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Guest Post: Inflation, Shortages, And Social Democracy In Venezuela

Tyler Durden's picture


Submitted by Matt McCaffrey via the Ludwig von Mises Institute,

The economic turmoil in Venezuela has received increasing international media attention over the past few months. In September, the toilet paper shortage (which followed food shortages and electricity blackouts) resulted in the “temporary occupation” of the Paper Manufacturing Company, as armed troops were sent to ensure the “fair distribution” of available stocks. Similar action occurred a few days ago against electronics stores: President Nicolás Maduro accused electronics vendors of price-gouging, and jailed them with the warning that “this is just the start of what I’m going to do to protect the Venezuelan people.”

Earlier this month, in another attempt to ensure “happiness for all people,” Maduro began to hand out Christmas bonuses, in preparation for the coming elections in December. But political campaigning is not the only reason for the government’s open-handedness. The annual inflation rate in Venezuela has been rapidly rising in recent months, and has now reached a staggering 54 percent (not accounting for possible under-estimations). Although not yet officially in hyperinflation, monetary expansion is pushing Venezuela toward the brink.

In such an environment, paychecks need to be distributed quickly, before prices have time to rise; hence, early bonuses. This kind of policy is nothing new in economic history: Venezuela’s hyperinflationary episode is unfolding in much the same way Germany’s did nearly a century ago.

Consequently, Venezuela’s economic policy is proving to be another example of Ludwig von Mises’s argument that economic intervention, if left unchecked, leads to complete socialism. The ever-expanding price controls testify to the fact that governments always search for new scapegoats in the market instead of admitting the failure of their own policies, and that it is always easier to increase government control than reduce it.

Maduro clearly knows the ropes when it comes to anti-market propaganda; like his predecessor, Hugo Chávez, he has placed blame for soaring prices on speculators and the “parasitic bourgeoisie.” But no witch-hunt for “price-gougers” will stop the eventual collapse of the economy that will result from further monetary expansion combined with crippling price controls. Inevitably, as Mises argued, “once public opinion is convinced that the increase in the quantity of money will continue and never come to an end, and that consequently the prices of all commodities and services will not cease to rise, everybody becomes eager to buy as much as possible and to restrict his cash holding to a minimum.”

As we speak, Venezuelan shoppers are queuing outside seized stores trying to spend their rapidly depreciating currency, and the economy is marching steadily toward a dénouement when bolivars (Venezuela’s currency) will be useful for little more than kindling.

Venezuela has in fact been fueling the fire of economic disaster for quite some time. The socialist programs of Chávez’s administration squandered the country’s scarce capital in wasteful production. As chronic shortages set in, the government turned to price, capital, and foreign exchange controls to keep the economy afloat, each of which led to further chaos. Currently, Maduro’s administration is planning to extend the controls to all commodity prices, in yet another doomed effort to fix the country’s dire economic problems, but new controls will only make things worse. The only way to truly prevent soaring prices is to stop the printing press and give the reins of the economy over to the market by eliminating price controls. The nationalization of private businesses and establishment of total price controls will not cover up disastrous monetary policies, but only prolong and aggravate their effects. They merely add to ever-higher price increases and ever-lower supply of consumer goods and more capital consumption, further eroding the country’s economic foundation.

Venezuela’s dire straits might seem far removed from the problems faced by other nations, and it is easy to believe that hyperinflation is impossible “here.” Yet as Mises warned, the seeds of disaster are sown from the beginning of government intervention in the market, although “the first stage of the inflationary process may last for many years.” But the final stages of economic collapse occur far more quickly: as Peruvian-Spanish writer and political commentator Alvaro Vargas Llosa points out, “going from 60 percent [inflation] to 1,000 percent is a lot easier than going from 3 percent to 40 or 50 percent.” As disturbing as the thought is, the difference between the U.S. and other Western economies and Venezuela is merely one of degree, not of kind.

After all, Chávez carried out his Bolivarian Missions through a program of nationalization, subsidies, and affordable healthcare. This is a familiar refrain in Western economies.

Venezuela’s problems are more easily visible and have escalated more quickly because its capital stock has been largely depleted by an unbridled 15-year commitment to socialist economic policies. Other states such as the US still rely on large capital stocks accumulated in years of freer markets. Therefore, Western economies may not see their toilet paper disappear from supermarket shelves, yet, but rising prices and numerous bankruptcies indicate that the tendency is the same. This cements once again Mises’s idea that no country will find a stable “middle-of-the-road” economic policy. All movements lead toward one extreme: markets or socialism. Mixed economies are just pit-stops in between. The games all central banks play with the purchasing power of money may be more subtle, but they are ultimately just as harmful as conspicuous socialism.

