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Hugo Chavez: International Economic Clown
From The Daily Capitalist
If it weren't for Hugo Chávez, my favorite Latin American dictator, life would be pretty dull. The guy is a walking, talking economics lesson. He's so easy to pick on because he has the Sadim touch (you know, instead of turning things into gold like Midas, he turns things into crap).
Everything he has done has moved Venezuela backwards. The people who actually do something productive in the economy hate him. The have-nots love him because he promised them lots of free stuff. But lately his numbers are sinking: his policies don't work. He's a typical populist caudillo1 like his hero Castro. He seeks only power and disdains concepts like individual liberty, freedom of expression, and free markets.
Chávez has no idea how the world or human nature works. He has no idea how economies work. The guy is ignorant. If all you study are socialists and populists, you will be ignorant. Ignorant of classical liberal ideas such as natural law, free markets, and limited government. I'm going to guess that his idea of Austrian economic theory has something to do with Arnold Schwarzenegger.
* * * * *
In 2009 he engineered the constitution so that there are no term limits to his presidency. He's been seizing or muzzling the opposition media. He has been beefing up the military and buying lots of arms. Other than a few rows over soccer and minor border disputes, Latin America has been a pretty peaceful continent so one must conclude his army will be directed at his fellow Venezuelans. He is spreading his poisonous ideas and oil wealth around the continent.
The government claims that they have had "robust" economic growth in recent years, but that is a lie. First, foreign and local capital has been fleeing the country. Second, no one wants to invest there because they fear nationalization. Oil is about 80% of the economy (90% of exports) and it is owned and controlled by the government. They claim GDP rose substantially in the latter part of the last decade but it was all due to rising oil prices. With declining oil prices, the economy has tanked. There is very little growth from private industry.
Most of the statistics for inflation and growth are made up by the government or the World Bank or the U.N. If you track economic growth it matches perfectly with oil prices. Inflation was officially 27% in 2009, but the free (black) market rate for the bolivar is actually much lower. So, it is my guess that the fictional growth claimed by the government is much less and inflation is higher.
Chávez continues to nationalize major industries. The oil industry was nationalized in 2002 and production has declined since then for several reasons. First he fired all the engineers and skilled workers after the 2002 protest strike (about 19,000 people fired). Second he has neglected to invest in the production infrastructure and the physical plant is degrading. He just spends.
His price controls (over 400 items are controlled) have lead to shortages of primary food products as growers and processors try to evade controls. Food production is declining and it must import two-thirds of its needs. There is power and water rationing as well. People are unhappy. He's rigged politics so that he can perpetuate his power. He'll be hard to get rid of unless he's assassinated or there is a coup.
* * * * *
What do you do if you are a dictator on the slide? It's hard to just declare martial law because it's so anti-democratic and it may backfire on him and even his friends in neighboring countries may abandon him. So you just bide your time and do it in stages.
First you devalue the currency. He just devalued the bolivar by 50% (4.3 to the dollar) and he created a two-tier system so the bolivar is slightly higher for imports (2.6 per dollar) than exports. The real ("black" market) value of the bolivar, according to the Wall Street Journal, is 6.25:1.
“They put the value of the dollar at more than 6 in an arbitrary and illegal manner,” Chávez said. “We have to organize to reduce and attack that speculative, illegal dollar that hurts the Venezuelan economy so much.”
Hugo is upset that people might want to protect their own interests rather than go down with his ship.
More from the WSJ article:
Mr. Chávez, 55 years old, is gambling that the benefits of a weaker currency will offset faster inflation. ...
In Mr. Chávez's favor, a weaker currency helps narrow a growing budget shortfall by instantly giving his oil-rich government more local currency to spend per barrel of oil exported by the state petroleum company, PDVSA. That is a key consideration with congressional elections looming in September.
Mr. Chávez has watched his popularity slide amid corruption scandals, a shrinking economy, rising crime and shortages of food and electricity. Increased spending could boost Mr. Chávez's popularity.
Mr. Chávez also predicted a weaker currency would breathe life into a domestic economy that depends on imports for everything from beef and milk to cars. ...
Devaluation isn't enough to revive the domestic manufacturing base. Few investors are willing to brave Venezuela's maze of price caps, currency controls and the ever-present fear of nationalization. ...
