Yesterday’s New York Times editorial on Hugo Chavez was comedy gold:
President Hugo Chávez of Venezuela — the very portrait of a modern Latin American strongman — is not content to exercise near-total political and military control of his country. Now he is tightening his grip on the Venezuelan economy. That’s bad news for foreign investors, but even more so for the Venezuelan people who will have to pay the price for an economy plagued by increasing inefficiency and corruption.
Mr. Chávez announced this week that he would nationalize electricity and telecommunications companies. Venezuela’s biggest telecommunications company is partly owned by Verizon Communications. Its largest publicly traded electricity company is controlled by another American company, the AES Corporation. Mr. Chávez also declared his intention to take control of four multibillion- dollar oil projects with significant investments from foreign companies.
State control is rarely an efficient way to run companies. And nationalizations are not a good way to encourage further foreign investment. Mr. Chávez is already using the state-controlled oil company to reward his cronies at the expense of getting the best return on Venezuela’s most lucrative resource.
Chavez is undoubtedly a lively and controversial figure, though warmly embraced by the majority of the Venezuelan population. As a Sydney-based, Chilean friend wrote to me today:
How dare Mr Chávez nationalise sections of the economy (telecommunications and electricity) which US shareholders obtained through shady deals with corrupt old governments in Venezuela? These services are so poorly run and inefficient that re-nationalising them makes good sense – just ask me about making a simple phone call in Caracas.
As for Mr Chávez “reward[ing] his cronies”, like all places, one can expect there to be some type of corruption in government, however, I think roughly 70% of the population who are benefiting from having health care, education and accessible food might think differently to the Times view of their government.