The Scoop on Venezuela
Aug 22, 2013
I found it fascinating to read a story in the Wall Street Journal this week – front page – about a successful Arkansas rice farmer. The story reads, "His good fortune springs from many roots, including an unlikely one: He is a prime beneficiary of the socialist economic policies of Hugo Chavez."
Here is what this is all about. Chavez’s heavy-handed socialist takeover of the Venezuelan economy has made a lot of money for capitalists in the U.S. and a lot of other countries. When Chavez came to power, he quickly began to nationalize many of the farms. Venezuela soon became a big net importer of rice. We expect to sell them 200 million dollars worth of rice this year, and not just rice, but also beef and a long list of other foods. Chavez continued to nationalize other industries. Capitalist countries have been the winners; U.S. Steel (Alcoa) is a big winner; Kimberly-Clark, with an order for 50 million rolls of toilet paper; Brazil’s ag exports to Venezuela have exploded.
You don’t have to be a rocket scientist to recognize that Chavez’s takeover of business after business has plunged the country into poverty. Their inflation is 42%. Their currency value is shrinking right before your eyes. Their budget deficit is worse than Greece.
The only thing that is keeping them afloat is oil. And, since they nationalized that business, their production has been falling. Although it is obvious that their government policies have failed, up until Chavez’s recent death, he continued to preach, "We are against capitalism."
So, what is my take on all of this? I would say that it is clear that Venezuela under Chavez is a prime example of how not to run a country. I have been to Venezuela before Chavez. It’s only a matter of time and the country will have to change. I have been to Cuba – another sister socialist state mired in poverty and going nowhere. I have been in South Korea – a rich, progressive nation. Just look north to North Korea and see a poor country falling further behind every day.
I think the global pie is big enough for everyone to prosper, but if you don’t follow the capitalist model, if you rely on the government to run your business, you don’t have a chance.