What is more, by keeping a subsidized dollar rate for importing food, medicine and essential items, Mr. Chávez removes any incentive for Venezuelans to produce what they need most.
* * * * *
I can write the script for Venezuela.
All this spending won't do anything to help the economy. It doesn't create wealth or jobs; it only redistributes the wealth created over the years from oil production. In case you haven't seen the obvious, this is Keynesian fiscal stimulus. Give money away to those whom the government favors. Pay a supporter to dig a hole and another supporter to fill it.
Which means citizens are bailing out of the bolivar because they think it will be worthless. Another slight problem he has with human nature.
At Caracas's middle-class Sambil shopping mall, lines at cashiers reached 50-deep. Carmen Blanco, a 28-year-old accountant, waited to buy a 42-inch flat-screen television she doesn't need because she already has one at home.
"It doesn't make any sense to keep my savings," Ms. Blanco said Saturday. "I'd love to see how things work in a normal country."
Carmen is one sharp person, although I would recommend gold jewelry or just gold instead of TVs. Which shows that even with an intelligent middle class, guys like Chávez can still succeed.
Chávez's response:
Venezuelan President Hugo Chávez said that businesses have no reason to raise prices following the devaluation of the bolivar and that the government will seize any store that seeks to capitalize on the situation.
Chávez said he’ll create an anti-speculation committee after private businesses warned that prices would double and consumers rushed to buy household appliances and televisions. The government is the only authority able to dictate any such increases, he said.
“The bourgeois are already talking about how all prices are going to double and they’re closing their businesses,” Chávez said in comments on state television during his weekly “Alo Presidente” program. “People, don’t let them rob you, denounce it, and I’m capable of taking over that business.”
Goods will quickly disappear from the shelves, businesses will close, the offending "bourgeois" (shop owners) will be arrested, and life and commerce will grind to a halt. Demonstrations will break out. Counter-demonstrations will be orchestrated by Chavezistas. The military will be called in to repress the people ("create order"), martial law will be declared and never lifted, and Hugo will be the new Castro. More price controls, rationing, and a growing bureaucracy will be the order of the day. To divert attention to his failures he will blame the U.S., traitorous bourgeois elements, maybe invade Colombia, pay off his thugs, spend money, and neglect oil production. A major part of our oil supply will be jeopardized.
He'll always be looking over his shoulder for someone trying to overthrow him or kill him. He'll create a police state with local block wardens and a powerful security service. People will try to leave. Lots of people.
All this because the guy knows nothing about economics or human nature.
* * * * *
I have a suggestion how we can help Chávez along: Boycott Citgo. Yes, he owns it and they sell a lot of gasoline in the U.S. Don't go there. Don't support his repressive, ignorant, backward regime.
1 A caudillo is a charismatic military leader with populist-socialist policies which aim to redistribute wealth to the poor masses, at least in the beginning of the regime. They always end up as dictators of various stripes. They control the economy through patronage to their supporters, redistribution of capital, and they rely on the military to maintain control. They promote a personality cult which is why you see huge posters of the leader. They can be leftist or kleptocratic-oligarchic. Castro is a typical modern leftist caudillo. Of course being authoritarian, it doesn't really matter if they are "left" or "right."
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Irony:
Zero Hedge has many, many contributions railing against the self styled Masters of the Universe class. It was EXACTLY THE SAME CLASS and their hubris that created the conditions to support the rise of people like Chavez and Castro. If you don't like Chavez, you need to put your masters on a very short leash.
People criticizing posts like Econophile's are not necessarily Chavez supporters or communists or socialists or stupid. They've simply connected the dots of history that are there for everyone to see if they can be bothered.
"When you punish the producers enough, they won't produce. That's conservatism."
When leaches pretend (and likely believe) they're producers and the producers don't make the effort to call them out, the producers are going to get punished along with the leaches. That's populism.
We agree that "mobs with pitchforks" is populism. Sometimes what the mobs do is warranted. For example, IMHO, US citizens are justified at being angry at Wall Street (and the Central Bank).
I disagree with the rest of your post: I don't care what leeches think of themselves. As a producer, I am not obligated to separate myself from leechers. Rather, people will voluntarily deal with me if they find value, otherwise not. I have no power to make anyone do anything.
