Venezuela


#1

Opening this thread to track the coming implosion of "21st Century Socialism".

Maduro is not changing course:

There is nothing left but oil (96% of exports!):

http://www.diariolasamericas.com/america-latina/industria-automotriz-desploma-venezuela-socialista.html

Stats:
Official Exchange Rate: 6.3
Black/Free market exchange rate: 88.4
Inflation: ??? (government stopped releasing figures)
Venezuela 20 year bond yield: 13.407%

Being a fan of Hayek, I give thanks to the leaders of Venezuela for choosing to give the world a perfect object lesson for the Road to Serfdom.


#2

Yes, Venezuela's regime is obviously not working, and needs to end.

Thankfully, when it's replaced, the country will have way lower poverty rates and way higher alphabetization than before Hugo chavez won the elections, so something better that the previous regime can be built from all this. Interestingly, although they have depressed the country economically, they have risen the average level of life.

And I'm not a supporter of Chavism, not by a long stretch, but when you look further away than economy (and compare living standards of the majority of the population -the lower class, not the middle class- to the previous regime) things become pretty complex.


#3

Agreed. The economy is having major issues, but it's not like it left the populace in squalor. edit - well, in any greater squalor than they were before hand.


#4

First they rode the enormous increase in oil prices from the late 90's on. Then they starved PDVSA of capital in order to fund the government (despite the largest oil reserves in the world, production has been falling throughout the Chavezimo era), then they nationalized the foreign oil companies assets at rip-off prices (just wait till the ICSID ruling comes down, no wonder they are trying to unload Citgo!), then they looted their own private sector, now they are selling off their future oil production to the Chinese in exchange for cash now. It's still not enough. They are financing a massive government deficit simply by printing money.

Venezuela is in the last throws of living an unsustainable lie. They are running out of other people's money to spend. Sooner or later the mother of all devaluations is going to happen, and the "average level of life" isn't going to look so good then, not at all. A wrecked private sector, 14 years of massive underinvestment in the oil sector, and a brain drain of epic proportions is going to make recovering from the epic stupidity of the Chavezimos a difficult prospect indeed. Compare and contrast to Colombia which doesn't have anything like Venezuela's oil.


#5

Although, the crime rate has skyrocketed with murder rate officially doubling, and quadrupling by some measures. IE, how much do you trust the official crime rate?

Many Latin American countries are going to experience a pretty rocky time as they sweep out old oligarchies and then replace them with hopefully a more democratic style government. Unfortunately, I think they will have some dips as some of the new governments will be at least quasi-socialist which will impede investment and growth.

Venezula is a nice case study of how to destroy an economy and society in a relatively short period of time.


#6

Yeah, this is for me more damning of the government that any economic indicator.

Again, although Venezuela's government has vastly outlived it's usefulness (and has become a populist democracy that has lost it's path) I'm not so sure socialism is that bad for the region. It's not that American investment helped them in the past, either. And European (and Chinese) companies are ok to invest in socialist democracies. And even dictatorships. Cuba remains a pretty livable country (despite the horrible, horrible clamping on press and rights) on average (with some people I know wanting to go back to Cuba after living some time in Spain), and does profit from some foreign investment that is able to go through the American boycott.


#7

I thought Venezuela was always a populist democracy that lost its path. Nationalizing industry is not socialist if it's done to enrich the people in power. My impression of Maduro is the same as Chavez, it's just that Chavez had charisma and knew how to cater to his constituency, (not to mention how to go about blaming the US for his problems) where Maduro is just a miserable shadow of his predecessor.

Uruguay: now that's how to do socialism without hypocrisy.


#8

Please don't mistake my comment as support for Venezuela's government. Just commenting on the rather odd form of mess that the nation is taking.


#9

Fair point, but I do think some of the early measures taken in the early years were necessary, seeing were the country was at the time.

And yes, Uruguay's policies are incredibly sound, and it's probably the best example for the region, but it's also true that it is really small population wise. It seems the smaller the country, the easier it is to manage.


#10

Yes, that's true. But they do have many of the same issues as their neighbors, and they are doing so much better that policy and leadership must be the answer. And many of the small countries in South and especially Central America are in very bad shape in comparison.


#11

You mean like the bank implosion in 2008 finished off "21st Century Capitalism"? Hype is hype, really.

Their problems are far more the nature of their political movement - closed-minded populism - than any economic philosophy per-se. I point to your Tea Party as another example of this.

I agree with Miramon here, if you could show Uruguay having this sort of issue...


#12

As was noted frequently to the tea party types calling Obama a Socialist:

Full Definition of Socialism

1 : any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods
2 a : a system of society or group living in which there is no private property
b : a system or condition of society in which the means of production are owned and controlled by the state
3 : a stage of society in Marxist theory transitional between capitalism and communism and distinguished by unequal distribution of goods and pay according to work done

In stark contrast to Venezuela, Uruguay is in no way Socialist.


#13

That depends on your definition, I guess: http://en.m.wikipedia.org/wiki/Socialism . Although I concede some so-called socialist parties are not socialist at all, there's a lot of different kinds of socialism.


#14

More deterioration. Debt downgraded, yields rocketing up.

http://www.economist.com/news/americas/21618782-probably-worlds-worst-managed-economy-oil-and-coconut-water

Stats:
Official Exchange Rate: 6.3
Black/Free market exchange rate: 95.9
Inflation: 63.4%
Venezuela 20 year bond yield: 14.945%


#15

The end is nigh.

Millions of pounds of provisions, stuffed into three-dozen 747 cargo planes, arrived here from countries around the world in recent months to service Venezuela’s crippled economy.

But instead of food and medicine, the planes carried another resource that often runs scarce here: bills of Venezuela’s currency, the bolivar.

The shipments were part of the import of at least five billion bank notes that President Nicolás Maduro’s administration authorized over the latter half of 2015 as the government boosts the supply of the country’s increasingly worthless currency, according to seven people familiar with the deals.

More:


#16

Send in Sean Penn, quickly.


#17

I’ve read about their toilet paper shortages, so I guess this is a solution…


#18

So at this point, Venezuela’s experiment can be pretty cleanly described as a total failure, right?


#19

Experiment in what? In ponzi-scheme dictatorship? They have no ideology, they are just greedy monsters.


#20

From Philips’ “The Triumph of Politics

President Hugo Chavez of Venezuela is widely regarded by scholars as the most representative case of populism in contemporary Latin America (Laclau 2006, Roberts 2008, Weyland 2003,2007). His politics encapsulate some of the key features of populism that are the subject of this chapter, particularly the populist rupture with the previous order, the politics of antagonism, the centrality of charismatic leadership and the foundational drive to set up a new political and economic order.

People have been saying that the economic policies put into place in Venezuela were doomed to fail and were just being propped up by high oil revenues, and were unsustainable long term. And that’s exactly what they were.