Friday, November 04, 2005

King of the socialist moonbats, part II

Previous: He's the new king...of the socialist moonbats

Hugo Chavez is at it again.
Chavez Aims to Challenge Bush on Trade
Venezuelan Leader Hugo Chavez Gets Rare Chance to Stand Up to Adversary President Bush at Americas Summit


MAR DEL PLATA, Argentina Nov 3, 2005 — Venezuelan leader Hugo Chavez, emboldened by thousands of anti-American protesters, is getting a rare chance to stand up to his adversary, George Bush, with promises to keep the president from reviving talks on a free trade area stretching from Alaska to Argentina.

The two men were to arrive in Argentina for the fourth Americas summit Thursday, the same day Venezuela is staging a mock U.S. invasion of its own territory. The event is the latest exercise intended to prepare soldiers and civilian volunteers for what Chavez says is a possible attack by American troops.

U.S. officials deny any such plan, but Chavez says it's best to be ready just in case.

With tensions rising between the two nations, Chavez and Bush will likely see each other Friday at the summit's inauguration after Chavez addresses a rally of mostly anti-Bush protesters. The two leaders are not scheduled to meet one-on-one, but they will both be taking part in the same summit sessions.

Chavez has joked about whether Bush is afraid of him, saying he might sneak up and scare Bush at the summit.

Bush has brushed aside Chavez's attempts to turn the summit into a showdown, saying he is focused on announcing job creation programs and promoting free trade in the region.

"The purpose of the summit is for the democratically elected leaders to get together and reaffirm the fact that there is really a shared vision for the hemisphere," National Security Adviser Stephen Hadley said in a pre-summit briefing in Washington.

There are signs the U.S. may be winning over supporters for the proposed Free Trade Area of the Americas, the summit's main sticking point. A high-ranking Brazilian official who said he wasn't authorized to give his name told reporters that 28 of the 34 countries participating in the summit had agreed talks should begin as early as April....

Chavez has used Venezuela's oil wealth to push for regional solidarity, offering fuel with preferential financing to various Caribbean and Latin American countries.

He also bought $950 million this year in Argentine bonds, saying it was a step toward creating a so-called Bank of the South to help provide financing to the region.

Chavez is expected to push that banking initiative at the two-day summit.

Some in the Bush administration have expressed concern about Venezuela's desire to build a nuclear power reactor. And, after Chavez said he might share his U.S.-made F-16 fighter jets with Cuba and China, U.S. Ambassador to Venezuela William Brownfield said that decision would need U.S. approval.
Chavez needs to learn that the road to autarky is a guaranteed way for a nation -- especially a developing one -- to impoverish itself. Has it been so long since Hawley-Smoot? Santayana's truism about "Those who cannot remember the past" means that if South American nations will certainly doom themselves should they attempt to trade only within their region.

A free trade zone spanning the Americas, even if it's only liberalized trade and not true free trade, is still better than the nations setting up barriers in the false names of "self-sufficiency" and "preserving domestic jobs" (see my entry "The error of protectionist economics"). Chavez is ignorant to deny the benefits thereof, and delusional to think Venezuela can be South America's financial backbone. Venezuela may be relatively wealthy because of its oil deposits, but it alone is not enough to finance the rest of the continent. However, in lending to Argentina, apparently in the name of good relations and keeping the money in South America, Chavez seems to think Argentina should join the IMF and WorldBank as the world's biggest suckers in international lending. What's worse is that Chavez is actually stunting potential growth for Venezuela and his trading partners, right now, by his ostensibly benevolent practice of selling cheap oil to his favored nations (especially Cuba).

The specifics escape me at the moment, but earlier this year, Jamaica completed a deal where it could buy oil from Venezuela at $40 per barrel. Chavez probably discounts his oil similarly for his other friends. By buying oil at a cheaper price, Jamaica will then have a greater consumer surplus, and it will have more money to spend on other things, but Venezuela will have a reduced producer surplus, and therefore less money to spend on other things. This is only a shift; there's no economic growth. Now contrast this with Venezuela selling the oil at full price to the U.S., China, Japan, or anyone else who is willing to pay full price. Venezuela would then have full income to trade with or invest in Jamaica, so Jamaica need not lose a thing. But more importantly, the wealthier nations would have the oil they need to power their larger economies, and with their greater incomes, they can trade more with (or invest more in) Venezuela, Jamaica and other developing nations, and that leads to economic growth, not just a shift.

Chavez is therefore denying everyone the maximum economic growth possible. It certainly hurts wealthier nations, which is his very purpose in using oil as a so-called "geo-political weapon," but it hurts Venezuela and other developing nations more. His thinking is identical to Democrats who argue against across-the-board tax cuts, just because "they benefit the rich." To them, heaven forbid that a "rich" person should benefit at all, though the rest of society would benefit more. Historically, it has been tax cuts benefiting "the rich" which produce economic booms: supply-side tax cuts that free income so it can be invested in business, and that don't tax profits so that the "evil capitalists" have a reason to invest.

A poor person does not prosper by trading only with other poor; a poor person prospers by continually creating things of value that "the rich" can buy, and then trading with other poor. What Chavez is doing will certainly eliminate the gap between "rich" and "poor" -- by making everyone poor.

The issue of the F-16s is where trading with other nations must be tempered with the fear that the goods can be used against us. Regimes can change quickly, but military hardware can last a generation or two. Ironically, we sold Venezuela the 24 F-16s in 1982, when it claimed Cuba was a threat.

4 Comments:

Anonymous Quincy said...

Perry -

My cynical side says Chavez and our Democrats aren't ignorant at all. The less wealth the population has, the more power they have. Shrewd in a sadistic sort of way

Friday, November 04, 2005 5:06:00 PM  
Blogger Perry Eidelbus said...

That's a very good point. Crazy like a fox?

I don't know which makes them more dangerous: ignorance or being outrightly evil. Evil, of course, is purely malicious. But ignorance allows them to whip up entire nations in a frenzy, and for the delusions to continue for a generation or more.

Sunday, November 06, 2005 12:00:00 PM  
Anonymous Quincy said...

It's not ignorance, nor is it evil. It's the presumption that they are actually better and more able than their subjects and therefore deserve the power they seek. They are doing it for the people's own good. And it is under that line of reasoning that people hand them power.

Sunday, November 06, 2005 6:47:00 PM  
Blogger Perry Eidelbus said...

I would consider that a form of evil, a desire to dominate because one thinks one is better, and that others aren't intelligent enough to live their own lives -- even for the supposedly best of intentions.

Monday, November 07, 2005 12:45:00 AM  

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