Should Spain Reject Rich Venezuelan Refugees of Socialism?
“Macroeconomics is a tautology and a myth, a dangerous one at that, sustaining the illusion that prosperity is necessarily linked with territory, national units, and government spending in general.” – Reuven Brenner, Labyrinths of Prosperity
Amid years of persistent collectivism and Bolivar-devaluation in Venezuela, the country has unsurprisingly suffered an outflow of its richest citizens. Countries and economies are just people, and people respond to incentives. If governments intend to expropriate wealth through devaluation, taxation and nationalization, those with wealth will logically migrate elsewhere.
According to the New York Times, Spain has become a popular destination for those escaping an ideology that consistently equates with misery. Apparently Venezuelans have snapped up 7,000 luxury apartments in Madrid’s fashionable Salamanca district alone. Even better, the Times reports that “some Venezuelans have become successful entrepreneurs in Spain, starting delivery services, opening restaurants and shops or taking over franchises.” One refugee started up a hamburger chain that was recently valued at $175 million.
The fact that some of the Venezuelan arrivals have revealed an entrepreneurial bent in Spain that Chavez and Maduro governments had been suffocating in Venezuela is very telling. Or maybe it isn’t. Think about it.
That Spaniards will benefit from the arrival of these people is a given. That life will improve speaks to an important truth about the productivity of other people: it elevates us.
Formerly unable to be productive, newly free Venezuelans will get to participate in the marketplace again. The more people producing, the more people competing to meet our needs. Better yet, the more people producing, the more we’re able to specialize. Specialization is obviously the path to greater productivity and greater wealth.
But what if Chavez had been an energetic proponent of economic freedom, and Maduro too, such that the country’s richest never had a reason to leave Venezuela? Would Spain be worse off as a result? The answer is that it only would be if the government placed tariff barriers on Venezuelan production. If not, what’s produced in Venezuela would benefit Spaniards much as if it had been produced in Spain. This is the genius of open borders to goods and services: the openness means that we benefit from the production as though it had happened next door.
To see why this is true, readers need only ask themselves if they own Apple or Dell products, and when they last purchased something on Amazon. Odds are most own at least one Dell or Apple product, and judging by Amazon’s soaring share price, odds are most reading this have purchased something on Amazon fairly recently. Ok, but how many readers live in Austin, Cupertino or Seattle? Probably very few, but so what? What matters is that we benefit from the genius of people like Jeff Bezos. Would it matter to any of us if California, Texas and Seattle were three separate countries, and those of us reading this piece didn’t live in any of them? Logically it wouldn’t. What would hurt us is if the companies didn’t exist at all.
It can’t be stressed enough that the city, state, or country origin of a good or service is of no consequence. What matters is that people are able to showcase their skills in the marketplace. If so, and if borders are open, everyone benefits as though the good work were taking place nearby. There’s no such thing as an “economy.” There are just individuals. Free individuals logically want to serve and be served. The bigger the market, the better.
In that case, let’s assume Amazon, Apple and Dell all move to Shanghai. If so, we’d gain from the genius of all three companies as though they were still based in the U.S. Again, the companies mentioned are all highly venerated by Americans even though a tiny percentage of Americans actually live where they headquarter. To believe that Americans would suddenly be imperiled by these companies if they moved to China is as silly as an American saying the Chinese have had their booming economic growth threatened by the fact that Apple and Dell are not headquartered there. What would hurt the Chinese is if Dell and Apple didn’t exist at all.
Applied to the U.S., imagine how much poorer we Americans would be if the rest of the world’s inhabitants were largely indolent. Not only would our corporations be expanding much less quickly, they would also be less innovative for them not feeling the heat of global competition. All that, plus Americans would suffer much lower living standards related to a much smaller portion of the world producing. People getting up and going to work don’t steal our jobs as much as their participation changes how we work. Nearly always for the better. If anyone doubts this, imagine if BMW, Sony, and Samsung didn’t exist. And never had. Would Americans be better off? Would the rest of the world be?
Bringing this all back to Spain, it’s great for the country that enterprising Venezuelans have made their way there. But so would it have been great for Spain if those same Venezuelans had been free to produce for Spaniards from Venezuela.
What’s true for Spain is true for the United States. While no sane person would look askance at Alibaba’s Jack Ma moving to the U.S., Americans will benefit from his entrepreneurial genius just as much if it keeps its markets open to Ma’s innovations crafted on the other side of the world.
To focus on where a good or service is produced is to vainly search for a distinction without finding any real difference. Jack Ma is Jack Ma no matter where he lives. Same with Jeff Bezos. Same with the late Steve Jobs. The only thing that keeps us from benefiting from their genius is a lack of freedom.
