Tag Archives: Regulation

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Chavez marches Venezuela down the road to serfdom at gunpoint

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CNN reports that Chavez has devalued the Venezuelan bolivar.

In the wake of his decision to devalue Venezuela’s currency, President Hugo Chavez on Sunday said he would put the military on the streets to ensure that business owners don’t raise prices.

Speaking on his weekly television program, “Alo Presidente,” Chavez railed against merchants who re-price their items in reaction to Friday’s announcement that the Venezuelan bolivar currency, which had been fixed at 2.15 to the U.S. dollar since 2005, was devalued to 4.3 to the dollar. For food and medicine, Chavez announced a second fixed exchange rate for these “necessity” goods at 2.6 bolivares to the dollar.

“I want the national guard in the streets, with the people, to fight speculation,” Chavez said, calling re-pricing a form of robbery.

[…]He encouraged people to publicly denounce businesses where prices increase and threatened to expropriate businesses that do.

The government would transfer ownership of such businesses to the workers, Chavez said.

Yes, attacking and nationalizing businesses with the Venezuelan army will do a lot to create jobs and increase competition among product and service providers. Surely lower prices and increased quality will result from this consumer-friendly policy. And foreign investors will be rushing to Venezuela to invest so they can take 700 million Euro losses in a split second.

Investors Business Daily explains the result of devaluing a currency.

For starters, it’s a tax. “The government has decided to recognize the massive accumulated inflation in the country and is trying to increase the purchasing power of the (dwindling) dollars it has . .. (by selling) dollars to the private sector at a higher price,” explained Hausmann. “In the short run, this is like a tax on the sale of dollars.”

[…]”The poor have no way to protect themselves from devaluation,” said Johns Hopkins University’s Steve Hanke, who has advised previous Venezuelan leaders about currency. “Their only means are awkward and inefficient.”

Meanwhile, the “tax” on dollars “means a transfer of resources out of the private economy to the government’s coffers,” said Hausmann. “As a consequence, the rest of society will have less income.”

Teachers and doctors, already in short supply among the poor, will likely be hard hit, along with small businesses.

Worse, inflation’s likely to surge, another burden for the poor.

Inflation was already on its way to 30% before Friday’s devaluation. Food, which makes up 80% of what the poor buy, has been hit with a 20% immediate increase in price. This effectively lifts inflation for the poor to a devastating 50%.

Costs for other goods, such as car tires, will rise by 100%. A banker in Caracas tells IBD this will push average inflation to 60% — adding to accumulated inflation of 600% over the past decade, a brutal tax on poor Venezuelans.

The very complexity of the new currency scheme will be a nightmare for the poor, says Hanke.

“More regulations will lead to repression,” he said, citing the weakening freedom to spend money. More controls mean shortages.

I think that people who elect communists like Chavez need to be more careful about listening to honeyed words about the benefits of wealth redistribution. When you attack the rich, they stop hiring workers. And if you attack them enough, they leave your country. Communism causes poverty and famine. It always has, and always will. If you want to know where it ends, look at Cuba and North Korea. That’s where Venezuela is headed.

More on this story from Fausta here and here. ECM sent an article about scheduled blackouts here.

Is Obama any different from Chavez on economic policy?

Here they are shaking hands:

Is there such a thing as a secret handshake for communist dictators? Just asking. Not saying that Chavez or Obama are communist dictators. Just wondering if communist dictators have a secret handshake. A communist dictator handshake conducted by communist dictators to congratulate themselves on how well their ignorance of economics “helps” the poor to starve to death.

Here is the currency graph of the US dollar versus the Canadian dollar. A decline of about 20% in 12 months. (The current exchange rate is 1.03301)

How many Canadian dollars is 1 US dollar worth?
January     1.22664 CAD   (21 days average)
February    1.24684 CAD   (20 days average)
March       1.26275 CAD   (22 days average)
April       1.22697 CAD   (21 days average)
May         1.15311 CAD   (21 days average)
June        1.12458 CAD   (22 days average)
July        1.12350 CAD   (23 days average)
August      1.08796 CAD   (21 days average)
September   1.08182 CAD   (22 days average)
October     1.05427 CAD   (22 days average)
November    1.05978 CAD   (21 days average)
December    1.05366 CAD   (22 days average)

I wonder which one knows the least about economics. Chavez? Obama? Or my keyboard? Hmmmmn.

Here is my previous story about energy rationing in Venezuela.

News

Obamacare and the simulus bill will increase your taxes

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First, Americans for Tax Reform. (H/T Health Care BS)

Excerpt:

Individual Mandate Tax: Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax of up to $1,485.

Hike in Medicare Payroll Tax: For self-employed idividuals, the Medicare tax jumps from 2.9% to 3.8%. For businesses with employees, a firm’s “matching” Medicare tax jumps from 1.45% to 2.35% of employee salaries.

Employer Mandate Tax: If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $750 for all full-time employees.

