Garbanzo Toons

From the Socialist Utopia of Venezuela

People clamor for it over and over, even people who should know better. It's failed every time it's been tried and yet, even among intellectuals who can read and who do know their history, it remains popular. BDS sufferers and socialist true believers throughout the world cheer whenever their latest Socialist darling, Hugo Chavez thumbs his nose at President Bush. And yet in this report we discover,

Faced with an accelerating inflation rate and shortages of basic foods like beef, chicken and milk, President Hugo Chavez has threatened to jail grocery store owners and nationalize their businesses if they violate the country's expanding price controls.

Food producers and economists say the measures announced late Thursday night, which include removing three zeroes from the denomination of Venezuela's currency, are likely to backfire and generate even more acute shortages and higher prices for consumers. Inflation climbed to an annual rate of 18.4 percent a year in January, the highest in Latin America and far above the official target of 10 percent to 12 percent.

And yet,

Chavez, whose leftist populism remains highly popular among Venezuela's poor and working classes, seemed unfazed by criticism of his policies. Appearing live on national television, he called for the creation of "committees of social control," essentially groups of his political supporters whose purpose would be to report on farmers, ranchers, supermarket owners and street vendors who circumvent the state's effort to control food prices.

But,

"It is surreal that we've arrived at a point where we are in danger of squandering a major oil boom," said Jose Guerra, a former chief of economic research at Venezuela's central bank, who left Chavez's government in 2004. "If the government insists on sticking to policies that are clearly failing, we may be headed down the road of Zimbabwe."

And,

Shortages of basic foods have been sporadic since the government strengthened price controls in 2003 after a debilitating strike by oil workers. But in recent weeks, the scarcity of items like meat and chicken have led to a panicked reaction by federal authorities as they try to understand how such shortages could develop in a seemingly flourishing economy.

Entering a supermarket here is a bizarre experience. Shelves are fully stocked with Scotch whisky, Argentine wines and imported cheeses like brie and camembert, but basic staples like black beans and desirable cuts of beef like sirloin are often absent. Customers, even those in the government's own Mercal chain of subsidized grocery stores, are left with choices like pork neck bones, rabbit and unusual cuts of lamb.

With shoppers limited to just two large packages of sugar, a black market in sugar has developed among street vendors in parts of Caracas.

None of this is new. All of this has happened in other during other attempts to subvert the marketplace. Some people just don't pay attention.

"There seems to be a basic misunderstanding in Chavez's government of what is driving scarcity and inflation," said Francisco Rodriguez, a former chief economist at Venezuela's National Assembly who teaches at Wesleyan University.

"There are competent people in the government who know that Chavez needs to lower spending if he wants to defeat these problems," Rodriguez said. "But there are few people in positions of power who are willing to risk telling him what he needs to hear."

So the climate of fear keeps Chavez in power and protects him from the truth.

Suggestion for the fearful; buy the following books. Secretly place them under Hugo's pillow before he goes to bed. Maybe he will get curious enough to read them:
Free to Choose, by Milton and Rose Friedman
Applied Economics, by Thomas Sowell.
While your at it, read them both yourself. Then you and Hugo can discuss them.

Labels: Milton Friedman, Socialism, Thomas Sowell, Venezuela

posted by Harry @ 9:43 AM