Hugo Chavez Steals More Productive Sectors of the Venezuelan Economy

CBS is reporting today that Hugo Chavez “ordered the expropriation of U.S.-based glass maker Owens-Illinois Inc.’s unit in the South American country.” This is just a fancy way of saying that Chavez stole another company. Moreover, Chavez isn’t too concerned that he is impoverishing his citizens and that Caracas is running out of milk and eggs.  If he was remotely concerned, he wouldn’t be nationalizing the entire country.

What is so depressing about all of this is that the American media largely ignores, or doesn’t understand, the economic ramifications of what Chavez is doing. For example, last month The New York Times printed a glowing article on Chavez’s new government-run coffee shops. Here are two relevant excerpts:

The planners behind the cafes have multiple objectives: to provide food and conviviality at democratic prices, to serve as commercial linchpins to renew some of the city’s most run-down districts and, not incidentally, to remind satisfied patrons of the government’s populist program in an election year.

Judging by the long lines that snake from the counter onto the sidewalk on most days, they are a hit.

The reporter doesn’t seem to understand that the long lines are due to the fact that Chavez instituted massive price controls on the coffee, using subsidies and government force at his disposal to undercut all private coffee shops. Moreover, the reporter laughably mentions the shortage of eggs and milk, but can’t seem to figure out that the price controls on those products are what caused the shortages in the first place:

The government’s entry into the restaurant business is part of its effort to alleviate shortages of basic foods like milk and eggs, which weighed heavily on voters in 2007, when Mr. Chávez lost a referendum about overhauling the Constitution, his only major electoral defeat since rising to power in 1998.

So here we have an example of the reporter supporting policies and programs based on good intentions rather than results.  However, I do not give Chavez the benefit of the doubt that he has good intentions behind what he is doing.  There is too much evidence that his policies are a recipe for disaster.   Instead, he will continue to accumulate power and the people will get poorer.  Eventually, violent force will be the only way to prevent Chavez’s democratic opposition, which  may have already started.

Link to photo.