Don’t look now, but Argentina wants to be the next Venezuela. Leftist President Cristina Kirchner has been leading the charge since her election in 2007.
It started with a mix of populism and protectionism. For example, Kirchner reinstated el impuestazo (The Big Tax) in 2009, doubling the value-added tax (VAT) on imported electronics. Her administration also recently lowered taxes paid by Argentine companies that assemble products in a region known as Tierra del Fuego, the frozen southern tip of the country.
Now Kirchner has taking things to the next level. A few days ago she formally proposed to nationalize the country’s largest oil-and-gas company, YPF, a firm currently controlled by a Spanish majority (57%) owner. Declaring that petroleum is of “national public interest,” Kirchner seeks to acquire 51% of the company for the government from YPF shares. To add insult to industry, the government would not even pay the market price for these shares; the final value will be determined (arbitrarily) by a “federal tribunal.” Kirchner sent her proposal to Congress where her political party holds a majority, so passage is predicted.
The philosophical argument for nationalization is subtle: Some industries are “too important” to be left to the whims and mismanagement of the private sector. But this line of reasoning is not limited to nations like Venezuela and Argentina. The K-12 industry in the U.S. is controlled and delivered by federal and state governments because “the children are too important to be pawns in the profit game.” Privatization efforts with regard to the USPS are blocked because only the federal government can be trusted with something so vital as the mail. Obamacare is an attempt to shift healthcare further in the same direction in part for the same reason: “Life and death is too important to be left to insurance and pharmaceutical companies, physicians, and other profiteers.”
But the profit motive is our friend. It pressures grocery stores, auto repair shops, and movie theaters to deliver the goods and services people really want. It is public ownership that creates the problem because those who produce and deliver the products and services are working for the bureaucracy, not the customer. It might sound attractive at first glance, but nationalization is never productive. I don’t always like everything the folks at my health insurance company do, but I certainly trust them more than somebody from Washington.
How do you put a value on life? It’s worth more than any amount the insurance companies can come up with. I don’t want companies trying to make profits when they decide what kind of healthcare I can get. The government doesn’t try to make a profit so they will not get caught up with cutting costs and letting people suffer.
Government might not make a profit, but it can certainly make a loss. $16 trillion the last time I checked. At least businesses have to balance their books.
Well, I can certainly understand the reason why Commenter #1 chose to post as “anonymous.” It is far better to be presumed ignorant than to open your mouth and remove all doubt.
Yes, “anonymous,” just look at the vast catalogue of technological, medical, and overall societal improvements and innovations that emerged under regimes of monarchy, feudalism, and despotism. Ah, to return to those “good old days.” What do we call that era again? Oh, yeah, “The Dark Ages.” Where do I sign up?