October 15, 2009

Former communist guerrilla blasts state intervention in the economy

Juan Cristóbal says:

(With my apologies to Teodoro-groupie Quico, but that headline wrote itself.)

In today's Tal Cual, Teodoro Petkoff sensibly butchers the Chávez administration for involving itself directly in every last corner of the economy and making a mess wherever it pokes its nose. I was stratled by the tone of the piece, specially considering who the messenger is.

The Venezuelan government has a knack - the understatement of the day - for involving itself in the direct production of goods and services that could be supplied better and more cheaply by private industry. Every time, yes, every time it does so, the results are sub-par and all Venezuelans end up poorer for it. Teodoro echoes this idea more strongly than I recall him ever doing so, and for that he earns two thumbs up from me.

It's funny that a right-wing talking point like that could come from a man like Petkoff, no ifs, ands, or buts. It's not just that he's correctly framing Chávez as the anti-Midas that he is, it's that he does it so vehemently. It's as if he's channeling his inner Margaret Thatcher.

Now, the issue with this argument has always been how to sell it. How can we convince Venezuelans that state-owned enterprises are a waste of money, that when the chavista heads of the Venalums, the Banco Industriales and the Venirans of the world call for the government to "capitalize" their companies, we all end up paying? Where is the outrage when the government announces its foray into the hospitality industry? Where is the outcry when we hear our tax money will be used to sell cars?

After all, explaining this is just a matter of math: it's a whole lot easier to simply pay workers in these companies wages for doing nothing than have them be a part of a company where you also have to pay bribes, managers, distributors and foreign suppliers, with all the "surplus" pricing that comes with it.

It's also a lot less time consuming for government decision-makers who, instead of focusing on these empty shells, should be thinking about education, national security and crime. How much time does Chávez spend coming up with funky names for his new companies?

The fiscal and welfare consequences of a badly-run state-company are unequivocally sub-optimal relative to simply giving the workers cash.

This is an issue some Venezuelan politicians have meekly tried to sell, and time and again, they retreat. Ultimately, it always proves easier to just continue doing what we're used to and keep feeding the statist beast.

But how can we break this vicious cycle?

We may never find out.