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Sep 17 2018

A Lesson on Minimum Wage from Venezuela

Thanks go to Hugo Chavez and his successor Nicolas Maduro, for teaching us the sort of economic lessons that our own homegrown socialists have conspicuously failed to learn. For example, here is what minimum wage laws accomplish when there are no conservatives in a position to keep them relatively restrained:

Nearly 40 percent of all Venezuelan stores have closed —some of them perhaps permanently —after the government of President Nicolas Maduro increased the minimum salary by nearly 3,500 percent in one fell swoop, according the National Council of Commerce and Services of Venezuela.

Minimum wage laws are invariably part of a larger package of pernicious leftist lunacy.

Many of the companies, which had been barely surviving the gradual collapse of the economy, saw the salary increase and other changes announced last month as the fatal blow in a series of policies that have been gradually strangling their businesses.

Every government decree creates problems that are addressed with more government decrees. In this case, business owners were forbidden to raise prices in an attempt to pay the artificially inflated wage. For many, this made it impossible to stay in business while complying with the law.

Government policies have also created hyperinflation. The bolivar lost two-thirds of its value in August. The fix: retailers are required to sell at prices that no longer make sense economically. This is another reason many are closing up shop.

About four in 10 stores have not opened since Maduro announced the salary increase two weeks ago. And some of the stores that did open are liquidating their merchandise and plan to close definitively when that’s done.

Even as we watch this tragedy unfold, many Americans express a desire to follow in Venezuela’s footsteps by supporting Bernie Sanders and the radicalized Democrat Party.

On tips from Lyle, Steve A, and 1-Bodhisattva.

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