Economic Realities Expose Socialism’s Liars
Anyone who has ever operated a business, large or small, recognizes the essential fact that you must make a profit to succeed. A profit can be a penny or a million dollars, but the fact is that it must exceed your costs over the relevant period of operation or you won’t be in business for long.
When any government has the power of what price you can charge, you lose all control of your products and your business and your investment in it.
Venezuela is a case study in the disastrous consequences of price control:
CARACAS—Venezuelan President Nicolás Maduro began to extend price controls over a broad swath of the economy in a bid to control runaway inflation set off by his government’s increased spending, moves economists say risk exacerbating shortages in this oil-rich nation.
Mr. Maduro, who is seeking special powers from the National Assembly to pass laws by decree, said late Sunday that he would also set “percentage limits for profits in all sectors of the economy” if legislators oblige him.
On Monday, long lines of shoppers formed outside a leading electronics retailer named Daka after Mr. Maduro over the weekend ordered the stores to slash prices by half. The National Guard was also sent to arrest five managers of various electronics stores accused of overcharging customers.
***
Venezuela’s woes also come in an era of low global inflation, and when most neighbors, such as Colombia enjoy annualized inflation rates of around 2%.
The central bank report also signaled the likely culprit for the rise: The amount of bolívares in circulation rose 70% over the past year, a clear sign the government is printing ever larger amounts of money to stoke a slowing economy.
***
The moves underscore the increasingly difficult trade-offs faced by Mr. Maduro as he tries to consolidate his legitimacy following the death in March of his charismatic predecessor, Hugo Chávez. So far, it appears he is doubling down on what critics call Mr. Chávez’s populist playbook: spend money to buy popularity, employ price controls when inflation rises and blame the ensuing shortages on greedy capitalists.[1]
Note that “the amount of bolivars in circulation rose 70% over the past year, a clear sign the government is printing ever larger amounts of money to stoke a slowing economy.” In America’s Obama Land this is called quantitative easing. If left unchecked, later it will have the same consequences for us.
For instance, consider this:
LA SIBUCARA, Venezuela—Hours after they looted and set fire to a National Guard command post in this sun-baked corner of Venezuela earlier this month, a mob infuriated by worsening food shortages rammed trucks into the smoldering edifice, reducing it mostly to rubble.
***
…Venezuelans wait for hours in long supermarket lines for basics like milk and rice. Shortages have made hunger a palpable concern for many…
“What’s certain is that we are going very hungry here and the children are suffering a lot,” said María Palma, a 55-year-old grandmother who on a recent blistering hot day had been standing in line at the grocery store since 3 a.m. before walking away empty-handed at midday.
Food-supply problems in Venezuela underscore the increasingly precarious situation for Mr. Maduro’s socialist government…
The unrest is a response to dramatically worsening living conditions for Venezuelans as the economy reels from oil’s slump following more than a decade of populist spending that left the government broke.[2]
Price controls, government spending of printed money, and the government’s attempt to buy popularity all result in economic destruction. This is a perfect example of what Socialism is all about.
Against thus background comes one of the world’s most world wise citizens and a former secretary of State, Hillary Clinton. Now admittedly, she is not sophisticated in the management of economic systems, for didn’t she say once upon a time that she and her husband were “broke.” This would be after Bill and Hilary had their dual careers in high-end law practice and well paid public service. This sort of stretches her credibility, but nonetheless, just a few weeks ago:
“Hilary Clinton proposed a $250 cap on prescription medication, which she claimed would stop the price gauging ‘of big pharmaceuticals.’”
The only thing that is clear about this statement is that Hillary Clinton is a radical socialist, just like Venezuela’s Cesar Chavez.
By the way, Chávez was not broke when he died. Socialist leaders somehow always figure out how to get their hands on a lot of money, in Chávez’s case, about 2.5 billion dollars.
But, getting back to Clinton, where has she been for the last 10 to 15 years while advances in biological drugs, and especially those against cancer, have been spectacular. For example:
Scientists at the American Society for Clinical Oncology’s annual meeting in Chicago last weekend announced “spectacular” results from one clinical trial of patients with skin cancer. More than half the patients with advanced melanoma, many considered to have little time left, saw tumours shrink or brought under control using a combination of drugs – ipilimumab, known under the brand name Yervoy, and the as-yet unlicensed nivolumab, branded as Opdivo.[3]
So at this point, we know that the Democratic Party’s leading candidate for President is a radical socialist who doesn’t know much about the American drug industry where the risks of inventing such drugs costs hundreds of millions of dollars—to make a profit. For without profits there would be no such drugs. Yes, this is just like Venezuela’s socialism—no profits—no food!
More on how socialism thrives on lies soon…
[1] WSJ: Venezuela Moves to Cap Prices 11/12/13
[2] WSJ: Venezuela’s Food Shortages Trigger Long Lines, Hunger, and Looting 8/27/15
[3] The Guardian: Cancer Breakthrough Triggers Big Pharma Interest in Drugs and Deals 6/1/15