March 11, 2009 [LINK / comment]

Chavez confronts rice industry

The falling price of crude oil on world markets has put the regime of Hugo Chavez under heavy pressure. His very "legitimacy" (in the crude, Marxist sense of the word) depends above all on delivering necessities to poor people, cheaply and reliably. The oil windfall has made possible all sorts of subsidies, and the longer such market distortions last, the more people get used to them, and the harder it is for a populist government to make the necessary adjustments when cash reserves run low. At the same time, the various government decrees which oblige nominally private enterprises to meet production quotas become harder and harder to enforce as people begin hoarding scarce goods and a black market emerges.

That seems to be the situation in Venezuela today, and Hugo Chavez must be getting pretty desperate, because he has picked a fight with Venezuela's rice-milling industry, which includes multinational corporations such as Cargill. Last week the President-for-Life sent troops in to occupy rice mills after the companies resisted his decrees. See BBC. This doesn't signify a major crisis for his regime, but it is a clear sign of trouble that he, being as headstrong and vain as any dictator, will almost certainly ignore. It's just a matter of time before his system crumbles, but that might be another five, ten, or even twenty years.

Chavez will certainly use his national team's victory over the United States in the first round of the World Baseball Classic to rally the nationalistic spirit of his supporters. It may even take some of the pressure off, temporarily. See today's baseball blog post.