Hugo Chavez has been fighting capitalism in Venezuela since he became president in 1998. From confiscatory taxes on the rich to the nationalization of private companies, Chavez has “fundamentally changed” the nation. Blessed with plentiful natural resources, one would expect Venezuela to be the shining star of South America. Instead, OPEC’s fifth largest oil producer continues to battle serious economic woes.
Chavez’s latest attack on capitalism includes a series of price caps on household products manufactured by Coca-Cola, P&G, and other evil corporations. His recently enacted Law of Fair Prices and Costs reads like something out of Atlas Shrugged. Chavez put it this way on Thursday (2/9/12): “They [the corporations] are still going to make money, we’re not asking them to lose money, but the profit has to be rational, they can’t rob the people,” Chavez said on state television. “If one of these companies says that they can’t comply with this, there’s no problem, I’ll take the company and give it to the workers and we’ll produce at a lower price and still make profit.”
Venezuela’s official inflation rate was 26% in January. Central planners like Chavez typically blame producers for such maladies and institute price controls to reign in profits. But the real problem is the money supply. Chavez’ government has been printing bolivars at a record pace to finance government spending. Prices always increase—sooner or later—when the money supply expands too rapidly.
The latest installment in Venezuela’s failed socialist experiment is simply another government attempt to fix the unintended consequences of previous interventions. What is most chilling is that Chavez’s rhetoric is often quite similar to that of our president. Perhaps Obama hasn’t gone so far as to threaten to take a private company from its owners and give it to the workers. But one could argue, however, that this is precisely what he did with GM.
Source: www.businessweek.com/news/2012-02-09/chavez-sets-price-caps-on-p-g-deodorant-coca-cola-water.html
Prescient analysis, as always, John. The Atlas reference is very apt, as well. When I first read of this new Venezuelan proposal, my first thought was “There it is. Directive 10-289.” I’ve always found it rather ironic that their currency is named after Simon de Bolivar, a one-time protege of Jefferson.
Thanks for the insight, once again.
There is no connection between Chavez and Barack Obama. President Obama supports supports corporations as long as they are responsible. We need a balanced approach to the economy and that’s all he wants to do. He isn’t perfect but at least he’s fighting.
the problem is WHO he is fighting. he’s fighting the most productive people in the country
A “balanced approach”? Remember, forced equality negates liberty. Always.
Without some forcing of equality you can’t have any liberty.
Amen Professor. I got turned on to you via Andrew Wilkow SiriusXM.
you and andrew make an awesome tagteam on these topics.
You guys should listen to the conversations John & I have on my show. Just click the “Sons of Liberty” link on the right-hand blogroll bar. It’s free to stream or download. John is on for the full 2 hours, once a month, and he’s got to be my favorite guest ever. (And I’m not just saying that because this is his site.)