Congratulations To Bolivarian Socialism: Now The Chavistas Riot For Food In
http://www.forbes.com/sites/timworstall/2016/06/03/congratulations-to-bolivarian-socialism-now-the-chavistas-riot-for-food-in-venezuela/#62b1c9526367
The central contention of that Bolivarian socialism, that Hugo Chavez led revolution in the economic affairs of Venezuela, was and is that the poor of that country deserve a better shake of the stick. And there’s nothing at all wrong with either that claim or that desire. It is an extremely rare person who actually revels in the poverty of others for example, we do generally think that the function of government is to make people better off. However, it does rather matter how you go about trying to achieve that goal. And a central contention of the free market types like myself is that you do not achieve that goal by adopting the idiot economic policies that Chavez and now Maduro have done. For if you try to do it that way then you will make those poor worse off, not better. And, let us be honest about this, making the poor worse off while trying to make them better off is not a good advertisement for that set of economic policies.
That things are becoming worse off is obvious:
Venezuelan security forces fired teargas at protesters chanting “We want food!” near Caracas’ presidential palace on Thursday, the latest street violence in the crisis-hit OPEC nation.
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As to why this is happening, I’ve been vocal around here in pointing out that it’s a simple result of idiot economic policies. That desire to make people better off is just fine. But there’s ways of doing that which make sense, which work. The Nordic social democracies do rather well for example: they tax lots so that government can buy lots for people. This may or may not be to your or my taste but there’s no doubt that it works. And those same Nordics make very certain to leave a robustly free market churning along underneath that taxation. That’s rather what makes the system work. That isn’t what Chavez or Maduro did. Rather, they decided to go mess with markets and this is what has caused the current collapse.
Zim: Article goes on to a page 2.
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" In short, Venezuela is the poster child of the perils of rejecting economic fundamentals. "
An alternative tradition, going back to Saint Thomas Aquinas, held that prices should be “just.” Economics has shown that this is a really bad idea, because prices are the information system that creates incentives for suppliers and customers to decide what and how much to make or buy. Making prices “just” nullifies this function, leaving the economy in perpetual shortage.
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*** But whatever you or we do don’t go messing with markets. ***
Not because markets are some sacred reification of the principles of the Godhead of economics, Adam Smith, but simply because messing with markets doesn’t work.
This is true of fixing food and toilet paper prices, as Venezuela shows, it is also true of fixing the price of labour or of rents, as the examples of the minimum wage and rent control show.
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Zim.
Mad Poet Strikes Again.
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