Another example of Chavez's stupidity

"Venezuela's President, Hugo Chavez, has said troops will seize control of any business that raise prices in response to the devaluation of its currency. He said there was no reason for prices to go up, and speculators' businesses would be handed over to the workers"

Like Ahmadinejad in Iran, Hugo Chavez is a man on a mission to destroy a country and distract his citizens from the fact by blaming the US for anything and everything.

Here is why this new policy is stupid:

Venezuela's currency (the Bolivar) has been devalued. That means that you need more bolivars to purchase anything from abroad than you needed before. For example, if something cost $10 before, a Venezuelan would have had to pay around 21 bolivars. Now, for the same good, he will have to pay around 26 bolivars. But, in his wisdom, Chavez sees no reason why Venezuelan businesses should raise their prices in response.

If this in enforced, businesses which sell imported goods, or which use imported goods to make products will go bankrupt. This is not very good for the average Venezuelan who will have access to fewer goods produced in his own economy and, since there will be fewer jobs, will not be able to afford imports. It will also make the country even more reliant on oil exports.

This is perfectly reasonable - imports are the product of someone else's hard work and they expect something back from you in exchange - your exports. If you don't produce much for export any more, they won't want to give you their products.

I expect that this will be very good for some of Chavez's pals though who, no doubt, will be excluded in practice from the policy, and benefit from reduced competition.

Ignoring the fact that increasing prices when the price rises in your own currency is, in fact, not in any way 'speculation', what would happen if the evil 'speculators' have their businesses repossessed? If we are generous, we can assume that they really will be placed into the hands of 'the workers'. If we are less generous, we can expect some of Mugabe's - err, I mean Chavez's cronies to get their grubby hands on them. Great.

Now let's imagine Chavez is more stupid than corrupt and that 'the workers' really do start to run the businesses. Do we really expect firms in the hands of those who don't know how to run them to do well? I think not. If it were so easy to make so much money 'in business' many more of us would be running successful businesses. The rate of failure amongst start-ups is pretty high - and a lot of that is down to inexperience in running a business. Even amongst the large firms, very few survive at the top for a long time.

Good luck Venezuela.