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Chávez vs. Toyota

In another attack on private enterprise in Venezuela, soon-to-be-President-for-life Hugo Chávez has given the Toyota Motor Corporation an ultimatum: give us your technological secrets and increase your local production of Land Cruiser 4×4 vehicles, or prepare to have your plants nationalized.

Toyota had discontinued production of this particular “rustic” all-terrain model used for public transport in poor and rural areas, where the transportation infrastructure is nearly non-existent and 4×4 travel is the only way to get around.

The Land Cruiser was not a big seller in Venezuela and Toyota made a business decision to import it on demand from elsewhere. This type of free market decision is anathema to a socialist such as Chávez:

What’s this that Toyota doesn’t want to make the ‘rustic’ model here? We must force them. And if they don’t, then they should leave and we’ll bring another company in … The Chinese want to come and they make ‘rustic’ models.

Notice the explicit threat to use force, which is a typical socialist tactic (a tactic Chávez has employed previously against Venezuela’s energy and communications industries, which he ultimately ended up nationalizing–to the great detriment of the country) when one is trying to assert absolute control.

Chávez has ordered his minions to inspect the Toyota plant. If the inspection reveals that Toyota has not transferred all of its technology to the Venezuelan Government, he will seize it:

We’ll take it, we’ll expropriate it, we’ll pay them what it is worth and immediately call on the Chinese. They’ll have to fulfill (the quotas), and if not, they can get out. We’ll bring in another company…companies who come here to set up must be ready to transfer their technology to us.

Will this hurt Toyota? Hardly. They only sold about 30,000 vehicles there last year (compared to nearly 10 million in the U.S.). So whom will it hurt? The only group ever adversely affected under socialism: the average citizen.

If Toyota leaves Venezuela under pressure from Chávez, even the Chinese may be reticent to fill the void in such a small market. Eventually, only one vehicle will be available: one produced by the government that nobody wants.

Anybody remember the East German Trabant?

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