"The Problem with Socialism, . . .

DonDiego concurs a reliance on petroleum exports played a role in the collapse of Venezuela. But even that was made worse by a Socialist Government intent on controlling everything within the Country instead of allowing markets to function so that its citizens might prosper.

Excerpts from Project-Syndicate.org

On oil:
"Venezuela used the 2004-2013 oil boom to quintuple its external public debt, instead of saving up for a rainy day. By 2013, Venezuela’s extravagant borrowing led international capital markets to shut it out, leading the authorities to print money. This caused the currency to lose 98% of its value in the last three years. By the time oil prices fell in 2014, the country was in no position to take the hit, with collapsing domestic production and capacity to import, leading to the current disaster."

This seems more like Government mismanagement than a collapse based upon the drop in oil prices. The Government spent its oil revenues as they came in and then borrowed against future revenues which failed to show up.

On free-markets vs Government price-setting:
". . . the market is essentially just a form of self-organization whereby everyone tries to earn a living by doing things that others find valuable. In most countries, people buy food, soap, and toilet paper without incurring a national policy nightmare, as has happened in Venezuela.
An alternative tradition, going back to Saint Thomas Aquinas, held that prices should be 'just.' Economics has shown that this is a really bad idea, because prices are the information system that creates incentives for suppliers and customers to decide what and how much to make or buy. Making prices 'just' nullifies this function, leaving the economy in perpetual shortage.
In Venezuela, the Law of Just Costs and Prices is one reason why farmers do not plant. For that reason, agro-processing firms shut down. More generally, price controls create incentives to flip goods into the black market. As a result, the country with the world’s most extensive system of price controls also has the highest inflation – as well as an ever-expanding police effort that jails retail managers for holding inventories and even closes the borders to prevent smuggling."

i.e. Control prices to "please the people", when farms go out of business, blame the farmers.

On expropriation:
"after former President Hugo Chávez was reelected in 2006, he expropriated farms, supermarkets, banks, telecoms, power companies, oil production and service firms, and manufacturing companies producing steel, cement, coffee, yogurt, detergent, and even glass bottles. Productivity collapsed in all of them."

i.e. After the farmers go out of business, because of price controls (or before since the Government is all powerful), seize the farms and any other productive assets "for the people". And then run everything into the ground.

Socialist/Communist Central Planning did not work for the Soviet Union; it did not work for Mao's China [one should look where China is now and ask oneself how it got here]; and it did not work in Venezuela.

DonDiego suggest the citizenry not grant a socialist in the USA too much power.


Incidentally, poor old DonDiego suggests the US media are under-reporting the collapse of Venezuela.
Folks in downtown Caracas last week were observed tearing open trash bags looking for any scraps of food they might find. This weekend bands of hungry people were waylaying trucks on the country's highways carrying bulk foodstuffs, like bags of rice, and meal.
DonDiego supposes June is likely to be unpleasant in Venezuela.

The collapse of the United States in 1929 happened before the New Deal and all of its pesky government controls over the economy. laissez faire capitalism yields every bit as bad of results as Hugo Chavez.

Chavez made the irresponsible inference that oil revenues would pay for his economy. But as irresponsible as that may have been I dont think the philosophy of modern Republicans is any better - that you can pay for things with tax cuts.

Bernie Sanders has the courage to tell people how he pays for universal college with new taxes on Wall Street transactions. Donald Trump tells us his 70 foot wall will be paid for by Mexico. Readers can choose for themselves which one of those people is offering "free stuff".

Pj - you are wrong. Forbes has shown that Bernie's goodies will cost $10t more than his new taxes will bring in over a 10 yr period

Do those bees get mad when you start slicing? LOL

I'm late reading this thread, certain you've already been 'grilled' about the bees, Terry.

Me, I watched a few war movies. No cooking.

My uncle (RIP) flew bombers in WWII. They named their planes.
He said one (his?) was named "The Limber Doogan." Read into it what you will.
He had no use for war movies. "Hollywood fluff."

I'd say Saving Private Ryan may be a possible exception.
At least more realism as to the carnage, horror.

