Venezuela

Politics and religion
101

The end result is generally a less efficient market, but that is often acceptable because it is perceived as more fair. The purpose of the market is to serve the needs of society, not the other way around.

No, the end result of this is that by severing the supply and demand mechanism, every single person suffers.

I mean, I guess you can say that it’s “more fair” in that everyone is fucked… Although, in practice, those with connections to the government never suffer. They always have plenty of shit.

All of which has nothing to do with socialism.

Except that it does, in that it is a socialist practice, with government attempting to control the means of production.

Avoiding socialism was the life mission of John Maynard Keynes.

And as a direct result, Keynes was a strong opponent of price controls. Even in extreme cases, like WWII, Keynes was an outspoken opponent of implementing price controls:

For these reasons, even liberal economists like John Maynard Keynes have opposed wage and price controls. As he wrote in The Economic Consequences of the Peace, “The preservation of a spurious value for the currency, by the force of law expressed in the regulation of prices, contains in itself … the seeds of final economic decay, and soon dries up the sources of ultimate supply.”

Even during World War II Keynes opposed price controls, believing that a freely fluctuating price system is critical to the operation of a capitalist system. He favored using forced saving to soak up excess purchasing power and keep prices in check. In effect, a sort of tax would be imposed on everyone, but the money would go into a private account and earn interest. The money could not immediately be spent, but after the war these accounts would be gradually unblocked, thus helping to boost the economy as war spending fell. Even F.A. Hayek, Keynes’ greatest intellectual opponent, thought the plan was brilliant. But the British government imposed controls anyway.

102

The definition of socialism is not merely exerting control over the means of production. If it were, then everything from the Clean Air Act to the Civil Rights Act would be socialist.

Is the ACA socialist? If so, then there is no reason to prefer it over single payer health care.

103

That’s why it’s not “socialism” but rather “a socialist policy”.

The problem you’re having here is that you are taking a single act of policy, and then saying, “that’s not socialism!” Well, no, of course it isn’t.

It’s also the case that any specific act of policy, or any resulting system, is ever going to be purely socialist or capitalist. That’s the other part which is kind of messing you up here I think. Is the US system socialist? No. But is it capitalist? No. It exists in between those two extremes.

Various acts of regulation on the part of the government are in fact steps towards the socialist side, with complete lack of regulation on the extreme laisez faire side. But things like full nationalization of industry are pretty much all the way on the socialist side, and are inherently part of the very definition of socialism itself. Implementation of price controls is also one of the types of policy which exists pretty far over on the socialist side of things.

104

The idea that any type of regulation at all is a “step towards socialism” or a “socialist policy” finds little support among mainstream economists.

Socialism is generally defined in terms of government ownership, not regulation. The distinction matters because even in very highly regulated industries you can find winners and losers, and by extension investors and profit. In a fully state-owned industry, you cannot.

105

Over the last few years many high profile socialists have lauded Venezuela as a socialist success. I think it’s fair to call Venezuela socialist.

Having said that, I can see there’s a big campaign to link the Venezuelan model to the kind of democratic socialism Sanders advocates, which is groundless. I can’t find any quotes from Sanders praising Chavez from back when socialists were doing that either.

Plenty of British socialists (democratic or otherwise :)) have lauded the Venezuelan model however, and even if they don’t directly advocate those kind of authoritarian policies it certainly reflects poorly on their judgement.

106

Pretty much everyone but Magnet agrees that Venezuela is socialist, I think.

107

Well, you are certainly free to define “socialism” as “anything that defines itself as socialist”. It’s a bit wishy-washy though. I was hoping for something more grounded in economic figures.

If we stick with your definition anyway, I predict that no matter what policy choices the US makes, it is practically immune to becoming socialist.

108

Which is why Venezuela is a socialist/authoritarian state. The government has nationalized many businesses. Established price and production controls on others. That’s not highly-regulated. You have the govt controlling what a company can produce, what they can sell it for and when. That’s socialism, regardless of whether the state owns it or not.

And who the hell is investing in the country? It’s FDI is non-existent. The state has had to implement crazy capital control measures so people wouldn’t take all the hard currency (US $) as they left the nation. (My favorite was the plane to foreign country arbitrages).

Venezuela, like every other county that hasgone socialist, is a place of economic misery. The difference is that the internet/press allows people to see societal breakdown whereas previously we couldn’t see what happened in Cuba/USSA/China.

109

It doesn’t really matter to me whether Venezuela is socialist. The problem is that you are pointing to Venezuela when you say “socialism is bad”, but you are not defining socialism except by pointing to Venezuela.

So what about socialism is bad?

Price controls? We have those here, including throughout healthcare. Your doctor can’t charge what she wants (well, she can charge what she wants, but Medicare will ignore that price when it pays her). Not only that, but your insurance company cannot charge what it wants (well, it can, but then it must reimburse you whenever the government thinks it charged too much). Healthcare is 17% of our GDP. By itself, it’s three times bigger than the entire economy of Venezula. Yet some still regard our highly controlled market the best in the world. It’s been this way for decades. So how can price controls necessarily equate to economic catastrophe?

Ok, how about nationalization? That’s a stronger case, since government ownership of industry is the traditional definition of socialism. But to my surprise, it turns out that the fraction of the economy under government ownership is about the same as the US. So how can that explain what went wrong in Venezuela?

Ok, how about nationalization of the major export, oil? Surely that hurt Venezuelans? Maybe, but this case is weaker than the rest because you can’t find a capitalist paragon to prove the point: no major oil-exporter is doing particularly well right now.

