Previous posts in this discussion:
PostNineteen Keys to Understanding Twenty Years of Chavismo (José Ignacio Soler, Venezuela, 12/11/18 6:12 am)
On December 8th, Gary Moore asked the following about Venezuela, "how and why did a powerhouse nation, in 20 years of shouting and demonizing, turn into an astonishing ruin?"
The answer could be a case study for a social science graduate course in any respectable university. Nevertheless, for years on WAIS I have been trying to explain Venezuela's hows and whys, as much as the whats. To explain what is happening is easier, mostly because it is based on measurable facts, observations and anecdotes. It is obviously harder to dig into the causes and development of things.
Venezuela of course is a complex problem, involving social, political and economic factors. They interact in many ways beyond my limited understanding. But for the sake of Gary and other interested WAISers, I will try to summarize these questions as I see them, more or less in chronological order:
1. From 1958 to 1999, after many years of an incipient democracy and a full dependency on oil exports, prosperity was reached by many sectors of the population and the country had the highest rate of social mobility and the lowest racial prejudice in the region. However, Venezuelan society also developed great inequalities and social injustices. An economic crisis, the ruling political party's corruption and a complicit bourgeoisie created a fertile ground for the rise of a new populism led by Chávez and other mid-level military officers. There was a temporary crisis, but nothing that could not be overcome with economic, social or political reforms.
2. Chávez's first attempt to reach power was his failed military coup d´etat in 1992. During his years in jail he worked for a reformist political platform against the status quo. Imprisoned for two years, he was eventually reprieved and released to start a rising political career as a candidate for presidency.
3. The rising populist star accepted a run for president in 1996 in a democratic election. With personal charisma, great rhetorical skills and demagogic speeches, promises and messages full of grievances and resentment against the political and economic elites, Chávez presented himself as a tough ex-military capable of saving the country from its crisis, but in reality he was a bully, a swindler, pretentious and megalomaniac, a religious provincial religious "macho." It seems there are no successful con men who are not also charismatic.
4. In 1999 he won the elections without yet declaring himself socialist or sympathetic towards the Cuban regime. He immediately received great support from all social sectors, but particularly from the lowest and marginal social classes. Chávez described his reforms as a Bolivarian Revolution, later on called "Socialism for the 21st century" when he explicitly declared himself a socialist.
5. Based in his social resentment (he came from a humble family), he promoted his populist reforms under this very emotional premise, which eventually proved to be nefarious and turned into hatred and hostility among the social classes. Accordingly, Chávez proposed a new constitution, fundamentally progressive, with legitimate social grievances but also giving almost unlimited power to the president. The constitution was approved in a referendum by a small margin just after Chávez´s election in 1999.
6. From 2000 to 2007, supported by high oil prices, the new government launched populist programs to directly subsidize the population, price controls, currency controls, economic control of the private sector, numerous expropriations and so on, all of which increased lower-class support and enthusiasm for the new government. These programs also contributed to the ruin of private-sector economic activity and productivity.
7. The new regime supported by the new constitution immediately took over all state institutions, and through a series of apparent "democratic processes" that legitimized and manipulated voting events, the opposition was left with little room, if any, for maneuver. However the opposition still was able to spontaneously arrange in 2002 the "National Oil Strike," which for 90 days paralyzed the country.
8. Chávez never declared himself a socialist before being elected, though it was clear he had sympathies for Castro. Only after Chávez reached power did he declare himself a socialist. Cuba actively started programs in the educational, health, military, propagandistic and strategic sectors, to support the Venezuelan regime in exchange for oil at low prices and advantageous credit conditions.
9. Chávez's basic mistake was to fire personnel in high governmental positions and the state-owned oil industry, as well as public employees, experienced bureaucrats, skilled administrators, well-prepared technicians and managers. They were replaced with incompetent, poorly educated and inexperienced people loyal to revolution and himself, including many unskilled military in civilian jobs. The result of these decisions started to show up quickly, as bad policies designed and applied with inefficient administrations, corruption and political abuse. These decisions created a patronage culture and social parasitism in the population, typical of a society with a revenue-based model of production. The most dramatic effect was PDVESA, the state oil company, which had a production of 4 million barrel/day when Chávez came into office, to less than one million today.
10. Chávez was a psychopathic character, a narcissist and megalomaniac, lacking all understanding of economics. He never admitted to any mistakes, recurrently blamed third parties for all the problems produced by his decisions. He continued to make bad populist decisions one after another to aggravate the decay process and to concentrate absolute power in his dictatorship. This situation was "legitimated" by numerous manipulated voting processes.
