RSS 2.0 FeedVenezuala Turns Socialist, Stock Market Collapses
by Doug MataconisWell, I don’t think anyone can say that this is really a surprise:
BOGOTA, Colombia, Jan. 9 — Financial markets from Buenos Aires to Caracas reeled on Tuesday following Venezuelan President Hugo Chavez’s announcement that he plans to nationalize some private companies, and the White House warned that it expects U.S.-based corporations to be compensated for any losses.
The U.S. Energy Department also expressed concern after Chavez, who has pledged to accelerate his socialist “revolution,” said Monday that he would nationalize telephone and electric utility companies and increase state control over four major oil projects in which American and other foreign companies have invested $17 billion.
At the White House, Gordon Johndroe, a spokesman for the National Security Council, said that “if any U.S. companies are affected, we would expect them to be promptly and fairly compensated.” He also said that a nationalization plan, if it proved far-reaching, could be harmful to Venezuela.
Meanwhile, White House press secretary Tony Snow lambasted Chavez’s plan, saying: “Nationalization has a long and inglorious history of failure around the world. We support the Venezuelan people and think this is an unhappy day for them.”
The Venezuelan leader did not say whether his nationalization plan would mean outright expropriation, higher taxes or majority state control. And as is often the case after Chavez’s announcements, Venezuelans scrambled Tuesday to play down the news, with energy officials saying the president was only reiterating existing policy.
But the announcement, made in a bombastic speech in which Chavez also attacked the Catholic Church and insulted the secretary general of the Organization of American States, sent stocks into a tailspin in Venezuela and generated market jitters across Latin America.
One can only assume that, with the death of Fidel Castro seeming more imminent by the day, Hugo Chavez is angling to be the heir apparent for the title of South American Socialist Nutjob.
This proving only that rightwingers are the utmost fools, not to mention liars. But since you’re all so vicious about it — take it in the teeth.
Comment by Vlad Lenin — January 10, 2007 @ 12:27 amYou deserve all you’re going to get.
I have huge problems with Chavez nationalizing in the midst of the global privatization movement. The world public is very near accepting privatization of almost every type of service and property and that took a long time and a lot of work worldwide to bring about — wars, ideological shifts, the mantra of “government is less efficient than private industry” (which now even my three year old daughter knows).
There is a shortage of even normal yield investments worldwide and it’s driving bond prices down. Chavez may stand in the way of the next wave of privatization which will likely include water, power, and other staples worldwide providing rich new sources of revenue.
The problem isn’t what’s best for these stupid brown people because they are screwed no anyway. If privatization triples their water bill, or electricity bill, then we can use microcredit to lend them the money to pay it. That makes two new investments for one.
The real threat Chavez presents is the possibility of an alternative example. That’s what’s got to be stopped. After blockading Cuba to even the most basic supplies for almost fifty years and after Helms-Burton and other efforts to punish any country that traded with Cuba, we’ve brought that little trouble spot to its knees. And it was worth it, without the embargo, there’s a possibility that it would “look right” what they were doing. And looks are everything. Suppose they had clean, new buildings and smiling people walking about nice cities who didn’t look poor and threadbare? That is the threat we have to avoid.
Look at the deregulation of the California energy market. It worked perfectly. The prices soared and investors loaned the state the money to cover the deficit. Now some lucky investors have a 30 year stream of income on state issued bonds of more than $10 billion. That’s a real investment with a real return. And that doesn’t even count the superprofits that the firms involved got to make.
Imagine as this progresses if investors can find opportunities worldwide in every sector in every country?
The risk has always been the risk of a successful alternative. Hopefully Chavez will screw this up, or as Pat Robertson suggested, someone will kill him. But he’s built a lot of housing and handed out a lot of food and built new schools and other things that are making neighboring countries nervous. He didn’t do it the right way by borrowing from abroad and having foreign companies come in from the lenders to build those projects.
I think that we can rely on the news media here to report Chavez in the light needed for the good of freedom and free markets, but the real worry is what if he pulls it off and the plebes in neighboring countries become recalcitrant?
Chavez has got to be pulled down.
Comment by Fred — January 10, 2007 @ 8:55 amGenerally I would have to say that nationalization does not work well. It has some plusses in medical assistance for the poor (Cuba)and stability issues, but also failures (housing, 55 Chevy’s and Desoto’s running around the streets and poor job creation). Due to poor economic development the environment has suffered less in Cuba though, same can’t be said for China. In these societies the leaders become the corrupt elite(Cuba, the Soviet Union, China) had all the goodies while in general the people suffer. We have some of that of our own too. Initially nationalization looks good but sooner or later initiative suffers, why work hard, the masses all get the same anyway. Just pick up your check and your meat ration. Some liked it that way, a guarenteed minimum.
Comment by Dale Campbell — January 10, 2007 @ 9:00 amOn the other hand what I think happens in a democratic society like the US is that the top few get too greedy leaving little for the bottom 50% (in the US the top 1% have 50+% of the money). Still we are better off then they are and spoiled. We acquire things and stuff to excess. However, if the top 1% were smarter they would distribute it better, creating jobs, prosperity and stability for all and maybe a better society. They would still be plenty rich enough and the rest of us would also be better off and happier. Although we are not perfect it is still the best system, it does need some fixing.
If the rich in Mexico, Bolivia, Venezuela, Cuba had better run their economies earlier by making things a bit fairer years ago we would not have these Socialistic entities in charge now.
