From minimum wage to maximum bankruptcy

venezuela1

Being a socialist means never having to say sorry – or never having to believe in laws of economic. But laws of economics don’t care if you believe in them or not:

Nearly 40 percent of all Venezuelan stores have closed —some of them perhaps permanently —after the government of President Nicolas Maduro increased the minimum salary by nearly 3,500 percent in one fell swoop, according the National Council of Commerce and Services of Venezuela.

Many of the companies, which had been barely surviving the gradual collapse of the economy, saw the salary increase and other changes announced last month as the fatal blow in a series of policies that have been gradually strangling their businesses.

“These decisions are leading many business people to say, ‘No, I can’t do it any more,'” said Maria Carolina Uzcategui, president of the council.

The problem is that Venezuelan companies are being forced to sell at prices far below cost just as employee salaries are increasing 60 times, Uzcategui said.

What’s more, the regime has banned stores from increasing their prices to cover the salary increases, arguing that it is not necessary.

If they do increase prices, store owners or managers can end up in prison, Uzcategui said.

Of course the shops closing down will be portrayed by Venezuela’s socialist and economically illiterate (but I’m repeating myself) leadership as wreckers and saboteurs. You bought X from a wholesaler for 5 bolivars, but the government is forcing you to sell it a 4, meaning you are making a loss as opposed to a profit that you could use to pay the wages at your shop. So not only you don’t have any money to pay the wages as they are, but next the government tells you that these wages need to be several times higher than they were before. But if you have 0 bolivars to spare, several times 0 is still 0. Unlike governments, private businesses cannot create money out of thin air.

Western socialists, from Michael Moore to Jeremy Corbyn, were happy to laud Venezuela as a great leftist success story until Venezuelans started picking through trash and eating their pets. Then it became “not real socialism”, even though everything that Hugo Chavez and then Nicolas Maduro have done over the past 15 plus years have inexorably led to picking through trash and eating pets. The varieties of misery vary, the fact of misery never does.

Don’t be fooled. Socialism, not even once.

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