Liberty Scott has an excellent post on Chavez’s foray into socialism. It’s a crying shame that every few years some idiot comes along and tries the old, failed ideas again, thinking that “this time we’ll do it in a new way that’ll work” - it never does.
And the results are always the same.
Rich becomes poor, and poor just stays poor - only now the possibility of becoming rich is gone too.
What does a socialist do when he is concerned about poor people not being able to afford food, well he makes it illegal to sell food at the market price so they can afford it. It is a childlike response “price too high, make it low or else”. Don’t laugh too hard, Rob Muldoon wasn’t much different for a few years. Venezuelan President Hugo Chavez, the latest pinup boy of the “New Left”, and mate of London Mayor Ken Livingstone did just that. What was the reaction? Well Venezuelan farmers weren’t too impressed by having their livelihoods cut, so they started exporting their produce to neighbouring countries to get the prevailing market prices for what they grow. Venezuela is a net food importer as well, but then few want to sell to a country unwilling to pay market prices.So shortages have appeared, you know like bread queues in the former Soviet Union - shortages are the stock in trade of socialism, because incentives to produce are completely schewed by central planning and prices not being an equilibrium between demand and supply.So what is Hugo Chavez’s response? According to the BBC, he has calledl for the nationalisation of farms that export their produce. He is willing to “call in the army” to do this. By saying this, he effectively is nationalising the farms, and the next thing you can be sure of is that the farmers will cut back spending on their farms. A low price means reduced production.Shortages will simply grow. He also threatens to nationalise banks that don’t give low interest loans to farmers. Again though, this is something else he has meddled in. With inflation reportedly at 22.5%, interest rates are capped at 15% - so banks can only loan money at a loss. So maybe there will be loans available on paper, but in reality none will exist.