11. In the decade of the 2000s, all was going well for him politically, and he was still popular among the poor and marginal populations. His popularity was supported by high oil prices, despite the decreases in oil production and local private sector production. He continually used huge amounts of resources from oil and an increasing external debt to promote his popular programs called Misiones (direct subsidies), or to obtain international support, and to export the Bolivarian Revolution to other countries in the region, following strategic direction from Cuba.
12. All Chávez´s actions, in spite of growing discontent among the middle class, an incompetent opposition, massive public demonstrations, the famous oil strikes and some international opposition, were possible for many years due to his policies for accumulating power, repression and to "bribe" the population with the Misiones, and internationally, by giving away money and cheap oil to other countries, what was popularly called a "Política de chequera" or bank-check policy). He even gave away oil to some poor people in Manhattan, New York.
13. Despite the huge amounts of money from oil exports and the enormous public debt during Chávez's years, the Venezuelan economy faced continuous devaluations and increasing hyperinflationary pressure, due mainly to bad monetary policies, an excess of liquidity, capital flight, corruption, a lack of local productivity, the expropriation of industries, and controls on interest rates, currency exchange, and prices of products and services. Moreover, there was fiscal pressure and more controls on private economic activity and insufficient and inefficient public investments. As an immediate consequence for the population, black markets and smuggling arose, and prices escalated on goods and services. There was frequent scarcity of basic goods. More imports were needed, or as one economist called it, an Economía de Puertos (Port Economy) was established with insufficient resources to support it. There was also decay in public or private services and infrastructure, employment decreased abruptly, etc. The ruin of the country started.
It seems the strategy behind this was to eliminate the private industrial and business sectors, considered enemies of the Revolution.
14. During these catastrophic years, the government's only response for the rampant inflation was to recurrently devalue the local currency and to impose more price controls on economic activity.
15. Adding to economic and productivity problems, a new social class arose, protected by the government, corruption, and allegations of drug traffic or smuggling. This new class, popularly known as "Bolichicos," is now dispersed around the world, with immense fortunes, in the US and Europe, with many of them still in the country enjoying and harbored by government impunity in public positions or under diplomatic protection.
16. One might ask how and why has so much corruption become possible in the Chávez regime. But it is easy to imagine a person, perhaps a humble person with low education or unscrupulous and educated, with low moral and ethical values, in a position where billions (not millions!) are going through his hands with scarce controls and abusive power. The temptation would be difficult to resist.
17. The problems dramatically aggravated when oil prices dropped almost 50% and Chávez died of cancer in 2013. He left a country in deep crisis, with scarce resources, very low international reserves, an immense public debt, a huge fiscal deficit, a GDP progressively decreasing over the last five years, hyperinflation, collapsing institutions, suspended investment, lack of productivity, international funds cut off, a lack of real economic policies, dramatic growth of unemployment, etc., with most of his promises unaccomplished and in the hands of an incompetent and illegitimate heir, elected by a supposedly "free" election won with only a 2% margin. This is hard to admit, but compared to Chávez, the successor is worse in every aspect, though he still follows the Havana´s directions and continuous Chávez's policies and doctrine.
18. Currently the crisis seems to be critical and dramatic, with collapsed institutions and millions of Venezuelans (10% of the population) emigrating to other countries. These emigrants are sending remittances in order to help their families and siblings survive.
19. Critics and intellectuals who have studied this revolutionary process say that the impoverishment of the population respond to a strategy directed by Cuba, which has been successful on the island, to control the population and their response against the regime, and in this way to stay in power. Whether this is true or not, I am not in position to say, but it seems possible considering the facts and their practical consequences. If there is weakened population, almost starving, fully dependent on the government to survive, it is hard for them to rebel against it.
Concluding this long exposition, it could be said by loyalists that Chávez´s intentions were generous and made in good will, and that some of the policies could be considered beneficial for the country... perhaps. But the reality, the consequences of his policies and egomania surpassed all expectations. Whether he was a true socialist, a communist or had any other political ideology is not easy to assert, as some detractors have said he was a socialista caribeño (Caribbean socialist, a mockery) with a potpourri of intellectual and religious concepts all mixed up in a twisted way.
This description of the hows and whys does not fully describe all the causes and the process of the nation's drama, but maybe it will help Gary M. and other WAISers to understand it better. I hope so.
In a future post I will lay out my predictions on the immediate future of the Venezuelan crisis.
