The Economics of Welfare

Here’s an excerpt from my interview with Bernardo Bieler Romero in April.  It’s an excellent lesson to teach us what happens when socialism is carried out to its logical conclusion.  Click the photo above to see the interview.

Phil: Back to gold.  It’s a shame Venezuela is going to sell its gold at $1,200 an ounce.  Great Britain sold its gold for $250 an ounce, and I suspect they did it in order to pay for the promises made to their people.  I can assure that the gold price is going to rise and Venezuela will no longer have any gold.  What do you think?

Bernardo: Just as they are going into debt with China, Venezuela is also going to sell its gold to pay for populist or social programs.  The government tells the people that they have a right to them, but the message that the government is sending is that the Venezuelan people have rights but no obligationsThis government has taught Venezuelans that they have something to claim but nothing to offer.  People think they have the right to be fed but no obligation to work.  In fact, the worst way to earn money in Venezuela right now is by working for it.  For example, look at my case.  I am a civil engineer working in a consulting company.  If I worked for a engineer’s salary in Venezuela, it would not provide me with the purchasing power I need to buy the things I need for my family.  I would need a second job.  The government has fixed prices on items that everyone needs, so manufacturers lose money when they sell these items.  The smarter thing for me to would be to buy things for a fixed price and then find a way to sell them for a 400-500% markup on the black market.