I’m not a fan of Barack Obama’s economic policies, but I’ve always tried to characterize them honestly. Too many who are right of center have made apocalyptic comments about “Obama’s Socialism”, so I think a reminder of what a nasty socialist regime actually looks like is in order. Unfortunately, Venezuela has just provided a good example:

Everyone the bill applies to (people or corporations, foreign or domestic, who do business in Venezuela) must submit all relevant information (costs, prices, production processes, etc.) that the government requires in order to set prices and margins.

The main regulatory arm of this mammoth law is the “National Superintendence for the Defense of Socio-Economic Rights,” known by its Spanish acronym of SUNDDE. Putting aside the fact that its enormous task will require tens of thousands of employees, the very name spells out just how the government views private businesses: as something people need to be “defended” from.

The gist of the law is precisely what it says: everyone must submit their costs so that the government can set their margins and their prices. Everyone can be audited at any point in time. The maximum margin allowed is 30 percent of costs.

How will the government determine what counts as costs? The law is purposefully vague about this.

For example, suppose you are an international airline operating in Venezuela. What’s your cost of production? Should you bill the cost of the plane? How do you account for depreciation? What about currency risk? Or say you’re a novelist. What’s the cost of writing your book? Suppose you’re doing research on a new anti-malarial drug: how could you account for your costs under the current law?

It doesn’t matter. The government will decide what your costs are, and only allow you to set prices up to a maximum of 30 percent above that. End of story.

Read the whole thing. Then be glad that the US doesn’t have an economically-crazy person at its helm.

Comments are welcome as always.