Venezuelan Cereal and United States Health Care Reform - One and The Same?

I came across an interesting article in the March 22, 2010 issue of Business Week and it got me thinking about Obama care again and how it has very little chance of being successful. The title of the article is "Cereal Socialism In Venezuela" and was written by Geri Smith. It seems that President Hugo Chavez has taken over much of the farming and agriculture businesses in Venezuela in order to fulfill his dream of providing inexpensive food to the masses and at the same time exert more control over the country and its citizens. According to the article, the nationalization (from farms to supermarkets) of the agriculture industry has resulted in the following:

• Since 1999, sugar production is down 8%.
• Fruit harvests have declined 25%.
• Beef production is down 38%.
• Annual food imports that were $1.3 billion in 1999 are now $7.5 billion.
• Food riots sometimes erupt when scarce items arrive at a store.
• State run supermarkets are generally cheaper than privately run supermarkets but many times do not have the variety of food options that customers want. The example given was that during a trip to a state owned supermarket, there was no availability of beef, chicken, or sugar. Instead, there were overwhelming supplies of cooking oil (almost a 1,000 bottles), corn flour, and dried oregano and curry.
• Private supermarkets are constantly under the watchful eye of tax authorities, consumer groups, workplace safety inspectors, and even the National Guard, any one of which can automatically and immediately shut down a store.
• Since the government regulates prices on many food items, the private supermarkets have to raise prices on other items to make up the profit they lose on regulated items.
• Chavez's approval ratings are slipping as a result of the government takeovers and the ineffectiveness of the management of those resources after the takeovers.

To compound Chavez's problems, inflation is over 30% annually, the currency was recently devalued by 50%, oil revenue is down, and the overall economy is shrinking. Does this sound like a good place to live? Your savings buy less, a mainstay of life - food - is under heavy, heavy control by a government bureaucracy, you have less and less choice of food either due to scarcity or prices, government agencies dictate price levels, etc.

Now consider the recent passage of Obama care. Do we really think that Obama can manage this large part of the economy any better than Chavez has managed the food economy in his country? Obama has just instituted a major new bureaucracy to oversee health care (just as Chavez has done to manage the food industry), Obama is dictating to the private market (in this case, insurance and drug companies) what prices they can charge (much like Chavez is doing with food prices), and Obama's plan will likely result in less choice for Americans seeking health care plans that match their needs and wallets (much like Venezuelans can buy any food they want as long as it is cooking oil, corn flour, oregano or curry.)

History has proven many times that centralized planning and control of major segments of a nation's economy are never efficient, nimble, and least expensive. Think back to how inefficient the old Soviet Union was with their centralized planning approach and how miserable and unfree the Soviet people were. Only the free market can simultaneously produce lower prices, more variety, ample supplies, and innovation at the same time. Chavez and his central food planning is a disaster as will be Obama and his central planning and control of America's health care industry.

Obama care comes down to three serious faults that will doom it from the start:

1. Obama care never figured out what the root cause of rising health care costs are in this country and as a result, without understanding the root cause you cannot come up with the root solution.
2. The American political class, and for that matter any political class, has proven that they cannot effectively run even the simplest programs. Remember that simple little visitor center that the Federal government recently completed in D.C.? Over budget by about 100% and way over schedule. Remember the Big Dig in Boston? Over budget by a factor of about ten, still leaks, and has killed at least one innocent motorist. I find it hard to believe that the American political class will get this right given that they have gotten nothing else right, ever. If the food economy of a small country like Venezuela is too complicated to be run effectively by politicians, the health care economy of a large complex country like the United States is impossible to be effectively run by politicians.
3. Most Americans do not want to be miserable like the old Soviet citizens. no choice in how to run their lives and no freedom. That is what Americans are reacting to today, the restriction of freedom that is being imposed on them in a life sustaining part of their life, health care. Chavez's popularity is waning because he also imposed restrictions on freedom in a life sustaining part of his citizens' lives, food. Given that the majority of Americans view Obama care as a restriction of freedom, it does not matter how good or how bad the legislation is, America has already spoken that it will not accept it.

Both Obama and Chavez are moving in opposite directions from what their respective citizens are saying about cereal and health care. According to the closing sentence in the article: "People look at everything the government has taken over and they're seeing that the companies (the companies and industries that have been taken over) have become dysfunctional." Chavez and Obama, perfect together but dysfunctional for us and freedom.

Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble.