Venezuela


#21

No true Scotsman, eh? They most certainly had an ideology and still do, Socialism. They rained down free stuff on their supporters for years to buy their support and their votes. First they looted the state oil company. Then they borrowed what they could. Then they looted their own private sector. Now they are broke, and they have run out of other people’s money.


#22

Populism isn’t an ideology or a system of government. It’s a political technique to gain and retain power. Venezuela was an extremely authoritarian plutocracy before Chavez. And now it’s a populist quasi-dictatorship that is so clumsy and ineffective they accidentally lost control of their own legislature. But that hasn’t stopped them yet.


#23

Their socialist economic policies totally destroyed their economy, and all of the claims that they were unsustainable in the long term turned out to be absolutely correct.


#24

Really it was more communism than anything. Like actual communism, not what the Soviets and Chinese practiced. Not surprisingly, it failed horribly.


#25

Venezuela was not socialist under Chavez. Centrally-governed does not mean socialist if the government is an oligarchy or a plutocracy. Socialist countries are democratic. Even communist countries are supposed to be democratic for the working class – or they’re just communist in name like the Stalinist USSR. Uruguay is a positive regional example of socialism, but Venezuela is just an example of a populist con game run by the local equivalent of Donald Trump.


#26

Venezuela suffered a similar economic crisis when the price oil fell in the 80s, before Chavez came to power. The problem, then as now, is that Venezuela is basically the Saudi Arabia of the western hemisphere.

Oil makes up 95% of Venezuela’s exports. Until that changes, it doesn’t matter which party is in power: whenever the price of oil falls, there will be an economic crisis.


#27

You act like this is just the natural state, but it’s not.
Venezuela has huge natural resources besides oil. But their industrial base is absolute shit because they have nationalized their industry and run it into the ground.


#28

I was going to post something along these lines as well.


#29

That’s like saying “Alaska has huge natural resources besides oil”. Maybe so, but their value is dwarfed by the value of their oil.

Let’s not forget that when oil prices were high, Venezuelans enjoyed the highest standard of living in South America. That can’t be maintained by exporting more iron ore and bauxite. When oil prices fall, a decline is inevitable.


#30

But as everyone was saying, those economic policies were totally unsustainable. They were just mortgaging their future.

And now they are paying the Piper, because their economic policies were total trash. They nationalized their industry, drove out any foreign investment, and then absolutely destroyed it through terrible mismanagement. Their other stuff isn’t just deserved by oil because their oil production is so large. It’s because they have literally destroyed their industrial sector.

I mean, holy crap dude, they basically did exactly what critics of socialism are afraid of, and created exactly the results that those critics predict. It is a poster child for exactly why this stuff doesn’t work, even if it sounds nice at first when you are getting promised free stuff.


#31

The wikipedia page for Venezuela describes the country as suffering from Dutch disease (https://en.wikipedia.org/wiki/Dutch_disease). Basically, they don’t have the economic discipline to limit their dependence on oil, for the greater health of their economy.


#32

Only if you insist on a myopic view of the Venezuelan economy.

I mean, Alaska and Saudi Arabia are both facing similar economic crises. Only an ideologue would claim “Alaska is a poster child for why Republican governorships don’t work” or “Saudi Arabia is a poster child for why hereditary monarchy doesn’t work.”

It’s basically the equivalent of blaming the President for the effects of the business cycle.


#33

I dunno, their political and economic system was (and is) pretty shit. And this is from someone is pretty socialist these days.


#34

No dude, you are the one being myopic here, in that you are refusing to acknowledge the fact that they nationalized all of their industry and then basically destroyed it… And that nationalization directly resulted in a withdraw of effectively ALL outside investment, since no one is going to invest in a country where the state is going to just seize whatever they create. And then this resulted in an inability to develop any of their other resources.

You are just saying " oh man, they only have oil as an export! " but you totally refuse to acknowledge WHY that is the case.

