What's the matter with Venezuela?

Great Debates
41

No it is not. It is easy. A particular Chavista interpretation of the idea, but it was a form of policy derived - incoherently and incompetently from a kind of interpretation of socialism.

Of course one can play no True Scottish Socialism games.

this is quite fair.

No your statement is pure nonsense.
Dutch disease is incoherent as an explantion of the particular collapse of the Venezuelan economy under the Chavista regimes. The economy had already deeply been effected by the 1970s - to tie 1970s experience to the 2000s collapse is mere incoherent excuse making.

The defects of the economy from the Dutch disease are of course to be found in a Venuezalan economic context of the 1980s, of the 1990s, but there was not at all the total collapse of the Chavista regime or regimes…

42

Ok, sure. It is a sorta kinda Socialism applied by Leaders with no understanding of Economics… or their own people.

43

No, they’re not. That isn’t how business works.

44

You’re wrong about “how business works”, and what I’ve written is pretty much the accepted mainstream view, best as I can tell. Your “No, they’re not” isn’t worth much.

Some random cites: How The US Subsidizes Cheap Drugs For Europe | IBTimes

http://www.wsj.com/articles/why-the-u-s-pays-more-than-other-countries-for-drugs-1448939481

http://www.nytimes.com/1991/05/24/business/why-drugs-cost-more-in-us.html?pagewanted=all

45

We usually call that Communism, but sure. :smiley:

Ramira is also completely right that there’s no logical way to claim that the Venezuelan collapse was caused by the Dutch Disease in any way. Until recently, oil was a major part of the Venezuelan economy, but it was only a piece is a much larger picture.

I considered for a while before writing this post, and by no means can I consider myself an expert. The number one reason as to why Venezuela collapsed has to do with the specifics of the Bolivarian Revolution, its left-wing roots, and specifically how the Chavista regime has stayed in power. Specifically, the one element which ties all of those together is corruption, on a massive scale. Even the word corruption doesn’t entirely explain it: the entire state apparatus has been turned into the tool of the leadership’s ego, greed, and fear.

This does not mean it wasn’t, and isn’t, heavily left-wing, and no amount of pretending that it magically changed into a right-wing dictatorship (conveniently, exactly at the moment when it became awkward for the hard-Left) will change that. When the state becomes God, it always turns out the Devil is sitting in the big chair.

Chavez undercut the oil industry, as well as the entire economy, in order to grab enough loot to make massive handouts to the poor. These giveaways made him very popular, and even more powerful, let him get away with functionally annihilating the Constitution and ruling by fiat. In addition, he also locked up or silenced almost the entire opposition, which includes everything to Right of him and even a few bitter Leftists. The problem was that in the process, he undercut everything necessary to keep the economy functioning, crippled the oil industry, drove off a vast number of the ambitious youth or people with expertise, and frittered away wealth trying to buy influence in Latin America.

This was foreseeable and foreseen, but the Chavez leadership doesn’t care. I’m sure they’d prefer it if the economy were humming along, but they don’t plan for the long-term because the only thing which matters is staying in power. That calculus hasn’t changed since Chavez was in power. So they make terrible decisions for next year, because it gives them another day of wine and roses now. And when the party finally stops, they most likely plan to run off to some neutral country with a very large bank balance which mysteriously appeared for no reason at all.

46

Other than ‘locked up or silenced the entire opposition’ (even the opposition never claimed more than 100 political prisoners, and the opposition is clearly not silent, as you can see volumes and volumes of their criticisms in newspapers, on the internet, and on tv) this is an accurate assessment. “Corruption” isn’t really an accurate description for that any more than “socialism” or “communism” though. What you’re describing is prioritizing short term consumer satisfaction over long term growth. Not sure if there is a good word for that, but populism might fit better than socialism or communism. As I pointed out above, the economic problems faced by actual communist regimes were somewhat different (and at least after the early 1950s and outside North Korea, less severe) than the ones faced by Venezuela right now.

47

That’s a very interesting perspective (following up on your prior post #17).

My father says the Chinese have an enormous fundamental economic advantage over the US, in that they are a dictatorship versus a democracy. The import of this is that they can afford to take the long view and don’t have to make short-sighted economic decisions based on fear of losing the next elections.

From that perspective, it’s possible that the disadvantage Chavez faced was in being too much of a democracy, not too little of one. He had to prioritize income redistribution over growing the economy, because that’s what his base of support was demanding. Meanwhile, true communist countries like Russia, China et all could grow the economy while imposing enormous short-term hardships on their populations because they were dictatorships and stayed in power due to the secret police and gulags.

48

The Corruption Perceptions Index, produced annually by Berlin-based NGO Transparency International (TNI) ranked Venezuela among the most corrupt countries in the world[31] A 2013 survey by TNI in 2013 found that 68% of those believed that the government’s efforts to fight corruption were ineffective; a majority of those surveyed said the government’s effort against corruption were ineffective, that corruption had increased from 2007 to 2010, and perceived political parties, the judiciary, the parliament and the police to be the institutions most affected by corruption.[32] In 2014, the World Justice Project ranked Venezuela’s government in 99th place worldwide and gave it the worst ranking of countries in Latin America according to the Rule of Law Index 2014[27] and in 2015, the World Justice Project’s Rule of Law Index 2015 report placed Venezuela as having the worst rule of law in the world, with the majority of Venezuelans believing that that Venezuelan government was not held accountable under the law, was corrupt, lacked transparency and did not respect the privacy of citizens.[33]

49

Yup, sure is. Conservative and libertarian economics predicts that when a country turns strongly to centralized control, seizing industries and imposing strict price and labor controls and so forth, the result will be disaster. Poverty will soar. Hyperinflation will set in. There will be shortages of food and other necessities.

