Adam Smith versus Hugo Chavez

Over the last couple of days, several major newspapers have done stories about a group of business men who defend the regime of Hugo Chavez. They call themselves Boliburgueses - or part of the Bolivaran bourgeois. Simon Bolivar is an important person in the history of Venezuela - enough so that Chavez constantly invokes him. But my definition of who is in the middle class and theirs is a bit different. In the Wealth of Nations, Adam Smith's monumental book that many quote and and few have read, Smith makes a case that when given the opportunity businessmen will collude. Some people have called the Chavez regime 21st Century Socialism. To me it looks like Eighteenth Century mercantilism. Smith pointed out the continuing efforts by businessmen to collude - if they are given the chance. Venezuela seems to reaffirm Smith's analysis.

The numbers for Venezuela are interesting. Wilmer Ruperti, an oil guy, argues for Chavez' reelection because "He is the only person who has identified himself with the poor." Evidently, Mr Ruperti is one of those that Chavez cares about. Ruperti rides around the capitol "in his armor-plated car, accompanied by two South Korean bodyguards, Yong Lee and Rim Paek who are tae kwon do masters who can brain an assailant with a butter knife at a distance of 20 meters." In 2007 the Venezuelan budget will grow by 32%, based primarily on growth in oil revenues. The original budget is based on $29 per barrel. The economy will grow by 8% this year, the highest in South America. GDP has almost doubled (from $92 billion to $170 billion) since 2002. But inflation is 15%, the highest in Latin America. These are not long term trends that are sustainable.

But the businessmen are all excited about Mr. Chavez. For example Alexander Uscátegui, head of a group called Entrepreneurs for Venezuela gushes "We think President Hugo Chávez has done a very good job. Here there has been incredible growth in companies. There are businesses that close, sure, but they don't close because of Chávez." But then he goes on to suggest "We defend the private property, we defend businessmen, we defend credits, our difference is we don't aspire to political power, we don't question Chávez."

For an alternative view, Flavio Fridegotto, the owner of a chain of hardware stores and head of a business asociation, comments"Ninety percent of those businessmen are there because they give them the money to be businessmen. They are there because they are opportunists." Fridegotto's comments seem right on point.