Some have argued that the crisis in Venezuela will most likely “undercut Chavismo’s viability” as a political program. Yet the critical issue is not a political one, but the economic fact that Venezuela is frantically squandering its resources, consuming its capital, and impoverishing its people. If Maduro’s policies persist, and if after the seemingly inevitable collapse the legacy of chavistas loses its viability — “vaccinating” Venezuelans against a return to such destructive regimes — it will be the only good thing to come out of these tragic events.

Although the odds are against it, let us hope other countries learn something from this episode before they too approach the brink of economic disaster.


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Fri, 11/29/2013 - 16:24 | 4200349 Kreditanstalt
Kreditanstalt's picture

Who is going to be wiling to PRODUCE stuff when his salary bill, prices and, ultimately, profits are being dictated under duress through government 'democratic violence'? Would you?

Fri, 11/29/2013 - 16:28 | 4200363 debtor of last ...
debtor of last resort's picture

Other formes of violence will take care of that.

Fri, 11/29/2013 - 16:33 | 4200369 ZerOhead
ZerOhead's picture

The good news is that the toilet paper shortage will soon be solved... albeit with a cheaper single ply although rather colorful substitute...

Fri, 11/29/2013 - 16:42 | 4200390 Colonel Klink
Colonel Klink's picture

I'd rather not wipe my ass with the faces of those to founded the country on solid principles.  Please let me know when Woodrow Wilson, Bernanke, Yellen, or Obama appear on the currency.  Then I'd be more than happy to.

Fri, 11/29/2013 - 16:47 | 4200398 TeamDepends
TeamDepends's picture

Why do these pukes always have to stick their arms out like that?

Fri, 11/29/2013 - 17:02 | 4200430 Colonel Klink
Colonel Klink's picture

It's the special club handshake kind of thing.

Fri, 11/29/2013 - 17:09 | 4200443 TheRedScourge
TheRedScourge's picture

As Twain said, "History doesn't repeat itself, but it often rhymes.". Thatcher also said "They would rather the poor be poorer so long as the rich were less rich", and as we are witnessing once again, economic reality would be happy to oblige.

Fri, 11/29/2013 - 17:15 | 4200460 Colonel Klink
Colonel Klink's picture

So when does the "Obama youth" movement begin?

Fri, 11/29/2013 - 17:27 | 4200485 TeamDepends
TeamDepends's picture

Brother, it has begun!  The Black Panthers are but one group who can run around and do as they please under the watchful eye of Eric Holder.

Fri, 11/29/2013 - 17:03 | 4200433 HoleInTheDonut
HoleInTheDonut's picture

This new guy Maduro is just not working for me.  At least Chavez looked liked a military thug.  When I see Maduro I think "high school dropout" or "C student".

Fri, 11/29/2013 - 17:07 | 4200441 Colonel Klink
Colonel Klink's picture

So in other words, like Bush Jr.

Fri, 11/29/2013 - 19:38 | 4200714 bigkahuna
bigkahuna's picture

I was just thinking that this guy looks like Saddam. He could be in trouble.

It might be the little dictator mustache and the drab green - but he looks like Saddam in that pic.

Sat, 11/30/2013 - 02:13 | 4201413 Colonel Klink
Colonel Klink's picture

He better not start trading oil in something other than dollars.  I've heard that puts you on the immediate hit list.

Don't wanna get "Gdaffi'd"

Fri, 11/29/2013 - 20:17 | 4200798 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

If Zero's grades had not been sealed you would have seen his F grades. Except the courses he passed because of his white half.

Fri, 11/29/2013 - 17:52 | 4200536 WmMcK
WmMcK's picture

We've a while for Wilson ($100k) to make his return. I'm first.

Fri, 11/29/2013 - 20:18 | 4200799 August
August's picture

The talented Mr. Wilson is already portrayed on the $100,000 FRN.

Maybe they'll be back in circulation again soon.

Fri, 11/29/2013 - 20:04 | 4200774 tunnelvizn
tunnelvizn's picture

Soon to be replaced with a single "plyer" system

Fri, 11/29/2013 - 17:07 | 4200444 Colonel Klink
Colonel Klink's picture

Not me, I stopped producing/being productive 4 years ago.  It was my only way of fighting back.  Starve the beast!

