Friday, February 26, 2016



Bernie Sanders is a democratic socialist in the running as Democrat candidate for the presidency of the United States of America.  Stop and take in that sentence. [Pause] One of Socialism’s most stunning current examples these days is Venezuela. What could Berniezuela actually mean for the United States? Interestingly enough, the political system of Venezuela is just like that of the United States – a democratic federal republic with a president, two houses of legislature and a supreme court.

Venezuela was once rich and prosperous; from the 1950s its economy was the strongest and most prosperous in all of South America with the highest standard of living. In 1998 Hugo Chavez was elected president on his own radical hope and change, the "Bolivarian Revolution." It was a mass movement to socialism through popular democracy. Once in office, the democratic socialist Chavez gave the poverty-stricken populace who supported him free stuff: highly subsidized food, housing, and gas for their cars, free healthcare, education, and low interest rate loans. At same time he expropriated whole industries from private hands into government or cooperative ownership; For what Chavez didn’t take, he fixed the prices.

Now let’s review some of the things President Obama has done and Bernie pledges to do in the United States.

Mr. Obama has explicitly expropriated to the government the student loan industry. He has implicitly expropriated the entire financial industry including placing government regulators into bankers’ offices. In a kind of mandated profit sharing against the five largest banks, the federal government has extracted $150 billion of their profits by investigations and threats of indictments forcing settlements. (Banks paid an additional $100 billion in fees.)  Government regulators fix banking prices, product offerings, loan structures and balance sheets. The president’s signature Affordable Care Act (aka ObamaCare) was the virtual takeover of the healthcare industry, now having tens of thousands upon tens of thousands of pages of regulations and thousands upon thousands of regulators. Housing, auto manufacturing, the environmental, energy and high technology industries all are tightly controlled by a convulsion of arbitrary federal rules by the president’s administration. There is virtually no major company in any industry in the United States able to make decisions without first lobbying Washington, D. C. for permission.  

Yet, Bernie will go even further: The democratic socialist will, of course, continue subsidized food, housing and the “social safety net” all of which exploded under Obama’s advocacy. But to them Bernie will add free single-government-paid healthcare, free education including college. His plans include the redistribution of incomes and wealth by punitive taxes on those he deems “rich” or sometimes “the 1%” (whatever suits that day’s fancy) and increasing the minimum wage. He wants to set drug prices by fiat. Today the U. S. is experiencing the slowest recovery from any recession in its history by many measures; banks don’t lend to emerging businesses, workers drop out of the employment pool, and many Americans are rightfully dejected.

Each of these Democratic Party policies are the similar to those imposed on Venezuela by Hugo Chavez.

Another similarity of both countries is spending more than they take in, filling the deficits with massive borrowings. In the case of the United States, its borrowings, nearing $20 trillion, are in excess of its GDP of nearly $18 trillion while Venezuela’s $110 billion is only roughly half of its (slipping) GDP. Its deficits range around 15% to 16% of GDP or around $36 billion a year. Those in the U. S. range from 4% to 5% but deficits have been going on since the first Internet capital gains bonanza in 1998 through 2001 brought a surplus and peaked with Obama’s four trillion-dollar deficit years aggregating an inflation adjusted $5.5 trillion! (Yes, $5,533,840,000,000.)               

Bernie (as well as President Obama) wants the United States to take away the blue ribbon number one in world “mass incarceration” by dropping its 2,300,000 prisoners to less than the number two China’s 1,700,000, a decrease of 600,000 people. (With only 210,000 in federal jurisdiction, the “how” with Bernie seems not to matter). President Hugo Chavez released thousands from prison in his “reform” of criminal justice which rekindled kidnappings up to nearly 17,000. His denigration of the upper classes led some criminals to believe it was a license to kidnap. The result is that about the only growth industry in Venezuela is crime. Venezuelan murders per 100,000 of population were 21 in 1993, 25 in 1999, 44 in 2003,79 in 2013, reaching 90 by 2015, one of the highest in the world. That’s growth!

Other than crime, how is hope and change into socialism working out for Venezuela so far?

Recently three dozen 747s each stuffed with 50 and 100 bolivar bills of currency flew into Caracas’s Simón Bolívar International Airport, the namesake of Chavez’ revolution. Talk about printing money. (Venezuela had to have foreign printers, since it couldn’t purchase the special paper.)And spending it. In order to remain in power, Chavez and his hand-picked successor after he died, Nicolás Maduro, spent more than the country took in. Sound familiar? Even with record oil prices, new sums of dollars flowing in couldn’t keep up. Borrowings from foreign banks has reached $110 billion.

Venezuela recently had the most proven oil reserves in the world at nearly 300 billion barrels but a couple of private investors in the United States invented hydraulic fracturing (“fracking”), and now the U. S. is number one at around 390 billion. Petroleum products represent nearly all of Venezuela’s exports. In the U. S. the number is about 9%. (Venezuela absurdly did not diversify its economy during the spike in oil revenues from the political oil price boost by OPEC, the Organization of the Petroleum Exporting Countries, in retaliation for the Yom Kippur War. And Chavez emotionally fired 20,000 oil industry workers – half – for taking part in a strike, greatly damaging the industry.) The recent 70% crash in oil prices has further devastated Venezuela.

Other than that, Venezuela’s inflation is expected to be 700% from nearly 200% last year the world’s worst. Chavez fixed prices for most every good and service, most of which come from other countries; local companies cannot afford to buy and make things to sell at his prices. So their revenues drop, employees are laid off and Venezuela has less money from lower taxes coming in. However, the black market is thriving. Poverty, too, is up, with over 10% of the population living in extreme poverty being unable to afford basic food and drink. A third of the population is thought to be poor. It at the top of the Global Misery Index for 2013 and 2014.

Recently the socialist revolution has not played well; even though the government dominates most of the media, Mr. Maduro’s approval rating is not much above 20%. The newly elected opposition National Assembly is in a power struggle with Maduro’s administration and Chavez’s Supreme Court. The court decided three opposition legislators cannot be sworn in for “electoral irregularities” depriving the legally-elected legislature of its supermajority ability to clean up the country.

I believe Berniezuala will take the United States on the road to insolvency and, as is occurring in Venezuela, dangerous social upheaval.  

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