Socialist leaders have propensity to become dictators


Venezuelan President Hugo Chavez’s recent strong-arm moves illustrate a couple of truths we’re weary of seeing illustrated.

The first is that those who proclaim themselves socialists — avatars of “the people” and battlers for the underprivileged — all too soon end up taking the maximum possible power unto themselves, to the point of becoming dictators.

The second is that it is only possible to think about establishing a socialist society in a country with ample quantities of a resource highly desirable to other people in the world — largely because of advances made possible under largely capitalist systems.

Last week Chavez announced plans to nationalize companies in the telecommunications and electricity industries, which would include taking an 87-percent stake in the sector’s leading company that is owned by AES Corp. based in Arlington, Va. This came on top of an announcement that the government plans to deny RCTV, a TV station that has criticized his administration, a license to operate when it comes up for renewal in March. RCTV says its license isn’t due for renewal for years.

All this talk of “moving toward a socialist republic of Venezuela,” as Chavez has put it, goes along with grabbing for power for himself. He will also seek a “revolutionary enabling law” that would allow him to approve legislation by personal decree — no need to have a legislature meddling. He has proposed a referendum to repeal presidential term limits, so he can stay in power as long as he wants.

Chavez also wants to consolidate the two dozen parties that supported him into a single “United Socialist Party of Venezuela.” He has appointed his brother education minister.

What’s ironic is that Hugo Chavez can speak boldly about imposing socialism largely because Venezuela sits on a pool of petroleum. His government has accumulated $50 billion in revenue from oil exports. So despite the inherent wastefulness of socialist economic policies — Ludwig von Mises pointed out long ago that without prices determined through supply and demand in a free marketplace, socialist economies cannot calculate how much of which goods and services people really want — Venezuela has a cushion of oil revenues.

Oil revenues give Chavez the luxury of flirting with central planning and other socialist policies. The market has already responded as investors last week rushed to sell Venezuelan stocks and, Monday, AES Corp. said it would drop its bid to control one of Venezuela’s largest telecommunication’s companies.

It all puts President Bush in a tricky situation. To give Chavez the criticism he deserves would likely do more to inflate his self-importance than protect U.S. companies and trade interests. And, some form of compensation may be forthcoming; so, the situation is best left to markets for the moment. The developments are another compelling reason to hope oil prices keep declining, and to get better control of the U.S.’ energy future, through market response.