Thursday, May 27, 2010


Indians are familiar with the socialistic system of governance which implies that wealth must be distributed amongst common people and the gap between the rich and the poor must be reduced progressively. Under such a dispensation the state owned enterprises are supposed to generate wealth, not allowing private players to exploit the resources for individual gains. Nationalization was touted as the single most creditable achievement and investing in public sector considered most appropriate for wealth distribution. Unfortunately the bitter experience of four decades of socialistic pattern of governing literally ruined the country and India had to sell its gold reserves two decades ago, to stay afloat as a viable economy cannot be easily forgotten. The economic liberalization gave the required spark for private entrepreneurship to bloom with state withdrawing from many manufacturing and service sectors during nineteen nineties. If India is considered an economic power to day, it is due to this transformation from government controlled regime to free wheeling policies encouraging private initiatives in most of the areas of economic activities. Against such a background, it is baffling how a country like Venezuela can go for massive nationalization under what ever pretext. Obviously the results cannot be different from what India had experienced earlier. Refusing to learn from history can be cost prohibitive for the people of this hapless country.

"Venezuelan President Hugo Chavez's leftist administration on Saturday threatened grocers with expropriation if they engage in speculation or price-fixing and said it was getting into the food business to put the people in charge. "We're going to continue fighting to build a socialist order to provide room for people to have social ownership of production and distribution systems," Vice President Elias Jaua said on opening the "Socialist Meat Fair" in Caracas. Jaua said the president "is empowered by law... to seize and expropriate wholesale, refrigeration and distribution businesses that resort to usury, hoarding and speculation, as mandated by the constitution."

In the food sector, government intervention cannot be justified because of the logistics, dynamics and dynamism required for efficient production, processing and distribution and creating government controlled industrial enterprises can become epicenter of inefficiency and corruption as has been exemplified by events in some of the communist and socialist countries of yesteryear. The Agro-industry Corporations, NAFED, State Farms, Modern Bakeries, Bacon Factories and many similar government enterprises in India are standing examples to prove that "doing business is not governments' business". The tragedy in Venezuela is going to be compounded by the reality that rulers may come and go but the damages done by them during their reign through such unwise policy decisions will be felt for years to come affecting the welfare of their population.

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