Old Dog: Same Old Trick

Once again, [T]hugo Chavez is attempting to seize personal property in the name of improving a moribund economy. He's threatening businesses with nationalization if it's found that they're hoarding products.

President Hugo Chavez threatened again on Friday to seize property from businesses if they are caught hoarding products, as Venezuela struggles with shortages of some basic foods and high inflation.

Chavez warned that price speculation is occurring "at all levels of society, from the big capitalists to the small shopkeepers," and said his government could expropriate property from individuals or companies that purportedly sit on goods for months to sell later them at inflated prices.

"I ask the ministers and lawmakers to pay a lot of attention to this because it's one of the causes of inflation," he said during a marathon address to legislators.

Annual inflation soared to 22.5 percent in 2007 — the highest official rate in Latin America — according to the Central Bank.

Chavez — a close ally of Cuban leader Fidel Castro — has made similar threats in the past. No such takeovers have occurred so far, however, and Venezuela continues to have many private supermarkets and food distributors.

Some food staples covered by price controls — sugar, cooking oil, milk, black beans, eggs and chicken — are sporadically hard to find in supermarkets, and Chavez's critics warn shortages are likely to persist as long as the price controls are maintained.

Chavez's economic policies have already caused the worst inflation in Latin America, and he's gunning to make it the worst anywhere. Give him time. He doesn't get the concept of supply and demand, and instead seeks to demand businesses operate at losses by governmental fiat.

He thinks that businesses are going to sell items at a loss. No business will stay in business if they continually sell at a loss. He thinks that businesses are not releasing their goods to the public because they want to sell them at a later date at inflated prices. No business is going to want to sit on a product that people wants now. They try to meet demand, but because prices keep spiraling out of control, the public can't afford them. Since the public can't afford them, businesses will not create the product in as great numbers. When you're dealing with food, that means that you get less food production.