I *do* agree that the angry mob will burn down its own neighborhood, to include punishing producers that otherwise don't deserve punishment. That has nothing whatsoever to do with the producers themselves (they have no obligation to do anything, nor would it matter). Instead, the mob will hurt many people, no matter who those people are, but possibly including the ones with which they are upset (maybe some bankers, for example).
Populism is a coercive broadsword, not a scalpel. That's why Venezuela is screwed, and the producers will leave or die. With Chavez devaluing currency and seizing merchandise on the store shelves, all he does is guarantee no one wants the currency, and no one will stock store shelves in the future.
Then, everyone will suffer to a much greater degree than how they suffer now.
What I am saying is that so long as real producers and leeches act as a block to consolidate and maintain political power, don't be surprised if you're the subject of populist attacks. Wall Street is running and hiding behind the "Capitalism is Freedom" fig leaf. The producers need to side with the angry mob until the RULES CHANGE so that the leeches can't hide. As long as conservatives are not allowed to identify with populist causes even where it makes sense, nothing is going to change until the producers are at the end of the pitchforks along with those who actually deserve it.
It has nothing to do with real producers, and producers are not acting as a block with those in political power.
Small businesses are paralyzed because they have no understanding of the rules, and no ability to plan. Those are the producers, and they are screwed. They have no power and no voice.
That is true, but it's not capitalism. More accurately, Wall Street wants more for Wall Street. That is no different now than any time before. What's different is the amazing raping of the public coffers by public officials for the benefit of Wall Street.
No, it doesn't matter. The producers have no voice, and their actions are irrelevant. Their bankruptcies may be a significant data point, but that's about all their contribution can be.
However, I do concede that the "angry mob" is composed of "citizens", and the "producers" happen to *also* have that status. So, the producers can act as "citizens" (e.g., a part of the citizen mob), but that's about it. It has nothing to do with their (previous) role of "producer".
None of these elites (elected, appointed, or industry) are conservatives. None.
The conservatives do not have a voice, nor do the producers. They are irrelevant.
We agree that there is significant (and growing) public outrage. We agree that outrage to be justified. Where we might disagree is the conclusion: I prefer a solution where the outrage manifests in *not* having individuals with the authority to hurt society at this level, while a collectivist would want to instill a "better/more capable" super-structure with the authority to better coerce desired behavior.
I fear heavy-handed structures that coerce desired behavior ... that always ends in tears. For example, we currently operate under a heavy-handed structure that coerces desired behavior -- they never should have had this power to begin with. (Indeed, in the US, they don't; this is usurped authority that was never granted.)
Mikla:
I appreciate your comments. We think alike and you argue well
Econophile
Solid article, Econophile. And a fine job of “outing” so many Kool-Aid drunks as well. Truth and common sense always manage to elicit their animal spirits…You’ve brought out the ‘best’ in them, for all to see.
Your predictions are a given. I’m just wondering how long it will be before our own caudillo will appoint an “Anti-Speculation Czar”…
Solid? One of the many things I like about ZH is when some posts an poorly informed piece of propoganda, it get torn to pieces by well informed ZH readers, and that when someone opines that this is a "solid article,[ someone like myself will respond that this opinion is as solid as fart because it totally ignores the many informed criticisms the article merited and received. "Kool aid drunks" ... adolescent name calling. A whole body of research now demonstrates that conservatives
are often intellectually rigid and ignore new information, a kind of intellectual disorder. This article and this comment are excellent examples. They would prefer to get into a name calling match than a true discussion.
A whole body of research also says "debt doesn't matter". But it's wrong. (Debt must be serviced.)
If by "rigid" you reference the conservative adherence to the concept that "incentives matter", then yes, I concede that in almost all cases, that holds true (incentives do matter). Rare is the case where incentives do not matter.
When you punish the producers enough, they won't produce. That's conservatism.
In response, I assert that failure to recognize this fact is, "a kind of intellectual disorder" (actually, I would liken it to a kind of childish naïveté). Perhaps you could share with us those cases where conservatives should be more "flexible" (i.e., less "rigid") because of "new information"?
"A whole body of research also says "debt doesn't matter". But it's wrong. (Debt must be serviced.)"
