People line up outside a supermarket next to motorists lining up for gas near a gas station of the Venezuelan state-owned oil company PDVSA in San Cristobal, Venezuela, November 10, 2018. (Carlos Eduardo Ramirez/Reuters)Suffering and privation never should be welcomed, but they do perform the needful task of shocking us out of our complacency.
NRPLUS MEMBER ARTICLE ‘G round chuck, where art thou?”
We may not yet have a vaccine against the novel coronavirus, but we are well on our way to extracting from that virus a vaccine against a far deadlier plague: socialism, which in the 20th century alone killed more than three times as many people as HIV did in the same time, which has killed about twice as many people as the Black Death killed in the 14th century, and which continues to afflict victims around the world from Cuba to North Korea to Venezuela.
Every way of organizing community life (and that’s what “the economy” is — one important part of community life) brings with it certain advantages, certain disadvantages, and certain risks, and the disruptions caused by the coronavirus epidemic have exposed some of the weaknesses in our way of doing things. Those weaknesses are, as far as the current evidence will show, pretty modest. The low-inventory “just in time” model of production and distribution that characterizes so much of American business saves businesses and their customers money by reducing such carrying costs as warehousing, but it also means that retailers and distributors typically do not have a great deal of product on hand to see them through an interruption in deliveries.
It was, for a minute there, hard to find toilet paper in some places. Because the epidemic has been especially punishing for workers in meat-processing facilities, there have been some local shortages of meat, accompanied by such Captain Obvious headlines as: “Meat shortage prompts price hike.” A price hike is exactly what you want in a shortage. Before you start whining about “price gouging” (“price gouging” is what happens when the ordinary operation of free markets reflects real-world conditions that politicians wish were other than what they are) consider the alternative: the so-called paradox of gasoline in Venezuela.
Gasoline is very cheap in Venezuela. You could buy all you wanted — if you could buy any at all.
The government sets the price of gasoline at almost $0.00 (on paper, about a penny for 26 gallons) and rigorously controls production and distribution of the stuff — and so, of course, it is virtually impossible for an ordinary Venezuelan to legally purchase gasoline. Instead, Venezuelans buy gasoline, if they can buy it at all, on the black market, where they pay some of the highest prices in the world, well over $10 a gallon in a country in which most people earn less than $10 a month. In local terms, the average monthly salary in Venezuela will not pay for a kilogram (2.2 pounds) of beef. In the United States, a month’s work at the minimum wage would buy about 300 pounds of beef; in the United Kingdom, a month’s work at minimum wage would buy more than 600 pounds of beef, as Max de Haldevang runs the numbers in Quartz.
As for our brief toilet-paper drought — Venezuela’s has been going on for a decade. Similar shortages have hit everything from rice to medicine to soap.
Venezuela isn’t some eternal basket case that has always been poor and backwards. It was, not long ago, the wealthiest country in South America and one of the wealthiest countries in the whole of the Americas. It sits atop some of the world’s largest petroleum reserves and yet at the moment is reliant upon handouts from Tehran, which is, like much of the world, sitting on more oil than it currently knows what to do with. Venezuela was not laid low by natural disaster, lack of resources, or foreign occupation. It was laid low by socialism. And that socialism was not imposed on Venezuelans by a rabble of rag-tag guerillas fighting their way out of the jungle — Venezuelans elected a popular socialist demagogue, Hugo Chávez, who was, for a time, the darling of American progressives from Hollywood to Capitol Hill. Boss Hugo imposed socialism, his successors kept the faith, and the average height of Venezuelans began to decline as they were ravaged by malnutrition to the point of eating zoo animals.
And now, our progressive friends see Venezuela as a “paradox,” or a string of them. “Venezuela’s paradox: People are hungry, but farmers can’t feed them,” the Washington Post reports. “Drive around the countryside outside the capital, Caracas, and there’s everything a farmer needs: fertile land, water, sunshine and gasoline at 4 cents a gallon, cheapest in the world.” Yes, but. “Yet somehow families here are just as scrawny-looking as the city-dwelling Venezuelans waiting in bread lines or picking through garbage for scraps.”
There isn’t any paradox, and there isn’t any puzzle to solve. Socialism begets inefficiencies of various kinds, these lead to higher prices, higher prices are unpopular, socialist governments respond with price controls, and, hence, as one Venezuelan farmer tells the Post, “There are no profits.” And so production tanks or comes to a complete halt. We have seen the same events play out in the same way dozens of times in dozens of different places. The story of socialism is always the same story: misery and deprivation — and, when people rebel against that misery and deprivation, repression and brutality.
Give me the price gouging, eight days a week. I’m happy for the butcher to make a little extra money.
There are many things that can disrupt the production and distribution of goods. A hurricane might do that for a while, as it did in parts of Texas and the rest of the country when Harvey drenched Houston and put an important gasoline pipeline out of commission. Not having easy access to retail gasoline for a few days was inconvenient — not having gasoline for months or years is something else entirely. Americans are pretty bent out of shape by the shortages some of us have seen during the coronavirus epidemic. We should think about that every time a Bernie Sanders or Alexandria Ocasio-Cortez promises us that socialism — and they embrace the word; it has not been pinned on them — will make us all better off, happier, more free, and more equal. (Equal to what?) It has been tried and tried and tried, and it has failed and failed and failed.
The reasons for that failure are well-understood and have been for a century. It isn’t lack of democracy, and it isn’t authoritarianism, although those are characteristic of socialist regimes. It isn’t that the bad people got into power, that they weren’t smart enough, that they weren’t good enough, that they didn’t genuinely care — socialism has been implemented by bullies and brutes, but it also has been implemented by intelligent and well-meaning people. As Willi Schlamm famously put it: The problem with capitalism is capitalists, but the problem with socialism is socialism. Specifically, the problem is central planning, which cuts off or distorts the most vital commodity in any economy: information, which is communicated by prices. That is true of socialism under Lenin or Stalin, it is true of socialism under Kim or Maduro or Castro, it is true under the socialism advocated by nice Ivy Leaguers writing in the New York Times, it is true of the socialism advocated by the new juche-lite anti-capitalists of the Right. It isn’t going to stop being true.
We have had just a little taste of shortage, the tiniest hint of Venezuela for a season. We didn’t much like it, and that is good. Suffering and privation never should be welcomed, but they do perform the needful task of shocking us out of our complacency. And so we have a little pork shortage: That sort of thing will happen from time to time, even in a very free and wildly productive economy such as the one the developed world enjoys today as a shared enterprise. For us, it is mild and short-lived. Our shelves were bare, in places, for a minute; Venezuela’s have been bare, almost everywhere, for a decade.
In a free economy, there is uncertain prosperity; in a socialist economy, there is certain misery. That’s the choice.