Under Chavez, Venezuela turned strongly to centralized control. seizing industries and imposing strict price and labor controls and so forth. Poverty soared. Hyperinflation set in. There were shortages of food and other necessities. People are indeed eating zoo animals.

Conservative and libertarian economics has predictive power. Liberal economics, on the other hand…

Socialism is horrible, never works, and causes immense harm. It is, of course, tragic that so many people have to suffer in the process of proving that this is true. There is a little bit of good news from Venezuela however. Some Venezuelans are turning their money into bitcoins and buying food from Amazon.com. Yay for capitalism!

50

Then your American libertarian ‘economics’ is engaging in ideological political nonsense. The issue of hyper inflation is not one that is closely tied to the command economy.

The track record of the command economies is indeed very medoicre at the very best case, and the command economies should be avoided of course.

This is very silly.

The American libertarian economics is only strange politics, not economics and is completely useless except for the dishonest to sell the gullible the various frauds of over priced commodities as money…

It is supposed by this you mean anti-market Leftist economics in the very weird distorted American political jargon.

The liberal economc is, which is the free market oriented economic thought (in the jargon of the Left globally, it is the dreaded “Neo Liberalism” or the “ultra liberalism”).

Of course the linked article is not liberal economics, it is a journalist of no economic education and it seems of a Left and socialist orientation, which is amusing as his profile indicates he is a critic of the liberal economic… and of Clinton and of Obama… from the Left.

The actual title of the article, of the interest for the No True Scottish Socialism

An example of a bizarre ideological nonsense trivia… that the American libertarians seem very inclined to get themselves excited about. As if it has some real relevance to the situation of the Venezuela or is a real innovation from the historical capital flight (with the border controls etc. ).

But your overall OP is the perfect example of the justification of the comments earlier about the confusion and incoherence of a certain kind of American right comment that collapses anything not in its economic fringe analysis, although this is completely incoherent.

51

Birth Pangs of Communism

52

No, it’s just something Americans love patting themselves on the back about.

53

Bit of a sidetrack, but that’s not how it works in Canada. In each province and territory, there is a government agency that handles the payment system. That agency regularly negotiates the pay schedule for procedures with representatives from the medical profession. That’s how the pay scales are set.

Now, it’s not an open market, because the government agency is the single payer and has a lot of bargaining power. But the doctors have the ultimate option of going on strike if they are really dissatisfied with the pay scale, which is a political disaster for the government.

As well, if a province’s pay scale isn’t competitive with other provinces or countries, that province finds itself losing doctors, which is a lower grade political problem.

So, not a completely open market system, but neither is it a government command system, as suggested by your post.

54

Price floors and caps don’t work as intended.

55

Thats just a myth.

While the US spends more money on biomedical research per person, the US spends more money on healthcare in general, without any indication that this yields better results.

Also, of the money the American consumer feeds to the pharmas, more goes to advertising than research. Thats what the American consumer is really supporting, more ad aimed at themselves.

In terms of results, the world leader per person I believe, is the UK. Which runs an NHS style system.

http://content.healthaffairs.org/content/28/5/w969.full

56

Oh.

A lot of the higher cost of healthcare in general is higher utilization of services. What we’re discussing here is selling the exact same drugs at different prices in different countries.

This is irrelevant to the issue being discussed.

57

That is a part of the problem. A higher level of utilization which does not improve outcomes. Or overprovision as it is also known. However, that is not the only problem. Every aspect of the system is more expensive. Wages, equipment, lab facilities, etc. The knock-on effects are rather enormous.

That is only relevant if the higher prices somehow result in more research.

I am afraid it is relevant. As I said above, the higher prices in the US only matters in relation to your statement if they result in more money being funneled towards research. Therefore the fact that most of it is instead funneled towards ads is quite relevant. And when we look at the money that is funneled towards research, we find that this is higher per capita than in other countries, but like with other aspect o health care, measurable results are not higher.

Number of new molecular entities per capita is not measurably higher than in the other big developed countries.

So the notion that US consumers is somehow subsidizing biomedical research for the rest of the world is demonstrably incorrect.

It is a myth that probably was true for a few decades after WW2 when everyone else was bombed-out and rebuilding. But by now, the US has returned to its long suit, comercializing and marketing breakthroughs rather than making them.

58

ISTM that you’re looking for a broader discussion of the merits of various types of health insurance, and/or that you don’t understand the concept of Americans subsidizing the R&D for other countries.

Again, what I’ve posted here is correct and is widely accepted by actual experts in the field (as cited above), and the simple and empty declarations by various posters that “it’s not true” have no value.

59

I agree that this is a derailment of the original point of this thread. However, I do understand somethings about Health care Economics and pharma research. nd I don’t really think you do. Your links were basically links to news organizations, not research.

Widely accepted can be a synonym for pervasive myth.

60

I’m sure you think so …

They were links to news articles from highly reputable sources, quoting experts in the field. (Did you even read them?)