Fri, 11/29/2013 - 18:44 | 4200620 mick_richfield
mick_richfield's picture

I'm trying, but it's hard.

I came to this life to make things.

Fri, 11/29/2013 - 19:34 | 4200705 Colonel Klink
Colonel Klink's picture

I still do stuff, it's usually just for betterment of myself now.

Fri, 11/29/2013 - 18:16 | 4200565 Zero Point
Zero Point's picture

The black market will pick up the slack.

I wonder if they'll be using USD, gold and silver or btc as opposed to truckloads of bolivars?

Fri, 11/29/2013 - 21:27 | 4200938 rubiconsolutions
rubiconsolutions's picture

Coming soon to a theater near you.

Sat, 11/30/2013 - 11:16 | 4201776 FredFlintstone
FredFlintstone's picture

Civic duty, of course.

Fri, 11/29/2013 - 16:24 | 4200350 Professorlocknload
Professorlocknload's picture

All will be equally poor.

Fri, 11/29/2013 - 17:08 | 4200449 Colonel Klink
Colonel Klink's picture

At least I'm poor voluntarily!  Makes it easier to stomach.

Fri, 11/29/2013 - 21:34 | 4200953 Iam_Silverman
Iam_Silverman's picture

"At least I'm poor voluntarily!"

Define poor.  Apparently you have a computer and internet access.  More than some folks I know.

Sat, 11/30/2013 - 02:17 | 4201417 Colonel Klink
Colonel Klink's picture

Poor, as in I have NO income.  I still have money and a great life.  Not everything fun in life take a lot of money.  Many simple pleasures are free.

Sat, 11/30/2013 - 11:15 | 4201772 FredFlintstone
FredFlintstone's picture

I am interested in this concept. How do you go about getting a spouse onboard?

Sat, 11/30/2013 - 13:00 | 4201896 Colonel Klink
Colonel Klink's picture

No spouse, no kids, no need to worry abou that for me.  It's hard to get someone else to change their normalcy bias.  My guess is small steps, getting them to self-educate on the matter is the easiest way.  Once their eyes open to what's coming, they come to their own conclusions pretty quick.

Fri, 11/29/2013 - 16:29 | 4200358 krispkritter
krispkritter's picture

Some countries never learn.  Thankfully I live in the US and this could never happen here.

Fri, 11/29/2013 - 16:30 | 4200365 Kreditanstalt
Kreditanstalt's picture

I realise you're being facetious, but North America is blessed too with collective "bargaining" "rights", taxes, "minimum wages", payroll deductions, import duties, rampant price fixing & a MASSIVE social wefare system to support...not a hell of a lot of difference.

Fri, 11/29/2013 - 16:44 | 4200392 Skateboarder
Skateboarder's picture

Not to mention the first world false dignity of labor.

Fri, 11/29/2013 - 17:25 | 4200481 knukles
knukles's picture

Look who remembered their Red Pills this morning!

How far down the reality rabbit hole can you go before complete unadulterated depression and suicidal thoughts?

Fri, 11/29/2013 - 17:33 | 4200497 Skateboarder
Skateboarder's picture

Even to the last second of your breath, you define yourself not by what you have or what you have done, but by how you treat others around you.

Fri, 11/29/2013 - 18:19 | 4200568 TheGardener
TheGardener's picture

You forgot you sarc tag. You define yourself how you treat yourself and keep up your conviction.

Messing about with the `others` is just self justifying how you failed or not, or worse socialist take over of other peoples suffering for your own benefit.

Fri, 11/29/2013 - 21:51 | 4200971 Iam_Silverman
Iam_Silverman's picture

"Messing about with the `others` is just self justifying how you failed or not, or worse socialist take over of other peoples suffering for your own benefit."

Condensed version:

Or, just trying to get laid or borrow money.

Fri, 11/29/2013 - 18:49 | 4200624 mick_richfield
mick_richfield's picture

Not quite, Mithrandir.

You are what you do.

How you treat others is part of what you do -- not all of it.

A lot of people in this time will tell you that you must treat others well.

I don't think that's quite right.

I think you should treat others as they deserve to be treated.

And yourself likewise.

Fri, 11/29/2013 - 19:37 | 4200712 Skateboarder
Skateboarder's picture

Perhaps the both of you have read this past its intention. I said how you treat people. I never said anything about nice.