Excise Tax on Comprehensive Health Insurance Plans: Starting in 2013, new 40 percent excise tax on “Cadillac” health insurance plans ($8500 single/$23,000 family).

Medicine Cabinet Tax: No longer allowable to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

HSA Withdrawal Tax Hike: Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent.

Excise Tax on Charitable Hospitals: $50,000 per hospital if they fail to meet new “community health assessment needs,” “financial assistance,” and “billing and collection” rules set by HHS.

Tax on Innovator Drug Companies: $2.3 billion annual tax on the industry imposed relative to share of sales made that year.

Tax on Medical Device Manufacturers: $2 billion annual tax on the industry imposed relative to shares of sales made that year.

Tax on Health Insurers: $10 billion annual tax on the industry imposed relative to health insurance premiums collected that year.

But that’s not all – there’s a marriage penalty in there, too. (H/T Jennifer Roback Morse at RuthBlog)

Excerpt:

“The Senate bill stipulates that two unmarried people, 52 years of age, with private insurance and a combined income of $60,000, $30,000 each, will pay a combined cost of $2,483 for medical insurance,” Quist wrote.  “Should they marry, however, they will pay a combined cost of $11,666 for insurance — a penalty of $9,183 for getting married.”

The numbers are based on the government’s definition of “poverty level.”  Those above poverty level will pay higher premiums, and the excess would be redistributed to those in lower income levels.

[…]John Helmberger, CEO of the Minnesota Family Council and Institute, said the middle class will once again take the hit financially.

“This hidden marriage penalty,” he said, “hits hardest the very people that are most suffering from the pathologies resulting from the decline of marriage in our culture.”

I recommend that all my readers click through to Dr. J’s post and read her comments about Christian liberals who vote for government-run health care, thinking that it doesn’t destroy marriage and family. The left is dominated by anti-family types who think men and women are interchangeable, and that means the traditional family is in their crosshairs.

The stimulus bill will cause tax increases

Second, Hans Bader writes about the stimulus bill taxes for the Competitive Enterprise Institute. (H/T ECM)

Excerpt:

The federal government’s $800 billion stimulus package, which failed to cut unemployment, is now forcing states and local governments to raise taxes. The Wall Street Journal describes how “stimulus dollars came with strings attached that are now causing enormous budget headaches . . . At the behest of the public employee unions, Congress imposed ‘maintenance of effort’ spending requirements on states. These federal laws prohibit state legislatures from cutting spending on 15 programs,” such as ”welfare, if the state took even a dollar of stimulus cash,” even if a state’s tax revenue has since fallen due to the recession.  “So when states should be reducing” their spending ”to match. . . lower revenue collections, federal stimulus rules mean many states will have little choice but to raise taxes.”

[…]The stimulus package actually destroyed thousands of real world jobs by triggering trade wars with Canada and Mexico that killed jobs in America’s export sector (the stimulus package barred a measley 97 Mexican truckers from U.S. roads, a minor NAFTA violation that led to massive Mexican retaliation against U.S. exports of 40 farm products and kitchen goods worth $2.4 billion).  It also is wiping out jobs by inflicting costly mandates on state governments (such as repealing welfare reform, and imposing costly “prevailing wage” regulations and expensive racial set-asides).

Don’t elect a radical leftist during a recession.

News

Communist Venezuela introduces energy rationing in 2010

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Story here from Breitbart. (H/T ECM)

Excerpt:

Oil-rich Venezuela ushered in 2010 with new measures rationing electricity use in malls, businesses and billboards, as Hugo Chavez’s government aimed to save power amid a crippling drought.

The new regulations came into effect January 1, with businesses required to comply with reduced consumption limits and authorities warning of forced power cuts and rate hikes if the measures are not followed.

[…]The power crunch is expected to have an impact on a wide variety of businesses, including cinemas, casinos and bingo halls.

Establishments failing to comply with the measures could face outages for a period of 24 hours, and up to 72-hour suspensions “in case of recidivism,” according to the decree.

The regulation also orders businesses to institute savings plans aimed at shedding consumption by at least 20 percent, a measure that will be evaluated monthly by the newly-created ministry of electricity.

Tariff surcharges of up to 20 percent could be imposed on violators.

Rationing is also to apply to lighted advertisements.

[…]In 2009 there were four nationwide blackouts, with daily failures common in several cities.

Communism produces economic decline by encouraging entrepreneurs to flee or to stop producing, since the state views what these producers produce as something to be seized and distributed to buy votes. If no one wants to start any businesses, then there won’t be any jobs for the people. People end up depending on the state for bread, with all that that entails. The left wants equality of life outcome regardless of choices, (except for themselves).

I don’t see any difference between the intelligence and policies of Hugo Chavez and Barack Obama. Hugo is just further along the road to serfdom, in my opinion. Obama just has more capitalism and Judeo-Christian morality to undo. After Obama passes government-controlled rationing of health care, he’ll probably move on to government-controlled rationing of energy. By then, Chavez should be rationing births, housing, food and water.