And people predicted that exactly this was going to happen, and those on the far left denied those predictions. The predictions were correct. It actually came to pass. To deny this failure, after its actually happened, is simply shoving your head in the sand and denying reality.


#35

You can think a leader is shit AND recognize the macroeconomy is largely out of his control.

Ok, Timex. Suppose (former) Alaskan Governor Parnell, a Republican, had been president of Venezuela instead of Chavez.

Do you think he could have reduced the dependence of Venezuela on its oil exports?

If so, why didn’t Parnell do the same for Alaska? If not, then why would you expect Chavez to pull off such a miracle?


#36

I’ll note that when I started this thread, the price of oil was 93 dollars a barrel. They were still running an enormous deficit and filling the gap by printing money. The drop in oil only accelerated the collapse by a year or two.


#37

Nationalizing things and destroying any hope of investment was 100% under his control.

Venezuela is going to be pretty dependent on oil, but not to the levels it has been. Look at Canada. They’re a very oil-driven economy. Last I looked they hadn’t collapsed into a pile of shit like Venezuela has. Probably because they didn’t put all of their eggs into one basket that can easily turn into shit.

I get where you’re coming from to an extent, but Chavez is an idiot who did idiotic things. When oil was high, it didn’t matter that much because oil. The instant oil’s value dropped, he was fucked because he’s based [I]everything [/I]on oil and systematically destroyed any attempts to diversify.


#38

On the spectrum of responsible stewardship of oil resources, you have Norway at the top (all royalties to a long term trust fund), Alberta somewhere in the middle (spend the royalties now to lower taxes), and Venezuela at the bottom (loot the oil industry, heck, loot everyone!).

So yeah, Canada is not collapsing into a pile of shit, but I wouldn’t want to have bought a house in Calgary last year.


#39

Alaska is not in even remotely the same economic condition as Venezuela. To some large degree, it’s not even really a comparable situation because Alaska is merely part of a much larger country, so it’s pretty much impossible for it to ever get into the same situation.

But no dude, Chavez’s actions directly led to where Venezuela is now. As Malthor points out, their economy was already starting to tank when Oil was still super expensive.

It was the nationalization of their industry which ruined their economy. You need to acknowledge that simple fact.


#40

In Venezuela, gas was nationalized in 1971, and oil was nationalized in 2001. A lot has happened since then, including a recent drop in the price of oil. With a such a large time frame, a number of factors might better explain the current crisis in Venezuela. If we were in a recession right now and someone tried to blame it on 9/11, I think you would be more than little skeptical.

Now, I realize the right has been predicting doom and gloom for a long time. That doesn’t mean they are right when a catastrophe finally happens. The extreme left likewise predicts the fall of capitalism, that doesn’t mean their theories are right when the housing market fails. For that matter, extremist fundamentalists have long been predicting that God will smite America for its sins, that doesn’t mean that Katrina and 9/11 are punishment from God. If you predict shit will happen, you will eventually be right.

When comparing the effects of nationalization to the effects of oil prices, it’s helpful to look at other measures. Are there are other heavily oil-dependent economies that that find themselves in a similar economic crisis? Certainly so, from Saudi Arabia to Russia to Alaska. Even Norway is now facing a possible recession.

How about other effects of nationalization in Venezuela? Are memories of 2001 still scaring off business and preventing foreign direct investment? No, in fact foreign direct investment in Venezuela was at an all time high in 2013. Did nationalization lead to inefficiency in oil production? No, oil production is stable, and anyway increased efficiency is not particularly useful considering that output is capped by OPEC. Has nationalization affected Venezuela in some other vague way that limits its productivity? Well, its current GDP per cap is about the same as that of Argentina. I don’t see how foreign non-oil investment could have dramatically improved it.

I don’t mean to suggest that oil prices and nationalization are the only two factors to consider, by the way. As others have suggested, corruption might also have played a role. But overall, I think it’s premature to lay blame for the current crisis directly at the feet of nationalization. Insisting that it’s a “simple fact” seems like an example of confirmation bias.