Lessons fr from Europe & Asia (and elsewhere) Conference on Security of Property Rights 20.November.2018 Johannesburg Dr. Tom G. Palmer Atlas Network Cato Institute Tom.Palmer@AtlasNetwork.org
What can we learn from experiences of expropriation without compensation? • It’s been tried before; • It often fails to achieve its ostensible goals; • Intentions and Consequences Often Do Not Correspond • It doesn’t matter what region, religion, color, or ethnicity those affected are; • Humans respond to incentives; • The consequences of changing incentives can be very severe, indeed.
Kazakhstan, 1931-1933 • 1927- 28: Expropriation of grain and “dekulakization” (in Kazakh terms, “ debaiization ” to expropriate rich landowners) • 1929: Expropriation of livestock from nomadic Kazakhs • 1929: European Russian colonists enter Kazakhstan (some unwillingly) • 1929-30: Expropriation of land and forced collectivization • 1930-1931: Harvests collapse; more livestock expropriated to turn over to collective farms (in 1931, 68.5% of livestock expropriated to feed the cities – numbers of sheep and goats declined by 70% and 90%) • 1931: Starving people flee to China, Iran, Afghanistan, and other countries • 1930-1933: Estimates vary, but a conservative estimate of the deaths from the expropriations of land, livestock, and grain run to 1,500,000, or about 1/.4 of the entire population and 1/3 of the Kazakh population • “I hope the current generation of Kazakhs will not forget about the people, the children, the elderly who died of hunger; about the villages that were deserted and died out; about the sick and those who died in the steppe....” • Tatyana Nevadovskaya, 1933
Ukraine: 1928-33 • 1928: Collectivization of land begins in the USSR, with farms expropriated and added to larger collective farms • Ukrainian farmers resist expropriation of land and collectivization and are subjected to greater expropriation of grain • 1929- 30: “Kulaks” (farmers with more land or a some livestock) are targeted for expropriation and deportation, often dumped in barren fields in Siberia or Central Asia • 1932-33: Brigades of urban party “activists” are brought to Ukraine to police grain requisitions
Ukraine: 1928-33 • 1932-34: Harvests collapse and livestock is slaughtered (Between 1928 and 1932 the number of cattle and horses dropped by nearly half, pigs declined from 26 million to 12 million, sheep and goats from 146 million to 50 million • 1932-33: Estimates vary, but conservative estimates of 4,000,000 additional deaths in Ukraine; approximately 2,000,000 are estimated to have died just in the period May – July 1933.
Romania: 1949-1962 • 1948: Communists nationalize firms and factories • 1949: Larger land holdings of peasants ere confiscated, allegedly to redistribute to poorer peasants • 1950s: Approximately 80,000 peasants arrested and imprisoned • Progress on expropriation and collectivization was slow, but resulted in declining outputs, nonetheless
Romania: 1949-1962 • 1955-1962: Percentage of households engaged in private agriculture goes from 88.5% to 7% • Romania rapidly industrializes, focusing on large state enterprises in chemicals and steel, with much of the investment completely wasted • Agricultural production languishes and the state conscripts millions of school children to bring in the harvests • 1981: Food rationing reintroduced and daily calorie consumption reduced and monitored • 1962-1989: Farmers are gradually forced into communal living arrangements, with buses taking them to the fields
China: 1958-1962 • 1958: Farmers forced to turn over land and productive assets to collective “Communes” • End of 1958: 25,000 state communes created, with an average of 5,000 households each • Farmers respond by hiding grain, slaughtering livestock, and selling what they could • 1959: Starvation becomes widespread • 1957-1961: Numbers of pigs and other animals plummets, as they are slaughtered or starve • In Hunan Province the numbers go from 10.9 million in 1957 to 3.4 million in 1961
Cambodia: 1975-79 • 1975: Khmer Route take over and property is expropriated while land titles and registries are destroyed • Urban people are forced into agricultural labor and frequently beaten to death • 1976: Four-year plan instituted to manage collective agricultural production • Mass starvation ensues • 1979: Vietnam invades and overturns Khmer Rouge
Afghanistan: 1978 - 1992 • 1973: Mohammad Daoud overthrew King Zahir Shah, his cousin, with the support of Communist army officers; • 1978: Daoud and most of his family killed by his Communist allies in 1978); • Debts cancelled and large tracts of land expropriated; • 1979: Popular rebellions, often spearheaded by farmers, led the USSR to kill the leaders and install rival Communists who were loyal to Moscow; firms were nationalized. • The country is almost totally destroyed in war
If that all sounds like ancient history • Let’s consider this case:
Venezuela: 2001-2018 • 2001: Chavez issues a decree on expropriation of farmland • "Our socialism accepts private property, just that private property should be in the framework of a constitution, laws and social interest." • "To those who own the land, this land is not yours. The land is not private, but the property of the nation.” • Hugo Chávez • 2005: Expropriation of land proceeds without compensation – farmland, followed by companies, shops, and other property • As output of farms collapsed, agricultural supply firms were expropriated (also without compensation) • Food disappears from shelves and prices soar • Average Venezuelan weight loss in 2017 was 11 kilograms • But not, of course, for everyone
Venezuela: 2001-2018 • The law has been used systematically to punish government opponents and to reward government supporters, confiscating land from opponents and giving it to supporters • The state combined lists of signers of petitions against Chávez and for him and used it as the basis for redistribution of land • Violence has engulfed the country • Tens of thousands of refugees are fleeing the country daily
Sometimes bad intentions are less important than unintended consequences • Famines resulted in massive • You don’t have to have bad deaths among ethnic intentions to generate very Kazakhs, Ukrainians, and bad consequences others mainly because of • If anyone thinks, ”It can’t indifference from the happen here,” they should rulers, rather than openly think again. genocidal intentions • The awful consequences in • Chains of consequences are Kazakhstan, Ukraine, China, Afghanistan, and Venezuela set off, with one leading to also were not intended another, without any • But they happened coherent plan; one nonetheless intervention leads to another, which leads to more unintended consequences
Sometimes bad intentions are less important than unintended consequences • Communist ideologues have a different • When people begin to understanding of truth consume capital and and loyalty than others; reduce production, the • If you rely on them to confiscation will not be blamed. The blame will gain or hold power, you fall on may find yourself in the • “Wreckers” position of President • “Saboteurs” Daoud of Afghanistan • Enemies of the People • Political Opponents • Ethnic Minorities • Anyone but those truly responsible
Expropriation Without Compensation Is Not a Novel Idea • It has been used to • Among the valuable incidents of ownership that has been dispossess individuals and expropriated is the right to groups for millennia. It has “traffic in land.” taken many forms • One of the most egregious • Conquest acts of expropriation in the • Colonization 20 th Century was the exclusion • Ethnic Cleansing of black Africans from the • And many others transmission of land titles in the • Native Land Act of 1913 • Eliminated “free traffic in land” by prohibiting sale or acquisition of land to members of other ethnic groups and reserved the bulk of agricultural land to “whites”
Expropriation Without Compensation Is Not a Novel Idea • EWC means the abolition of property altogether. • If property can be confiscated without compensation, there is no property at all – for anyone. No one can be sure that they will own tomorrow what they own today. • People who do not believe that they will will benefit from investing in productive assets will cease to invest; they will consume it.
There are millions of Zimbabwean refugees in South Africa If same conditions are created in South Africa, where will you go?
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