Chavez Marches Towards Private Sector Nationalization — One Grain at a Time

Hitler did it. Stalin did it. So why shouldn't Venezuelan President Hugo Chavez do it too? No, I'm not referring to practicing and preaching anti-Semitic policy (though all three have that in common as well). I'm referring to nationalizing private industry. According to a Bloombeg dispatch from earlier in the week Chavez is back up to his nationalization games, ordering "National Guard troops to seize rice-processing mills for allegedly failing to observe government price controls". One Latin American economist quoted in the article notes that "This is a process of the state absorbing different distribution and production chains that they consider strategic ... [which] will only exacerbate food inflation and drive the little private investment that's left away”. Which US companies might be impacted by Chavez' recent actions? Cargill has rice operations in the region. But nationalization trade truth be told, any company doing business with Venezuelan suppliers -- or with manufacturing or service interests in the region -- should develop supply risk contingency plans. If oil prices remain low, Chavez will have no option short of heading down a free market path other than to nationalize much of the private sector to make good ona his socialist agenda. After all, he's already nationalized suppliers and private sector assets in the steel, telecommunications, electricity and oil sectors. What's next? And what tactics will his neighbors with similar nationalist ambitions employ?

- Jason Busch

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