Venezuela has become today's text-book example of what happens to a nation when it is forced to succumb to large-scale economic nationalization.

President Hugo Chavez is tightening state control over Venezuela's food supply, setting quotas for food staples which are to be sold at government-imposed prices.

Venezuela's public finances are unravelling, with oil prices at $40 a barrel, while the national budget is calculated at $60 a barrel. Inflation is running at over 30 per cent, yet with the new measures Mr Chavez is seeking to ensure that his core support, the poor, can still fill their shopping baskets with food.

"If any industry wants to ride roughshod over the consumers, with a view to getting better dividends, we are going to act," said Carlos Osorio, the national superintendent of silos and storage. "For the government, access to food is a matter of national security."

Production quotas and prices have now been set for cooking oil, white rice, sugar, coffee, flour, margarine, pasta, cheeses and tomato sauce.

Of course a passionate Communist like Hugo Chavez can never admit that placing his nation's economy under a centrally-planned stranglehold is the true cause of the current double-whammy of dwindling wealth and double-digit inflation. It's always the "profiteers," never the planners.

Chavez bet the farm that oil futures would continue to trade at over $100 a barrel. He used Venezuela's state-run oil company PDVSA as his own personal piggy bank, replacing its directors and engineers with cronies who knew little about the oil industry, redistributing its capital in massive giveaway programs, and turning its corporate office into a free public university.

But now that oil prices have tanked, Chavez is in big trouble. As Margaret Thatcher famously noted, "The trouble with socialism is that you eventually run out of other people's money."

Over the past few years, Chavez has tightened his death grip over Venezuela one piece at a time by targeting newspapers and television networks critical of his policies, creating new and powerful secret police and domestic spying agencies, and pushing his people into a constitutional referendum that ended term limits.

Those who believe that bigger, more powerful government is the solution to poverty and economic troubles would do well to pay attention to Venezuela as it slowly swirls down the drain into a full-blown Communist dictatorship.
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ADDED: Chavez has also steered Venezuela straight down The Road To Serfdom. Anyone care to guess how far Venezuela has already gone?