Marxist President Hugo Chavez of Venezuela is watching his country’s economy collapse under the weight of his socialist policies. It is not a pretty sight.
Venezuela ought to have wealth to spare. It is rich with oil, much of which it sells overseas for a handsome sum. Yet it is a basket case of scarcity and want.
Despite the long history of economic disaster from socialist policies, Chavez has had his government take control of one sector of the economy after another — creating horrible inefficiency and making foreign companies unwilling to invest in the country.
Meanwhile, price controls have been placed on many foods, and food retailers and distributors can go to prison for years if they are caught “hoarding” food or trying to charge what the government considers “too much.” The result has been that companies often cannot cover their production costs. That creates an incentive for them to reduce, rather than increase, production of vital goods.
Recently, the Venezuelan government seized two sugar mills, accusing them of hoarding sugar. Operators of the mills were accused of failing to ship the sugar promptly to distribution centers and of waiting for the government to raise the price. Now, the government says it will run the mills to ensure that “our people don’t go without sugar,” a top Venezuelan bureaucrat told The Associated Press.
Ironically, products in Venezuela that are not price-controlled are in reasonable supply.
It seems socialism’s painful lessons have to be learned again and again.