A Cautionary Tale
November 9, 2017
In today’s American political landscape, two words have made an appearance that were long absent from much political discussion: populism and socialism. With these ideas now in vogue, it is worth looking at a place where populism and socialism were put into place in the new millennium. I am speaking of the nation of Venezuela.
Venezuela has, it would seem, all the ingredients to succeed as a country: massive oil resources (the largest in the world), a location relatively close to the huge markets of the United States, Mexico, and Brazil, year round good weather, and other factors.
And yet, Venezuela is rapidly becoming a failed state. At supermarkets across the country, people are standing in line for hours to buy such things as apples, rice, chicken, and toilet paper. Medicines are hard to come by, people are sick because the cures are simply unavailable. Daily political unrest is common in the country.
How did all this happen?
Venezuela had systemic problems for years before the current crisis, but it had been among the more successful Latin American countries. Since the fall of the last military regime in 1958, the country had been relatively stable and democratic. By the start of the 1990s, it had a GDP per Capita (PPP) hovering around the $14500 mark, much higher than nearby countries Peru and Colombia. However, whereas Mexico, Peru, and Colombia’s GDPs grew at 2.5, 3.3, and 3.1% in a recent study by the IMF, Venezuela’s shrank by 5.7%.
In 1989 the “Caracazo,” a wave of protests, riots, and heavy-handed government action rocked Caracas. The economy was in crisis and poverty was rampant. In the evening hours of February 4, 1992, amid still simmering tensions, a completely unknown army officer named Hugo Chávez launched Operation Zamora. It was an event all too familiar in the Americas, a military coup d’é- tat.
It was a miserable failure; Chávez’s men failed to capture and kill the President, Carlos Andreas Perez, and the violent night ended with Chávez locked in a museum before surrendering. Other members of the plan had seized control of entire cities elsewhere in the country, so Chávez was allowed to appear on television to instruct his men to stand down. This marked the emergence of one of the most charismatic and, I would argue, disastrous figures of 21st century international politics.
After a stint in prison, Chávez would be elected President in 1998, promising to help the poor and change a system that often functioned only for the well connected. His rise coincided with an oil price boom. After an unsuccessful 2002 coup that would’ve placed a business leader in power, Chávez began a long, slow, crackdown on dissent.
Once in power, the populist socialist government curtailed freedom of speech, imposed controls on the economy, and eroded the separation of powers in government. It was this that ultimately led Venezuela down the path to ruin. The government asserted that the reason their country was relatively poor was some absurd conspiracy of the “empire” of the United States colluding with wealthy business people in Venezuela itself to thwart and oppress the Venezuelan masses. It was a fiction, but a powerful and resonating one.
This is crucial to the disaster that is now unfolding in Venezuela. Slowly, the activists of the opposition began to be arrested. Manuel Rosales, a politician who ran against Chávez, was charged with attempted assassination and corruption. Rosales fled to Peru, where he was granted asylum. Recently he returned to Venezuela to participate in midterm elections. He was arrested the day he landed.
Late in the 2000s, Leopoldo López emerged as a major challenge to the authority of Chávez and his successor, Nicolás Maduro. A popular mayor who urged protests against the government, López was occasionally referred to as a future president with widespread popularity among the opposition. After a charge of inciting violence, López was arrested in 2014, and has allegedly been subject to torture. A wide range of human rights organizations condemned his conviction. The opposition was harassed and fractured, weakening the movement.
The government in Venezuela also imposed socialist economic policies during the Chávez and Maduro administrations. They imposed a far-reaching land reform that seized vast tracts of the country from wealthy Venezuelan landowners. Although the government purported to be giving the land to peasants, multiple reports indicated most of it found its way into the ownership of political allies, who then stopped farming it. The result is that a country that has fertile soil and large areas that could be used for agriculture and livestock had to import almost all of its food.
For most of the 2000s, the country had strong economic growth, largely due to record-high oil prices, which gave the country the resources needed to buy imports. Those imports dramatically declined when the economy spiraled out of control in 2014 with the decline in oil prices. Major industries were nationalized and then immediately were condemned to failure. Inflation reached as high as 700%, under the control of a treasury official who claimed that inflation did not exist. The country’s largest brewery shut down. So did the Coca-Cola plant. Shortages were on the rise, and a cottage industry for black-market goods from Colombia sprung up on the border.
By the time of the 2015 midterm elections, people in all parts of the country had to wait hours in line for basic food. Power blackouts had become common. Mass protests broke out early in the year, and were often violently put down by the SEBIN secret police service. It did not come as much of a surprise when the opposition won a majority in that year’s elections. The opposition coalition, ranging from the moderate Justice First party to the more radical Popular Will, had a clear majority in the National Assembly.
And yet, because of the concentration of power in the hands of the executive, the National Assembly’s authority had been neutered. A recent example came when President Maduro bypassed the Assembly altogether and adopted a budget without any interaction with the legislative branch of government. The National Election Authority is a tool of the government, the Supreme Court strikes down any law that the Assembly manages to pass, and the result is a society that has the two simultaneous plagues of a decline in democracy and a decline in the economy.
A friend of a friend who lives in Caracas told me that their president was “too incompetent” to be the president of any country, and had “earned the hatred” of his constituents. Polls show large percentages of Venezuelans want to leave the country. The phrase “dying civilization” has occasionally been used to describe the country, and it has some truth to it. Nations, great and small, fall apart because they turn their backs on the things that sustained them. In the modern world, hallmarks of a successful nation include rule of law, respect for private property, acknowledgement of human rights, and separation of powers. The current rulers of Venezuela systematically eliminated all of these.
While not the most powerful or important nation, it serves as a dire warning to other nations considering similar policies. Fortunately, we live in a country with a more stable republican tradition, but no government is immune to such a calamity. For there is a way to destroy a nation’s economy and its republican form of government, and it involves the same steps taken by the Venezuelan regime.