The 20th century was full of examples, large and small, of what grand-scale economic planning does to an economy, and its people. Sadly, that wealth of experience has not deterred socialists from trying over and over again. One of the many examples of our time is Venezuela, where president Maduro just raised the minimum wage. As Bloomberg reports, Maduro’s move is going to accelerate the Venezuelan economic tailspin:
President Nicolas Maduro intended the mandate as political boost, but it’s having the opposite effect as companies, already hit by Venezuela’s epic economic contraction, tell workers they can’t afford to keep them. While there have been many similar moves in the past, never has one been so disruptive, arriving amid hyperinflation, depression and devaluation. Some employers are restructuring costs, rejiggering pay scales and negotiating settlements with workers. Others are simply dismissing people. Much of the action happens secretively as companies try to avoid punishment by the government, which has been jailing those it believes are flouting the rules.
The Miami Herald has more details:
Nearly 40 percent of all Venezuelan stores have closed their doors — some of them perhaps permanently — after the government of President Nicolás Maduro increased the minimum salary by nearly 3,500 percent in one fell swoop … Many of the companies, which had been barely surviving the gradual collapse of the economy, saw the salary increase and other changes announced last month as the fatal blow in a string of policies that have been gradually strangling their operations.
For example, stores are not allowed to raise prices to match cost hikes. According to the Herald, government inspectors can have store owners jailed if they do not comply with the government’s price dictates. But that is not all: if a business decides to close the doors, government can seize its facilities and equipment.
It is no wonder that Venezuela has become a monumental economic disaster zone, with one million percent inflation, widespread starvation and a population fleeing just about anywhere they can. The silver lining in the Venezuelan implosion is that the lessons of central planning are now readily available to a new generation, too young to have seen the Soviet empire in action.
There is also a general lesson to be learned from the central planning disasters in recent history. For at least a few decades now, the environmental movement has been gradually advancing its own version of central planning. This movement, the origins of which are more than a little shady, is trying to micromanage our lives in the name of the general good.
We are now beginning to see the consequences of this green central planning. The automotive industry is a good example, as the problems with hybrid and electric cars get worse. The latest example is from Toyota, which has to recall a million gas-hybrid vehicles due to a serious fire risk originating in the hybrid power control system.
Construction, maintenance and repair of hybrid vehicles is not exactly an environmentally friendly endeavor. At the far end of the spectrum is the horrible practice of child slave labor in central Africa, for the sole purpose of mining cobalt, a key ingredient in hybrid batteries. Yet the environmental movement continues to push for green central planning, with tax rebates to all who buy hybrid or fully electric cars.
Tesla Motors is another example of green central planning. This house of tax-paid cards has received billions of tax dollars in subsidies, yet continues to implode like a hot-air balloon.
Beyond the automotive industry, green central planning has pushed hard for more wind power. As it turns out, this supposedly magic-bullet solution to our energy problems is not that environmentally friendly after all. On the contrary, as demonstrated in an innovative Chinese research project, wind energy it is actually harmful to the environment. Not only do wind farms have a generally harmful effect on regional climate, but they are also bad for vegetation and, consequently, animal life:
The results showed that: (1) WFs had a significant inhibiting effect on vegetation growth, … and (2) the major impact factors might be the changes in temperature and soil moisture: WFs suppressed soil moisture and enhanced water stress in the study area. This research provides significant observational evidence that WFs can inhibit the growth and productivity of the underlying vegetation.
Green central planning is yet another example of what happens when government imposes an ideology on its people. With some luck, the regulatory rollback under the Trump administration will mark the turning point for green central planning in America, but we are by no means out of the woods yet (no pun intended). The ideological battle against big government is certain to continue for many more years to come.
