Thursday, February 15, 2007

Verizon Abandons Venezuela

Can you hear me now Amigo? Verizon (NYSE: VZ) becomes the latest capitalist company to take what they can get and escape the 21st Century Socialism of Hugo Chavez’s Venezuela.

CANTV, Verizon stock down on 2006 profit: Shares of CANTV and major stockholder Verizon Communications Inc. fell Thursday after Venezuela's largest telecom reported stunning 2006 profits, suggesting a nationalization deal with the government may have been undervalued. … The results follow a preliminary agreement struck Monday by President Hugo Chavez's government to buy out Verizon's 28.5 percent stake in CANTV on Monday for US$572 million (euro436 million), the first step toward bringing CANTV under state control.

Redstate offers an insightful analysis of the Chavez offer to Verizon and why Hugo may be creating the model for successful 21st Century Tyranny.

Verizon to Venezuela: "It's a Deal!": The big lesson here is that Uncle Hugo is smarter than your typical banana-republican. He's going to get a nice little cash-cow for his piggybank, and some interesting vertical-integration opportunities with the rest of his growing portfolio. Venezuela may become the latest state in the running to prove that tyranny indeed can be durable when managed in a sophisticated way.

The lesson: the will to suppress the freedom of others hasn't gone out of style, and it never will. What have gone out of style are the old-time religions of Marxism (with its naive faith in human perfectibility) and Maoism (with its ruthless suppression of any kind of nonconformism). Today's sophisticated tyranny is (to paraphrase Debussy) savage, with all the modern conveniences. Chavez shares with Hillary Clinton the desire for total control over the economic productivity of the people who had the absence of mind to vote for him. But he is shrewd enough (or he learned from Castro's misadventures) to know that no tyranny exists in a vacuum and he can't afford to cut off the world's money-people. He's tough and savvy enough to deal with them from a position of strength, however.

At the end of the day, what "21st Century Socialism" appears to be all about is plain old vertical integration.

These new socialists are anti-capitalist but not anti-profit. Hugo is clearly happy to lock up large cash flows for the benefit of his government. When Wisconsin Governor Jim Doyle says stupid things like, “Tonight, I propose an oil company assessment of two and a half percent per barrel to support our transportation needs. It will be illegal for them to pass the fee on to consumers … with criminal penalties if they break the law”, it only demonstrates he is still practicing last century’s socialism. The new socialists only hate profits they don’t control.