Tuesday, May 9, 2017

Feel the Bern: The Venezuelan Crisis is Due to Economic Ignorance

By Robert P. Murphy

As the world watches with horror, the crisis in Venezuela continues. For years, the population has suffered from rampant inflation, shortages of basic necessities (like toilet paper), high murder rates, and an autocratic government. On April 19, the “mother of all protests” involved hundreds of thousands -- or perhaps even more than a million people -- demonstrating against the regime.

President Nicolas Maduro has authorized paramilitary groups to crack down on protesters and has called for a new constitution, a move that cynics think is merely to weaken his political opponents. As awful as the Venezuelan crisis is, it is not surprising. Indeed, the pattern we see there is a predictable outcome of “populist” policies that ignore the basic laws of economics.

The distinguished Austrian school economist Ludwig von Mises (1881-1973) explained decades ago that government intervention into the economy only causes problems, inviting further rounds of destructive intervention.

Ultimately, Mises argued, the people must decide if they want to live under the institutions of a market economy or of outright socialism. There is no stable “third way” between capitalism and socialism because interventionism creates unintended consequences that no one likes............The worst part of Venezuela's tragedy is that it was so obviously predictable...........Read more

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