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February 10, 2005

Bring Back the Commies!

Who in hell is this ignorant little gobshite, Neil Clark? He’s actually seriously suggesting that under the Socialist Dictatorships of pre-1989 Eastern Europe people were better off than they are now. It’s not just the vileness of the purely monetary comparison that he makes (not being jailed or tortured because you disagree with the powers that be has some sort of value, surely?) but  the fact that  the statistics he uses are complete  bollocks as well.

The statistics speak for themselves. GDP in the former communist states fell between 20% and 40% in the decade after 1989 - an economic contraction which, in the words of Budapest economist Laszlo Andor, "can only be compared to the Great Depression of the 1930s".

Only Poland had managed to return to its 1989 level of output by the end of the 20th century. Hungary, considered by many the most "advanced" economy of the region - and certainly the one most open to foreign investment - had to wait until 2002.

No one with the slightest pretension to economic literacy believes the old statistics. Firstly, they did not even measure GDP, they used other more Marxist measures. I know more about Russia than I do Eastern Europe but the basic methods of measurement were the same. It is an oft told tale that things like tractor output were measured in tonnes.Yes, the weight of output was what counted, not the number, or their value,  their utility, but the weight. I remember being at the British Embassy in Moscow at a talk by my old Professor, Richard Layard (and he’s no right winger, believe me,) when he was working with the Russian Foreign Trade Ministry and trying to actually make sense of the old statistics. He told the story of some workers at the Volga car plant in Moscow. They’d worked out that they could save 5 or 6 kg’s of the car’s weight by slightly changing the way the chassis was made. In a western firm that would be an addition to value, being able to make a car with less raw materials. In the Socialist system this would be a loss of GDP, as tonnage of cars produced would fall. The workers were lucky to keep their jobs for suggesting such a reduction in production.

Secondly, of course, (sticking with the example of cars)  when the West measured the output of a car, we meant a Ford Escort or Fiat Panda or the like. East Germany meant a Trabant, made of papier mache. It is almost impossible to make a valid comparison between the two things.

Everyone got these things wrong, the CIA and literally everyone. No one could actually grasp quite how poor these places were. Gorbachov in a speech in 1986 made the point that the Soviet economy, absent population growth and resource extraction, was the same size as the Tsarist one in 1913. An entire 70 years and a bit of industrial development had produced no increase in value added at all....and as all good economists know, GDP is value added in an economy.

The old figures were purely bullshit, nothing that can be used to make a valid comparison with now at all. We could even look at Germany...at unification Ostmarks were exchanged at 1:1 with D Marks, one of the things that is still causing huge problems in the East. But even responsible economists thought that 2:1 would have been valid.....now we think that 4:1 would have been about right. What this means is that in 1989 we were overvaluing the GDP of East Germany by a whole 100%. This Clark character is simply spouting nonsense.

While a minority have seen real wages rise, for the vast majority in the countries in question, the transition process has witnessed a spectacular fall in living standards. In Hungary, average real wages fell by 24% in the first six years of transition; in the Czech Republic it was only in 1997 that average, real wages reached their 1989 level.

This is further frothing nonsense. As one who was actually there in E Europe at the time (yes, my first visit was in December 1989 to Hungary, doing business in Warsaw by March 1990, full time residence in Moscow from Feb 1991)  they were not cash economies in any normal sense of the word. You could have pockets stuffed with money and not be able to find anything to buy. Time was the thing, not money. Even on a $100 a day (around the average monthly wage) expenses package in Moscow I still had to spend 2 hours a day scrounging up the food required to keep me going. To ignore all of that and just talk about cash incomes is obtuse, whether from ignorance or design.

Inequality has risen sharply. Countries that not so long ago prided themselves on their egalitarianism now challenge Britain at the top of the European income inequality tables.

