Sunday, March 27, 2016

All the Difference in the World

How can Barack Obama be President of the United States?

I continue to ask this question even though he has now been in office for over seven years.

Consider this statement that President Obama made last week to a group of Argentinian youths when he offered this advice on what economic system would work for them in their lives,

"There's little difference between capitalism and communism."

This is a statement coming from the President of the United States?

He went on to say this,

"So often in the past there has been a division between left and right, between capitalists and communists or socialists, and especially in the Americas, that’s been a big debate,” 
“Those are interesting intellectual arguments, but I think for your generation, you should be practical and just choose from what works. You don’t have to worry about whether it really fits into socialist theory or capitalist theory. You should just decide what works,” he added.

Interesting intellectual arguments?

I suggest that President Obama say that to an audience in North Korea, Venezuela or Cuba (where had visited just before he made his way to Argentina). How are those communist system working out for them?

I don't think they are too interested in intellectual arguments. They are struggling daily with shortages of every day items that you and I take for granted.

President Obama may think there is little difference between capitalism and communism, but let's be practical (as he also said) and look at facts.

Take North Korea and South Korea. Same people. Same cultural background. Very different results.

There is no better way to view the stark difference than this satellite image taken by NASA in 2014. That dark area between South Korea and China is North Korea at night.

The difference? Communism vs. Capitalism.

Looking at it in graphic terms comparing Gross Domestic Product it looks like this.

Credit: Edward C. Prescott, Barcelona Graduate School of Economics

A similar situation occurred in West Germany and East Germany when Germany was divided after World War II. Same people. Same culture. The West and East both had GDP per capita numbers that were identical in 1949. By 1990 (at the time of reunification), the capitalist West had GDP per capita that was almost double that of the East.

The difference? Communism vs. Capitalism.

It is no different between Communist China and Taiwan (The Republic of China).

China has made enormous strides since it moved away from its "planned socialist economic" system and moved to what it now calls its "socialist market economic" system beginning in 1978. Is it a coincidence that China's economy took off right after they moved from a strict communist system to a more open, market based system?

Credit: International Business Times

By the way, Taiwan has 23 million people in a country of 13,973 square miles. China has a population of 1.3 billion with 3,705,407 square miles. Despite all the advantages of geographic size, natural resources and population that China has, Taiwan's GDP per capita is 3 times larger today even after China's huge step forward with its economic reforms over the last 30 years. That is a lot of additional wealth. That is the difference between capitalism and communism.

But what's the real difference?

The economic system of governance makes little difference to the leaders of countries like Barack Obama.

After all, they lead a life of luxury no matter what the economic system that is in place.

Consider that President Obama had a second Air Force One at his disposal in Argentina last week so that he and his family could do some sightseeing and hiking in an area of Argentina where the airport could not accommodate his Boeing 747 according to this Washington Times report.

After dancing the tango at a state dinner in Buenos Aires Wednesday night, the president and first lady Michelle Obama took their daughters aboard the government plane colloquially known as “baby” Air Force One Thursday to fly to the scenic town of Bariloche in southern Argentina. It’s a Boeing 757 used when traveling to places where the runway is too short for the primary Air Force One.

The larger Air Force One, a 747-200, was parked alongside the smaller plane at the airport in Buenos Aires, according to pool reporters traveling with the president. It costs about $206,000 per hour to fly the larger plane, which the president is expected to use for the 10-plus-hour flight back to Washington late Thursday night.

You can do math yourself on how much all of this cost for seven hours of sightseeing for the First Family.

To him, it did not make much difference. A few extra millions to enjoy a hike in the country with his family. Priceless!

It is no different for Raul Castro in Cuba, Kim Jong-un in North Korea or Nicolas Maduro in Venezuela. They are all living large.

However, the economic system and the level of freedom in a country makes all the difference in the world to everyday people trying to get by every day. Even if our President does not recognize that fact.

That is why the leader chosen by the people also makes a HUGE difference.

Choose wisely in 2016.

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