Hugo Chavez – No Hero of the Poor
Supporters of Hugo Chavez and his legacy typically argue that, regardless of his illiberal crackdowns on speech, dissent, and civil liberties, those aspects of his regime pale in comparison to the great good that he did for the poor in his country. At the newly relaunched FiveThirtyEight, however, Dorothy Kronick demonstrates – quite conclusively, in my view – that despite all of his populist Bolivarian rhetoric, Chavez’s policies achieved virtually nothing for the poor, but instead largely squandered the windfall that came with increased oil prices in the 2000s. Kronick cannot be accused of simply engaging in hippy punching here, either – Chavez’s ideological compatriot Evo Morales comes out of the analysis looking just fine. Money quote:
We can also compare Chavismo with the rest of the region on the outcomes that Chávez emphasized: poverty, inequality, health and education. “What good is macroeconomic stability if, in the end, there is more poverty and hunger?” Chávez asked in a speech early in his presidency (my translation). “How many kids are going to school? How is infant mortality? Those are the big questions.”
On all these metrics, Bolivarian socialism underperformed. Nature handed Chávez by far the biggest resource windfall in Latin America (Figure 4), yet compared with its less-lucky neighbors, Venezuela experienced slow economic growth (Figure 5) and high inflation (Figure 6). Nor did Venezuela eclipse many of its neighbors in lowering infant mortality (Figure 7), slashing poverty, reducing inequality or improving school attainment during Chávez’s tenure.
Defenders of Hugo Chavez reminded me of the defenders of the Soviet Union or Mao’s China. They were so desperate for something more exciting than a liberal democracy with decent regulation and a welfare state that they were willing to support anything.Report
I think that there were also some “opponent of my opponent of my opponent of my opponent” dynamics going on there.Report
Yeah couldn’t agree with this more.
But at least, thank God(ess?) there are some countries in Latin America that are genuinely developing.Report
There always seem to be people that need something more exciting politically than liberal democracy.Report
I don’t understand it Lee, how could people not be enraptured by the deliberations of the elected members of the subcomittee on efficient allocation of defense contract financiallllzzzzz…..zzzz…. *snort* What was I talking about? Oh yeah those dictators sure do a lot of flashy stuff, why can’t we be more like them?Report
The other thing is that liberal democracy reveals the divisions in society and that not everybody wants the same thing. If you believe in an ideology that holds itself out to be the one acceptable truth than democracy is not really that palatible.Report
I grad school, I knew some fellow students who were explicitly sympathetic to non-democratic approaches, the primary reason being that in democracy sometimes the bad people won. Somehow they had a belief that if they could just once set up a socialist/Marxist system (depending on just who was speaking), you didn’t have to worry about the bad people winning anymore.Report
@jm3z-aitch
Well, once you enshrine the right to private property and freedom of contract in the constitution, you don’t have to worry about the bad people winning anymore….Report
@murali
I thought the idea was to enshrine those ideas in the Constitution precisely because were are still afraid of the bad guys winning.Report
@jm3z-aitch
is there a difference? After all if you are still worried about them winning, removing such issues from the vagaries of majoritarian politics will ensure that you won’t have to worry about them if not indefinitely then at least for a long time.
It seems that the impulse to remove some issue X from the purview of the majority is a perfectly legitimate impulse. All we’re doing is haggling over which things to remove and what the baseline norm should be.Report
Murali,
I would draw a line between removing certain issues from the public and removing the choice of governors from the public.Report
This all might be true but how do the poor of Venzeula still support Chavez and his successor and what can be done about it?
IIRC the most recent protests in Caracas come from the middle and upper-classes, educated and well off people and the poor still largely support the regime. People can’t just jump up and down and say look at the facts and figures and my quantitative analysis. You need to use rhetoric to convince people that they are being screwed.
I imagine the poor of Caracas would feel even more screwed by the opposition and potentially have a good basis for believing this. So they probably enjoy someone who is willing to say fuck the rich.Report
The article points out that the poor are in fact better off than they were before Chavez, but only because of the fact of soaring oil prices, rather than because of anything Chavez actually did. So they don’t have any basis to realize that Chavez did relatively little to help them. The article also emphasizes that Chavez’s predecessors were no angels, either, and bemoans the fact that elements of that old regime are part of Chavez’s opposition. Basically, she argues that the opposition’s problem is that it has failed to unite behind an actual agenda other than being anti-Chavez/Maduro.