I think the body of research actually says deficits don't matter, but deficits are not debt. Or at least there is no need for them to be for the USG.
And as far as sovereign debt is concerned, if it's denominated in the sovereign's own floating currency, then it can be converted to a deficit instantly using an accounting entry.
I defer to (and agree with) Steve Keen on this subject (economist in Australia) who constantly rails against neo-classical economists (and much of the Economics profession) regarding, "treating money seriously", and factoring in debt.
I take your point that deficits can sometimes merely imply leverage (and all the good and bad that entails), but no, I mean debt.
Deficits matter, and debt matters. Between the two of them, debt matters more.
Sorry that my use of the word "conversative" was misleading in this context. I was referring to a body of psychological research, not economic research. I would certainly agree that debts do matter.
I find Chartalism to best describe what I see. Steve Keen posted the Chartalist view from Bill Mitchell at the end of the article here:
http://www.debtdeflation.com/blogs/2009/09/27/it%E2%80%99s-hard-being-a-...
The comments are worth reading.
Chartalism posits that net financial assets in the non-government sector can only come from government sector deficits. No accumulated deficit = no financial assets. This is actually an accounting identity and is therefore fact.
This post is an embarassment to the site. The coverage of Latin America in the Anglo press is an even greater embarassment to all of us. The former only appears coherent because of the latter fact. It's vertically integrated ignorance.
Here's an example:
- for the last two years the WSJ has been criticising the Venezuelan Government for not devaluing their currency
- now that they have devalued it's the end of the world apparently:
http://online.wsj.com/article/SB126316619465423909.html#printMode
Of course the devaluation hasn't reached anywhere near the levels seen during the last "free" regime in Venezuela when the poor suffered such devaluations without even the pretense of it mattering to anyone. (Everyone else had long since figured out how to protect themselves as much as possible - a favourite SA pastime.) But why let consistency get in the way, right Econophile?
Here are a few suggestions.
- The most informative anti-Chavez blog in Venezuela to my mind was the Devil's Excrement. Even he despaired of the opposition's hyperbole about Chavez being a dictator. (And would you please look up Uribe's record re. term limits please?) He's popular. Deal with it like any other sane democrat: propose a way that the opposition could become similarly popular or STFU.
- Stop reading the western press for info on South America. The exchange seems to be oil, cheap shoes, bananas, and cocaine for all the hack reporters they can stomach. (If you don't believe me troll through the archives of this site and convince me that it's not, almost day in and day out, one of the funniest blogs out there. Do you have to be Chavista to think it's funny? No, it's just funny. Here's a sample:
http://www.borev.net/2009/12/arab_with_a_capitol_a_that_rhy.html
- Stop harping on the tired socialism thing. I swear, for the US South American politics is like one of those ridiculous hunting ranges where people can go and bag big game and brag about it at home. Errrr... the f'ing thing was penned guy. Try taking these attitudes to a more demanding hunting environment where they are similarly endowed with natural resources and see how it plays, like Norway. Come to think of it, maybe Venezuela needs to set up a sovereign wealth fund for its oil wealth like Norway. Then I presume it would be a "playa" and no longer subject to your disdain.
- If you are going to write for a trading / economics blog actually impart some useful information based on good analysis and actual knowledge of your subject. You know, is there a trade in Venezuelan bonds for instance. Here is an example:
http://dalmady.blogspot.com/
I can't wait for more of your wisdom on South America. You should have look at Bolivia. It should drive you mad.
Dear Anon:
This post is an economics lesson. It shows how to do everything wrong. If you want trading advice, look elsewhere. Instead of criticizing me and the "Anglo" press please reveal the "true" facts backed up by references, and then we can have a conversation. And I'm going to keep on criticizing socialism and if you wish to defend it, that's fine, but back up your statements with facts. I can understand your wish to spew, but this type of criticism is not very helpful or informative. All of the information in the article can be referenced, except perhaps my conclusions which are based on my economic philosophy which I believe is well thought out. These are things we can discuss. I welcome disagreement but you've not done anything useful here.
Chavez problem is that Bolivar, or whatever is called, is not a dollar, value of both is similar and equal to piece of s....
