Venezuelan Price Controls
The economic brilliance of Venezuelan president Hugo Chávez continues to amaze the world. Rather than performing training drills or studying in the classroom, some of his reserve soldiers are being sent out to enforce government price controls. As Chávez spreads his systematic, maniacal socialism throughout Venezuela, the weakened economy is deteriorating faster than a Hollywood marriage. As always, centrally planned prices are leading to shortages as businesses fail or are shut down for defying regulations. Many choose not to sell anything as the mandated selling price would result in a net loss. The inefficiencies of such regulated economies are obvious and well documented. Unfortunately for the Venezuelans, as Chávez seizes more private businesses and converts them to state entities, they enjoy less and less freedom.
While the United States is far from this state of affairs, Venezuela serves as an important reminder. Without both the documents given to us by the Founding Fathers and a capitalistic economy, the United States would never have achieved such greatness. As the late Milton Friedman best explained, there is a direct relationship between capitalism and freedom. The more capitalistic a nation, the more liberty its people enjoy. Conversely, the more socialistic a nation, the more the heavy hand of government must step in to maintain its control.
On its face, the correlation appears so simple. Yet I fear many Americans do not connect the dots when it comes to economics. The assault on capitalism and corporations is so strong that it even slips into the subconscious of conservatives. There is such a fear of being stigmatized as unrealistic, cruel, or condescending, that many people I know that would otherwise be conservative, acquiesce. They talk themselves into supporting programs or accepting mandatory deductions from their paycheck because we “have a responsibility” to “help others” or “it’s only right.” Or, they support tobacco or local sales taxes in order to “generate more revenue” rather than demanding spending cuts or looking for an answer through private enterprise. “It’s just the reality of the situation” is often the refrain. But when does that justification stop being valid? Never. And therein lies the danger. Usually, we trade away our freedoms in a piecemeal fashion, but they are traded away nonetheless. Once another 1/2 cent of every dollar is taxed, regulation put in place, or agricultural price floor mandated, the chances they will ever go away are slim to none. On the other hand, it’s almost certain the government will need to grow in order to maintain the trade off we made.
We might be a long way from Venezuela, but as we slowly acclimate to socialism, we stray further from the capitalism that has made our nation great. No nation has ever taxed or regulated its way to greatness and I doubt any ever will. The excellence of America thrives because its people are allowed to live free and to innovate. It’s a shame capitalism, which has done more to improve the lives of people across the world than any program FDR or Bono could have envisioned, is so maligned. And more perverse still is the glorification of a socialism that has taken the lives of tens of millions of people and left nations destitute. If we believe socialism is the answer to the world’s evils, then lets go after it with gusto and follow the lead of Chávez. But if it is as devastating and controlling as history shows, why do we want anything to do with it, no matter how small?
