What's the matter with Venezuela?

Great Debates
81

The number one problem that causes confusions and manipulations like this in our society, is that almost no one is taught to think, particularly to understand how to think about the “big picture” and how the “big picture” actually related to the functional details.

That vague sounding phrase refers in this case, to the fact that too many politically motivated people and groups, either actually believe, or ingenuously want to have everyone else believe, that “isms” are magic spells.

Those who want to manipulate us in to blindly opposing socialism (and just as blindly letting them declare what is and isn’t socialist), as well as those who want us to blindly oppose capitalism, tend to write and speak as though the “ism” itself, directly causes whatever good or bad things that we see happening somewhere, and does so inherently.

When ever anyone tells you to believe that one thing causes another, without showing you the detailed mechanics of how it does so, they are trying to get you to believe in magic.

What most of these liars then do, once they get you to buy into the self-blindness required to support magic, is to construct false linkages in your mind, between what has been declared to be magically good or bad, and whatever OTHER items they want you to buy in to, sight unseen.

This is how much of the worst kind of sales trickery works. They start by establishing a general “magic” idea, such as that you are a bad parent if you don’t buy your child the “best” things you can, and then they proceed to demand that you accept their claims as to what “the best things” are.

In the case of capitalism versus socialism, or more specifically, ANTIcapitalists versus ANTIsocialists, the way the game is played, is to cite particular details about one or the other, then pretend that the “ism” in question, MAGICALLY causes that particular detail.

Many such tricks, are followed by pretending further magical linkages exist, such that pretty much anything the politician wants, is also necessary to accept.

That’s how we arrive at anti-socialists, persuading many people that attending to ANY of the personal needs of workers, will “cause” the same problems that some other nominally socialist government has suffered.

Bottom line, as several smart people have hinted at in detail, is to look to the exact MECHANISMS that a society constructs, and how competently they are designed and managed. What happens overall, is due to the collective results of those detailed mechanisms. NOT to the vague political label that someone decides to attach to it all.

82

“Conservative and libertarian economics” is wrong then, for the reasons Ramira correctly points out. I am more sympathetic to command economies than she (or most Americans) is and don’t think that their record was as terrible as is sometimes claimed, but leaving that aside, the question you have to answer is why Venezuela’s economy is doing terrible even by the standard of command economies. The Soviet Union after 1956, for example, had many problems, but it shifted from high economic growth to 0.5% economic growth in its latest years: it didn’t have, even at its worst, either the massive economic contraction or the “people eating zoo animals” misery that Venezuela is having now. (Those things happened, but not till the system started falling apart). East Germany, Hungary, Czechoslovakia, etc., also had plenty of problems, but they far outperformed Venezuela as well.

And when you do that you’ll quickly see that, whatever their other problems, which were many, the more successful command economies (Eastern Europe and the Soviet Union- China and Cuba were much less successful) did not make the same mistakes that Venezuela did (prioritizing consumer goods over capital investment).
Taking some of your claims in detail, it’s very misleading (while technically true) to claim that “shortages started shortly after Chavez started moving towards socialism”. Shortages mean an excess of demand relative to supply, and while it’s true that there were shortages of many consumer goods includeing meat, fruit, vegetables, etc., this conceals the fact that people were actually consuming more of these things. Supply of high quality foodstuffs and other consumer goods actually increased over Chavez’ tenure, it’s just that (because of expanded purchasing power among the working class and poor, due to redistributive policies) demand went up even more.

That has changed in the last few years, and I’ll certainly agree that long term effects of Chavez’ policies contributed to some of that, but it simply isn’t true, as you imply, that people were going hungry throughout the Chavez terms: they weren’t. They are going hungry now, of course.

83

When has Venezuela ever had a “major focus on agriculture”? I would agree they ought to, and Chavez made half hearted moves in that direction (without much follow through), but Venezuela has been one of the most urbanized populations in the world for a long time.

Anyway, not being able to feed yourself clearly isn’t an inevitable result of a nationalized agriculture. Hungary and Czechoslovakia were net food exporters in spite of having a socialized agricultural sector. And as pointed out above, Venezuela’s oil industry has been state run since 1976, and was doing fine until Chavez started his policies of redirecting a larger share of PDVSA profits to social spending.

84

igor frankensteen made the point I wish I had been cogent enough to make. Thank you.

I’m not defending Chavism. I just think that its major flaw was that it was built on petrostate arrogance, rather than that it was properly “socialist.”

The comparison to Zimbabwe is interesting, smiling bandit. I hadn’t thought of that, but I can see some similarities.

85

OK, this explains it well.

If you want first causes, this is arguably a failure of democracy (at least of presidential democracy), as much as of socialism specifically. Chavez may have been a fool, but his folly was geared to win elections.

86

Uh, I don’t know what your point is, but China actually has very strong real property rights. They don’t have the eminent domain system the USA has, so it can take a long time to buy out small landholders.

87

Urbanization has very little to do with the overall importance of agriculture, which is one of Venezuela’s few export commodities, and thus, assumes an out-sized importance. Far from being “half-hearted,” Chavez did run some major land-redistribution plans, although they have been counterproductive, if anything. IN any case, almost all the land is still owned by a few small groups.

Hungary famously did relatively well on Ghoulash Communism, but are you sure about Czechoslovakia? They may not have starved, but they weren’t doing that well, either.

88

Of course focusing on the Soviet Union after 1956 manages to ignore what happened in the Soviet Union before 1956, when tens of millions of people starved to death.

Focusing on percentage growth can make things look good. If a beggar has one dollar and then finds a dollar bill in the trash, his wealth has increased by 100%. If a middle-class guy has a million dollars in the bank and inherits $10,000, his wealth has increased by only 1%. Understand this and the “high economic growth” of the Soviet Union makes sense.

