By Chris Rossini
It's always a great danger when people place faith into government, no matter where in the world it may occur. The more faith placed into it, the more government is expected to come in and fix the problems that it often caused in the first place. If faith reaches the level of Socialist Venezuela, the entire country turns into an economic basket case.
Venezuela has been spiraling into the abyss, and "government help" has been the driver's seat. Every move the government has made in recent years to reverse the spiral only quickens the decline.
Venezuela has instituted capital controls (which shouldn't exist). It has raised the minimum wage by 30% (which also shouldn't exist). The country's central bank has been printing money like there's no tomorrow. (Of course, central banks should never exist).
As a result of the money printing, prices for consumer goods went through the roof. That opened the door for the Venezuelan government to make things even worse by instituting price controls (which should never be done). Economics 101 dictates that price controls must lead to shortages. Unsurprisingly, shortages for even the most basic goods have become a daily experience for Venezuelans.
That's a lot of damage that the government has created already.
But faith in government leads to a never-ending thirst for more "help". So after driving prices up, and following it with price controls and shortages, the next move is to seize the food suppliers and warehouses!
As government infested as the U.S. economy has become, can you imagine an Obama or Bush rationing food to American citizens? Who do you think would get the food? If your answer is those who are closest friends and cronies to the politicians (along with the politicians themselves of course), your answer is correct!
The solution for Venezuela is really very simple, but faith in government bars its consideration. Minimum wages should be immediately abolished so that teenagers, the low-skilled, and poor could gain employment. Price Controls should be abolished so that shortages can disappear and market clearing prices can operate. The Venezuelan Central Bank should be turned into a museum and capital controls should go with it. Venezuelans should be free to use a market-determined currency that cannot be destroyed by government's money printing.
It's easy to look at the situation in Venezuela and feel sorry at the ideas that have been embraced. They after all are further down the line of decline than we are here in the U.S.
But we here in America are not very far from the downward spiral if the ideas that dominate here do not change. We too have a monstrous central bank that prints with reckless abandon. We too have confused politicians calling for a $15/hr. minimum wage, or some arbitrary "living wage".
When inflation kicks into high gear in America, it's almost certain that the government will try to institute price controls. So shortages can be right around the corner. We already went through them when government created gas lines in the 1970's. If Americans are unable to understand the chain of events, it's not out of bounds to think they too will support government nationalization of industries as well.
Never place faith in government to "help" to fix problems. It'll help everyone right into the economic abyss. The goal should be to incessantly peel government away. That'll keep it from preventing most of the problems that we encounter in the first place.