ARI : Nationalization is Theft

[galtgulch]

Nationalization Is Theft

Venezuela, Russia, and other countries that nationalize natural resources are violating private property rights.

By Thomas A. Bowden

For years, the Canadian operator of a huge Venezuelan gold project known as Las Cristinas has been seeking an environmental permit to start digging. Well, Crystallex International Corporation can stop waiting--the mine is being nationalized as part of dictator Hugo Chavez’s long-running program of socialist takeovers. “This mine will be seized and managed by a state administration” with help from the Russians, said Mining Minister Rodolfo Sanz.

It’s not surprising that a brute like Chavez would want to grab the 16.9 million ounces of gold estimated to lie buried in the Las Cristinas reserve. But what’s more puzzling is why--when gold mines, oil rigs and refineries worth billions of dollars are nationalized by regimes such as Venezuela and Russia--the ousted companies can muster no moral indignation, only tight-lipped damage appraisal.

The reason, in a nutshell, is that resources like gold and petroleum in their natural state are universally regarded as public property that cannot be extracted by private companies except with government permission, revocable at will. “Venezuela will not accept that foreign organizations tell them what to do with their own resources,” said a local journalist recently.

But unexploited natural resources are unowned, not publicly owned. Ownership--the legal right to use and dispose of material resources--cannot exist until someone actually brings those resources under human control. A dictator cannot, by decree, bring hidden gold or oil deposits to the surface. Only the knowledge and effort of entrepreneurs, engineers and drillers can transform that hidden potential into actual wealth. Ownership is the law’s recognition that those particular producers deserve the legal right--as against every person on earth who didn’t tap that potential--to control the wealth they created.

Consider that Arabs wandered for centuries across desert sands that concealed vast petroleum deposits, but it was Western investors who actually made Middle Eastern petroleum valuable. These companies searched for many years in a vast wilderness, moving in frustration from one dry hole to another, risking utter failure and financial ruin. Eventually, by virtue of their ingenuity, courage and perseverance, world markets were flooded with oil that Middle Eastern governments should have deemed private property--100% private.

Instead, those governments muscled in, claiming public ownership based on nothing but their sovereignty over the geographical areas where oil deposits happened to reside. First through royalties, then by extorted royalty increases, and finally by outright nationalization, the descendants of nomads whose meager possessions fit on a camel’s back could now build palaces, buy airplanes and fund terrorism from the seemingly endless profits generated by Western technology and ingenuity.

But all this was a perversion of sovereignty. After all, why are states entrusted with exclusive power to use force within their borders? There’s only one legitimate reason: to protect individual rights, including property rights. Just as a bodyguard’s task is protecting clients from physical attacks, a government’s function is safeguarding people and property against criminals and foreign invaders.

Sovereignty exists to protect private property, not to destroy it. A bodyguard who claimed to own his client’s house, cars and jewelry would be immediately fired. Yet governments that claim to own all natural resources within their borders get a free pass, as if ownership could be conjured from the barrel of a gun.

Today, nationalization is endorsed not only by third world thugs but by the United Nations, which--with America’s full agreement--declared in 1962 that the “sovereign right of every State to dispose of its wealth and natural resources” is “recognized as overriding purely individual or private interests.” Even the victims agree. Said one CEO: “We do not see the issue of nationalization as a violation of the law but as a right of a government.”

This is why power-grasping dictators like Venezuela’s Hugo Chavez and Russia’s Vladimir Putin can claim moral authority to treat foreign investors the way they treat their own citizens--as cattle to be herded, milked or slaughtered for society’s sake. Thus when ExxonMobil recently dared to dispute the pittance Venezuela offered in payment for seized assets, Chavez denounced “those bandits of ExxonMobil,” absurdly declaring they “will never rob us again.”

Nationalization, stripped of all rationalization, is naked theft. A blow for justice will be struck by the first public figure to denounce it as such. In the meantime, companies like Crystallex will continue to be bullied by dictators who know exactly how much they can get away with.

Thomas A. Bowden is an analyst at the Ayn Rand Center for Individual Rights. Mr. Bowden is a former lawyer and law school instructor who practiced for twenty years in Baltimore, Maryland. The Ayn Rand Center is a division of the Ayn Rand Institute and promotes the philosophy of Ayn Rand, author of “Atlas Shrugged” and “The Fountainhead.”

Copyright © 2008 Ayn Rand® Center for Individual Rights. All rights reserved.

[Brant Gaede]

ARI puts out some good stuff.

--Brant

[Michael Stuart Kelly]

You know, one of the deals I was working on in Brazil before I came here to the USA was trying to help a friend who owned property in Bahia to get funding and a structure to develop a gold mine on it. The preliminary surveys in a region near Jacobina where the Canadian company Desert Sun operates a huge gold mine, all pointed to a rich content of highly lucrative minerals and stones in addition to gold. (For the record, he was able to get a prospecting license, satisfy the legal requirements, but several of the people near the funding we had set up got really greedy and tried to trick him out of his land. It was at this point that I came to the USA.)

The trouble is that region is the real deal in terms of Wild West environment. In many places, travel is by horse and mule. I intend to return to that project after a while because, although I helped my friend from getting the royal shaft, I was unable to complete some of the inheritance issues that would cause a major headache once the digs started. But I need a different kind of structure than I had back then. At the very least, I should take horse-riding lessons.

In short, it's a long story.

Now what is interesting is that Brazil opened the entire country to foreign private capital for prospecting gold and other minerals and stones after years of government control, which was why I was able to start the project. Not a peep comes out of places like ARI when these things happen. This migration toward capitalism is happening all over the world, yet I see no celebration of any privatization in other countries within our little subcommunity, but plenty of name-calling like "third world thugs" and so forth.

