Saturday, October 18, 2014

Solving Inequality the Venezuela Way

The constant drumbeat about inequality coming from the Obama Administration and, more recently, echoed by Hillary Clinton and Janet Yellen will produce more calls for direct government intervention to redistribute income and wealth.  They have a blueprint to follow -- Venezuela.

To see how that's working out, just stayed glued to your armchair.  Venezuela is self destructing as an economy. Once the pride of South America, helped by a booming oil industry, Venezuela is now degenerating into economic chaos.

Venezuela's Hugo Chavez was "democratically" elected to deal with inequality.  His message was, in most respects, the same message that we hear from Obama, Clinton, Yellen and others who find capitalism and free markets unseemly.  Chavez followed the earlier examples of Cuba, the Soviet Union and other enemies of "inequality."  The leaders of these countries lived in luxury while the average citizen descended into a political prison and a life of economic deprivation.

Under Chavez, Venezuela embarked upon an expanded version of the Obama agenda -- increasing government control of the economy, massive subsidies to large (politically friendly) sections of the population and an unceasing, unrelenting war of words (and arbitrary new rules) against the business community.  The rule of law became a thing of the past and civil liberties disappeared in the interest of reducing economic inequality (as always happens).

In some measure, Chavez succeeded.  If you ignore the extreme wealth of the political class in Venezuela, the rest of the country is showing less and less inequality, as gradually the entire populace moves in the direction of poverty.  This follows both the Soviet model and the Cuban model closely.

The big government approach to reducing inequality always and in every case leads to reducing the vast bulk of the citizenry to penury, while the political leaders bask in their palaces and pat themselves on the back for their anti-inequality accomplishments.

Meanwhile, what does capitalism do for you.  Check out modern China to see.  Today, the only place on the globe that shows economic growth is China and its periphery.  Capitalism is the order of the day along the eastern seaboard in China and result is over 300 million people have moved from dire poverty to middle class economic status.  Not bad.

There are no examples in the history of the globe where waging war on inequality and abandoning capitalism has succeeded in improving the lives of the average person. But, there are plenty of examples of the Hugo Chavez experiment in Venezuela.  Obama, Clinton and Yellen would like to bring the Venezuela experiment to the US.

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