I still don't understand why anybody would hold dollar, what kind of value is behind it now, full faith of US goverment, my full faith or mr Geithners? You guys can play with full faith for a moment but after some time you may get a bit different faith and it will be very strange!
Hugo is a monkey
You guys piss me off consistently with your US-centric view of everything happening around you. Will it ever get to your great mind that silly idea, that your toilette cleaner is not worth much more that the one in Venezuela but still he’s making probably 10000 times more, where is the secret? Are it military and our very redneck generals announcing every sometime very costly freedom ideas for other nations? Or maybe you, who want to live at very high level not doing anything productive and dictate prices for everything? Don’t give me that shit that we give the whole world free market (it’s not free anyway as you try to show it day in and out) and that’s why we should have much higher standard of living than others. What do we produce? Nukes, corn, soya beans, Hollywood movies, computer games, shitty cars nobody wants, a lot of tattoos, body piercings, give me few more examples!!!! Tell me just 3 reasons why we should stay on top!!! What advantages we have, except military financed by the whole world, over the other countries. Guy’s making 3 tattoos on some drunken idiot or teenager disappointed with her or his family gets flat screen TV for days work, or half. Just tell me how it works; manufacturing is much cheaper offshore, intellectual work is much cheaper offshore, what is left for us? We will borrow and play on stock market? I know! we will build and sell houses to idiots!!!!!!!!!!!!!!! And stop those silly tin hat remarks, those on the left are as stupid as those on the right, whatever is right or left its just the ideological base to explain to you the reasons why they suck you dry, as soon you understand it the better for you! Is OB doing good job for you? Is he better than Chavez? And tell me why you focus on Chavez; is he creating any problems for your standard of living? What about Bushie? Was he good for us? Is O doing better job? Just focus on YOUR LIFE! Chavez doesn’t have anything to do with it (maybe a little).
I'd like to know why the CATO Institute suddenly dropped all the "Chilean Social Security Privatization is Awesome" articles from their newsletter a few years back.
For that matter, what happened to all the triumphant "Argentina is the Latin Tiger thanks to Deregulation" articles in the CATO newsletter in the late 90s?
I don't the person who wrote this article but it is with out doubt that it is THE most stupid article that I have read in the last 10 years.
I now have very very serious doubts as to the integrity of the statistical/analysis content of any other articles written on this website.
Thank you! I take that as a compliment. You are now free to roam the blogosphere.
It's probably the only article you've read in the last 10 years. But, let's go. Cite some facts showing it's wrong. And, no, you can't use Chavez or Castro quotes as legitimate sources.
The Econofool strikes again.
I love how the douchy populist retards get all uppity about defending Chavez's idiocy because it was implemented through a popular vote. "If you had any intelligence or sophistication, you'd know Chavez is just following the will of the people..."
Like it takes some special sophistication to think mob rule is a super classy way to run a country.
It is rather amusing to see that the American college students, who have never held a job in their lives and are probably in their underwear at their parent's home, have such free time to write inane comments in support of Chavez that are so dramatically at odds with reality and history. I guess they learned that blather from some professor who never held a real productive job either. It certainly shows what our future holds.
Wow. I am amazed to see Chavez supporters here. But, then again, in a world where once every few years someone dies consensually being screwed by a horse, nothing should surprise me. The law of large numbers means that there will always be some level of idiocy at the forefront--even Chavez supporters.
Why do people support Chavez? Do you realize that if you do not vote for Chavez, you get blacklisted and cannot find a job? For example, consider this article on Bloomberg, circa 2006, which understates the case in 2010. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=abASlsAyXgoE&refe...
Have you Chavez supporters ever known those that fled Venezuela? Have you heard how they couldn't get work because they didn't wear the red shirt? And if not, why are you opining on Chavez, knowing nothing about what it is like there? Are his actions those of someone who has the people at heart?
Were you aware that Chavez changed to constitution to keep himself in power? To remove term limits? Is that the kind of person you want in power?
Do you know that he followed Zimbabwe's model, seizing farmland and giving it to poor people who don't know how to farm? Did you know that it is working out about like Zimbabwe where it has happened? Did you know that he has seized countless businesses? Do you want a leader that would steal your property?
