America’s Economists Should Look at Venezuela

The death of Hugo Chávez has focused the world’s eyes on Venezuela—and for good reason. The mistakes made in managing that country’s economy are being made elsewhere—even in the U.S. Chávez was a free spending socialist who nationalized much of the nation’s industry. His political vitriol deeply divided the affections of the people. Does this sound familiar? Chávez’ policies have resulted in an inflation rate of 29.1% in 2011.

One disturbing fact about Venezuela is that a huge number of people there love him. His populist policies of spending excessive amounts of money have crippled a lot of private enterprise and caused significant  shortages of foodstuffs and sugar. It must be admitted that Chávez’ has apparently raised many in his country out of poverty; and for that many in his country deeply revere him. But…it seems to me that the huge governmental spending deficits are catching up with the country in the form of the most pernicious economic effect known, i.e., INFLATION. Inflation cuts across all sectors of an economy and hurts everyone indiscriminately.

Here in the U.S, we see government spending programs outrunning money supply despite the Federal Reserve’s printing money at the rate of $85 billion monthly. This is bound to catch up with us soon. But…liberals and other who look only at the short term benefit of spending absolutely love it. And…like Venezuelans, I fear that they will outvote the conservatives who look at the long-term dangers of high levels of government spending.

The U.S. attempt to spend our way out of the recession has cost us hundreds of thousands of dollars per job created.

Of course, liberals are also worried about inflation—in a peculiar sort of way. They cried bloody murder about the Medicare drug benefit bill passed under President George Bush’s administration (and I, also wonder at the wisdom of that program) because they did not like the overspending it entailed. But they don’t seem to mind seeing the government pay for Obamacare, which costs hugely more money. Now, liberals are hell-bent on another government spending program, i.e., universal preschool education ($25 billion/year).

It will be hard to out vote a free-spending, high-taxing, high-borrowing, inflation-producing, administration in 2016. Like Venezuelans, the voting population will likely opt for the short-term gains rather than for sound fiscal policy.