austin-murphy-the-triumph-of-evil

284 THE TRIUMPH OF EVIL
achieved through heavy investment as opposed to the efficiency of central planning).
However, Bergson (1992) later admitted that his results may have been biased by his
overestimate (and perhaps very large overestimate) of the value of the Eastern European
capital stock (among other things). rn particular, he made no adjustment for the much
higher cost of technology and high-tech capital goods in Eastern Europe resulting from
the technological embargo (Parrott, 1985), and he used gross capital stocks that do not
take into consideration the higher level of depreciation that exists on Eastern European
capital due to their tendency to keep it in service longer (instead of depreciating the
capital over time, he increased its value with price indexes). He also fa iled to adj ust for
differences in the quality of agricultural land and weather factors in all countries except
the Soviet Union, he excluded services such as education and health from the analysis
although socialist countries may be more efficient in these areas (which are priorities
in many socialist countries), and he attempted to arbitrarily factor a portion of government
administration and capital out of the model although he admits the importance of
government infrastructure that communist systems are more efficient in administering
(Campbell, 1974). rn addition, by effectively measuring output per employed worker,
he fa iled to adjust for overall system efficiencies in communist countries related to a
higher level of employment that is made possible by the existence of guaranteed jobs
(which greatly reduce or eliminate unemployment) and extensive childcare netWorks
(whose economies of scale may permit more women to be more productively employed
as opposed to individually having to take care of children). Moreover, Bergson (1987)
made no adjustment for the effect on labor effort of differences in worker protection,
environment, and satisfaction, which may be higher in communist countries compared
to other nations at similar levels of development due to the communists' pro-worket
philosophy (Adler, 1980). For instance, Bergson ( 1987) did find that an adj ustment for
the quality of labor related to the number of hours worked per worker increased the
estimate of the product ivity of communist labor.
16. Although corruption (including tax evasion and bribery) does exist in communist
systems, communist governments frequently engage in widespread efforts to ro_o1
it out (through imprisonment and expelling corrupt bureaucrats out of the commumst
party), as in the Soviet Union under Stalin (Getty, 1985) and in China under . M�o
(Gong, 1994). Corruption does tend to rise when communist countries initiate capitalis­
tic market reforms, as in China in the late 1970s (Kwong, 1997) and in the Soviet u . nion
in the late 1980s (Marcy, 1990). lt should also be mentioned that corruption also ex 1 s � ed
before communism, especially in China. which had a substantial amount of corruption
prior to the communist seizure of power in 1949 (Gong, 1994).
17. Although the Soviet Union spent a higher percent of GNP on defense than the
USA, the absolute dollar amount was substantially less. It is therefore likely that the
USA could also exist on far lower defense expenditures if it maintained a more defen­
sive foreign policy like the Soviet Union did (especially since there would be no other
world power to threaten it), thereby further lowering the tax bite. Moreover, given the
USA's enormous nuclear arsenal and overwhelming military power, it is very unlikely
that there would be any foreign invasions to prompt the type of destructive civil war
which occurred after the communist revolution in Russia in 1917 and which reduced
national income there by about half. Instead, if the USA were to choose a communist
path, there would be no more USA economic, military, political, and subversive (i.e.,
NOTES 285
CIA) pressure for the rest of the world to remain capitalist (Blum, 1995), and it is
quile possible that a large number of other countries would tum toward a communist
system.
1 8. For example, the Soviet Union typically spent only I% of GNP on government
ldministration vs. 3% for the USA (Campbell, 1974). rt should also be noted that the
lack of unemployment in communist countries would eliminate the taxes that have to
be paid under USA capitalism for the unemployed. Further evidence on these issues
�provided by communist China. whose government spending (including not only for
ldministration but also for defense and various government services) represents only
16% of economic output. and the overall tax burden there is one of the lowest in the
world (Forney, 2000).
19. The nontrivial risk of falling into poverty can be illustrated by the fact that there
tnAmericans who go quickly from very good-payingjobs (such as S 125,000 annually)
to being unemployed and homeless, and by the fact that even working people earning
over $30,000 per year often live in poverty and sometimes go homeless because land­
kxds require a good credit history as well as high current income to ensure payment of
rmt (Wuhington Post. 2000). It should be noted that the latter figure is the approximate
median income for USA fam ilies (Phillips, 2000).
CHAPTER 2
I. While West Germany did eventually pay out DM72 billion for war-related crimes
lid debts, including for some pre-war debts of Nazi Germany that were largely forgiven
by the rich West (Faber, 1990), and while the united Germany continues to make some
WW-rellteci payments (Winestock, 2000), the amounts were spread over very many
l"** (Merkel and Wahl, 1991) and therefore amounted to only a small portion of West
�GNP each year. Assuming an average payment of DM2 billion per year begin
DII&m 1953 were invested at 18% instead of paid out for war-related crimes and debts,
11111
-.ning the earnings (based on the same 18% interest rate) from the capital accu­
� after 36 years were paid out in 1989 (and each year thereafter), West German
IIICOme per capita wou ld have been only about 1/3 higher. Comparing this figure to the
. :.Ciplta East German figures estimated to have existed without reparations indicates
Inti German per capita income in 1989 to still have been far higher at 5- 10 times the
of West German per capita income. In order to provide just compensation here, it
� be necessary for the West Germans to pay the East Germans an lllmJil amount
ClCecds their own current GNP. For the very reason that an annual payment in
:- 0� GNP would not be possible, it would be necessary for the West Germans
. fllllllilh
.• more efficient economic system (like communism) so that they could
::-e therr GNP sufficiently to be able to afford fair compensation to the East Ger-
� lnllltion first �red in East Germany after the currency uni� that replaced the
Gennan �arlc With the West German Mark in 1990. Accordtng to the German
�
in 1991btnk. pnces were 14% higher in eastern Germany with the West Ge� n Mark
(Nata than they were under the old system with the old East German Mark m 1990
tifold . Da,tsch_land, 1991 ), and these figures do not even include the effect of the mulian...
..� 10 rents that occurred subsequently (and other factors that are analyzed
�� 4 1o more detail).