Great moments in the history of statism

So how does a country that once was one of the leading exporters of coffee go from that to actually having to import coffee? By instituting price controls, nationalizing the industry and employing a vast social safety net… rinse and repeat.

The black humor in this is that Chavez instituted price controls first. When this resulted in the inevitable shortages, instead of seeing the folly of this policy, Chavez did what any respectable Peronist would do by nationalizing the coffee industry. If one form of government intervention won’t work, it is surely a sign that a different and more comprehensive and intrusive form of government intervention is required.

“We’ve had enough of this! We must do the same with all companies that behave this way,” thundered the socialist leader. “We are going to continue nationalising monopolies to turn them into productive businesses in the hands of the workers, the people, the revolution.”

If by “behave this way” one means scaling back production and/or selling the coffee on the black market to get a market price for the product, then yes, nationalizing the industry is certainly the most effective way to keep them from “behaving” like that.

The problem is further exacerbated by Venezuela’s extensive social safety net that becomes a disincentive to employment and thus drives up labor costs for the growers. This has all resulted in a continuing death-spiral for Venezuela’s coffee industry that shows no signs of turning around.

As you can see, the coffee situation in Venezuela represents an all-around statist fandango of crap-tasticness. And for this, we salute you, Hugo!