Let me give you an example. I had a great college friend a few years ago. We skateboarded together and built ramps and shit. Over time, I got second-class treatment before our time together came to an end. I stopped taking calls. Over time he had called once in a while, but this year the messages are exploding. He really does miss me. The cold shoulder always works. ;)

Fri, 11/29/2013 - 20:20 | 4200803 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

It is harder to find people who understand that. I get tired of looking.

Fri, 11/29/2013 - 16:50 | 4200410 NOTaREALmerican
NOTaREALmerican's picture

As does almost every other country on the planet.

What other system is there to keep the top 50% from eating the bottom 50% alive?

Fri, 11/29/2013 - 18:53 | 4200631 Anusocracy
Anusocracy's picture

Getting rid of government.

Government is, first and foremost, a tool of the rich. It always has been, even if a bunch of clueless morons call it democracy.

Fri, 11/29/2013 - 16:31 | 4200368 Winston Churchill
Winston Churchill's picture

Uber Schleswig ?

Fri, 11/29/2013 - 23:30 | 4200440 Fight-Club
Fight-Club's picture

I advise all to be aware of the potential impact of Venezuala's collapse.  While almost anything can happen, the chances that oil production is cut off is high.  An ensuing political stalemate may evolve between China (who has rights to most of Venezuela's production), Russia (who provides arms), and the US, (which may be compelled to assist a rebel counter-revolution if misery spreads like Syria, and missiles (purchased) from Iran are targeted at the US.).  

Fri, 11/29/2013 - 16:40 | 4200383 Yen Cross
Yen Cross's picture

  In the U.S. you buy votes with obama phones & EBT cards. In Venezuela you buy votes with THIS...

Fri, 11/29/2013 - 16:44 | 4200395 Colonel Klink
Colonel Klink's picture

That's pretty much what you buy votes in Amurika with, it's just more colorful and rectangular.

Fri, 11/29/2013 - 18:56 | 4200634 mick_richfield
mick_richfield's picture

Votes don't matter, to people who can create money.

If I gave you the task of controlling all politics in America in 20 or 30 years -- and gave you the ability to create trillions of dollars -- don't you think you could do that?

And if you still needed to buy votes after that time, I would have you eaten.


Fri, 11/29/2013 - 16:47 | 4200400 debtor of last ...
debtor of last resort's picture

12 mega rolls = 48 regular rolls. That's a nice fucking piece of inflation.

Fri, 11/29/2013 - 16:53 | 4200416 Yen Cross
Yen Cross's picture

  LMAO! Nice posts fellas. Greenies for the both of you.

Fri, 11/29/2013 - 16:44 | 4200391 MeelionDollerBogus
MeelionDollerBogus's picture

doesn't sound right. Venezuela is not ruled by corporations. America is. America is forking over all the cash to corporate oligarchs. Venezuela is not. That's not "degree" that's direction.
Venezuela is socialist. America is Fascist. They aren't the same.

Fri, 11/29/2013 - 16:46 | 4200396 Colonel Klink
Colonel Klink's picture

No but the results are the same for the population.

Fri, 11/29/2013 - 16:47 | 4200402 Skateboarder
Skateboarder's picture

((( all -isms ))) -> oppression

Fri, 11/29/2013 - 17:04 | 4200434 Colonel Klink
Colonel Klink's picture

Works with 'ish too!

Fri, 11/29/2013 - 17:18 | 4200467 Skateboarder
Skateboarder's picture

Satan - Oppression

"A piece of destiny old and free
For a life condemned by tyranny
A young man laughs as his father dies
But a young man will grow old
In succession
Life goes on in an evil land
Where a man can die and the kings commands
No reason
One man rules and the rest obey
You think you can say what you want to say
It's treason

Far beyond the mountains in the east
A woman prays
Twenty years have passed since the day
A young man went away
Away, he climbed greatest heights
Reaped the virgin fields
A way to break the storms of rock
Break the dark lord's shield

A young man dies in the land of no where
Where the seeds of death are already sown
A woman waits in the eastern hills
With a dying hope from a dying heart
City prides the new king crowned
Into the realm don't make a sound
A young child born to a great sunrise
Looked up to the sky with helpless eyes


Fri, 11/29/2013 - 17:23 | 4200478 NOTaREALmerican
NOTaREALmerican's picture

'ese' too.  

