Hugo's Public Option

Chavez: You will buy my arepas! AP

Chavez: You will buy my arepas! AP 

Politics: One might be tempted to think there's no comparison between Democrats' health care overhaul and Hugo Chavez's orgy of class warfare on Venezuela's private sector. But consider Chavez's new public eateries.

Last week, Venezuela's Hugo Chavez announced he would start a chain of government-run "areperas" to sell arepas — filled white-corn patties, similar to tacos — at state prices.

Slinging hash at a grand opening in Caracas, Chavez announced his new firm would be called Comerso, the "Socialist Corporation of Markets," to counter the private restaurants he claims are charging too much. With arepas selling for 20 bolivars at private eateries, Chavez was going to dish his out at five — to keep eateries "honest."

It's no different from the public option House Democrats are proposing in their 2,074-page bill now being reconciled in Congress.

Unlike the Democrats however, Chavez makes no bones about what he's up to: driving the private sector out of business with his "public option" for these taco stands.

"We'll show them what a real market is all about, not those speculative, money-grubbing markets, but a market for the people," the caudillo claimed. "Private individuals in sales can still sell, but they'll have to compete with us and with a people who are now fully aware."

It's remarkably similar to what Democrats have argued in their insistence on a "public option" of state-run health insurance for their health care overhaul bill now being reconciled in the Congress.

"One of the best ways to bring down costs, provide more choices and assure quality is a public option that will force the insurance companies to compete and keep them honest," President Obama said just last October.

"If a vigorous public option is not included, it would be a major victory for the health insurance industry," said House Speaker Nancy Pelosi this December.

"I think it's the fairest way to go," said Senate Majority Leader Harry Reid in October.

To both Chavez and Democrats, prices charged by private firms, whether health insurance companies or areperas, are too high and need government intervention. What's more, they aren't high because of conditions of supply and demand, but out of pure malice.

That obscures the reasons why health care costs are high in the U.S. and arepa prices are soaring in Chavez's Venezuela.

Three factors stick out in Venezuela: Chavez has instituted price and capital controls to "discourage speculation" on foreign currency, which makes hard cash a lot scarcer than it should be.

Because of this, importers can no longer buy as much imported food for a nation that has always imported food. White corn, a staple of Venezuelan cuisine, must be imported from Argentina or South Africa because it doesn't grow well in the local climate. Net result: Store shelves go bare and prices rise.

Chavez also has been confiscating private farms in the name of "the people" and has added more food shortages, as well as driven up prices even further.

Lastly, he's already set up a network of government-run stores in the shantytowns, called Mercal, which quickly runs out of goods every time it's stocked because of its artificially low prices. This is unfair competition with the established private sector, which has suffered.

"Buhoneros" (poor street vendors) buy up the goods in bulk and sell them on the street or at fairs at higher prices consistent with Venezuela's inflation rate — which runs around 30%. That's the highest in Latin America.

In that atmosphere, inflation, food shortages and the withered private sector are tightly linked to government intervention. It is little different from the kinds of controls that have hurt the U.S. insurance industry, which has been battered by Congress' controls against companies selling policies across state lines and hundreds of capricious mandates.

There may not be much that can be done for Venezuela, but in light of these results, we can pretty well tell what Democrats are up to with their "public option." And it's going to have the same result.
 

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