In previous columns, I have raised concerns about the economic damage imposed by progressive politics on the once widely respected United States economy. This column clearly identifies the predictable end-point of such progressive politics in the nightmare form of the failed economy and brutal liberal fascism of Venezuela under the presidency of Hugo Chavez.
Hugo Chavez was elected President of Venezuela in 1998 with a successful campaign that promised to help the country’s impoverished majority. He was re-elected in 2000, and again in 2006. In February 2009, he won a referendum to eliminate term limits on the presidency. Although a controversial figure – identified by the administration of George W. Bush, for example, as a threat to democracy in Latin America – Chavez is highly regarded within the international progressive movement. In 2005 and 2006, he was named one of the left-leaning Time magazine’s 100 most influential people. As a man of limited education, he has been awarded honorary doctorates by universities in South Korea, the Dominican Republic, Brazil, Russia, and China. In a list compiled by the left-leaning magazine New Statesman Chavez was voted eleventh in the list of “Heroes of our Time”.
So let us scrutinize the manner in which Chavez has earned his high standing within the progressive movement, the nature of the economy that he has transformed during a decade of populist arbitrary rule. The recently published Index of Economic Freedom for 2010 provides information directly relevant to this inquiry.
In 2010, Venezuela is ranked 174th out of 179 nations in terms of the index of economic freedom. With an overall score of 37.1 on a scale of 100 (maximum economic freedom) to 0 (minimum economic freedom) Venezuela is categorized as a repressed state. Venezuela is ranked 28th out of 29 countries in the South and Central America/Caribbean region. Its economic freedom score has deteriorated throughout Chavez’s rule, declining by 2.8 points during 2009. Despite its oil wealth, Venezuela has a per capita income of only $12,804.
The authors of the Index characterize Venezuela as follows:
“Heading a government that has abandoned all but the trimmings of democracy, President Hugo Chavez has positioned himself as the leader of Latin America’s anti-free market forces and sought allies in China and Russia, as well as Iran and other rogue states. He has hobbled opponents, undermined speech and property rights, pursued a military buildup, and imposed foreign exchange controls….Venezuela has Latin America’s highest inflation rate.”
Most startling of all the specific freedom indices for Venezuela is the zero awarded to property rights protection. The authors note that the judiciary is completely controlled by the executive, that politically inconvenient contracts are abrogated, and that the legal system discriminates against or in favor of investors from certain foreign countries. A close second in the dismal rankings is the index of 5 allocated to investment freedom. The authors note that investment laws and bureaucracy are non-transparent and burdensome, that the legal system is corrupt, and that government expropriation of key assets – in the cement, dairy, steel, and banking industries – is increasing.
Other very low valuations are the scores of 19 for freedom from corruption, with Venezuela ranking 158th out of 179 countries in Transparency International‘s Corruption Perceptions Index, and of 20 for financial freedom, with Venezuela’s financial system subject to growing government control and nationalization. Capital markets are small and subject to pervasive government interventions.
The Index of Economic Freedom does not focus attention on the erosion of civil liberties under the Chavez presidency. Private radio and television outlets have been shut down and replaced with state networks. Political opposition has been brutally suppressed, with protesters beaten by National Guard soldiers wielding metal chains. Rumors abound that the Venezuelan military is being placed under the control of Cuban officers as the reign of terror advances. The recent resignation of the Venezuelan Defense Minister and Vice President, Ramon Carrizales is associated with this Cuban takeover.
Ironically, the immediate cause of fermenting protest in Venezuela is a sequence of rolling power blackouts instituted by the government in January 2010 in response to an electricity shortage. Underlining this collapse is the fact that Hugo Chavez is running out of foreign exchange because oil production is falling. In 1998, the privately-owned oil companies pumped 3.3 million barrels a day. In 2010, the nationalized oil industry pumps only 2.4 million barrels a day – and that is an optimistic government estimate. Venezuela is not running short of crude. Having expelled or seized the assets of foreign companies capable of maintaining rhe country’s fields, and firing thousands of skilled employees of the state oil company PdVSA because he did not like their politics, Chavez is now reaping the economic rewards of liberal fascism.
