At the heart of America's high quality of life is our system of government — a constitutional republic built on a foundation of individual rights, namely property rights.
But, for Venezuela, property rights are an anachronism in the socialist dictatorship, where despite the fact that the country is teeming with oil and natural resources, more than 37 percent of the population lives below the poverty line, unemployment hovers near 9 percent, and life expectancy is five years less than in the U.S.
How nonexistent are property rights in Venezuela? Consider a 2001 land law, part of Hugo Chavez's "revolution for the poor" that allows the government to confiscate privately owned land judged to be idle or unproductive. Beginning in 2005, Chavez’s government began seizing hundreds of thousands of acres of land owned by private firms and individuals. No objective crime had been committed, nor was the ownership in dispute. The government simply decided private individuals weren’t being productive enough with their land and promptly took it from them by force.
Under the socialist Chavez, ownership rights are contingent on the whim of a government official who can revoke, rescind or redistribute your property at will. As one affected landowner told a western reporter, “At the end of the day, the government can do whatever they want to us and our land."
Chavez’s thievery hasn’t just been restricted to farmland. On May 1, the government took over Venezuela’s last privately run oil field from BP PLC, ConocoPhillips, Exxon Mobil Corp., Chevron Corp., France's Total SA and Norway's Statoil ASA, all of whom had invested some $17 billion in energy projects at the promising Orinoco River basin.
Ironically, just as he is confiscating their property, Chavez is asking the multinationals to stay on as minority partners. Turns out he needs their expertise: even as drilling and exploration technology has vastly improved in recent years, Venezuela's crude output has fallen dramatically, down over 22 percent since Chavez took office in 1999. Why any profit-seeking entity would partner with a government that doesn’t respect private property is a mystery to me.
And although it’s obvious Chavez’s theft is immoral, one should also note it’s impractical as well — especially for the poor he claims to care so much about. Venezuela has the highest inflation rate in Latin America, running at over 19 percent. The infant mortality rate is three and a half times worse and per capita income is 84 percent less than that in the United States.
Moreover, the government’s price and currency controls are prompting widespread shortages. A survey by private pollster Datanalsis revealed that over 72 percent of Venezuelans were having difficulty finding sugar, 52 percent finding beef and 45 percent finding powdered milk. Who does Chavez blame? The capitalists, of course.
As Ayn Rand wrote, "without property rights, no other rights are possible." Chavez’s socialism, under which private property does not exist, is bringing this once-promising country back to the third world. He might have called Bush “El Diablo”, but it doesn’t take much to see the effect of Chavez’s benevolent populism.
Simply put, he is leading his people down a pathway to hell.
Jonathan Hoenig is managing member at Capitalistpig Hedge Fund LLC and is a markets columnist for Smartmoney.com. He appears regularly on FNC's business program Cashin' In.
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