“The big gap in the world is between those countries that have adopted free-market capitalism, and became rich, and those that haven’t, and stayed poor.”
-John Mackey, Whole Foods Co-Founder
Let’s look at one of these socialist, anti-free-market countries: Venezuela.
“The country ended 2015 with an estimated 10% contraction in its GDP, 275% inflation, widespread shortages of consumer goods, and declining central bank international reserves…The Venezuelan Government’s response to the economic crisis has been to increase state control over the economy and blame the private sector for the shortages.”
Put another way in Forbes:
“(Venezuela) decided that the poor couldn’t buy toilet paper so let’s change the price of toilet paper. To below that market clearing price: thus the shortages that appear as sure as eggs is eggs in these situations. This is the wrong way to do it.”
In 2010, the private sector controlled two-thirds of the Venezuelan economy.
“Shopping malls (were) filled with middle- and upper-class Venezuelans browsing through Lacoste shirts, Guess jeans, and Montblanc pens. Sales…declined in the recession, but just about everyone who (could) afford it (seemed) to own a Blackberry, and Scotch whiskey (flowed) liberally in upscale restaurants at the equivalent of $110 a bottle.” (Washington Times)
But even at that time, the government was selectively nationalizing companies, setting up state run supermarkets, and ranting against capitalism.
In a shining example of incentives inherent in private, free-market systems contrasted against the work-just-hard-enough-not-to-
Just five years later, the Venezuelan economy was in shambles, and shortages were abundant. The Washington Times piece linked below offers a great hindsight look into how not to manage an economy.
It stands to reason that if a rising tide lifts all boats, a receding waterline eventually leaves these boats dry. History teaches us that a socialist, anti-free market system makes everyone poor.
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