Nationalizing nature in Bolivia

Bolivian President Evo Morales took control of the country's natural gas industry last weekend and promised at the same time to do the same with mines, agriculture and land (read: no more free market, no more private property).

It's been a while since a leader has been ready to go down the "complete state control of the means of production" route, but that seems to be what Morales is suggesting.

The results of nationalization are sadly obvious because we have seen it all before. At first, the take-over will look smart. Revenue will roll in to the state. The state will reject giving the people a dividend in favor of "investing in society" which means building a big expensive public sector to provide services. As the spending orgy commences, the state-led sectors will begin to grow inefficient due to corruption and lack of competitive pressure. The state will borrow against their reserves to continue the expansion. The state will grow more and more expensive to maintain while at the same time becoming more oppressive towards the growing opposition. The state will continue to demand more money and currency will be printed, leading to inflation. Prices skyrocket. About this time, natural gas prices worldwide will collapse due to decreased demand, the state will default on its debt and a new social revolution will ensue.

In the end, the people of Bolivia will be just as bad off, if not worse, then they are now.

To learn more about the Bolivia gas take-over, click here.