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February 25, 2016

DAILYKENN.com -- Socialism works like this: a) Everything is free except people and b) there is nothing except people. 

That's the vision Bernie Sanders and the Democrats have for America, though they'll never admit it. 

A harbinger of life under socialism can be witnessed today by scanning the current affairs in socialist Venezuela. 

1. Runaway inflation.

While Americans have grown accustomed to a staggering 4 percent annual inflation rate, the rate of inflation in Venezuela is predicted to be 720 percent. That is, an item that cost one bolívar today will cost 720 bolívars in one year. As of this writing bolívar is currently worth about 16 cents. By the time you finish reading this post the bolívar may be worth 15 cents. The country has phased out small denomination currency and has begun printing 500 and 1,000 bolívar bills.

2. Foreign investment dissipates

Among the highest paid elite in Venezuela are fortunate few who live at American-owned baseball academies. They earn about $1,000 per month in American dollars.  As the economy declines and crime increases, NBL-affiliated academies are closing and moving elsewhere. The Seattle Mariners closed their facility last year because they couldn't find the basic food staples to prepare three meals each day for their forty players. As foreign investment flees, they are not replaced by new investment.  

3. Free healthcare is non-existent

As the Zika virus spreads through Latin America, socialist governments are finding the added burden to their free healthcare systems overwhelming. Venezuela's stubborn adherence to socialism is devastating. The country reported 5,000 cases of the viral infections while experts believe the actual number of infections is about 400,000. Free-market economies will, no doubt, send relief. According to The Wall Street Journal, "Six infants died [last week] because there wasn’t enough medicine or functioning respirators."

4. Economic dependence

Venezuela's economy managed to stumble along when the international demand for oil kept prices high. When prices fell, the nation's largest export no longer provided enough cash to fund the government. Note the demand for Venezuela's oil is due to free markets in other nations. The government announced this week that gasoline prices in Venezuela would increase six fold. The government is also planning to cut back on electricity. PVC (polyvinyl chloride) products, a petroleum based innovation invented by free marketers, increased up to 800 percent in a single day. About 96 percent of Venezuela's export revenue comes from oil. One economist said oil prices would need to stabilize at $200/barrel for Venezuela to balance its budget. Prices current range around $30/barrel. 

5. Borrowing money to pay debts

Venezuela owes $24 billion in debt payments in 2016. $5 billion of that will come from loans from China. The government will necessarily be forced to sell assets (it has about $60 billion in assets) or default on its payments. 

6. Collapsing infrastructure

You may have read about the water supply crisis in Flint, Michigan. Imagine such a crisis grips and entire nation. That is challenge facing citizens in Venezuela. This weekend an estimated three million people were without drinking water in the nation's capitol city, Caracas. The shortage was due to “maintenance” work by state-run utility, according to official reports. Meanwhile, in the United States, government bureaucrats are imposing punitive EPA standards on American under the pretext of "climate change" (global warming) and environment management. Expect the government to take away your water as a cattle prod to keep you in line under a Sanders government. Meanwhile, Venezuelans are having to do without toilet paper. 
For those who support Bernie Sanders' presidential campaign because they view the aging hippie as "honest," keep in mind that the now deceased Hugo Chavez was once perceived with the same admiration.

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  1. The phrase, "will cost 720 bolívars in one year" should be "will cost 7.2 bolívars in one year"