Yo, Venezuela. Being socialist doesn’t repeal laws of economics

Venezuela has just devalued its currency, and also instituted a two-tiered system of exchange – three if you count the black market.

“The bourgeois are already talking about how all prices are going to double,” [President Hugo Chavez] said “People, don’t let them rob you. Denounce it and I’m capable of taking over that business.”

If you devalue the currency and make imports much more expensive, inflation will increase. Nationalizing a business does nothing to stop this. Nor does denouncing inflation.

“It’s too easy a game to steal money through a multi-tiered exchange rate. You make a bundle just on the exchange differential” said a former planning minister.

Or the economy just shifts to the black market.

Chavez gets thuggier

Coming soon to Venezuela: Armed militias answerable only to Chavez

There is no ambiguity on where the militias’ loyalties lie. Not with the Venezuelan state, not with the military, but directly and personally with Ch├ívez.

Early on with Chavez, when I thought Chavez represented something truly new and democratic, a friend who has followed South American politics for decades and who reads and speaks Spanish fluently and thus can read newspapers and websites in Spanish said wait, you’ll see, Chavez is just another dictator thug.

Any head of state who wants armed militias accountable only to him is neither democratic or for the people. The possibility such power can be abused is huge and obvious.

And no, that doesn’t mean I support the oligarchs there either. They probably have their own militias.

Unclear on the concept of global markets

Venezuelan President Hugo Chavez, who has threatened to cut off oil sales to the U.S., said reports that making such a decision would hurt his country’s economy are false, and that Venezuelan oil can be sold anywhere.

Well of course it can. And by the same measure the US can buy oil anywhere, including from whoever Venezuela sells it to. At any given time, oil trades at the same price worldwide.