Tuesday, April 5, 2016


Rather than getting into these things on other people's excellent blogs I thought I would go over the problems with the protectionist mindset that at least two major Presidential candidates are suffering from. And since it doesn't hurt to pull out your big guns first I'd like to point to Milton Friendman who even from the grave is a far better advocate for economic freedom than I'll ever be.

Also I since I was asked nicely to provide backup for why I cited currency controls as a major factor in Venezuela's problems:

So when things started going to shit, the government decided to grab the wheel and try to get the skid under control. You know how in tough economic times, people in the USA tend to blame foreigners (like those damned Chinese companies stealing our jobs, or those lazy Mexicans stealing our tax dollars)? Well, that happened there, too. The feeling was that Venezuela was getting exploited by all those damned foreign countries. So the government started seizing the assets of foreign companies doing business there. (Or rather, "buying" them for a fraction of their price -- Exxon, for example, was made to "sell" $900 million of assets for $250 million.) The government, of course, did not have the slightest idea how to manage what they acquired, and things only got worse. The country's currency became all but worthless, and the economy collapsed into chaos.
The wealthy quickly started to exchange their local currency (bolivars) for good old Yankee bucks that would hold their value, so the government quickly made that illegal. But then businesses couldn't import goods, since they couldn't use dollars and nobody outside Venezuela wanted their worthless currency. And that, friends, is how you get a scarcity crisis in which buying toilet paper is a monthly holiday and hospital patients wind up sleeping on the floor.

I know that at this point everyone that has emotionally invested in a personality are dug in with pill boxes and barbed wire and aren't ready to hear this yet. But for those with ears let them hear.

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