Crush Liberalism

Chavez’ socialist utopia unraveling

The left thought they had finally found their guy in Hugo Chavez. You know, the one who could finally prove that socialism really can work if only the right people are in charge (never mind that it’s failed in 100% of the other places it’s been tried)? Well, they’re going to have to keep looking. From Bloomberg News:

The Venezuelan economy, under the direction of President Hugo Chávez, is starting to unravel in the currency market.

While Venezuela earns record proceeds from oil exports, consumers face shortages of meat, flour and cooking oil. Annual inflation has risen to 16 percent, the highest in Latin America, as Chávez tripled government spending in four years.

Exxon Mobil and ConocoPhillips are pulling out after Chávez demanded that they cede control of joint venture projects.

The bolivar has tumbled 30 percent this year to 4,850 per dollar on the black market, the only place it trades freely because of government controls on foreign exchange. That compares with the official rate of 2,150 per dollar set in 2005. Chávez may have to devalue the bolivar to reduce the gap and increase oil proceeds, which make up half the government’s revenue.

“This has been the worst-managed oil boom in Venezuela’s history,” said Ricardo Hausmann, a former government planning minister who now teaches economics at Harvard University. “A devaluation is a foregone conclusion. The only question is when.”
…
“It’s like our director of marketing, our director of sales, our director of manufacturing is President Chávez,” said Edgar Contreras, who runs international operations at Molinos Nacionales, a Caracas-based food manufacturer that employs 1,500 people. “We can’t go on like this.”

Contreras called the government-set prices on many products “fantasy prices” that are below production costs. Milk, chicken, coffee and flour have disappeared from store shelves in Caracas at times this year.

As Thomas Sowell has said: “Socialism in general has a record of failure so blatant that only an intellectual could ignore or evade it.”

September 5, 2007 - Posted by crushliberalism | Hugo Chavez, socialism