Jesu Christe, where do they find such people? Is he seriously suggesting that in a place where cash incomes have little meaning we should measure equality by cash incomes? Does he not know of the special stores for special people? Or how the further up the party one got,  the better stores one had access to? Leading, at the top, to never visiting a store at all, having it all delivered to you at home? Gorby never got more than a few hundred dollars a month for being Party General Secretary yet he wore thousand dollar suits. The special housing for the favoured? (I’ve walked past the same Gorby’s place many a time and believe me that didn’t come out of his pay packet.)

Reformers blame problems on the legacy of 40 years of communism. But could it be that the reform process itself is responsible? Far from being a panacea, as claimed by eastern Europe's political elite, following the IMF-EU economic prescription has caused hardship for millions.

Well, there we have it folks, absolute proof that the man’s a complete dingbat. Of course, socialism was great and capitalism is grinding the faces of the poor into the dust. I don’t know whether he is using completely absurd comparisons because he actually believes them, and is therefore hopelessly ignorant, or because he does know them and wants to make a political point in a grossly mendacious manner. Whichever it is the entire argument is complete and total bullshit. Both he and the editor that published this tripe should be ashamed of themselves.

Yes, I have emailed this to him and will inform you of any response.

Udate:
More Neil Clark stuff:
Guardian Archives.
A book review from the New Statesman. Apparently George Soros is not actually a CIA spy but he is in bed with the Bushies.
Pravda: (Yes, really, Pravda):

Milosevic, Prisoner of Conscience. Neil Clark raises a lone voice for a man whose worst crime was to carry on being socialist

I always remember my first visit to Belgrade, in the summer of 1998. As an unreconstructed socialist, completely out of step with the spirit of the age, I had spent most of the Nineties trying to escape, as best I could, to a place where it was still 1948. So imagine my delight when I arrived in Belgrade and found a city that seemed miraculously to have escaped all the horrors of global grunge.
Bookshops, self-service restaurants and state-owned department stores abounded: a walk down the city boulevards reminded one of a British high street in the late Sixties. My delight turned to ecstasy when, on entering a state-owned bookshop, I saw on prominent display in the window a copy of that classic tome Arguments for Socialism by Tony Benn. What a truly wonderful place was Belgrade! Yet here I was, in the capital city of a nation
commonly regarded as the 'pariah' state of Europe and whose leader - a certain Slobodan Milosevic - was routinely dismissed in the western media as Europe's Saddam Hussein.

(Taken from the New Statesman).

Dr Frank comments on a earlier piece.

Well, I think that’s enough for now eh? Unless anyone else has a link to more absurdities from this complete nutso.

The Daily Ablution has more.

February 10, 2005 in Economics | Permalink

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» Communist Living Standards from L'Ombre de l'Olivier
Tim Worstall manages to find yet another gem from the Grauniad. Neil Clark manages to make the astonishing claim that Eastern Europeans were better off under communist rule. Like Tim I do wonder whether Mr Clark ever visited Eastern Europe before the... [Read More]

Tracked on Feb 10, 2005 12:00:22 PM

» A calm and rational report on socialism ... from Bill's Comment Page
... for it said no more than the bare truth. I refer to Tim Worstall's admirable fisking here of an article in today's Guardian by someone called Neil Clark. [Read More]

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» More than one way to be unequal from Room Twelve
Tim Worstall does a great job demolishing a ridiculous article in the Guardian, which argues that the old Soviet economies were better than the capitalist ones that replaced them (written by a journalist from Pravda, not that the Guardian will tell you... [Read More]

Tracked on Feb 10, 2005 11:38:51 PM

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» We'll Always have Pyongyang from Dr. Frank's What's-it
I've had occasion to comment on Neil Clark's unique brand of totalitarian nostalgia before. While I doubt he will ever again meet the standard set by his groundbreakingly perverse "Milosevic, Prisoner of Conscience," I still keep rooting for him. Perha... [Read More]

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» Value Added Idiot from Isaac Schrödinger
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» Stupidity on Parade from The Eleven Day Empire
Blogger Tim Worstall points out, and has some appropriately harsh words for, a piece from the Guardian which pines for... [Read More]

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» Eastern European Economic Statistics Made Fun (Really!) from EconLog
Tim Worstall provides some entertaining insight into the neverland of Communist and post-Communist economic statistics. It's gotten rather trendy to... [Read More]

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» Eastern European Economic Statistics Made Fun (Really!) from EconLog
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Comments

Yes, let us try the whole little idea again. Clearly, Clearly(!) anti-communism is nothing more than a plaything of the Right.

