The great promise of Hugo Chavez and his Bolivarian socialism was that the poor would be made better off by the redistribution of society’s resources. The actual fact is that everyone in the country has been plunged into deprivation, destitution, by that very redistribution. The problem not being with the redistribution part, amazingly. Nor was it to do with the socialism. Rather, they thought they could do better than markets in the pricing and distribution of goods and services and this isn’t something that anyone is actually better at.
The socialism part, there are havens of exactly that in the UK and US economies. John Lewis is a socialist organisation for example, so is WinCo Foods. They’re both owned by the workers in them, that’s socialism. There is no problem with this form of socialism either, good luck to them in fact.
It’s also not to do with the redistribution. Oh, sure, we all complain about how much goes to the undeserving in food stamps and welfare and it’s entirely possible to insist that it puts a, slight, brake on the speed of economic growth (and also to insist the opposite, that it speeds it by not having the poor dying in the streets) but no one is going to try to insist that it creates destitution for the entire country. A bit of tax and spend just doesn’t do that.
Killing off the price system does however manage to do that:
Venezuelans reported losing on average 24 lbs in body weight last year and almost 90 percent now live in poverty, according to a new university study on the impact of a devastating economic crisis and food shortages.
The annual survey, published on Wednesday by three universities, is one of the most closely-followed assessments of Venezuelans’ well being amid a government information vacuum and shows a steady rise in poverty and hunger in recent years.
Over 60 percent of Venezuelans surveyed said that during the previous three months they had woken up hungry because they did not have enough money to buy food. About a quarter of the population was eating two or less meals a day, the study showed.
The problem is that they decided, first Chavez and then Maduro, not to do the sensible thing. Which was to take some of the oil money and give it to the poor people so they would be less poor. Instead they decided to price fix. You know the thing, wouldn’t it be nice if bread were cheap? So, pass a law making bread cheap and it will be so. What everyone forgets is that this sort of price fixing means the absence of bread. For those little charts of supply and demand at the start of every economics book are in fact correct. Sure, there’s more to the subject than 101 but just as with our not getting far in physics unless we’re willing to agree to the existence of gravity (no, it’s not “The Earth Sucks!”) so we’re not going to get far in economics without supply and demand.
The essential point being that a market price is the one at which all those who can and are willing to supply at that price do so, all those willing to consume at that price do so. Now look what happens when we lower the price by fiat. We have fewer people willing to supply at that price, more people who want to consume at that lower price. We’ve thus just, by lowering the price, created shortages. And there is no way around this, this isn’t an optional aspect of a universe which contains us humans.
So, what happened when the Bolivarian socialists lowered prices by fiat? The price controlled goods were subject to shortages. And they in fact lowered prices so much that the basic food stuffs, those most likely to be price controlled (hey, politics, you know? No one controls the caviar price because who cares? But the bread of the working man is a tempting control target, no?), have disappeared from the country. Which is why everyone is starving of course.
Worker ownership of business is just fine as long as it is voluntary – as is the opposite, consenting capitalism. A bit of tax and spend to redistribute is just a fact of life, in moderation it’s going to happen whatever the loopier Objectivists say. But price fixing in markets? That does indeed lead to disaster as Venezuela shows. Something we might recall when we consider such escapades as rent control, minimum wages, free at the point of use health care and other such dreams of the non-Bolivarian left. They’re all, to greater or lesser extent, making the same mistake.
Markets work, non-markets don’t.
And if you want to aid the poor who cannot afford to partake of the market the solution is to send the poor some cash so they can, not destroy the markets.