JE comments: Bravísimo, Nacho. A masterful analysis, which I hope WAISers will share with interested friends and colleagues. This post will go in the #1 spot on our homepage banner (waisworld.org or wais.stanford.edu)
In Praise of Nacho Soler's "Nineteen Keys" (from Gary Moore)
(John Eipper, USA
12/12/18 3:51 AM)
Gary Moore writes:
José Ignacio Soler's magnificent itemization (December 11) of the doom factors that
led to ruin in his native Venezuela--during just 20 years of chavismo--is surely
a landmark, rightly bannered by JE on the WAIS homepage.
Credit also goes to John's moderator wizardry in shepherding this subject to succinct summary,
like a fire bell for the world, and especially for Latin America: Don't do it this way!
Nigel Jones started this much-needed autopsy thread by flagging The Guardian's
brilliant Dec. 6 anniversary story on the 20-year disaster (Hugo Chávez came
to power on Dec. 6, 1998). And Cameron Sawyer's fact-packed counter-itemization,
on Scandinavia's alternative way via judicious economic freedom, drives home the
There is so much in Nacho's list of 19 points that I'm going to need some
time to understand each one, because they peer into the obscure heart of political
disaster: economics and personal psychology--the great unknown lands that
post-Enlightenment inquiry has only thought it had systematized. The list uses the
only linguistic tools we have: "personal charisma," "in reality he was a bully, a swindler,
pretentious and megalomaniac," while pointing out that "charisma" fits well with the
term "con man."
Did Venezuela meet its pie-in-the-sky Bernie Madoff--with questions
to be debated ever afterward about the precise mix of sincere generosity, bewildering
power hunger, grandiose denial and sociopathy? Our almost-superstitious psychological
terms mix still more elusively with Nacho's other lexicon: balance of payments, currency
controls, productivity--and "Socialism for the 21st Century."
Just here, in this detailed
post-mortem, is the tantalizing cautionary roadmap for Latin America's future. But the
paths lie jumbled by our limited knowledge in a jigsaw maze (though Chile, Colombia,
and Costa Rica might say they've figured it out). As globalization careens forward into
the unknown (in technology, climate, population, competition, and bursts of rage),
each insightful answer like Nacho Soler's becomes indispensable as a further doorway,
its answers now aiding us to at least phrase the deeper questions, which stand right
before us, but somehow still leave us in the dark.
JE comments: The more I think about it, the more I see parallels between Chávez and Perón. Both were charismatic military officers who came to power with massive popular support. Both made great progress in eliminating poverty until the national cookie jar ran out. Both channeled populist rage against a vaguely defined "oligarchy." And Chávez became a martyr of sorts, like Evita.
What conclusions can we draw from this? Chavismo, like Peronismo in Argentina, will forever be a "movement" within Venezuela, although (happily for the Venezuelans), the chavistas will also have to learn to give up power from time to time.
Did you miss Nacho Soler's Nineteen Keys? If you did, shame on you. Visit the WAIS homepage (waisworld.org), and click on the top banner.
Comparing Hungary 1956 and Venezuela 2018
(Istvan Simon, USA
12/13/18 2:48 AM)
I agree with Gary Moore that José Ignacio Soler's analysis of Venezuela's descent into total economic ruin from a relatively prosperous country in 20 years, together with the Guardian article of December 6th, are cautionary tales of what not to do.
I'd like to add a few thoughts on this subject.
A while back I argued on WAIS that the fate of Maduro should be dangling from a lamp-post, as was the fate of secret police officers who shot unarmed people protesting communism during the Hungarian revolution which I witnessed as a child. (I did not witness the actual hangings--I witnessed the revolution.)
I observed that the conditions in Venezuela are much worse than they were in 1956 Hungary. Venezuela is experiencing hunger, with a total collapse of everything, no medicine in hospitals, people not being paid for months. In any case, there is little difference between no pay and being paid with money that is worth less than soiled toilet paper, because of hyperinflation predicted to soon reach a million percent a year. None of these conditions were present in the Hungarian revolution. The protests that started the Hungarian revolution were due not to such extreme economic ruin but a suffocating lack of freedom, a regime of slogans and lies coupled with arbitrary arrests, political persecution and repression, political murder. These same conditions are present in Venezuela--and I might add, in every communist country. In Venezuela they are aggravated by the economic collapse caused by total incompetence and mismanagement of the Chávez-Maduro governments.