Posted by: Brock | Feb 10, 2005 11:11:04 AM

No-one's stopping him moving to North Korea or Burma, if it's good old Socialism that he hankers after. That's "hanker".

Posted by: dearieme | Feb 10, 2005 12:26:55 PM

Pravda runs some pretty good UFO stories too (literally -- alien abductions, etc.). That's an awesomely insane Milosevic headline.

Posted by: Evan | Feb 10, 2005 1:17:29 PM

This article is astonishing. If it turns out that this Clark fellow is not, in fact, mildly retarded, I say with confidence that those of us who have lived amongst the locals in the Soviet Union for an extended period of time (years) will no doubt accept that this man, based on this article, is a complete fraud. He is an intellectual fraud. He is a journalistic fraud. Shame on the Guardian.

Posted by: dkidd | Feb 10, 2005 2:51:46 PM

meanwhile if you are in the UK government you don't have to worry about traffic jams, having a big house in London and one in the country with lots of staff for entertaining, travelling on public transport (including jets), or getting your children into a good school. In fact all the things the Politburo used to take for granted. (Blunkett, reportedly the biggest abuser of motorcycle outriders, and Cook both showed their true colours in refusing to give up their grace and favour properties when sacked)

Posted by: Mark T | Feb 10, 2005 2:56:34 PM

I seem to remember reading that the output of the Soviet economy, in the last ten years of its existence, was lower in value than the cost of the raw materials it used. In other words, they'd been subtracting value, not adding it.

Quite believable I think.

Tim adds: I know that was true of some factories. The entire economy? Not sure.

Posted by: Andrew Duffin | Feb 10, 2005 3:41:20 PM

State Owned Department Stores????

That thought alone should be enough to put anyone off the idea of Socialism.

Posted by: EU Serf | Feb 11, 2005 7:28:19 AM

Try today's New Statesman
http://www.newstatesman.com/200502140024

Now he informs us that due to propoerity we have lost the ability to love. Therefore economic success , by definition means personal misery.

Posted by: Elaib | Feb 11, 2005 9:02:55 AM

On the other hand, Mark T, the UK does NOT make the claim to being a strictly egalitarian society, as the old Soviet Block did!

Posted by: mamapajamas | Feb 12, 2005 12:12:27 AM

I (heart) Clark!

Posted by: cb | Feb 12, 2005 2:12:12 AM

Just more proof of the incompetence of the Left when it comes to economics ...


RWR


Posted by: RightWingRocker | Feb 12, 2005 2:48:13 AM

Its funny. I was in GDR during late spring of '89 and had my first glimpse of socialism. Whew. The meat section of 'grocery' store was an open freezer with unwrapped frozen chunks of beef I wouldn't feed to my dog. I think the exchange rate was closer to 20:1. The light bulbs hung loose from the ceiling. 'Salad' was sour pickled vegetable matter. Every other person on the street was a green clad cop or soldier (0% unemployment). You could buy the collected works of lenin for about $1 (that's a lot of paper people).

So yeah - life was good.

I lived in Russia from 92-98. Basically the same as GDR but much worse (the germans were efficient communists) There is definitely truth in that the collapse of Soviet command economy led to catastrophic drop in living standards for vast majority. Many older folks remembered the good old days when 1 rouble meant something.

