Blaming Venezuela’s spiraling inflation on “economic war and mafia attacks,” Hugo Chavez’s successor, socialist President Nicolas Maduro has raised the nation’s minimum wage for the fifth time in a year. The whopping 50 percent wage hike raises the monthly wage to between $12 and $60, in U.S. terms, depending on whether one goes by the state-controlled or the more accurate black-market exchange rate.
No matter what, though, the measure will provide no relief given Venezuela’s projected 1,600 percent inflation rate.
Decades of Chavez-ism have finally demonstrated Margaret Thatcher’s dictum: Socialists “always run out of other people’s money.” Venezuela’s paper money has lost so much value that it is no longer counted at the point of purchase. It’s weighed.
The once-affluent and still oil-rich nation came to this because of a long train of abuses, missteps and shortsighted moves typical of socialist regimes. These began when Venezuela nationalized its oil industry in 1976. The pretext for nationalization was to take profit from capitalists and return it to the people. But when the government seized the oil companies, it removed the profit incentive people had to develop and maintain the physical apparatus that brings oil to market. Predictably, everything has fallen into disrepair.
It also removed another equally important force: the loss incentive.