Funny how humans assholes the entire world round.  

Fri, 11/29/2013 - 16:50 | 4200406 Kreditanstalt
Kreditanstalt's picture

America has: price fixing, fake asset "values", central banking, government medicine, government schools, a HUGE army, government police, pro-labour legislation, government housing, foodstamps, fiat currency, subsidized student, subsidized home"owners", artificially cheap loans, inflating currency, subsidized mortgage loans, subsidized farmers, "minimum wages", dictated working conditions and a MASSIVE public sector.

Why is Amerika NOT just as socialist as Venezuela?

Fri, 11/29/2013 - 16:54 | 4200414 NOTaREALmerican
NOTaREALmerican's picture

All that matters is what percentage of the loot is going to what percentage of population.

The US still has enough going to the peasants to keep them decile.    At what point does that change?    Who knows, but we're not to the Venezuelian distribution split yet.

Fri, 11/29/2013 - 20:25 | 4200814 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

You can buy toilet paper at fucking convience stores. You can buy toilet paper at almost any general variety consumble store in any fucking state. You can not do this in Venezuela or do you not understand that this is about access to markets under total control of redistributive thugs?

Fri, 11/29/2013 - 19:01 | 4200643 jeditolstoy
jeditolstoy's picture

Fascism is a cousin of socialism. It's national socialism, as opposed to the Marxist type international socialisism. But socialism all the same.  Both don't believe in free markets, and are leftist in origin.

Wed, 12/04/2013 - 05:01 | 4202825 MeelionDollerBogus
MeelionDollerBogus's picture

COUSIN once removed : - what is Fascism, Von Mises, John T. Flynn

Fascism is NO kind of socialism: it is CORPORATE oligarchy merged right into government. By no means do the people (citizens) own the means of production - the PRE-condition for SOCIALISM.

The entire left/right paradigm is a lie - a lie you obviously believe.

It doesn't even exist.

Socialism IS compatible with free markets: one collective group can deal with another non-overlapping collective group in a manner that IS a free market. They may not but they ARE able.

Fri, 11/29/2013 - 16:52 | 4200409 Kirk2NCC1701
Kirk2NCC1701's picture

"All your oil belongs to our oil cartel" - Exxon Mobil

"All your oil belongs to our currency-cartel" - The Fed

"All your asses belong to us" - CIA + DoD

"You can keep your freedom, if you want to" - BHA


Fri, 11/29/2013 - 17:08 | 4200445 earnulf
earnulf's picture

Speaking of inflation, took a quick trip through wally world after the sales and happened to notice the popcorn tins.   You remember those massive, five gallon tins that carried all sorts of wonderful and delicious popcorn!   Sadly inflation has struck even these bastions of corny goodness.     If any of those cans was 3 gallons, I'm a monkey's uncle.       Every one of them looked like a kids drum compared to the boom boxes of yesteryear.

Fri, 11/29/2013 - 17:16 | 4200463 Colonel Klink
Colonel Klink's picture

Boom boxes huh, ewe raycis!

Fri, 11/29/2013 - 17:17 | 4200465 lakecity55
lakecity55's picture

And so, Maduro and Backdoor Barry began a race to the Bottom.........

Fri, 11/29/2013 - 17:20 | 4200470 Colonel Klink
Colonel Klink's picture

But I'm not so sure Maduro is a butt pirate like Obama.  I get the distinct feeling Obama will be the first to the bottom.

Fri, 11/29/2013 - 17:27 | 4200484 Son of Captain Nemo
Son of Captain Nemo's picture

Just maybe when the U.S. Government minds it's own business in this part of the World like we also "never interfere" in the Democratic process in places like Honduras, Bogota, Mexico Ukraine, Georgia, "oh just about and every place else" on the map that has oil, agricuture and mineral wealth.

Not saying that much of what is being said here isn't true, but it leaves out the catalyst and "Catch 22" for the leaders like Maduro and Chavez having to implement radical economic mechanisms to stave off the constant threat of a predatory Government in the U.S. that is always at it's throat or it's feet in order to keep it's interests intact.

Just sayin

Fri, 11/29/2013 - 17:38 | 4200506 Iam Yue2
Iam Yue2's picture

* The United States remains Venezuela's largest importer, however, taking 40 percent of its crude oil exports in 2011.

Turning a blind eye.

Fri, 11/29/2013 - 17:41 | 4200511 mark mchugh
mark mchugh's picture

But, but what about the wealth effect?

Venezuela's stock market has risen 350,000% since 1993.

Surely stock momoism will save the country.  They don't call it South Cramerica for nothing.

Fri, 11/29/2013 - 17:46 | 4200522 joego1
joego1's picture

I heard Venezuela has a hot new virtual currency called "wipecoin".

Fri, 11/29/2013 - 18:26 | 4200585 bugs_
bugs_'s picture

is your TP commie red or eco green?

is that what we are in line for comrad?

Fri, 11/29/2013 - 18:40 | 4200610 rodgerleanne
rodgerleanne's picture

Oh Mr. Obama,  It's time for you to make a list of your scapegoats for when the USA goes belly-up like Venezuela.  God forbid you'd be cornered into admitting that it was all your fault. 

Fri, 11/29/2013 - 18:57 | 4200635 jeditolstoy
jeditolstoy's picture

MeelionDollerBogus : Fascism is a cousin of socialism. It's national socialism, as opposed to the Marxist type international socialisism. But socialism all the same.  Both don't believe in free markets, and are leftist in origin.

Fri, 11/29/2013 - 18:56 | 4200639 dobermangang
dobermangang's picture

Everybody's equal.  Nobody has toilet paper.

Sat, 11/30/2013 - 11:09 | 4201762 FredFlintstone
FredFlintstone's picture

I am an cause and effect kind of guy and was wondering how a toilet paper shortage followed a food shortage. Well maybe they can use their currency. 

Fri, 11/29/2013 - 19:46 | 4200677 gallistic
gallistic's picture

This particular load of excrement is not a serious consideration of the particular issues of Venezuela. It does not cite accurate, detailed, or even relevant facts. It also makes some massive (and demonstrably incorrect) assumptions.

No man with half a brain can take this article seriously. One realizes very quickly that this is merely an ideologue using Venezuela as a tool to expound on his dead messiah's economic theories and preach his gospel.

Whether the facts square up with reality is not neccessary or required for a true defender of the faith to proselytize.

When it comes to Venezuela, the discussion here is like a bunch of five year old children discussing complex economic and geopolitical issues of the world- they don't have a freaking clue.

The mainstream media is playing their role, painting the issues in the same distorted, nonsensical, non-factual way that the propaganda narrative requires.

Zero hedge is serving as a platform and microphone for this. Shame on the Tylers for the Venezuela tripe they have been trotting out for the past few months. Whether by design or not, Zero Hedge is an enabler of the powers that define and propound this narrative.

The inconvenience and difficulty in posting some hard-hitting, serious articles and discussion of the true issues in Venezuela is that one has to go into non-mainstream, primary sources and academic places to find them. There is an iron-clad consensus in the "main stream media" on the "party line" for Venezuela. One simply cannot have a serious discussion relying on MSM "products".


Fri, 11/29/2013 - 20:32 | 4200833 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

WOW. You had all that time to type, if you do not know how to create a link, to any source that would be helpful.

You could have pointed all of the rich resource of materail that is out there disputing the theme or the validity of any point in the article, yet you chose to attack where it is presented.

If you are a communist you should try and become the WH Press briefer because Obama needs more people like you who attack the messenger while lying through their fucking teeth.

Fri, 11/29/2013 - 21:56 | 4200984 Iam_Silverman
Iam_Silverman's picture

Yes, his discussion was very mattering and helped to understand the blobbing up of American Exceptionalism with Venezuelan Citizenism.

Sat, 11/30/2013 - 03:15 | 4201489 gallistic
gallistic's picture

I just didn't feel like doing it this time. Look back through some of my previous posts and you will see many resources and material.

And no, I am definitely not a communist.

Sat, 11/30/2013 - 08:33 | 4201644 Mike in GA
Mike in GA's picture

You are wrong on this issue/article, communist or not.  I've read many articles over the years concerning Chavez and now Maduro, el bus driver/presidente.  Every article I've come across, bar none, mentioned the same risks that are now playing out in real time across their economy. 

The Austrian Economics principles cited in this article are dead on.  A little gov stimulus here and a helpful gov program over there lead to actual economic distortion and further gov policies to remedy those distortions create other distortions and then every gov - bar none - is off to the races as far as central planning heavy-handedness.  Once the price signal is dampened, distorted, removed or otherwise tampered with, misallocation of scarce resources becomes unavoidable. 