I wouldn't be surprised if that fellow could find some statistics that showed the average person was worse off now. But Russia is still in a transition that could take another generation - if it ever really and truly happens. They seem to be stuck in a robber baron mafia thug limbo right now.

One big point this neil fellow misses, is that the soviet system collapsed because it sucked. If it had been a good system it would not have collapsed into the rubbish heap I lived in for 6 years. Its pointless to wonder what things would be like now if the USSR still existed. Things would probably be much worse.

Posted by: Charles | Feb 12, 2005 5:18:22 AM

Yeah well, that's the sort of condescending sh*te most East-Europeans have to take from the Euro-Atlantic Socialists & Co. "You were too dumb to see the light, too dumb to properly establish communism, too dumb to understand that freedom's not good for you, so dumb that you believed your lying eyes instead of chic, self-righteous socialist propaganda". And on and on, ad nauseam.
Good to see, though, that there are plenty of clearheaded, intelligent people on the other side of the former Iron Courtain, that don't buy this kind of discourse and remember things AS THEY REALLY WERE - people to which I adress my warm salutes from the former Socialist Republic of Romania :)

Posted by: valachus | Feb 12, 2005 3:13:17 PM

Most ordinary people in the West JUST DON"T GET IT. They have no point of reference.

In the West, we walk into ANY mom-&-pop convenience store, chain convenience or supermarket... walk to the laundry soap section, and we look among DOZENS of brands, sizes, types... that's just the way the world is, isn't it?

NO. Not in 'State-owned department stores' it ain't!

IF you have permission to shop there and IF you have enough money and IF you stand in line long enough to get in, THEN you go to the soap section and choose: Brick Laundry Soap OR Powder.

That's it. No fancy packing, just a choice of brick or powder. When its in-stock.

See a difference here?

Posted by: Carridine | Feb 13, 2005 3:27:44 AM

In 1980 I visited East Berlin. The official exchange rate was 1:1 with the West German mark. The standard rate from taxi drivers or private parties was 5:1 or 6:1 on the East German side. It was new years eve. We walked all over town, and the only restaurants open were the ones reserved for Russians. Cafe Sophia was one. The prices were resonable, but the only Germans there were the help. We waited for a half hour in line and then got a bottle of Bulgarian wine that could have doubled for paint remover. Certainly price was no indicator of its performance. People were there to check your ticket to see what kind of party function you had. Sports fans, that was East Berlin: the show place. By contrast every thing in West Berlin was booming, available, and high priced. If a East Berliner managed to get there, their money was worth nothing at all, but mostly they got shot trying to escape the worker's paradise.

Posted by: Don Meaker | Feb 13, 2005 5:03:11 AM

Hungary is in Central Europe, not Eastern Europe. If Clark isn't able to get the most basic facts straight, why should we believe anything else he has to say?

Posted by: Rossz | Feb 13, 2005 9:26:31 PM

I bet he has posters of Guy Burgess and Kim Philby next to his Viet Cong flag to help him masturbate himself to sleep every night!

Posted by: Dumbo_the_Elephant | Feb 14, 2005 3:39:49 AM

Tim, you COMPLETELY missed the point of this article. Are you denying that the transition to capitalism has gone badly in much of Eastern Europe? Nobody wants a return to the dark days of Communism. The Guardian bloke isn't saying that. He's drawing our attention to the problems in some Eastern European countries - problems which, if ignored, could well lead to an unwanted resurgence of Communism in these countries.

Posted by: Leo Kearse | Feb 15, 2005 2:43:05 PM

West Germany's 1:1 DM/OM parity was a bad mistake, and its sudden absorption of the DDR was hasty over-enthusiasm that cost dearly. The 4:1 idea mentioned earlier might have been right. And for cripe's sake, why didn't Kohl hold the icky thing at arm's length for 5-10 years, call it Prussia or something, help it recover, and THEN annex it? Look at Germany now!

Posted by: peter fibb | Mar 16, 2005 1:31:30 AM