In my forthcoming (July 18) book, The Problem with Socialism, I describe how socialism is always and everywhere an economic poison regardless of the form of government. Socialism is socialism. As Frederic Bastiat explained in his classic, The Law, the imposition of one social “plan” or set of “plans” on all of the society – a defining characteristic of all varieties of socialism — will have the same effects whether it is instituted by democracy or by a dictatorship. Obamacare is Obamacare regardless of whether it was imposed by democracy or by a dictator.
All of history has proven that the effects of socialism are always and everywhere mass impoverishment; the destruction of civil liberties; tyrannical government; a population dependent on the state for survival; and the enrichment of the ruling class. Everyone is equally impoverished while the political elite live high on the hog, whether it is the Soviet Union, African socialism, Latin American socialism, or any other kind of socialism.
At best, socialism turns people into spoiled children constantly demanding more and more freebies at the expense of . . . . who knows? At worst, it becomes a totalitarian nightmare where dissenters are mass murdered by the The Problem with Socia... Best Price: $7.94 Buy New $6.98 (as of 06:55 EST - Details) millions, as was the case with twentieth-century socialism all over the world.
The latest display of the effects of the malicious myth of “democratic” socialism is the economic implosion of oil-rich Venezuela. When the proud socialist Hugo Chavez became president he nationalized industries; redistributed land and businesses to political cronies; imposed pervasive, government-imposed price controls; and made himself popular by giving away lots of free stuff – even houses. He was a Latin American Bernie Sanders, in other words. The entire socialist world spoke of the new “socialist paradise” of Venezuela.
But socialism is always and everywhere economic poison because of several fundamental reasons. It destroys work incentives for one thing. It is also guided by the false pretense that a few politicians can somehow do a better job of possessing and utilizing the detailed knowledge that millions of consumers, entrepreneurs, workers, business managers, investors, and market participants who make real market economies work possess. And it foolishly asserts that rational economic decisions can be made without the benefit of private property, market prices based on supply and demand, and a market feedback mechanism that rewards those who serve their customers well with profits while punishing those who do not with losses. By ignoring these realities the economic implosion of Venezuela was perfectly predictable and inevitable.
Venezuela has become reminiscent of the old Soviet Union where there were shortages of everything because of the economic chaos caused by the elimination of markets based on private property and prices determined by supply and demand. A May 21 article in The Telegraph by Szu Ping Chan about how socialism turned Venezuela into “debt and hyperinflation hell” describes how people there now routinely “queue alongside hundreds of other Venezuelans for food, nappies, milk, and other basic goods.” Everything is in short supply – or no supply – thanks to Chavez’s socialist price controls. Black markets are the only thing saving the Venezuelan economy.
A recent “yahoo” news article entitled “Venezuela: Where a Hamburger is official $170” wrote of how stores are shuttered; restaurants are empty; “nobody is buying anything”; there are long lines of people waiting around stores for something – anything – that they can use to barter for things they actually need. This again is exactly reminiscent of daily life in the old Soviet Union. The Law Best Price: $1.97 Buy New $6.00 (as of 06:50 EST - Details)
Venezuela has become one of the worst places in the world to do business, ranking 186th out of 189 in a World Bank index of “business friendliness.” Only Libya, South Sudan, and Eritrea were worse. Political corruption is rampant; of course. No one can be in business without paying the “appropriate” bribes to one or another political hacks and criminals.
People in Venezuela “cannot afford to get ill because when you turn up at the hospital there is nothing,” says one Venezuelan cited by The Telegraph. Sick people are desperate for antibiotics, which are all but non-existent.
Explosive government spending combined with declining oil prices made Venezuela a “debt hell” as Chavez and his successor, fellow socialist demagogue Nicolas Maduro, refused to admit the folly of their ways and resorted to massive money printing. Today a hamburger costs the equivalent of $170; a night in a hotel is $6,900; and middle-class monthly salaries savaged by inflation are worth about $35. Food prices more than tripled just in the past month; and the annual inflation rate is 4,505 percent. One Venezuelan interviewed for the Telegraph article said that he had to spend more than half his monthly income just on toilet tissue. Socialism has resulted in the Zimbabwe-ization of Venezuela.
The Venezuelan government fails to perform what all governments claim to be their primary responsibility: maintaining law and order in society. Caracas is now the world’s most violent city in the world according to the Council for Public Security and Criminal Justice, which computes such rankings.
The drinking water in Flint, Michigan is like fresh, Rocky Mountain spring water compared to the drinking water in Venezuela, described by a May 29 New York Times article about the country’s “hunger, blackouts, and government shutdown” as “a brownish color” that makes people sick, with many Venezuelans contracting “skin irritations from showering . . .” One woman is quoted as saying that because she has been showering with this How Capitalism Saved A... Best Price: $2.55 Buy New $10.18 (as of 04:30 EST - Details) government water “her body is filled with small bubbles and they sting horribly.”
Like all other socialist demagogues, Venezuela’s wealthy, living-lives-of-luxury, socialist political elite blame all the disasters they have created on various bogeymen, from “the American government’s efforts to destabilize the country” (according to the New York Times), to “a drought that has crippled Venezuela’s ability to generate hydroelectric power.” This last reason is reminiscent of how the Soviets blamed the results of their disastrous policy of socialized agriculture on seventy straight years of “drought.”
Just about anyone who is able to leave Venezuela is doing so. So far, it’s a much easier task than leaving that other Caribbean socialist “paradise,” Cuba.
Venezuela has joined a very long list of countries whose economies have been utterly destroyed by just a few years of socialism. Meanwhile, in the U.S. hordes of “millennials,” the first PC generation, a generation that has been indoctrinated since kindergarten in the alleged evils of capitalism and taught to worship Big Government as their savior, are wildly cheering a 74-year-old communist who wants to be president on the promise of making America the next Venezuela. (Like the Soviet communists who called their government the Union of Soviet Socialist Republics, not the Union of Soviet Communist Republics, I don’t distinguish between “communists” and “socialists”; they’re all the same gang of looters, frauds, demagogues, and tyrants).