It is more acute now to see the ongoing train wreck of Socialist For-the-People Policies clean shelves, impoverish millions, deprive pensioners of dignity and drive everyone toward central government dependence.  It sure as hell ain't academic anymore, if you're paying attention.

Just wait.  Not only will Venezuela get worse and worse as the Beneficient Maduro robs through inflation and jobs the very citizens he purports to want to help, but the inflation there makes food unaffordable.  Socialism will be on track to kick off the 21st century the same way it spent the 20th - killing and impoverishing people by the millions.  One would hope our current "leadership" would learn from  this real time example and from history for once rather than attempt to outdo its most egregious errors.

Fri, 11/29/2013 - 19:17 | 4200678 pashley1411
pashley1411's picture

If you believe Venezulans are all, equally, becoming less rich, you are listening to the propaganda.    Au contraire.

Every economy system has its winners, as well as it losers.    Government officials, community organizers, security officials, will be at the front of the looters.    At the end of the day, land, most buildings, and many production facilities, are left standing; one set of owners has been taxed or burnt out, another set of owenrs moves in, whether directly in the form of private ownership, or as some bureaucracy.   

Fri, 11/29/2013 - 20:35 | 4200837 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

Some things eat some things get eaten.

Sat, 11/30/2013 - 23:34 | 4202951 MagicMoney
MagicMoney's picture

Shortages of real goods like toilet paper suggests otherwise. Changing capital owners doesn't produce the same results. Karl Marx was ignorant of economics, and always used the term capital owners. Whether how something is executed, or produced is irrelevant of who is the capital owner. This is completely false. Karl Marx, and people who follow him simply believe in the change of capital owners with no regard to the impact of productivity of the new capital owners ordained under socialism. Venezuela is indeed more poorer than it was before. Wealth is the actual ability to meet the needs of society. Venezuela is going through a period of capital consumption, which is a trend to the natural state of poverty. IE no toilet paper, no electricity, etc is where the tendency is going.

Fri, 11/29/2013 - 20:23 | 4200807 Iam Yue2
Iam Yue2's picture

On the attempt by Venezuela to control Twitter, through censorship;

Sat, 11/30/2013 - 23:59 | 4202982 MagicMoney
MagicMoney's picture

Ludwig Von Mises was one of the top minds, if the not the top mind in economics. He is correct. Mixed economies are usually pit stops toward full blown socialism. The state does not typically shrink, or even stay stagnant, it gets bigger, because that's what the state does, it wants more control. A mixed economy coming from a free market, laissez faire economy in it's past such as the US has is going towards more government control. More regulations, more taxes, more government programs, more welfare, more punishment for employers, even workers. The trend is clear, the US is going more socialist, toward complete socialism.


China on the other hand is a communist country, since the communist revolution, China is going towards more the opposite of a totalitarian state, toward are more liberalized economy. The tendency is the opposite. Even national communist Vietnam is shown it's pro free market policy reforms in it's economies. These asian countries are realizing that economic freedom isn't bad, and is actually beneficial to their own society.


The US, and Western European economies are coming from the opposite directions from this communist nations in asia. While the US, and it's Euro states are becoming more socialistic, asian economies are becoming more freer.


Governments in a mixed economies always have a tendency to blame market failures on shortcomings of a national goals, so the state uses the excuse to expand more power to achieve national socialist goals, like subsidized and regulated healthcare.  Strong -arming the market into doing things it wants to achieve, when all along it's government that undermines the tendency of the market economy over time to achieve the wants, and needs of society. Government creates the problem, then seeks to force correct the problem with new laws, only to create more problems, which will be addressed yet again by more government laws to correct the unintended consquences of previous laws. US health care is a good study on this phenomenon. As such governments or the state think they are smarter than everybody else.


Venezuela is going through a period of capital consumption. The attack on capital directly with inflation, government regulations, and nationalizations. Austrian economics is very simple. It's not convoluted or contradictory in describing "what is". The fact that nationalization is used as a cure to fix a market failure is classic how intervening governments operate. They create the problem, and tell everybody they can fix it. It's a racket that inevidentably leadss to full socialization of the a economy. Socialist don't specialize in optimal capital production. The core of socialism is the redistribution of capital, in doing so damage the capital structure of the economy. Even Barack Obama Senior acknowledged this by terming "pro growth" policies affiliated with free market capitalism, and socialist policy of redistribution. One being pro-growth, the other having a different goal altogether ie socialism.

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