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Monday, December 20, 2010

 

the difference in taking and borrowing

A lot of people have associated the current and former administrations approach to dealing with failing industries with communism; or complain about the socialist aspect as if it is anything new. Loaning General Motors $50 billion on behalf of the American people is intrusive and evokes feelings of being robbed by the politicians that approved such measures. The people in Detroit and other towns with GM plants may feel differently. While Americans complain about government support, in this case the majority ownership, of a private company, the people of Venezuela lose entire private companies to the government without payment. This expropriation is in the name of productivity. The latest victims are two construction equipment manufacturers, who were reportedly not productive. In the face of current floods and mudslides, many people have been displaced and need new shelter. The government is claiming they can use the existing capital to be more productive and provide a better service to the public under the control of the government. Some would say there is only a difference in the degree of taking in the US ownership of GM and what the Chavez regime's latest taking of the two manufacturing companies. The American anger stems from fears the money they loaned GM will disappear. Where the US seeks to sell their share of GM, the Chavez regime has no intentions of returning their 100% share of these expropriated companies back to the private market. The problem in Venezuela illustrated the typical communist taking of private companies to plan inputs and outputs in the name of public good. The US temporary ownership of GM represents the mixture of markets and government involvement, described by Olsen as necessary in a modern economy. The US policy is opposed by a large number of taxpayers who, in their opposition must assume their tax contribution would be better spent in another program are not affected by the policy, while a very small number of people support the policy because they benefit directly from the policy. In Venezuela, a large number of people support the taking of ranches and private business because they see the quality of life benefits associated with it, while the small number of ranch and company owners strongly oppose the taking. The former describes the luxury to oppose policy for personal reasons. The latter illustrates the shift of incentives, as Venezuelans now associate taking with a higher quality of life and those would be future ranchers will not be as productive in fear their life's work will be expropriated.

http://www.bloomberg.com/news/2010-12-19/chavez-orders-takeover-of-2-construction-suppliers.html

http://www.reuters.com/article/idUSTRE63K56920100421

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