Those of you lauding Chavez consider him a hero because you have lost under the capitalist system. But that isn't the capitalist system's fault--the capitalist system is fairly agnostic in whom it rewards--it's yours. You are the loser. You're the one enviously viewing the wealth earned by others. You are the one blaming them for your incompetence.
If you like Castro and Chavez, go to Cuba, go to Venezuela. Just get the hell out of my country.
Excellent article. The person who wrote this is very well informed. Part of the problem in Venezuela is that the military guy in power is very ignorant. The other part of the problem, it's that many of the policies that have taken Venezuela backward, have been taken as a means for the military guy to stay in power. So some of the damage has been done on purpose.
The military guy is a fascist and compulsive liar.
The woman who purchased the TV is thinking about liquidity later on. I think in Venezuela it is easier to re-sell a TV than it is to re-sell gold.
Econophile's has with out a doubt written THE most stupid article that I have read in the last 10 years. Whoever Econophile is they are either extraordinarily ignorant or he/she is insane.
Either way, I will not longer bother to waste my time with this website. Anyone website that allows a fool to write such crap cannot be trusted to post material that would have any more credence than what Econophile has written.
Hey. While you're gone, would you mind learning how to write? Ok, thanks, bye.
Don't let the door hit you where the Good Lord split you, bro.
Finally an honest write up on that piece of tin foil crap Chavez. For years it was the great South American Liberal warrior.
Interesting comments. Remember, I'm talking about Chavez and Venezuela, not the U.S. of A. But, those comments reflecting certain parallels between Venezuela and the U.S. are rather good. I especially find humorous the commenters who believe that the U.S. is a free market capitalist system that has failed or that those who agree with me support Bush, or bailouts, or The Oppressive State. We'll just dent our picks with these people.
The Chavezista apologists always defend whatever he does. The facts are that he controls the country, that he's packed the legislature, that the opposition has been frozen out, and that makes him a dictator. He'll never lose another election, but neither does Castro. Socialism doesn't work, can't work, and never has worked. The socialist apologists always claim it's a great system but hasn't worked because of (choose one or more: the U.S.; lack of enough power; unsavory party opportunists; traitors; greedy capitalists; foreign interference). The lack of understanding of economics here is appalling.
I do wish to clarify my comments about the continent being rather peaceful. What I meant by that is there have been very few wars between Latin countries. The commenters who noted the internal disruption in most Latin countries are correct. My point was that the weapons Chavez is buying are not needed for defensive purposes, so I conclude they are for purposes of maintaining his power over his countrymen. BTW, I do have some knowledge of the history of South America and I follow current matters there somewhat.
to Econophile:
Granted, Chavez is but another in a long list of Latin American thugs wrapped up in the Communist Manifesto.
However, Economic Ignorance and Megalomania- isn't that what is running rampant in New York and Washington ?
Muzzling the Media- without the likes of ZeroHedge, we would still be hearing about "greenshoots" etc. in the MSM.
Ditto for claims of "Robust" economic growth.
And Nationalizing Major Industries, while Debasing the currency- isn't that the primary object of our (current) economic masters ??
It is these here United States that I worry about. Chavez is an economic dwarf and we are a very sick Elephant.
In economic terms the only difference (between Dear Leader Chavez and Dubya and Barry) is that we like to Rob the Poor to Engorge the Rich.
What a country...
dude - again, research before you write something as if you know what you're talking about. last time I checked, Chavez lost in his bid for term limits the first time in 2007, but then won relatively narrowly in the more recent vote. something like 55 percent of the vote. look it up. note that the opposition party won Caracas in the November 2008 elections. yes, his party is consolidating power in the media and regional governments, but the situation there now is not too different from the Republicans in 2002-5: seemingly unbeatable, media consolidated behind him, rural support, patriotic message, etc. But things can change quickly. Politics are politics, and once you learn more about Venezuela than you see on FoxNews and read in the op-ed section of the WSJ, you will understand that Chavez is not an all-powerful dictator who will "never lose another election." Say what you will about him, he is an demagogue, but he is a democratically elected demagogue, and definitely not ignorant of economics or policy.
But those facts obviously don't fit well into your neocon diatribe. Move along.
The new US "southcom" base(s) in Columbia will assure Chavez and "peace" in SA have limited shelf life...
