”El Comandante” is at it again. Venezuela’s Hugo Chavez, our irritable neighbor to the south and all-around burr under George Bush’s saddle, continues to take his country down the path of socialism. This time, he's gobbling up land.
On his Sunday “Hello President” program, Chavez announced that his government would move to create “collective property.” While his government fully respects private property, he said, the plan is to replace capitalist institutions with socialist ones, such as cooperative cattle ranches and farms.
It takes either a master politician or a complete idiot to segue from “fully respects private property” to the idea of forced cooperatives while keeping a straight face. Whichever Chavez may be, he is banking on Venezuelans having a short attention span. Oblivious of having contradicted himself in the same breath, Chavez added ”It cannot be production to generate profits for one person or a small group of people that become rich exploiting peons who end up becoming slaves, living in poverty and misery their entire lives.”
In other words, productivity is to be defined by its level of “social justice.” For Chavez, an economy is like youth soccer: the goal is that everybody wins, even if the team ultimately gets clobbered, 10-0. What he fails to understand is that the ease with which people can legally own and transfer property is the underpinning of any society’s overall wealth and prosperity. Socialist tinkering usually starts with the erosion of property rights. And always ends in disaster.
In the 1970’s, the Khmer Rouge abolished all forms of currency and ownership of private property in Cambodia as it herded the people into rural work camps. Some 1.5 million Cambodians didn’t take to Pol Pot’s agrarian paradise with enough enthusiasm, costing them their lives. Cambodia’s economy is still struggling to recover from this ruinous experiment and ensuing civil war.
More recently, Zimbabwe was the supermarket of Southern Africa, at least until President Robert Mugabe’s land reform policies helped ruin agricultural output. Beginning in 2000, Mugabe allowed his supporters, colorfully called the War Veterans Association, to occupy large farms, most run by the descendents of white settlers. It was a politically expedient move with disastrous, if predictable, consequences.
Most of the “veterans” had no experience in commercial farming and, without a deed to the land, could not secure loans for operating costs. Within a few years, Zimbabwe went from breadbasket to basket case. Inflation is running at an annualized rate of 1,700%, with predictions of 4000% by year’s end. (I’m no currency trader, but I think that means a wheelbarrow full of Zimbabwean dollars will get you about one Weimar-era mark.)
Mugabe’s answer to this mess? Force the banks to extend loans to these new farmers, with or without proof of collateral.
While the stories are different, the results are painfully similar. Indeed, just about every country mired in perpetual Third World status ranks poorly when it comes to property rights. In Haiti, one has to lease government land for five years before being able to purchase it. The leasing process takes 65 bureaucratic steps and about two years to complete. In Egypt, an effort to register a lot on state-owned desert land goes through 31 agencies and can take anywhere from 5 to 14 years.
What distinct roles could 31 government agencies possibly play in the transfer of a strip of desert? I have no idea, but chances are it involves stamping some forms filled out by the previous agency. Our DMV’s are models of efficiency by comparison.
To some degree, Chavez’s program is already underway. Venezuela has redistributed about 4.6 million acres, and the early signs are ominous: critics of Chavez point out that staples like meat, milk, and sugar are all in short supply.
Undeterred by such failures, the Left keeps tilting at windmills in its drive to make a socialist paradise. When the grim statistics show how they clearly got it wrong, as Mugabe did, they simply chase the solution for the latest problem, not pausing to acknowledge that the latest problem was caused by the previous “solution.”
It’s still too early to tell how it will pan out for Venezuela, and they have the advantage of petrodollars to soften the blow. Still, history shows that the real solution to poverty is the establishment and protection of property rights.
But for people like Chavez, the political advantages of “doing something” far outweigh the practical advantages of creating a free environment that is truly conducive to generating wealth.