Chavez "Nationalizes" Petros, Eyes Banks, Steelers

This will be a very interesting experiment. Perhaps this is what the people of Venezuela want. In any case they are getting it: socialization, communism, collectivism, whatever you wish to call it. Will this attempt overturn the results of USSR, China, Vietnam, Cuba, and all the other attempts at government ownership of the "means of production" and "resources"? I'm confident of the answer and thankful not to be living in that petri dish! Let's wait and see...


Nadir said...

"Private banks have to give priority to financing the industrial sectors of Venezuela at low cost," Chavez said. "If banks don't agree with this, it's better that they go, that they turn over the banks to me, that we nationalize them and get all the banks to work for the development of the country and not to speculate and produce huge profits."

Paul, what's wrong with focusing on widescale domestic economic development versus all profit being held by a few greedy executives who make their money off of account holder interest?

Explain your position. Don't just use propagandist buzz words like communism, socialism, and collectivism.

What is fundamentally wrong with a broader distribution of wealth to the many, especially when it is the many whose wealth generates the profits?

Paul Hue said...

My study of history and economics leads me to conclude that governments controlling resources, such as banks and oil, and making decisions in the name of improving the world, lead to disaster for the controlled resource.

On the other hand, private control of these resources, with individuals trading goods and services freely with each other and governments intervening only to enforce contracts and adjudicate disputes, leads to the best possible results for the most possible people. Within such a scenario, broad swaths of the population earn income and build wealth. This is one reason why so many people move to the US and so few leave, and one reason why countries like Venezuela gain few immigrants and produce increasing numbers of emerges.

Socialist systems like those advocated by Chavez here for petro, oil, and steel industries certainly achieve their goal of preventing a few people from getting very rich, and evening out the wealth distribution, but at the expense have having such a low average income and level of wealth that "the people" start moving to places like the US, where income naturally distributes according to a bell curve, but where even the officially "poor" people have a much better life, with more material resources and possessions, and much greater chance for rewards for smart choices, than in places like Venezuela.

I totally agree with your assessment that a nation has more overall wealth if a large fraction of people has wealth. This is why those dirty, rotten, greedy rich people can only succeed in getting rich (or rather, more of them can succeed, and to a greater extent) if a maximum fraction of people have wealth and income.

There is more wealth to be made by the masses of Venezuelans owning homes and cars than in living in lean-tos and lacking autos. Leave humans alone to trade goods, services, resources, and labor with each other, and they will make the best world possible. I expect that you will find that the widespread lack of prosperity in Venezuela derives not from a lack of a smart and compassionate leader owning and allocating all the resources, but rather from government corruption, incompetence, over-taxation, and over-regulation preventing people from creating prosperity for themselves and with each other.

Nadir said...

But nations like Libya have done really well with nationalized oil. They do a very good job of distributing the wealth among the populace. They still have some rich people, but the populace isn't impoverished.

This is the goal of a country like Venezuela. It is not the goal of a nation like the US where the wealth is increasingly being concentrated into fewer and fewer hands.

The US middle class is shrinking and the lower class is growing. The top 2% are making more money, but the rest of us are being eaten up by inflation and lower wages. We're working longer hours and don't have a better quality of life.

If privatizing a natural resource like oil or banks could help lift very poor people out of poverty, how can that be a bad thing? It's only bad for the very wealthy people who own the banks and oil companies because they have to share the wealth with others.

Paul Hue said...

So you are advocating Libya's economy as a model for the US; I would take the opposite view.

I also take the opposite view regarding your claim that Americans have an ever-worsening economic situation, and that wealth is fattening pockets of a few wealthy greed heads at the expense of the vast majority whose wealth is shrinking. The articles I read indicate that the lower wrung in the US is exploding with immigrants and new adults from a population boom, and of these people, those who make smart choices are moving up the ladder.

Paul Hue said...

This is why I am preparing my daughter to make smart choices, not to brace herself for a lifetime of suffering under the jack boot of fat cats lighting their cigars with $20 bills; those fat cats can get fat only if the common experience of working Americans includes gaining wealth themselves (to obtain money to buy goods and services from the fat cats).