So, from my point of view, the relevant question is why this has not yet happened in Venezuela? The Guardian article gives a glimpse into this, with the "opinions" of die-hard supporters of Chávez who apparently continue to believe Maduro's slogans and lies, in spite of the overwhelming evidence to the contrary in front of their eyes. These people are apparently completely immune to logic, and seem to lack even minimum critical thinking skills. The same happened in Cuba, where Fidel survived despite a similar collapse of the Cuban economy when the Soviet Union's demise eliminated the subsidies that were sustaining Fidel's horrible regime. Why is it that the same constant propaganda did not turn the Hungarians' brains into mush, who were able to see through all the lies?
Another factor sustaining Maduro's corrupt and incompetent regime is paradoxically the 10% of Venezuela's population who voted with their feet and left the country as refugees. They send money to their relatives left behind, and this in turn helps the Maduro government remain in power, by making the economic collapse a little more bearable by the recipients of their aid.
Cameron Sawyer called the democratic socialism of the Scandinavian countries a myth. I think that a myth is the wrong word to use for these countries. Cameron is right that there is economic freedom and capitalism in Sweden, Norway, Denmark, and Finland, which he included in the same group, even though Finland is not Scandinavian. But he also acknowledged the socialism that he had called a myth. The welfare state of socialized medicine, education, and myriad other state-provided high quality services that genuinely help the lives of all, rich and poor, in exchange for high taxes. We might as well call this the good socialism, to distinguish it from bad socialism or communism of Cuba, Venezuela, Soviet Union, East Germany, Poland, Czechoslovakia, Hungary, Romania, Albania, Yugoslavia, Pol Pot's Cambodia, Allende's Chile, Ho Chi Minh's Vietnam, Mao's China, and North Korea.
I contend that the crucial difference between bad socialism and good socialism is genuine democracy, free elections which are respected, in which there is more than one candidate to vote for, and in which the results are respected. Lula and others have argued that Venezuela had democracy because there were elections during Chavismo. But elections by themselves are insufficient for having a genuine true democracy. Chavismo was a fake democracy, in which the results of elections were not respected.
When Chávez lost the referendum to the opposition, he called it una victoria de mierda (a shit victory), and refused to abide by it. He simply increased the bribery of his electorate by giving away refrigerators, TVs, etc, to the "poor" and repeated the very same referendum until the result was what he had wanted. Vote-buying should not be confused with genuine democracy.
Chávez treated oil, this gift of enormous national wealth and resource, that had always sustained Venezuela, as if it were his personal wealth to distribute any way he saw fit. He gave subsidies to Cuba, and other Latin American countries to buy regional influence. He bought votes from the "poor" to sustain his megalomania. And of course he was corrupt and enriched himself and his family as well.
People called Chávez charismatic, which seems completely inappropriate to describe his antics. I called him the clown of Latin America, a lightweight demagogue, with boring interminable hours-long ideological garbage monologues, spewed weekly on his unhappy listeners, broadcast by state-owned media. This garbage he borrowed and perfected from Fidel Castro's interminable speeches of likewise ideological verborrheic ruminations.
Back to José Ignacio Soler's analysis. All his points are well taken, but I would like to add that they are not independent. Most are just inevitable consequences of the root cause of all the rot, which is dictatorship. The concentration of power in the hands of one man, the lack of an independent judiciary, the lack of free press, state-owned media, inevitably lead to all the rest.
A dictator surrounds himself with sycophants, in which all opposition is demonized and suppressed, and once this happens, the result over time is inevitable catastrophe. When bad news happens, the sycophants are afraid to tell the bad news to the dictator. Data is falsified, bad news presented as good news, the truth masked in euphemisms. It is obviously impossible to act in a competent way if all the sensors feed false data and a fantasy to the man at the helm. Though dictators are rarely benevolent to begin with, even if they were benevolent, they cannot possibly take sound decisions if the data they are fed is false. I claim that this phenomenon occurred in Hitler's Germany, Stalin's Soviet Union, Mao's China, in the Chávez-Maduro disintegration of Venezuela, and in many other examples.
JE comments: How long does it take to turn your brain to mush? The Hungarians in 1956 were rebelling against a system in power for barely 11 years, although the pre-1945 system wasn't any better (just different). José Ignacio Soler made the convincing argument that 20 years of chavismo have created a new privileged class, which will do everything it can to maintain its privileges.
It would be interesting to contrast Venezuela and Cuba. The latter nation, despite its crushing poverty, has safe streets and virtually no inflation. Tomorrow morning, by the way, I'll be waking up in Cuba. Look for an instructional post today on how to reach me, but be sure to direct your WAIS correspondence to the following e-mails: firstname.lastname@example.org or email@example.com.
- Comparing Hungary 1956 and Venezuela 2018 (Istvan Simon, USA 12/13/18 2:48 AM)