Econophile,
Socialism works every day. Fire department. Police department. Road maintenance. Etc. Even health care (Medicare pays for much of the expensive equipment needed most for end of life type health care, but everyone else free rides.) Socialism seems to be optimum for some things.
And by the way, I'm no Chavez apologist. He is a perfect example of what happens when a leader challenges the wealthy establishment in his own country. He is fought tooth and nail. Class interest always trumps every other interest including patriotism and even religion. Catholic Church in Latin America starts advocating for the poor? Wealthy turn protestant. How's that for faith?!
Google General Smedley Butler to see the reaction the last time (and maybe only time) this challenge happened in the USA.
You confuse "socialism" with "economies of scale associated with overhead".
Government is overhead. Police and fire are not productive pursuits -- they are necessary overhead to permit other people to be relatively more productive.
Socialism doesn't work because it is fundamentally not productive. Cuba is a crappy place to live because society is not productive -- why bother? That society doesn't actually produce anything, because the people must suffer under the confused whims of people in charge that don't know how to actually do anything.
Venezuela under Chavez will decline in productivity continuously because socialism guarantees the taking of all the money from productive pursuits so it can be applied to overhead (and waste and corruption). In the end, the store shelves will be empty, and no one will produce anything -- why bother?
That's how you create a broken people and ensure your place in leadership for decades (ala Castro).
No. You are wrong. People could enjoy these "economies of scale" without government involvement. Just band your neighborhoods together and pay a private fire department to protect your homes. That would be capitalism. The way it actually works is pure socialism.
If you insist on defining it this way, why all the opposition to running health care the same way as a fire department? With one provider to gain the so called "economy of scale"?
You're playing a game of semantics here.
And Cuba's failures can't be pinned to any cause without taking into account the 50 year embargo. To assert otherwise is plainly idiotic.
We agree.
No. We choose to pay government to provide these services. We could have chosen someone else, but we did not.
Because Government does a bad job. Government typically provides dis-economies of scale. Government is one of the worst providers of anything, with no accountable connection between "cost" and "benefit".
No. Cuba can trade with the whole world. Unfortunately, they have nothing to offer.
When no one can own their house, no one will take care of their house. When anything you create can be seized by the government, you won't create anything. Cuba used to be a nice place, but decades later, everyone wallows in the slum provided by the government (because why bother?)
I didn't realize just how many armchair imperialists we had on this site.
By the way, the number of 5 star restuarants, BMW sales, etc. is all higher since Chavez took power.
The truth is he broke the power of the "Public-Private Partnership" technocrats in the Venezuelan nationalized gas bureaucracy. They hate him with every part of their soul. He took away their guaranteed, lucrative, corrupt jobs they could pass on to their children. Imagine how much all the generals and colonels who work for Lockheed Martin would hate it if the US President banned them for working for MIC Contractors after retirement.
Funny how the privatized Social Security Scheme in Chile dropped off CATO's newsletter after it came out that participants generally ended up with a fraction of what their peers who elected to stay in the government run public system did.
Before 2000, all you read in CATO was "Chile, glorious privatized social security, perfect and wonderful libertopia!"
Ditto for Argentina as well.
The Venezuelan people elected Hugo Chavez.
I get sick and tired of the "amerikan" rhetoric that the only good Latin American/South American country is one where the US has instated one of its brutal dictators that support the elite 1% and major corporations that rob and pillage the indigenous peoples and the countries' resources.
Hugh Chavez gets bad publicity because he thumbs his nose at the US.
HOORAY For him.
Someone is ignorant but it isn't Chavez. A revolution to take back the country is what is happening. Every day Chavez must battle the schemes devised by the US. Do you know that Columbia borders Venezuela? Do you know what is happening there? Do you even read the news? Do you know that the country was controlled by a small group of people that were in the process of extracting all wealth from the nation and sharing none with the indigenous people? Before you write an editorial you should at least educate yourself a little.
"So basically your advocating the denial of the freedom for someone or for a nation-state to determine their own destiny, right?"
Actually, I'm refuting your silly little dream world where communism works if it's run by "the right people" who somehow magically never have to deal with anyone else on the planet.
"The world works that way because the US and others force it to work that way. It is the only way they can maintain power."
