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The Collapse of Venezuela is a Current Example of What Results When Socialism Is Allowed to Overtake Capitalism

By: Steve Johnson

5/12/2010 - 115 Comments

Socialist president Hugo Chavez is leading Venezuela into a complete economic collapse that is likely to end in massive death and starvation by the millions.

Socialism is evil, not because its goals are bad, but because it is impossible to implement without leading to massive death. 

Socialism has been proven again and again throughout history to fail, yet it continues to be attempted by the next guy that is too ignorant to study history or to seek the counsel of those who have.

In an effort to take over the entire private economy, Chavez has systematically destroyed the productivity and wealth creation of the entire economy. 

In order to pay for his government expansion programs, Chavez has resolved to printing money – which has inevitably led to massive inflation. 

Earlier this year, Chavez devalued the bolivar by as much as 50 percent in an attempt to stimulate production and exports. 

Chavez created price controls to try to stop the inflation, but price controls always lead to shortages, which they did and when they are lifted prices jump up until supply catch up to demand. 

This is all economy 101 for anyone that has read a few books about capitalism or government economic central planning, like Henry Haslett’s book “Economics In One Lesson”.

Economics in One Lession

The shortest and surest way to understand basic economics 

But Chavez is a stubborn fool that refuses to accept the laws of economics, which are like gravity and he continues down a path of no return.

Venezuelan consumer prices surged the most in seven years in April after the government raised price caps on basic foods and bolivar fell to record lows in the unregulated currency market.

The Venezuelan currency will soon be worth nothing, and the people will spend 100% of their income on food, until they starve.

Annual inflation accelerated to 31.9 percent – hyperinflation range.  The policies that Chavez has led his nation are criminal and a humanitarian disaster in the making. 

The supporters of Chavez’s socialism policies should be deported to live in Venezuela under his disaster.

U.S. and Europe

With such a clear and present example unfolding in real time, it is unthinkable that the U.S. or Europe or China or any other nation should resort to printing money or promoting government expansion with more regulation and taxes to further crush the wealth producing sectors of the economy.

But that is exactly what they are doing.  The global financial meltdown is getting worse, not better.   Obama should take a good look at Venezuela and see the future of what his policies will lead to. 

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