Be aware, my fellow Americans of the future that awaits the United States, if progressive populism really takes hold and destroys the cherished economic freedoms that we currently still enjoy.
Tags: Hugo Chavez, liberal fascism, nationalization, popular arbitrary rule, progressive politics, repressed state
January 31, 2010 at 9:52 am |
These are all excellent points. Chavez also seized the property of the opposition in exile. This was also a recent event.
Another problem is that Chavez has a lot of influence over other states that have budding Marxist leaders. Evo Morales of Bolivia is an example – he is a follower of Chavez and just like in Venezuela there has been some curbing of freedoms, including freedoms relating to the sale of second hand cars.
The most oppressive aspects of the Chavez regime is the way in which dissent is repressed. The repression is similar to that which occurs in Iran, but the type of “weapon” used is only slightly different – a chain with spikes c.f. with an axe.
January 31, 2010 at 10:19 pm |
I won’t deny that Chavez has some appeal for progressives or leftists; personally I think he has provided an important critical voice of US policy. But your evidence that he is some kind of guiding light for the progressives (and that progressive policies in the USA would look anything like Venezuelan policies) is disingenuous.
A quick glance at the Time Magazine (which I would not exactly identify as progressive in any regard) article reveals that (a.) Chavez is in the “Leaders and Revolutionaries” section along with the likes of Donald Rumsfeld and Kim Jong Il and (b.) his writeup is not exactly glowing.
Moreover, the top hit for a google search for “new statesman chavez” is harshly critical essay calling him “power-crazed”, among other things.
I’m just getting interested in economics and found your blog via someones recommendation. But if you bend your basic news facts this way, why on earth should I trust your economic analysis?
January 31, 2010 at 10:51 pm |
The points that you raise are fair. However, the magazine’s rankings do hold. My point in the column is that Chavez is the end-game scenario for the US progressives, not where they are at this point in time. It is a slippery slope. As freedoms are eroded, and as defenses against the progressive agenda weaken, so the more extreme among them will come to dominate. As the economy collapses, so coercion increases. That was the situation in Argentina under Juan Peron; and in that case it did not take very long to wreck a wealthy economy.
As for my economics, well no economist should be taken on trust. Always, individuals should think carefully about what they say, and weigh each hypothesis against the available evidence, just as you have done in this case.
January 31, 2010 at 11:57 pm |
@Ben,
first of all, Time Magazine cannot be regarded as Conservative. It is Progressive, and some of their lead articles over the past 2 years is sufficient evidence of the way in which Time has become a Progressive magazine. It is no wonder that the magazine continues to lose customers.
Second, it sounds to me like you have totally missed the point regarding Chavez. For the record I have no idea why Rumsfeld, a man who has been off the world scene for about 6 years even rates a mention. Chavez on the other hand appears to have a lot of influence with Progressives, being the darling of the likes of Sean Penn, Oliver Stone and Michael Moore, who are all in the habit of fawning over him.
Specifically, this piece is about the way in which Venezuela has deteriorated as far as freedoms are concerned since Chavez came to power. As well as the freedom aspects addressed in this article, there are the economic consequences for a once prosperous country that is now on the edge of bankruptcy due to the policies of Chavez. Venezuela is an oil producing nation and its economy should reflect that fact, however, since Chavez became president this is no longer the case. Chavez has been busy implementing his Marxist policies including taking over the oil fields, and other forms of production. He has also confiscated the property of others, including the Opposition leader, who had to flee for his life. On top of that Chavez has confiscated other factories that were owned by foreign interests – with no compensation.
Just another point, Chavez deserves to be harshly criticized because of the way in which he has reduced the freedoms of his people. He should also be criticized for his links to Iran, especially to that nut Ahmadinejad, and Khamenei.