Guess what--it's been that way for about 7,000 years. The US didn't invent the methodology. It's telling that this is your knee-jerk blame magnet, though.
"A hippie compound is an over-exagerration in the extreme. Tell us all why its so wrong for people to be treated with fairness and dignity?"
Give me a break. You are hopelessly naive if you think for one minute that what is going on in Venezuela right now is an example of "fairness and dignity," unless by fairness you mean everyone being equally poor and miserable. The only place your utopian scenario of communistic bliss actually exists is in the Smurf village; it certainly never has existed in the real world, and never will as long as human beings inhabit this earth.
"I am fully aware Venezualas success with this is dependent on the price of oil."
So in other words, you admit that your little whine earlier that socialist democracies would only be successful if they were just "left alone" is complete bullshit. It's especially ignorant given that Chavez himself has used his country's oil money to try to influence nations other than his own. I'm not surprised you don't condemn THAT, but at least have the intellectual honesty to admit that you are a one-sided partisan and not some saintly arbiter of objectivity and compassion. You're not upset with the methods the US uses, you're just upset that the person calling the shots isn't on your particular side of the political spectrum.
I find it hard to fathom how anybody could defend the quality of governance of Chavez. Just because he rejects the methods (and madness) of the US political-economic system doesn't mean his methods are any better. It's a bit like saying that the Soviet Union had better governance and better economic leadership than North Korea!
I fail to see how 50% currency devaluations, 27% annual inflation rates (or higher), price controls under threat of asset confiscation and imprisonment, nationalisation of key industries while firing skilled and competent workers, media suppression, cult propaganda and outright corruption can lead to a harmonious society and vibrant economy.
Ah yes, the good ol' days of unfettered markets in central and southern America. I'm sure the peasantry waxes poetic and with melancholy looks back to the days when rulers like Dole, Chiquita, Exxon and CIA thugs allowed them to feast on grubs and salamanders.
Horrors of horrors ! Nationalizing oil ! A product that belongs to the nation as a whole ! Why, how would some fatass dipshit, with jowls like a Northface parka afford his female child prostitutes in some God-forsaken barrio !
Yes, longing for the good ol' days when Nestle tried to buy the water supplies in Bolivia and had peasants slaughtered by the busload when they objected ?
Seems to me, they've lived the "free market" dream.
"Boycott Citgo... Don't support his repressive, ignorant, backward regime."
"Buy Exxon," adds ChopShop.
So the US and Brits invade, bomb, strafe, subjugate, irradiate, threaten, and occupy several Arab states for, what... Freedom'n'Democracy® ?
Your post is a bunch of fantasist hogwash. Do you honestly think believe that the policies of a nation-state should be the equivalent of a 70s-era hippy compound? By your logic, the Mormons would have turned Utah into a utopian paradise if they hadn't had to deal with interference from the US.
Yeah, any organic system that's completely isolated from the outside world will "work" in its own fashion, but guess what, the world doesn't function that way. Do you really think that Venezuela would even be functioning with Chavez at the helm if their economy wasn't entirely dependant on the sale of oil? Why the hell do you think they're having so many problems right now? Without high oil prices, Chavez can't possibly finance all the social goodies he promises and deliver them in an efficient manner, as we are seeing right now. Your contention that Venezuela's form of government is "working" is in direct contradiction to the actual facts.
Someone wake these coffeehouse philosophers up to the real world, please.
Anonymous. So basically your advocating the denial of the freedom for someone or for a nation-state to determine their own destiny, right?
The world works that way because the US and others force it to work that way. It is the only way they can maintain power. A hippie compound is an over-exagerration in the extreme. Tell us all why its so wrong for people to be treated with fairness and dignity? Tell us all why capitalism, which is an every-man-for-himself system is so much better than a nation that works towards a common goal as one?
I am fully aware Venezualas success with this is dependent on the price of oil. But guess what. So is the US. Guess what else. The US doesn't have the ability to maintain its level of "success" without the oil from Venezuala, or Mexico, or Africa, or the Middle East. It is impossible for the US to maintain itself without these nations resources.
This also means that at some point in the near future, oil will become so expensive that the US collapses from it, or they'll change their attitude towards the world and begin to work with people instead of running over them to get what it needs. One of these two scenarios WILL happen. Which one would you prefer?