In the end, the defining feature of Venezuelan socialism seems to be that it put Chavez in charge. And so the take-home lesson is, “Don’t put Chavez in charge!” No objections here.

110

It doesn’t really matter to me whether Venezuela is socialist. The problem is that you are pointing to Venezuela when you say “socialism is bad”, but you are not defining socialism except by pointing to Venezuela.

So what about socialism is bad?

I would say that socialism, taken to an extreme, is bad. In the same way that capitalism, taken to its extreme, is bad.

Price controls? We have those here, including throughout healthcare.

Healthcare is probably not really a good example to use for anything, since the way pricing works in our system is basically a disaster at this point.

Interestingly, a major part of this is due to the same problems caused by price controls. Essentially, that when the markets forces are suppressed or distorted, the system breaks down.

For healthcare, even without government intervention, we have a ton of things which make it somewhat unique compared to most markets. First, the disaster that is our insurance based system largely insulates consumers from prices, so supply and demand don’t really directly interact with each other. But even beyond that, the fact that you have a fairly inelastic market means normal market forces don’t really work that well.

For instance, if you get severely injured, you can’t really “shop around” for healthcare. You can’t easily just choose not to get healthcare if you’re gonna die from something. So the demand is kind of pegged at “max”, regardless of price, so the market doesn’t work that well.

That’s why I think that healthcare provides a somewhat unique opportunity for more socialist practices, because capitalist practices don’t really work there anyway.

111

But what does that mean?

It sounds like you mean “no market intervention by itself is bad, but combining market intervention on top of market intervention is bad”.

But we have a pile of interventions in the US! We have price-controlled health care, on top of regulation of agricultural prices, on top of the Clean Air Act, on top of the Civil Rights Act, on top of banking regulations, and on and on. And we seem to be doing fine.

In the end, you’re left with the idea that our particular pile of regulations were chosen wisely, but the pile of regulations chosen by Chavez were unwise. And that’s really no different than “Don’t put Chavez in charge!”

112

You seem unwilling to accept the fact that there is a massive difference in the degree of government intervention in the US compared to that in Venezuela.

113

Well, it’s certainly possible!

But if we’re moving from categorical differences to differences in degree, then one example really isn’t enough. Because there a lot of variables for which Venezuela has a greater degree than the US. Like poverty. Or sunshine.

If we really want to make a case that Venezuela suffered from too much of something the US also has, then we must first show a correlation among multiple data points. For instance, China and India also have a much greater overall degree of government intervention than the US. Yet their economies are not suffering like that of Venezuela.

114

For instance, China and India also have a much greater overall degree of government intervention than the US. Yet their economies are not suffering like that of Venezuela.

When China was turned into a socialist state, it caused the great Chinese famine and killed between twenty and forty million people.

But aside from that, I’m not sure what the point is of saying they are more socialist than the US, but then comparing their economies to Venezuela.

I’d say India’s system is less socialist than Venezuela, by far. China’s economy has demonstrated a directly inverse correlation between nationalized industry and economic productivity. In the past few decades, they have moved from having virtually all industry in the country owned by the state in 1980, to less than half by 2002.

115

Let’s see. China and India were a marxist and socialist country, respectively. They have moved towards market based reforms (but not enough, especially in China). And look how their economies have responded.

Venezuela was a rich albeit unequal corrupt place. They have moved towards socialist/autocratic society. And look, their economy has disintegrated.

The correlation of China/India/Venezuela is pretty much that enacting Socialist policies kills your economy.

(Of course this assumes that Mao/Nehru are still considered socialists these days).

116

While this is true for severe injuries and emergency conditions, those make up a relatively small proportion of health care contacts. Using these two stats pages from the CDC, I see about 1.05 billion physician and hospital outpatient visits, and 136 million ER visits. On the one hand, not all of those physician/outpatient visits are for minor issues; on the other hand, not all of those ER visits are for life-threatening issues. I suspect that the proportion probably holds: about 10 minor issues per one life-threatening issue.

There’s a lot of room for market forces to work there.

117

They’re just populist authoritarians.

… kidding.

118

Loosely defined, Venezuela was considered socialist. If you look closely, it was more a banana republican autocratic system, but as long as oil prices were high, it worked. Once oil prices weren’t high… Not so much.

Well, right up until the US elects a Kenyan-Muslim-Communist to the presidency. If that ever happens, the US will be a socialist hell hole overnight.

119

No, it was both socialist and autocratic.

At this point looking at the historical record the challenge for people supporting this kind of extreme socialism is to prove that it can exist without becoming a corrupt autocratic system of some kind.

Essentially your argument is not so much “No True Scotsman” as “No True Antarctican” - not only are you disallowing all the counterexamples, but no actual examples survive the cull!

120

I would describe the kind of extreme socialism Venezuela represents as having the following characteristics:

  • High degree of government control over productive industry and commerce; typically in the form of government ownership, price controls, exchange controls, and regulation to restrict the freedom of action of market participants.
  • Explicitly for the purpose of benefiting the proletariat rather than public safety, correcting market failures, coordinating a war effort, etc.
  • Socialist economies are often characterized by high levels of wealth redistribution by government.

Although the US has a great deal of regulation, I wouldn’t describe most of it as socialist, exceptions would be:

  • minimum wages.
  • The trade barriers being advocated by the extreme candidates in the primaries.

In the end it’s a matter of degree, and the Venezuelan example only serves as a counterexample for the extreme, where industry has almost no freedom of action at all, and most of the main industries have been taken into government control. This was a gradual process - the early years of Chavez were a long way from the policies of the 2010s.

In general usage a “socialist” state is a state at that extreme; but socialist politician would be someone who is on the extreme in relation to their domestic political climate.