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The Escape from Collectivism - Jeff Thomas (18/5/2017)

image: Dollar bill being tugged

May 18, 2017

Recently, I penned an article entitled, “A Chicken in Every Pot,” which described the reasons why countries that have delved into collectivism are likely to slide further down the slippery slope, once it’s addictive qualities have been introduced to the brain.

Since then, I’ve received requests to address whether it’s ever possible to fully escape collectivism, once it has taken hold in a country. The short answer is “yes.” It’s always possible to kick an addiction, but it’s not easy nor without pain.

There are two forms of exit from collectivism. The first is national, the second is personal.

Ending Collectivism Nationally

Russia has crawled out of the collectivist tar pit, but not before an economic collapse in 1991. The political leaders that were responsible for the reinforcement of collectivism were able to bail out and retire in comfort to their dachas, whilst the hoi polloi suffered the pain of collapse and slow recovery.

East Germany made a concurrent recovery from collectivism, but had a bit of help from the more free-market West Germany after their reunification. (This fast-track form of recovery is rare.)

The German recovery is especially notable, as the West Germans eagerly encouraged the East Germans to join the job market and otherwise participate in the then-vibrant West German economy. The initial result was that, whilst East Germans looked forward to the opportunity to have more money, better jobs, bigger apartments and luxuries like new cars and televisions, they began whingeing immediately at the longer hours and increased productivity expected by West German employers. They were also miffed at the loss of holidays, extended paid leave, medical benefits and other unrealistic collectivist perks that West Germans did not receive.

However, Germans are all of the same race and ancestry, so the East Germans could not cry, “discrimination.” As a result, they got on with the changes. However, the change in mindset was slow and, to this day, some older East Germans still grumble that they had hoped to gain free-market advantages, whilst hanging in to collectivist perks.

But, again, this is an anomaly. Generally, for an entire culture to rid itself of the addiction to collectivism, collectivism itself must play out. As Maggie Thatcher said, “The trouble with socialism is that, eventually, you run out of other people’s money.” Collectivism can hang on for decades, bleeding what remains of the free market in a given country, but eventually, it’s left with a bloodless corpse. At that point, the government can no longer deliver on its “entitlements”, because collectivism is not a productive system, it is a parasitic system.

In most cases, in collectivism, like alcoloholism, the country must bottom out before the realization sinks in that the addiction simply doesn’t work. A textbook case can be seen in Cuba, where the system was slowly bled dry by collectivism and the Cuban people remained at the bottom of the prosperity curve for many years before they took action. Although the government remained staunchly collectivist, the people slowly created a black market, providing goods and services to tourists. Over time, thousands of people operated small restaurants and offered their houses for rent illegally to tourists.

It’s important to note that the government did not change its view of what sort of system they wanted. On the contrary, they determinedly stuck to oppression until the black market was so rampant that it could no longer be controlled. The government then did what all governments do to that which they cannot control – tax it.

New laws were passed to provide the cuentapropistas the right to operate restaurants, guest houses and taxis, but they now had to pay a fee to the government to do so. Over time, the numbers of cuentapropista private businesses swelled and so did the government coffers. At this point in time in Cuba, the government is engaged in a wrestling match with itself. On the one hand, it’s resisting the passage of greater freedoms in order to maintain maximum control, whilst at the same time legislating greater freedom to create a free market that will provide the government with greater revenue. (After all, the Castro Concept is still officially the policy, but each bureaucrat wants to get rid of his rusty old Russian Lada and get a shiny new Hyundai, paid for by the cuentapropista revenue.

Although the world at large does not realise that this change is taking place, it’s truly a non-violent revolution that’s being generated by a people who had nothing left to lose.

Collectivism had not only failed but bottomed. Most Cubans now understand that prosperity is created by working harder and being more inventive. A free-market Cuba is now in the making and, at this point is unstoppable. Within ten years, the new Cuba will have fully blossomed and be highly productive (if it isn’t swallowed up by a larger and more powerful country that’s still working towards greater collectivism.)

Of course, the reader may well say to himself that he’s not especially eager to wait two generations or more to regain his freedom. He may seek to regain it soon. The good news is that this is possible, but he’d be naïve to think that he may do so by writing letters to his congressman, refusing to pay his taxes or holding a placard at a protest demonstration. If he’s a citizen of the EU, US, UK, Canada or other country that’s rolling ponderously toward collectivism, he’d be very foolish to believe that, if he were to stand in front of the government bulldozer, it might magically stop and reverse itself. It’s far more likely that his act would result in his own demise (either economic or physical).

Ending Collectivism Individually

But, it’s entirely possible to end collectivism individually. The downside is that it cannot be done by remaining in a country where the central government (regardless of which party currently holds office) is charging headlong into collectivism. The solution is to step away from the bulldozer – to seek out jurisdictions where the government isn’t on the path to collectivism.

Of course, as stated above, this doesn’t come without pain. Most people don’t especially wish to give up their houses, their neighbourhood, their job and their friends and begin a life anew. It’s particularly difficult to move away from family members – grandparents, grown children, etc.

Of course, it’s also true that the grandparents can be brought along to the new country if they wish to go. And, even if the grown children are shortsighted enough to believe that their home country will not further deteriorate, they might be very grateful in a few years if their parents had exited, thus paving the way for them, when they belatedly realise that the writing is on the wall.

Another one of the most common reasons for not effecting an escape from growing collectivism is, “It can be a fair bit worse before I’ll be really desperate. I’ll just wait until then.” Unfortunately, whilst it’s often relatively easy to escape a jurisdiction that isn’t fully collectivist, those who wait until the door has been shut find that they’ve waited too late.

And if we observe the litany of new laws in the above-mentioned jurisdictions, there can be no doubt that ownership of bank deposits has ended; assurance that continued possession of non-financial assets has been lost, and freedoms of speech and international travel are presently under fire.

At present, third world immigrants are noisily coming into the above jurisdictions in large numbers. Meanwhile, smaller numbers of those who are educated, skilled and productive are very quietly leaving those same jurisdictions.

To be sure, this is a challenge. It takes forethought, planning and commitment. But the reward is the greater likelihood of a rebirth into a new home where opportunity and freedom still thrive. There are quite a few such destinations out there, but the first step must be to decide to make the move.

Jeff Thomas is British and resides in the Caribbean. The son of an economist and historian, he learned early to be distrustful of governments as a general principle. Although he spent his career creating and developing businesses, for eight years, he penned a weekly newspaper column on the theme of limiting government. He began his study of economics around 1990, learning initially from Sir John Templeton, then Harry Schulz and Doug Casey and later others of an Austrian persuasion. He is now a regular feature writer for Casey Research’s International Man ( and Strategic Wealth Preservation in the Cayman Islands.

The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.

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