Tag Archives: Cristina Kirchner

How well are Democrat economic policies working in Venezuela and Argentina?

Are Barack Obama and Hugo Chavez very different?
Are Barack Obama and Hugo Chavez very different?

I have been reflecting sorrowfully on some of the outright lies spoken by the President in his recent State of the Union address. I am thinking specifically of lies that are almost universally rejected by economists across the ideological spectrum – lies so obvious that you would have to be an illiterate peasant living in a village in Venezuela or Argentina in order to believe it.

Three of his lies stand out – the minimum wage lie, the global warming lie and women pay gap lie. Each of these lies is as false as saying that the Sun goes around the Earth, or that the Earth is flat. What bothers me is not that the President spoke them, because I expect someone with no scientific background and no private sector experience to say things that are not true. But what bothers me is that the American electorate is now incapable of identifying such obvious lies.

Let’s take a look at this article from the leftist Washington Post.

Excerpt:

On aisle seven, among the diapers and fabric softener, the socialist dreams of the late Venezuelan president Hugo Chávez looked as ragged as the toilet paper display.

Employees at the Excelsior Gama supermarket had set out a load of extra-soft six-roll packs so large that it nearly blocked the aisle. To stock the shelves with it would have been pointless. Soon word spread that the long-awaited rolls had arrived, and despite a government-imposed limit of one package per person, the checkout lines stretched all the way to the decimated dairy case in the back of the store.

[…]Pathetic, in a country with the world’s largest petroleum reserves and oil prices at nearly $95 a barrel, yet unable to supply basic goods because of its crumbling local currency and a shortage of U.S. dollars.

[…]Nearly a year after Chávez’s death of complications from cancer at age 58, his hand­picked successor, Nicolás Maduro, is struggling to contain food shortages, spiraling inflation and rampant crime.

The arrival of basic staples such as cooking oil, chicken, flour or milk brings Venezuelans running to supermarkets and touches off surreal mob scenes, even as the government imposes price caps and rationing to prevent hoarding.

Maduro squeaked past opposition candidate Henrique Capriles in April’s presidential election, and Maduro’s United Socialist Party won enough races in Dec. 8 local elections to push back against perceptions that Chávez loyalists were deserting him. Just before the vote, with television cameras rolling, he sent soldiers into an appliance store accused of price gouging and ordered huge markdowns on televisions and microwaves. Apparently it gave his party a final boost at the polls.

There’s not a dime worth of difference in terms of vision between the Democrats in the USA and the socialists in Venezuela. The same people who think that sending armed troops to nationalize industry in Venezuela are nationalizing health care in this country right now. We will eventually see the same lines for health care that form in Canada and the UK. When you tax, regulate, and even attack those who provide services and products, you get shortages. Period. And yet big government redistribution of wealth seems to be winning over low-information voters in Venezuela and in the United States.

Are Barack Obama and Cristina Kirchner very different?
Are Barack Obama and Cristina Kirchner very different?

Venezuela has 56% currency inflation right now thanks to “stimulus” spending, but that is not the only place where Democrat policies are in force. Consider this article from the leftist Guardian about Argentina, where Democrat “stimulus” spending policies have led to rising prices of consumer goods.

Excerpt:

Every morning around 8am, the stern-faced cabinet chief Jorge Capitanich stands behind a podium at the Casa Rosada presidential palace for a televised verbal blast at the perceived enemies of the “victorious decade” presided over by the current president and her husband, the late Nestor Kirchner. Without naming them, Capitanich lashes out against the “visible and invisible” politicians, labour representatives, businessmen and journalists he blames for the sudden collapse of the peso and the explosive price increases that followed the forced devaluation.

Argentina’s economic earthquake has placed a huge question mark over the political future of the stateswoman so powerful she is referred to as Queen Cristina by both the opposition press and her supporters. In the past week, Capitanich has attempted to pin the price lurch on faceless foreign speculators, whom he accuses of a “strategy of domination” to gain control of Argentina’s oil and freshwater reserves, pandering to the widespread belief here, often underlined by the president in her speeches, that “vultures” of the leading industrial countries harbour secret plans to siphon off natural reserves from this resource-rich South American nation.

Capitanich has also blamed “anti-patriotic” farmers and large retailers, allegedly in league with independent, corruption-probing journalists, of fuelling price rises by “generating psychological action of permanent destabilisation” against Fernández de Kirchner.

But critics of the government point to inept administration and populist spending by a government that considers itself to be leading a revolution against Argentina’s erstwhile oligarchy.

Just like Obama, the socialists in Argentina are always looking to blame others for the problems they cause with their own policies. The problem is never bad policies that attack job creating businesses, it’s always a lack of loyalty and patriotism. We are disloyal to our economically-illiterate elites who only want to help us, they say. Leftist economic policies can work if we just believe in the leader, they say. And many ignorant peasants believe that, even when the failure is right in front of them.

