Free Markets, Free People

Daily Archives: August 19, 2013


Once again socialism is proven to be a lie

The lie – that central planning and a command economy run by enlightened socialists is superior to capitalism.

As usual, that’s been proven to be false … again …  and as irony would have it, capitalism is their savior.

Steve Orlicek, a rice farmer here, is living the American dream. He owns a thriving business; he vacations in the Bahamas.

His good fortune springs from many roots, including an unlikely one: He is a prime beneficiary of the socialist economic policies of Hugo Chávez, Venezuela’s late president and critic of what he called U.S. "imperialism."

I know, you’re just surprised, right?  I mean, Venezuela, pre-Chavez, was pretty much self-sufficient.  And the new, better way that Chavez promised – *cough* socialism *cough* – was going to make Venezuela the economic jewel of South America.  That is, after he stripped the foreign companies of their assets and nationalized or took over the businesses of the home-grown capitalists first, and then put himself in charge of the economy.

And, as usual, the result of that tired old plan played out exactly as it has everywhere else in the world.  It failed miserably:

It is a paradoxical legacy of Mr. Chávez’s self-styled socialist revolution that his policies became a moneymaker for the capitalist systems he deplored. During his 14 years in power, he nationalized large farms, redistributed land and controlled food prices as part of a strategy to help the poor.

But these policies turned Venezuela from a net exporter to a net importer of rice—from farmers like Mr. Orlicek. "The rice industry has been very good to us," Mr. Orlicek said, sitting in his newly renovated home, appointed with a baby grand piano played by his wife, Phyllis.

It isn’t just rice. Production of steel, sugar and many other goods has fallen in Venezuela, leading to occasional shortages. Until recently, Venezuela was largely self-sufficient in beef and coffee. Now it imports both.

In this year’s first half, the U.S. exported $94 million of rice to Venezuela, a 62% jump from a year-earlier, making Venezuela the U.S.’s fourth-largest rice market, according to the Department of Agriculture.

Overall, Venezuelan imports have quadrupled since Mr. Chávez took office, to $59.3 billion in 2012 from about $14.5 billion in 2000, according to Venezuela government figures and economists at Barclays PLC. Exports to Venezuela from the U.S. hit $12 billion in 2011, up 16% from the previous year, the latest U.S. government figures show.

I remember the US bailing out the Soviet Union year after year when its wheat harvests again failed to produce the needed grain.  Socialism fails again.   Command economies have never worked (except in the short periods of warfare).  Complex systems like economies do not lend themselves readily to central control and function properly.  No central authority is able to a) know all the variables that comprise a healthy economy, or b) how to weight them or c) understand their complex interactions.  Healthy economies are true grassroots systems.  They are driven by billions upon billions of buying decisions made by individuals – something the socialists would prefer to ignore. 

Venezuela is just the latest in a long line of countries and economies who have fallen for the utopian promises of socialism and again proven that it is and always will be a leftist fantasy.  Unfortunately, real people end up suffering for the “dream” of something for nothing.  But the belief must be ingrained somewhere in the genetics of our species because time and again a new group falls for the promise and ends up flat on their face while the capitalists are thankfully there to bail them out.

~McQ