By
Carl Stoll
A review of “Chávez Decaffeinates
Venezuela. Coffee shortages predictably follow his price controls", by
Mary Anastasia O'Grady, Wall Street Journal, May 3, 2010
Author’s note: It is not my intention in this review to defend President Hugo
Chávez’ nationalization of the coffee plantations. On the contrary, I agree
with Ms. O'Grady that price controls are useful measures only in emergency
situations, not as instruments of steady economic policy.
Firstly, Ms O’Grady inexplicably confuses
central planning with price controls. These two sorts of state intervention in
the economy are both deplorable, but should be kept analytically separate
because their economic effects are different, as pointed out by Ludwig von Mises
in his works A Critique of Interventionism and Middle of the Road
Policy Leads to Socialism.
Ms O’Grady cites a prominent economist, the
late Milton Friedman, to the effect that governments are always incompetent
bunglers. Milton Friedman was undoubtedly a very talented economist and much of
what he wrote is very sensible indeed. His arguments against a gold standard,
his critique of federal regulatory bodies as artificially imposed cartels, and
numerous other positions he espoused are well worth reading and have held up
well against the ravages of time and fashion. .
Nonetheless Mr. Friedman had an unfortunate
proclivity for dogmatism when it came to the issue of government participation
in the economy. This proclivity drove him to propagate what can only be called
blatant and horrendous lies. Mr. Friedman’s sleazy record on this score is
exposed in excruciating detail by Elton Rayack in his book Not So Free to
Choose: The Political Economy of Milton Friedman and Ronald Reagan,
published by Praeger in 1987. Rayack cites claims from Friedman’s works that
are patently ridiculous and are obviously purely ideological secretions lacking
any empirical basis whatever. For example Friedman claimed that Japan’s 19th-century
industrialization was driven by private entrepreneurs, whereas the most cursory
glance at Japanese economic history reveals that the state played the decisive
role in every single stage of Japanese economic history since at least 1850! And
that is but one example of many.
Consequently I am not terribly impressed by
one more Friedman quote badmouthing government.
I admit that governments often make
blunders. However the government is not the only party guilty of mismanagement.
In the article "America the Resilient. Defying Terrorism and Mitigating
Natural Disasters” by Stephen E. Flynn, that appeared in the March/April
2008 edition of Foreign Affairs, I read the following:
“In 2005, after a review of hundreds of
studies and reports, the American Society of Civil Engineers issued a scathing
report card on 15 categories of infrastructure: the national power grid …
received [a] D … the best grade, C+, went to bridges …”
The US power grid is owned and operated by
power companies, the great majority of which are privately owned. According to National
Public Radio, "The U.S. electric grid is a complex network of
independently owned and operated power plants and transmission lines. Aging
infrastructure … has forced experts to critically examine the status and health
of the nation's electrical systems.”
On the other hand US bridges are almost
without exception government property.
How do you explain that, according to the
American Society of Civil Engineers, in 2005 the infrastructure belonging to
and maintained by the government was in better shape (score: C+) than the
infrastructure belonging to and maintained by private enterprise (score: D)?
Don't bother to reply. I know the answer
already. My many years of researching the issue of private vs. public ownership
of the means of production have persuaded me that the slogan “the government
can't do anything right” has a certain basis in reality, but it is by no means
a universal rule.
Furthermore I have concluded that private
enterprise is guilty of just as much incompetence, waste and sundry other misdeeds
as the government.
Blaming the government for everything is
merely a right-wing hobby, very much cultivated in the US, where it has become
a kind of folk religion.
The US is perhaps the only industrial
country that lacks an integrated national power grid. Those bungling
capitalists have been extremely negligent about connecting the East with the West,
and Texas has its own separate grid! (At least when I researched the matter in
2003, links among those three segments were both scarce and feeble.)
If the power grid were run by the
government, as I think it should be, the US would undoubtedly have been
provided with an integrated power grid many, many years ago. Like Mexico, for
example, where electric power was a state monopoly for many years.
I believe that judgments on economic
phenomena should be based on meticulous study of the facts and not on
right-wing propaganda à la Milton Friedman.
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