It has been a long time since I read a newspaper article that succinctly summarized the total, utter and unmitigated destruction that is socialism, but the November 8 article in the Wall Street Journal (p. A13, print edition) about corporate flight from Venezuela, really did the job.*
The article tells the story of how an Irish packaging company, Smurfit Kappa, finally gave up on the Venezuelan economy and left the country. Chased out by a bullying government, the company left behind local former workers, their families, a school that it funded, and an entire community that is now hurled into despair at the brink of existence.
In the wake of the midterm election here in the United States, where openly socialist candidates tried – some successfully – to get a foothold in elected offices, the story out of the crumbling Bolivarian republic is more important than ever. The Wall Street Journal reports of the plight of the people who lost their jobs when Smurfit left, and how they even stand guard at the abandoned work equipment in the desperate hope that someone else will come in and restart the operations.
The Journal quotes a former employee:
“We’re so scared because we now know that all the government does is destroy everything, every business.”
As businesses leave the country in every cardinal direction, the Venezuelan economy has been decimated by half in four short years. Inflation is destined to reach ten million percent in 2019. This still is not at Zimbabwean levels, another socialist experiment that topped out at 89.7 billion billion percent in 2008, but beyond a certain point the zeros don’t matter anymore.
What matters is that Venezuela, once the most prosperous nation in Latin America, suddenly decided that it could afford socialism. The result is an imploding economy, mass starvation, rampant flight from the country and the utter destruction of the futures of generations to come. As the country collapses, all systems that provide people with goods and services in a free-market system grind to a halt.
One major reason for Venezuela’s economic destruction is the relentless harassment, bullying and outright hatred that the socialist government has shown toward the business community. The Wall Street Journal explains the result:
A survey conducted by the Venezuelan Industrial Confederation found more than 200 industrial companies closed shop in the second quarter of 2018 while nearly half of respondents said they were working at around 20% capacity due to the lack of raw materials.
When government starts taxing and regulating the private sector, there comes a point where the tax base – the private sector – can no longer deliver the revenue that government wants. At that point, the Venezuelan government doubled down on its intervention into the private sector, as in the case with the Irish company Smurfit. The Journal again:
Smurfit, which had worked here for six decades, abruptly pulled out in late September after Venezuelan military officers arrested several managers and seized its plans. Authorities accused the company of market speculation and demanded it lower prices of some goods by 80%
It is absurd, of course, to accuse any business of price speculation when monthly inflation is at 800,000 percent. Yet absurdities are lost on a government that thinks it, and only it, can run the economy.
Needless to say, the government assault on Smurfit has had consequences far beyond the loss of jobs. The Journal article mentions that Colgate-Palmolive can no longer ship out personal hygiene products from its own plant because the boxes that came from Smurfit have stopped coming.
The article also gives examples of the broader consequences for the local community:
-Smurfit issued interest-free mortgage loans to workers, a benefit that obviously will not be available anymore;
-The local community can no longer rely on its four ambulances, paid for by the Irish company.
But that is not the worst part:
At the Agricultural Technical School in the nearby town of Acarigua, which was entirely financed by Smurfit, nearly 200 children living in extreme poverty used to receive an education, lodging, as well as hot meals that have become a luxury as public schools collapse. … “This used to be a family. I just don’t have words right now,” [school psychologist Maria] Vielma said. “We have a government that is dedicated to destroying, not constructing.”
Venezuela’s journey from the richest nation in Latin America into destitution, dictatorship and economic torture, began as that journey always begins. Calls to “spread the wealth around” turn into increasingly radical calls for economic redistribution. The growth of the welfare state continues, entitlement programs keep popping out of government, and taxes keep going up until the private sector grinds to a halt.
When government cannot confiscate itself to revenue anymore; when it cannot find anything more to steal; it turns to the monetary printing presses.
What socialism cannot destroy with boots, bullets and dissident labor camps, it obliterates with inflation.
May we never forget President Reagan’s words of wisdom: freedom is never more than one generation away from extinction. Hopefully, the Venezuelan tragedy can help us keep freedom here in America out of the jaws of socialism.
*) The online version is available behind a subscription wall.