At the end of Stalin’s reign, much of the Soviet Union is stuck with medieval technology, and Stalin’s policy of trying to seize everything and shutting down all business has ruined the economy and killed millions. Switch from Stalin to the slightly improved policies of Kruschchev and then the slightly more improved policies of Brezhnev, and obviously growth will occur. Farmers are now allowed to grow some crops for their own profit, so they start growing more crops. Businesses are allowed to keep some profit, so they start doing business again. A few roads get paved and a few electric grids are set up and a few people outside government/military now have cars and trucks. There’s economic growth, compared to the Stalin years.

But nonetheless, throughout the Soviet Bloc there’s still massive human misery. My mother, who grew up in East Germany, can testify to that, as can numerous other people I know.

89

[QUOTE=Fotheringay-Phipps]
Because it’s the most well-known and convenient number, and the real number is not substantively different for purposes of this discussion.
[/QUOTE]

Yeah…I can see how a 7 or 8% increase as claimed by the government is ‘not substantively different for the purposes of this discussion’ to a maybe 4-5% (or maybe less) that are generally thought to be more realistic than the well known Chinese government exaggerated claims would be.

I can see how this would be confusing…I guess. I guess it’s hard to understand that 4-5% of $7-9 trillion would only be a very slight difference than a 2% increase on $17 trillion, especially when you look at per capita…you know, $380 billion increase over 1.4 billion people verse $320 billion increase over 360 million people. Very confusing, I’m sure…

Yes…I can see how context isn’t your thing. In the context of the actual discuss and perhaps after you have a chance to look over the above paragraph and grasp that 4-5%, while it SOUNDS like a lot more than 2% isn’t really when you have over a billion people verse a couple hundred million. Or, maybe to you the big numbers of 4-5% sounds like the standard of living is leaping up instead of crawling and all that context stuff is just too complex…

I don’t think I’m repeating it with the same context stuff you are, because I’m not convinced you are grasping the differences in what we are saying. I think you DO get it, but personally I think you are being pendantic on this for some reason, so I’m treating your post that way in the hopes you will, you know, stop doing it. Or maybe you really don’t get it. I honestly can’t tell.

Then you go on, after that comma thingy, to say ’ but if it is it doesn’t follow that they’ve been failing at bringing up the standard of living. The opposite is very frequently the case. Civil unrest is sometimes the greatest in times of rising expectations, which are triggered by improved living conditions. (The race riots of the late 60s following civil rights laws and Great Society reforms being one of many many examples.)'. See? See what my own post was about?

90

Sorry for not responding earlier. I missed your post.

China doesn’t have to have an eminent domain system because the government already owns all the land. Individual people aren’t allowed to buy a piece of land and own it. They instead have contracts with the government that allows them to use a piece of land for a set period of time for a given purpose.

91

while I have no sympathy for Hector st claire’s apoligetics for the Soviet union or the Soviet system of command economies, as he takes at the face value the very doubtful economic data produced, this response constains much that is incorrect.

It is specifically to be accurate, ignoring the 1930s and indeed the worst excesses of the Stalin economy.

This an incorrect and gross exaggeration. The forced industrialization in the war period was not of course medieval technology, indeed it in fact was stealing and copying from the American methods. But the command economy structure created very severe inefficiencies.

???
The period of Brezhnev is the period of the stagnation and not a period of improvement in the policies or the growth. One can not have more than a little idea of the economic history or the policy history to write this.

The growth period of the Soviet union where the figures are more sensible is in the period where the basic industrialization and the “new lands” of the central asia are brought in production.

The comments you make on the economics do not give any confidence.

92

It is mostly fall of oil price. Where in Venezuela there economy was base on Venezuela.

And the Venezuela food shortage. The Venezuela’s reliance on imports and its lack of having dollars to pay for such imports caused major food shortages.

93

Another post I missed earlier. Normally, I’d let it go at this point but it’s directed at me.

I’d like to be clear that didn’t intend my post to be “cheap” or disingenuous. My preface was because I feel you are an economic conservative based on past posts you’ve made so I felt I didn’t need to explain the reasons why private property rights are important in the same way I would to somebody who was a socialist. My point was basically intended to remind you of something I figured you already knew. For the same reason, I didn’t feel I needed to go to great lengths to substantiate what I was saying.

94

And a modern example of this is the 1.3 million people displaced for the 3 rivers gorge dam.

95

I don’t understand the confusion over the Venezuelan economy. Government overreach into the private sector destroyed their economy. It’s not economical to risk investing in the country and that applies internally as well as externally. They privatized the only consistent large scale taxable base and that accelerated the collapse.

Call it whatever you like.

96

The point of your post was not that property rights were important. The point of your post was that people in dictatorships had a significantly higher likelihood of losing their property, to the point that this made them less likely to invest. This is a very tenuous claim and is based on zero evidence.

97

There’s nothing tenuous about it and Venezuela is a prime example. If their currency is worthless then it should be easy for oil companies to invest and grow within the country.

98

LN was making a general point about dictatorships. You can’t generalize from Venezuela to dictatorships (even to the extent that you consider Venezuela a dictatorship). There’s a lot else going on in Venezuela.

99

I’ll say. It’s like watching the Marx Brothers attempting to start the Russian Revolution instead of Karl Marx.

100

Here is an update on the situation in Venezuela:

2nd worse index of economic freedom score (beating out North Korea)
estimated 1660% inflation for 2017
“The capital city of Caracas is now the most dangerous non-war zone in the world, with 120 murders for every 100,000 residents.”
“Venezuela is now the leading country for U.S. asylum requests, ahead of even war-torn countries.”

What, if anything, can be done to fix Venezuela?