Hugo Chavez: Up is down… in is out… and dumb is smart

Hugo Chavez is back in the news, threatening to nationalize Venezuela’s banks.

“Private banks have to give priority to financing the industrial sectors of Venezuela at low cost,” said the democratically elected head of state. And if they don’t, “it’s better that they go [away]… that they turn over the banks to me, that we nationalize them and get all the banks to work for the development of the country and not to speculate and produce huge profits.”

The nation’s big steel company better watch out too. Chavez doesn’t like the way Sidor (a company whose owners are based in Luxembourg) does business. It “has created a monopoly,” Chavez says. But what annoys the man is that they try to make a profit by selling their output on the world market at market prices, rather than selling it into the local market at reduced prices. “If the company does not immediately agree to change this process they will oblige me to nationalize it,” he says.

Can anyone remember a case when nationalizing a major industry led to greater efficiency, higher profits, more output, lower prices, or happier customers? We can’t. But up is down…in is out…and dumb is smart.

Eventually, dumb will be dumb again. But who knows how long that will take and how much dumber smart will get by then.

Bill Bonner
Markets and Money

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.

Bill Bonner

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2 Comments on "Hugo Chavez: Up is down… in is out… and dumb is smart"

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You ask, “Can anyone remember a case when nationalizing a major industry led to greater efficiency, higher profits, more output, lower prices, or happier customers?” I don’t really know my history on this topic but is it possible that if companies would cooperate with the Venezuelan government that they could be profitable? Perhaps not as profitable in the short term but what about over time? Look at Japan where the government and industry are bond like husband and wife. I mean, it’s pretty common knowledge that Japanese men are married to their companies. The government gets its cut and business… Read more »
This is in response to JLTN. Why would it ever be in a companies best interest to say sell some of its product at reduced prices to the local market? I think you are looking at the situation backwards. It is the the governments best interest to cooperate with the company. If the company can sell good X abroad for a sizable profit it will keep trying to make more of good X. This means more Venezuelans will be employed. The alternative is that Chavez can nationalize it, distribute good X to the people, and watch as the company slowly… Read more »
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