After all our own Constitution starts of with the words “We the People”. Not much different in concept than them except in their poor choice of the execution of that thought.
Meanwhile we have our own work to do here in the western economies to clean up our own methods (Stock option back dating, corruption, no-bid contracts, fraud (both individual and otherwise), the list goes on and on.
What it comes down to is we need to keep fighting for what is right and true, where ever that is. Government, Church, the corporate world, and our own individual lives and treat others like we would like to be treated.
Fred,
Good work. You’ve just created yourself a no-lose scenario. If Venezuela turns into a utopia (a highly unlikely scenario), you win, because it proves that socialism works. If it turns into a hellhole ruled by a despot, you win, because you’ll blame it on the US making it impossible for them to succeed.
Neither scenario forces you to evaluate why private property rights, markets, and capitalism will always do more to raise the standard of living of all people living under it than central planning and socialism. Heck, you don’t even need to work it out for yourself, Friedrich Hayek has already done all the heavy lifting… You can always (like most socialists) claim it just hasn’t been “tried properly” yet.
Venezuela is doing well right now, with Chavez winning favor with the poor by distributing oil wealth to them. Yet the gravy train may be derailed, as it’s becoming increasingly clear that socialists can’t pump as much oil as capitalists. But I’m sure once Chavez nationalizes everything else, the situation will get better, right?
Comment by Brad Warbiany — January 10, 2007 @ 9:37 amWhat Fred said was interesting. I especially loved the remark about his daughter “knowing” that “government is less efficient than private industry”. She knows it because she’s been brain washed. 3 year olds don’t know anything but to please their parents. That is not what I found the most interesting however. This is the statement that I loved: “If privatization triples their water bill, or electricity bill, then we can use microcredit to lend them the money to pay it. That makes two new investments for one”. Who is going to lend that money? Will it be global financial institutions? Maybe it will be local banks who borrow from world banking institutions. I don’t really know the answer to that but the important part is that the only real winners here are finance capital, the robber barons of our age. I don’t know about you, but if I were forced to acquire a loan every month to pay my bills I would be pissed. Not only do these loans need to be repaid but they need repaid with interest. How does that work when the people already can’t afford their bills? This leads to an over extension of capital that could lead to a complete collapse of the state’s economy if not more when the people are no longer able to pay their loans. Conditions such as these are what create the conditions in which Socialist or Fascist dictators rise to power. Unfortunately I have no power to change the most powerful economic philosophy in the world. However, if the powers that be do not start to make some meaningful reforms to ensure more equality by bringing the bottom up, then leaders of Chavez’s caliber will continue to pop up. Maybe Chavez will fail. He may become too power hungry and greedy. Still, one day a radical new thinker will come along that will finally topple the policies and power of the West. I hope it happens before the West ruins the global economy with free trade.
Comment by Greg — January 10, 2007 @ 12:15 pmViva la Revolucion!
As a U.S. expat living in South America, I sort of follow socialism and communism around, feasting on the economic carcasses they inevitably leave in their wake. Privatization in Chile, is creating the strongest economy in Latin America, so I will be moving to Patagonia this year, which is still recovering from the Argentine collapse of 2002, and where my limited US dollars will buy more. If Chavez keeps it up, I will probably be moving to Venezuela in a couple of years after the dust settles from the unavoidable revolution, coup or junta that will return that resource-rich country to the real world.
Fortunately I have a lot of help in this endeavor from some of my fellow expats. The come here in herds from the liberal centers of the U.S. to decry their home country for meddling in Latin affairs, while at the same time fomenting Marxist revolution by condescending to and “educating” the ignorant natives in the glorious advantages of the Workers’ Paradise.
Some day click into http://www.santiagotimes.com and read the latest English-language diatribes condemning the US and praising socialism and communism. This electronic propaganda sheet is operated for profit by a failed U.S. attorney, and is staffed by unpaid children from various left-leaning U.S. universities. None of them know any thing about journalism, but have the leftist polemic down pat.
For someone who was born in the last days of World War Two, the notion that the U.S. has thus become an exporter of communism defies belief.
Comment by Johnny Baker — January 11, 2007 @ 8:13 amCORRECTION
The link http://www.santiagotimes.com WILL NOT take you to the publication I was discussing in my previous comment. Better to Google Santiag Times, then click on the English language newspaper hit.
Comment by Johnny Baker — January 11, 2007 @ 8:20 am[...] But a comment over at The Liberty Papers, and the blog it leads to, made me realize something. There may come a day when it’s time to get out of the USA. At the very least, I plan to figure out my debt and asset situations such that I can do it if I need to. Outside of the typical benefits of learning a second language, though, knowing how to speak Spanish greatly widens the number of countries I can run to. I had thought of Ireland, Australia, etc. But I don’t want to rule out Costa Rica, Nicaragua, and South America. [...]
Pingback by The Unrepentant Individual » Planning To Learn Spanish — January 11, 2007 @ 8:43 am[...] The news came down early this month that Hugo Chavez intended to nationalize industry in Venezuela. There have been many media glorifications of Chavez in recent times, who has been using the oil wealth of Venezuela to improve the lives of the poorest in the nation. Many socialists think this might be their one bright point in the history of the movement. They see Chavez as the guy who will prove that socialism can work. [...]
Pingback by The Liberty Papers»Blog Archive » Why Chavez Will Be Bad For Venezuela — January 18, 2007 @ 10:16 pm