed by the International Monetary Fund or the World Bank and social policies destined to palliate public rage. Beyond their desire to remain in power and collect as much cash as possible, they don’t really have a coherent economic theory, policy or even direction. What they do best is to borrow and spend on themselves and their friends. If there is any objective, this is it.

Of course, not all such “people of power” are that clueless and corrupt. Some actually have some degree of vision, being this vision always “nationalistic” (whatever that may mean). Some even manage to stumble upon less idiotic economic policies than the ones of their own. For example, in Chile, the dictator Allende managed to stumble upon the Chicago School of Economics . He implemented their policies and as a consequence of this, Chile’s economy did not crash and burn as it was destined with Allende’s economic nonsense.  In contrast, in Argentina, with the military “Junta” and their blind adoption of IMF and WB mindless economic policies, they manage to utterly destroy even the tiniest vestige of Argentinian industry while racking-up the biggest debt the country ever had since…ever!

 If we take a look at the world, we will find many such people in positions of power, their economic “policies” varying immensely but still maintaining the most negative characteristics described above. We will name this type of Right Politics as Crackpot Politics.

 

Right-Politics Intended Effect

First, let’s take a look at the policies of Classic Conservatives:

 

Right Politics Intended Effects

 

They understood that the vast majority of the people will become somewhat poorer while the oligarchy will become much richer. This is reflected by the distribution having shifted slightly to the left (the maximum moving from 103 to 99) and the apparition of a new elite rich class in the area of 127 through 129.  The bar graph also reflects the same, showing poor people still poor, middle class becoming poorer while the rich class becoming richer.

Now, let’s take a look at the policies of Crackpot Politics:

 

Crackpot Policies

 

They don’t really care one way or another for the poor or the middle class, so long as “they” become rich. This is reflected by the spike that occurred to the right of the distribution (representing them) and the increase in Average Net Income After Taxes that can be seen in the Bar Graph.

 

Right-Politics Unintended Consequences

Again, let’s take a look at the economic reality of Classic Conservatives:

 

Right Politics Unintended Consequences 1

 

The distribution shifted to the left, indicating that poor people became poorer and they also increased their numbers when the middle class became poorer and some of them shifted into being poor. However, it is to be noted that the shape of the distribution itself did not change. In other words, the ratio of people in one extreme of the curve to the other did not change. This means that although we have more poor people, there is no major tendency to be poor, just a shift. In other words, the effort required to move from poor to middle class remains roughly the same.

At the same time, rich people (the oligarchy) became richer as it can be seen in the shift to the right of the small spike representing them in the distribution.

These effects are also reflected in the Bar Graph.

Now, let’s take a look at the economic reality of Crackpot Politics:

 

Right Politics Unintended Consequences 2

 

It is clear that they succeeded in making themselves rich. However, if we take a look at the distribution curve, we noticed that it not only shifted drastically to the left, but that it also changed shape. It went from Gaussian to Poisson-like. What this means is not only the vast majority of the middle class is now poor, but that the concentration of poor people to middle class has increased dramatically. This means that in such economic conditions, the effort required to move from poor to middle class is gigantic. These people not only destroyed the economy of a country but they also condemned most of the population to perpetual poverty!

Is there any wonder then, that all dictators, kings and generally “strong man” are so overwhelmingly hated throughout the world?

Note: please see the Glossary if you are unfamiliar with certain words.

Continue to Austrian Economics In Pictures - Part 5

 

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