They might exist, but so does progress. Why consistently report only one? Do these people know the image they project? I think they do and they do it on purpose.

The third world is not the USA's backyard and garbage dig, but that is largely how it has been treated by the USA government for decades. That third-world backyard kind of thinking is what I sense to be grounding Bowden's comments in the name of ARI.

Things like "perversion of sovereignty" jump out at me. The way to stop the "perversion of sovereignty," of course, is to bribe local politicians, or in the last resort, invade the offending country and set up a puppet "sovereign" who will allow USA government backed old-boy crony companies to rape the country at minimum wage for the people (but with handsome payoffs to local politicians), as a form of not being "perverted." All this is backed by guns.

And for the hawkish intellectuals, you just pretend the evil stuff doesn't happen. As Rand would say, "Blank out."

Why don't they just be honest say that any government other than the USA government is a "perversion of sovereignty" and that government-backed monopolies are in reality capitalism so long as they don't look like monopolies on the surface? Then they can preach conquering the entire world in the name of capitalism.

Heh.

Chavez will discover, like President Figueiredo did in the at the end of the 70's and early 80's in Brazil with the Serra Pelada mountain (that had oodles of gold and is now mostly a barren hole) that the gold runs out after a very short while. The reputation of the government's greed and incompetence lingers. Gold is not like oil because it actually does run out short term.

This has more political impact than all the ranting for and against sovereignty by strongman dictator-like leaders like Chavez or the ARIs of the world. The people get really pissed when they see it and radicals can then mobilize them because they no longer respect the government (and consequently no longer fear it).

But when they get mobilized, at least if Brazil is any indication, they don't do so to once again become the USA's backyard and garbage dump. Those days are over.

Interestingly enough, I believe the Internet and other forms of global communication are the main reason why.

Moral political reasoning really should take modern communication technology into account. Kings and queens are mostly a thing of the past because of the industrial revolution and individual rights. In the same manner, I believe the information revolution is making a social impact just as great. It is now increasingly more difficult for politicians and intellectuals to get away with lies and rewriting history for long periods.

For example, if a term like "perversion of sovereignty" ever gets into the mainstream, people from all over the world are posting all kinds of written information, images and sounds that provide referents for that concept. If the referents don't look perverted, if they look like people living normal lives with their cars and houses and schools with some occasional clashes between extremists, the "perversion of sovereignty" concept will be widely seen as the ranting of a fringe group and there is will stay with its teeth pulled.

That goes for any dictator-like government's exaggerations and smokescreens, also. Mere words and thematic presentations are no longer as powerful as they once were. Direct observation provided instantly from a myriad of sources is now an integral part of mass persuasion.

A wise intellectual will understand that if he wants to persuade the majority instead of promote a fringe group.

Michael

[Chris Grieb]

Jonah Goldberg in his Friendly Fascism made the point that socializing and nationalizing property are the same thing.

[Selene]

Jonah Goldberg in his Friendly Fascism made the point that socializing and nationalizing property are the same thing.

Is this Karma?

Hugo Chávez may be wondering, as Venezuela's taps run dry and its cities fall into darkness, whether God is on the side of the Yankees.

The El Niño weather phenomenon appears to be taking sides as it parches leftist-ruled parts of South America and brings bounty to US farmers and corporations. One of the severest droughts in decades has given Venezuela's socialist president a political nightmare as hydro-electrical power dribbles to a standstill, unleashing blackouts, rationing and protests. The waters behind the Guri dam, which supplies more than half the nation's power, have touched perilously low levels. Chávez has declared an "electricity emergency", urging people to spend no more than three minutes in the shower. The president has even dispatched Cuban pilots to seed clouds for rain.

http://www.guardian.co.uk/world/2010/feb/21/hugo-chavez-el-nino-venezuela/print

Executive action time.

Adam

[jeffrey smith]

Jonah Goldberg in his Friendly Fascism made the point that socializing and nationalizing property are the same thing.

Is this Karma?

Hugo Chávez may be wondering, as Venezuela's taps run dry and its cities fall into darkness, whether God is on the side of the Yankees.

The El Niño weather phenomenon appears to be taking sides as it parches leftist-ruled parts of South America and brings bounty to US farmers and corporations. One of the severest droughts in decades has given Venezuela's socialist president a political nightmare as hydro-electrical power dribbles to a standstill, unleashing blackouts, rationing and protests. The waters behind the Guri dam, which supplies more than half the nation's power, have touched perilously low levels. Chávez has declared an "electricity emergency", urging people to spend no more than three minutes in the shower. The president has even dispatched Cuban pilots to seed clouds for rain.

http://www.guardian.co.uk/world/2010/feb/21/hugo-chavez-el-nino-venezuela/print

Executive action time.

Adam

No, Adam, he'll blame it on El Yanqui Malo. Didn't he blame the series of Caribbean earthquakes (in Venezuela and the Cayman Islands as well as the major one in Haiti) last month on the US?

After all, we all "know" that weather changes like this are the result of Global Warming/Climate Change, and of course we all "know" that Global Warming/Climate Change is the fault of the USA...

Jeffrey S.

[Philip Coates]

..

Edited February 23, 2010 by Philip Coates

[Brant Gaede]

..

Phil, best editing job by you I've seen.

--Brant

[Selene]

..

Phil:

No fair using invisible internet typing!

Adam

[9thdoctor]

..

Phil, best editing job by you I've seen.

--Brant

As Shakespeare wrote: Brevity is the soul of wit

Maybe Phil could give Peter some lessons...