I'm still chuckling over PJs first post here.....it appears that if you oppose communism, he automatically assumes that you are a Republican! LOL, I have always felt that but seeing PJ thinking that is quite amusing.

Well gee whiz, I didn't say that, Fritzy - but I'm glad I made you "chuckle". Laughter is the best medicine even when its expressed with antiquated words.

It makes me chuckle that so many people think we still have a capitalistic system here in the U.S. rather than the sick on its last legs system we have where a bunch of heavyweights capture and hold their markets through their lobbying efforts rather than striving to produce the best product or services.

Goodness !

DonDiego opines that there will always be ups-and-downs in a free market. And DonDiego suggests when these things happen the eventual result is a reversal back to a more "normal" economic condition.
However, to say that "pesky Government controls over the economy" didn't exist before The New Deal is erroneous.
And to suggest laissez faire capitalism exists in the USA today is ludicrous.
There are still competing theories as to the precise cause of the Great Depression, but all of them include policy errors of the Government and/or particularly the Federal Reserve, the US Central Bank, as well as "normal" business excesses which pop up from time to time, like 10% margin to buy stocks in the '20's.

F'rinstance, as The Great Depression commenced it is generally accepted that over-indebtedness and deflation was fueling bubbles leading to boom and bust. Things like real estate bubbles in the '20's.
One of the major contributors was low interest rates.

If any of this sounds familiar, . . . low-interest, over-indebtedness, real-estate bubbles, . . . it's because that's where the Good Old USA is right about now !

OH LOOK ! DATA:



Goodness, . . . that looks ominous. Sorta like 1929 on steroids o'er there on the right.

The Bank of the United States received its charter in 1791 from the U.S. Congress and was signed by President Washington. It was the first "central bank" in the US. Secretary of State Thomas Jefferson believed the Bank was unconstitutional because it was an unauthorized extension of federal power. It died in 1811.
The Second Bank of the U.S. was chartered in 1816. It expired in 1836 with assistance from President Andrew Jackson who knew a bad thing when he saw it.
And then, . . . well, . . . who really cares, . . . now it's the Federal Reserve in charge of controlling US currency and most particularly "adjusting" interest rates, . . . and boy-oh-boy has it !
[DonDiego recommends jatki's post on The Federal Reserves Ticking Time Bomb.]

Everybody who can, including poor old DonDiego, has refinanced their house at historically low interest rates, . . . so US mortgage debt is at a forever-high. And lots of folks, not including poor old DonDiego, took all the equity they could outta those houses.
High times, . . . 'ceptin' lots of folks spent that "extra" money on geegaws and gimcracks and fancy E-lectronic gadgets.
Oh, and there's another side, . . . lots of pension funds, especially public employee pension funds which were already underfunded require a return of about 8%-per-year to fund all those promised pensions for the next, . . . well, forever; right now they're lucky to find 2%. Oopsie!

DonDiego wonders just how all this is a'gonna turn out when the next economic hiccup arrives and nobody's got any savings to get them through it. Or when the public employees find out there's no retirement money left in their pension plans.
Pr'bly nothin' good.

The reader needn't worry about poor old DonDiego; he lives far from a major metropolis and on a high ridge, so he'll likely see trouble a'comin' a'fore it gets here. And he's even got some fresh produce.

Maybe, . . . jes' maybe, . . . if'n the Federal Government jes' let some things alone, instead of trying to control everything and fix everything and screw everything up, . . . society would work better.
Maybe if the Government let markets work with everyone making their own decisions about what's best for them, within the Law, . . . maybe thing's would work better, . . . like in the Good Old Days.

DonDiego sez "Let free markets work".

DonDiego is not holding his breath.

Ref:
__facts from wikipedia et al
__opinions from poor old DonDiego

The government didn't let free markets work in the wake of 1929. They declared class warfare on the "free market" sweatshop lords and created the greatest expansion of any middle class in history. 12 year old DonDiego likely got a good education instead of working on an assembly line as a result.

Unfortunately many of those principals have been lost to a tax code of kickbacks allowing people like Donald Trump to pay zero taxes.. Time for another class war.

At last, . . . pjstroh and DonDiego agree on something.
n.b. Poor old DonDiego doesn't want it. He does not know what pjstroh wants.