What do Venezuela and the USA have in common? Nationalization, of course. Over the last month the United States media has fallen into a nationalization frenzy. Last night I saw a CNBC news story called “Banks of America.” Today, perusing online news websites I’ve found stories titled “What if Uncle Sam takes over your bank?” (WSJ), “Rescue of banks hints at nationalization” (New York Times), and “Don’t insure the banks – nationalize them” (International Herald Tribune – The Global Edition of the New York Times). What scares me is the how casually the word “nationalize” is thrown around; as if it is a daily occurrence that we need not worry about; as if it is for our own good.
Other countries have nationalized industries as well: USSR, Cuba, China, UK, and most recently Venezuela. The USSR and UK eventually became largely privatized as a result of the failures of socialism and China is on its way to a freer economy, but Venezuela is the perfect example of nationalization in today’s world. Hugo Chavez, the President/Dictator or Venezuela, has nationalized virtually every large industry in Venezuela over the span of his rule. This has led to a lack of incentive for workers, which leads to lousy production. When a company doesn’t produce it goes out of business, things aren’t so simple for a government. When a government doesn’t produce goods to sell it produces currency to meet its obligations, which is just what Venezuela is doing. As a result, Venezuela has been experiencing inflation in the 30% range, which has led to disastrous consequences for its citizens. This lack of production also inevitably leads to shortages. In the USSR people averaged waiting in line for two hours per day because of all the shortages and lack of incentives.
In Venezuela nationalization was glorified and welcomed by most of the citizens. The scary part is that we are beginning to see that in this nation today. Nationalization has never made anything better in this nation. Consider the Postal Service. Have you ever tried waiting in line at a Post Office and dealing with the Postal employees and compared it to doing the same at a UPS Store? This is only one small example, but it is an important one. Employees at the Post Office have absolutely no reason to expedite the line beyond leaving work sooner if it is late in the day. They have set hours, set lunches, set raises, set promotions, and virtually nothing they do will change any of that. Their only motivation to work is to not get fired. By contrast, employees of private companies have every motivation to work hard and be seen as a “star.” They stand to make more money, have better hours, gain more benefits, and simply move up in the world by working hard and better serving their customers.
Don’t be scared into submission by the constant fear mongering that goes on in the media and government. The government uses fear to get the people to agree to things that they would never otherwise agree to. It used to be war and now it is socialism. Nationalization is the exact definition of socialism, and socialism requires a police state to operate and inevitably ends in the bankruptcy of the state and the demise of the people. Read your history books, my friends. Socialism never works in the long run.