Monday, July 18, 2005

Chavez to Confiscate Private Businesses

Radical leftist Venezuelan President Hugo Chavez continues to desperately try to rescusitate the moribund Venezuelan economy with the usual menu of failed socialist policies. Having secured power for himself through class war rhetoric, and then stacked the government with his cronies, Mr. Chavez is now proposing to "revive" closed businesses by confiscating them and re-opening them under government management.
The Venezuelan government has warned it will confiscate hundreds of private companies that are lying idle if they fail to re-open.

President Hugo Chavez said the firms' workers would be given help to set up co-operatives and re-start production for the benefit of the community.

He said the move was needed to fight poverty and end Venezuela's dependence on "the perverse model of capitalism".

Some business leaders fear it may lead to a wider attack on private property.

The "perverse model of capitalism" seems to work pretty well just about everywhere. But the socialist model that Mr. Chavez seems so keen on has failed in every country in which it has been tried. But don't tell that to Africans and South Americans, who appear not to learn from each decade of economic ruin brought to their continents by Marx-loving demogogues like Mr. Chavez (or Mr. Castro, or Mr. Mugabe, etc.).

Speaking on his weekly television programme, Mr Chavez said the measures were necessary.

"It's against our constitution," he said. "Just as we cannot permit good land to lie uncultivated, so we cannot allow perfectly productive factories to stay closed."

The Venezuelan leader said that more than 700 companies in the country were idle.

Of these, 136 were being examined for possible expropriation and a small number were already in the process of being taken over, he said.

The president's TV show was broadcast from a cocoa-processing plant in eastern Venezuela, which is re-opening as a workers' co-operative after shutting down nine years ago.

Private companies usually shutter their doors when the economic conditions prevent them from earning a proper return on operations. That is to say, it costs them more to run the company than they receive in revenue. When a government tries to run a private enterprise, the same economics apply, save that the government can keep the operation running at a loss by subsidizing that loss with taxpayer money. Unfortunately, the money is still being lost. Now it's just being drained from the treasury, which means additional taxes will need to be raised to cover the short fall. But since economic activity hasn't actually improved, there's no additional wealth in the economy to tax, therefore, more private property gets confiscated to hide this fact. This process continues until virtually all wealth in the nation has been appropriated by the government and squandered, at which point the government falls or turns into a really nasty, and very bloody dictatorship, which promptly blames everyone else for its problems. Sadly, Venezuela seems headed for the second fate.

But Mr Chavez did hold out an olive branch to employers.

He said more than 1,000 firms in Venezuela had partially closed down simply because of economic difficulties.

"We want to work with you to help restore your production," he told company owners.

Venezuelan business leaders have expressed concern that government policies on land reform and co-management in industry could signal the beginning of a wider attack on private property.

Earlier on Sunday, Venezuela's most senior Roman Catholic Cardinal, Rosalio Castillo, accused the president of acquiring dictatorial powers.

But in his broadcast, Mr Chavez again insisted that Venezuelans have a clear choice.

"Either capitalism, which is the road to hell, or socialism, for those who want to build the Kingdom of God here on Earth," he said.

That last bit will only increase Mr. Chavez's popularity on American college campuses, where socialism and communism are still regarded as the premier economic models. However, it should make Venezuelans' blood run cold. If Mr. Chavez really believes that socialism leads to the "kingdom of God on Earth", then Venezuela is in for a long, dark and bloody night. People who try to establish 'kingdoms of God on Earth" usually end up creating scenes straight out of a Heironymous Bosch painting. Socialists who try this typically end up killing a great many people before they are stopped.


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