Forget Iran, the next war could be Venezuela

Don Boudreaux highlights some Hugo Chávez shenanigans from the WSJ:

Venezuelan President Hugo Chávez, beset by a recession that is hurting his popularity, has turned his sights on international car companies, threatening them with nationalization and pledging to ramp up government intervention in their local businesses.

The populist leader has threatened to expropriate Toyota Motor Corp.’s local assembly plant if the Japanese car maker doesn’t produce more vehicles designed for rural areas and transfer new technologies and manufacturing methods to its local unit. He said other car companies were also guilty of not transferring enough technology, mentioning Fiat SpA of Italy, which controls Chrysler Group LLC, and General Motors Co.

Let's assume that Chávez indeed nationalizes a General Motors plant. Being that the U.S. Department of the Treasury owns a majority of GM, we could expect more war almost instantly. I know Chávez is a little off, but I think he's smarter than that.

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To me, the key part in this story isn't the mandates for particular vehicle models but the demand for the "transfer [of] new technologies and manufacturing methods to its local unit." Sounds to me like Chavez's socialist paradise needs a productivity boost (and of course, needs evil, horrid capitalism to provide it).


There's a method to Chavez's madness that is impossible for us Americans to get at first glance. Having followed Venezuelan politics a little, it seems his agenda is to offer an alternative economic model, something in between old-style Communism and Capitalist republicanism. But in the mean time, Venezuela has a lack of infrastructure and technology going back well before Socialists took power there. Will it work? Who knows, I imagine its probably dependent on whether oil prices stay reasonably high and he will have the dollars to throw at his government enterprises until they become self-sustaining.

The US also wouldn't go to war over GM property, considering GM property in Venezuela is actually somewhat limited and the market is constricted by the combination of the recession and currency policy there.

Lastly, Chavez normally does pay near market value for these industries post nationalization, so for the sake of getting the billions, I imagine Obama would quietly ignore it.

Where's this money going to come from?

Come on Californian. I want to understand your twisted mind. How do you figure that Chavez is paying "near market value". What is Chavez going to use to pay for all these nationalizations? Is he using Bolivars that have now been devalued by a factor of three? Is he on a 20 year payment plan with no interest. Does he use dwindling foreign currency that he gets from dwindling oil revenue that is needed by him to pay off his cronies and voters? Maybe he gets it from the Chinese with strings attached?

Won't work

"Will it work? Who knows...?"

I know and no it will not.

If Obama is a socialist as some say

he should give the property to Chavez as a gesture of good will and international co-operation.

"...have the dollars to

"...have the dollars to throw at his government enterprises until they become self-sustaining."

Dang, you cant honestly believe that government enterprise can ever be self-sustained?

Yeah, he does believe it because ...

... everyone knows that when you replace free market actors with political cronies that improves efficiency. Just look at Zimbabwean farms.

Hey! dont knock Zimbabwe, I

Hey! dont knock Zimbabwe, I am a multi-trillionaire in that country.