Not just in Venezuela and Argentina

Of course in America, we have a different kind of policy failure. We have Obamacare. Conservatives warned the public about it for years, but our peasants went ahead and voted for it anyway when we re-elected a know-nothing in 2012. He said that we could keep our health care plans and that we could keep our doctors. He said he would reduce the cost of health care. And we believed him. We believed him because the uneducated stand-up comedians we watched on the Comedy Channel made us believe him.

Take a look at the peasants realizing that not every piece of happy talk read from a teleprompter by a celebrity is automatically true:

Human Events explains the story behind that video.

Excerpt:

All of Barack Obama’s phony rhetoric about how wonderfully the Affordable Care Act is chugging along means less than nothing compared to the cold reality that awaited the employees of a Pennsylvania company, as a local news station captured their stunned reactions to ObamaCare price hikes in real time.

[…][They] learned they’d be facing premium hikes of over 30 percent, with higher deductibles.  Even their co-payments for doctor visits have doubled.  And the numbers hitting these good people aren’t as bad as the premiums and deductibles slamming into other ObamaCare victims around the country.  The great second wave of damage in the larger group insurance market is about to get under way.

“I don’t know how President Obama thinks he’s helping us,” one employee sighs, “because we can’t afford this, we can’t afford to pay these co-pays, to pay these deductibles on what we’re making.”

Another repeats the sarcastic but accurate observation made by ObamaCare critics since day one: “there’s nothing affordable” about the Affordable Care Act.  It is observed that average people can’t just cough up three hundred dollars a month, because that’s a big chunk of a rent check or mortgage payment.  One shell-shocked woman, looking at a $400 monthly premium increase plus a $4000 deductible, confesses she has no idea how she’s going to pay it.

[…]Needless to say, none of these people will be invited to come on stage with President Obama and talk about their ACA experiences.  They’re learning the hard way that political control of an industry means distant commissars picking winners and losers.  You can do everything right and still get socked by the biggest middle-class tax increase in history, because the imperial President and his court have decided other people need lower premiums, and you must be squeezed to pay for it.

We have a generation of people who have been educated to value rhetoric from celebrities over the Constitution and sound economics in general. We must not think that we can be as ignorant as South American peasants now and avoid the consequences of that ignorance. We need to turn off the TV and pick up the Thomas Sowell book.

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Socialist Argentina follows-up runaway inflation with price controls on groceries

Take a look at this article from the leftist Washington Post, which reports on how the socialists in Argentina have imposed price controls in order to minimize the impact of runaway inflation caused by money printing.

Excerpt:

Argentina announced a two-month price freeze on supermarket products Monday in an effort to stop spiraling inflation.

The price freeze applies to every product in all of the nation’s largest supermarkets — a group including Walmart, Carrefour, Coto, Jumbo, Disco and other large chains. The companies’ trade group, representing 70 percent of the Argentine supermarket sector, reached the accord with Commerce Secretary Guillermo Moreno, the government’s news agency Telam reported.

[…]Economist Soledad Perez Duhalde of the abeceb.com consulting firm predicted on Monday that the price freeze will have only a very short term effect, and noted that similar moves in Argentina had failed to control inflation. Consumers shouldn’t be surprised if the supermarkets are slow to restock their shelves and offer fewer products for sale, she added.

A more effective way to contain inflation would be to “reduce government spending, which is financing an expansion of the money supply, and to have a credible price index.”

Isn’t ironic that the United States is pursuing the exact same policy of printing money and overspending as Argentina has? Excerpt we are a little further along.

So what happens next in Argentina? Zero Hedge explains:

What consumers will certainly do is scramble into local stores to take advantage of artificially-controlled prices knowing very well they have two short months to stock up on perishable goods at today’s prices, before the country’s inflation comes soaring back, only this time many of the local stores will not be around as their profit margins implode and as owners, especially of foreign-based chains, make the prudent decision to get out of Dodge while the getting’s good and before the next steps, including such measures as nationalization, in the escalation into a full out hyperinflationary collapse, are taken by Argentina’s female ruler.

[…]So to summarize: first capital controls, then a currency crisis, then expectations of sovereign default, then a rise in military tensions, and finally – price controls, after which all out chaos usually follows.

Study this sequence well: it is coming to every “developed” country near you in the months and years ahead.

Just to be clear, price controls are a clear signal to suppliers to stop supplying, since they cannot make any money if prices are held low by government decree. Price controls lead to shortages, necessarily.  And that’s what’s in store for Argentina once the private sector food suppliers (and other companies) pull out of there when they can’t make a profit. There are other places they need to be.

Imagine if America elected a charismatic, incompetent fool to run our country like socialist dictators do in Argentina or Venezuela. Imagine if the mainstream media, with their non-quantitative degrees and lack of real-world experience, covered for his every blunder. Where would we be then?