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Thursday, May 3, 2012

Bolivia and Argentina Nationize Foreign Corporations

From the Telegraph:

Mr Morales said the expropriation of Transportadora de Electricidad (TDE), which runs most of Bolivia's power grid, was "in honour of all Bolivian people who have struggled to recuperate our natural resources and basic services". He timed the seizure for May Day.

TDE is 99.94pc owned by Spain's Red Electrica and, according to El Pais, accounts for about 1.5pc of the company's business. Accusing Red Electrica of underinvestment in TDE, Mr Morales said: "We do this... for the benefit of the Bolivian people."

The nationalisation comes just two weeks after Argentine President Cristina de Kirchner announced the expropriation of Spanish company Repsol's stake in oil group YPF, also citing underinvestment.
There is a lot that can be said about how political pandering goes hand-in-hand with thievery. The key concern with "nationalization" is the disregard for the rule of law. People expect to have the government pick their pockets, and largely accept it when it is deemed "fair," in the sense that it occurs pursuant to laws and rules and due process. But when due process and the rule of law is abandoned to prop up government finances or appease certain groups, it reveals the true rot in the system. Economic prosperity ultimately relies on trust; and when the trust is gone, so is the money and effort that produces prosperity.

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