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.
Markets and Money