Historical lesson not learned in Venezuela
January 27, 2014
History is rife with examples of attempts by meddling or greedy socialistic-type governments taking over private enterprise under the guise of improving life for the common man. The examples usually end badly, and it’s usually the government and its cronies that enjoy the improvements while the commoner endures terrible hardship.
The latest in economic train wrecks brought about by socialistic idealists is Venezuela.
Trying to rescue a dire situation brought about by now deceased President Hugo Chavez, Venezuela’s new President Nicolás Maduro (Chavez’s former foreign minister and vice president) is following in Chavez’s footsteps, making a bad situation worse.
Maduro is continuing, and in some cases amplifying, the same types of policies Chavez instigated, mainly taking over private business and printing a ton of money while enriching himself at the expense of the people he is supposedly trying to help.
With the largest proven oil reserves in the world, Venezuela has plenty of money that the government and President Maduro can steal and use to limp along while they bleed the country dry.
Their massive money printing is causing inflation north of 50 percent annually, and the country is finding it harder and harder to borrow money on the public markets.
With their currency plummeting in value, black markets are rampant. These back room markets always spring up when currencies head south from abuse as people struggle to obtain the things they need anyway they can.
The government’s answer to the chaos is right out of the communist manifesto — take over more businesses, jail and kill those who try and stop them, raise taxes and force price controls on what private businesses remain.
Empty store shelves attest to these failed polices, and if history is a guide, Venezuelans are in for a hellish ride as the economy and the country implodes under the weight of crushing government and its misguided policies.
This will ultimately give rise to a new system, which may or may not be an improvement, and the transition will most likely be bloody one.
It remains to be seen what the country will be like when it comes out the other side, but at the present time, Venezuela is in the middle of its crack up, which will likely last for several more years before it reaches a conclusion.
This article expresses the opinions of Marc Cuniberti. He hosts “Money Matters” on KVMR FM 89.5 and 105.1 FM at noon Thursdays and is syndicated on more than 30 radio stations throughout the U.S. His website is http://www.moneymanagementradio.com.
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