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Venezuela Goes Into the Car Business

We have commented on the death spiral of Venezuela’s economy under the socialist government of Nicolas Maduro. With inflation running at 54%, his government keeps looking for more prices to control, and more “parasitic capitalists” to persecute, with predictable results. Even the Associated Press seems to be catching on:

Venezuela’s government is setting limits on prices for cars as President Nicolas Maduro tries to close a popular loophole used by savers to guard against the fastest inflation in two decades.

Maduro said Monday that he would use new emergency decree powers granted by Congress to enable the government to set “fair” prices for all cars sold in Venezuela. At the same time, used vehicles won’t be allowed to exceed the price of newer models, he said in televised remarks.

Automobiles purchased in Venezuela generally jump in value as soon as they leave the dealership’s lot as decade-old currency controls reduce the availability of imported cars and parts, leading to months-long waiting lists.

If you gave a midterm exam in an elementary economics course and asked a question about the predictable consequences of price controls, reduced output would be on the list. Unfortunately, Maduro only employs socialist “economists.”

Carmakers including Ford and Toyota are on pace to churn out 70,000 vehicles this year in Venezuela, about a third of their capacity and less than the 104,000 they produced here in 2012.

Another inevitable consequence is a thriving black market:

Instead of reducing inflationary pressures, however, the price caps are likely to spawn a black market for the buying and selling of used cars much like the one that already exists for rental apartments, where regulations are also severe, said Asdrubal Oliveros, an economist at Caracas-based economic think tank Ecocanaltica.

“Cars are going to become even scarcer, and prices will rise further,” Oliveros said.

Maduro’s government appears to be in its death throes:

Since seizing a number of retail chains and ordering them to slash prices on televisions and fridges, Maduro has turned his attention to other targets, including the automotive industry, where he says speculation is rife.

Last month, TuCarro.com, a popular website for selling used cars, was ordered to stop listing vehicles less than two years old and more recently it stopped publishing prices altogether at the request of the government.

All of this, Maduro says, is the doing of saboteurs. Funny how socialist governments are always bedeviled by “saboteurs.” There is only one way out: the government will have to take over the Venezuelan auto industry.

The government is also getting in the car business itself. Earlier this year it set a goal of selling directly to consumers 7,000 vehicles made in partnership with automakers from China and Iran.

Say, I’ve got a great idea: let’s take Maduro’s economic principles and apply them to the U.S. health care industry! We’ll start with a Rube Goldberg system of regulations and mandates. When that collapses, we will impose price controls to reduce the cost of health care–who will mind, other than those “greedy, overpaid doctors”?–then, when price controls mysteriously fail to work, the government can step in and run medicine itself! It’s called single payer, and that’s what Barack Obama says he really wants. If you want American health care to look like Venezuela’s automobile industry, just sit back and wait (and, of course, keep voting for Democrats). That’s the path we are on.

STEVE adds: On top of this, yesterday Venezuela suffered a major widespread electricity outage. Naturally, Maduro blamed it on–wait for it–”sabotage.” “Be strong against this electrical war that yesterday’s fascists have declared against our people,” Maduro said. Seems to be a lot of that going around there lately. Guess the government better take over the electric utility industry, too. Oh, wait–the government already runs the electricity system.

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