Though, in fairness, it’s worth mentioning that it’s a lot harder to develop and unite behind an economic agenda when the people most capable of doing so are being semi-regularly thrown in jail on trumped up charges.Report
First article is fair points.
I am not arguing that Chavez was good but when we get into debates, it is important to remember what came before. The USSR was horrible but that doesn’t automatically make Czarist Russia great and noble. Castro might have been disaster for the Cuban economy but Batista was also horrible and only interested in helping United Fruit and a small Cuban aristocratic elite.
Were the opposition to the current regime in charge pre-Chavez? What did they do for the poor then? Or did they just help themselves?Report
I think it’s certainly fair to ask what preceded Chavez. However, so far as I’m aware, the old regime elements are generally on the fringes of the current opposition groups. That said, the article suggests (relying on a piece the author wrote in 2007) that Chavez’s economic policies were actually very similar to the policies of his predecessors. To the extent that’s true – and I’m not at all sure the extent to which it is – then the suggestion is that the predecessor’s policies would have had the same effect on the poor as Chavez’s, just without the rhetoric.Report
The article points out that the poor are in fact better off than they were before Chavez, but only because of the fact of soaring oil prices, rather than because of anything Chavez actually did.
This is a genuine question: in this argument (the one in the article not just the summary stated in the quoted passage), how exactly is the fact that soaring oil prices helped the poor of Venezuela separated from Chavez’s economic policies during that price elevation? What’s the mechanism by which those rising prices helped the poor that’s entirely disconnected with the regime’s economic policies (i.e. things they actually did)?Report
@michael-drew It seems hard to imagine a scenario in which a quadrupling of the value of a country’s sole export (which now accounts for 50% of Venezuela’s GDP despite the problem of crumbling infrastructure) doesn’t provide at least some marginal benefit to its poorest citizens. That neighboring countries almost all had as good or significantly greater success at poverty reduction despite lacking access to any natural resource boom further suggests that Chavez’s policies were minimally helpful to the poor at best.
The best that could be said, I suppose, is that it’s conceivable that Chavez could have had even worse policies for the poor. But that’s hardly a ringing endorsement.Report
The soaring oil prices helped the poor, but they could only do so because that oil money was going into the Venezuelan economy – including a substantial amount in the form of social programs for the poor. If the oil companies are minimally taxed and all the oil money leaves the country, as was the case under the previous government, then that oil money doesn’t benefit the poor nearly as much (or at all).Report
Well the problem, ND, is that the party is running to a close on the Chavez system. Chavez paid off the poor with all kinds of distortionary ineffective handouts and also indulged in his own hobbies and regional/international ambitions while eating Venezuela’s seed corn. Now oil prices are moderating; the oil extraction infrastructure in Venezuela is crumbling (their oil production is decreasing) and their budgets are a nightmare. If nothing else the poor will turn against the government when the government runs out of dough and the poor get dumped back into abject poverty (especially when, then, they compare their lot to those of their neighbors and realize how horribly they were duped).
The 25 billion dollar question is whether the poor in Venezuela can turn against Chavez’s con prior to hitting the actual wall? I remain skeptical that the non-poor in the country and do it without convincing at least a significant portion of the masses of the poor (properly so).Report
The problem is @North is that ineffective discretionary handouts was still much more than previous regimes were doing and all evidence, more than the people protesting against Chavez will do for the poor. So, yeah, for the poor of Venezuela, better the devil who will at least try to help you while he can instead of the devil who will say screw you from day one.Report
I am not arguing that Chavez was good for the poor or the country but from a historical prospective, we should look at what came before and see how it explains the rise of Chavez.
Was Czarist Russia better for the majority of Russians as compared to the Communists? Probably not.
Was Batista better for the majority of Cubans over Castro? They probably would disagree and would be rightfully skeptical of neo-liberal economic talking points.
Same with Pinochet in Chile.
This is not saying that Castro or Chavez is good but I think there is rightful skepticism that the opposition will really help the mass of people in Venezuela. Batista did not help the majority of Cubans, he helped himself, his aristocratic cronies and backers, and United Fruit. That is all.Report
Death solves all problems – no man, no problem.Report
Jesse, ND, yes I’d agree that’s a major reason that the poor supported Chavez.
I maintain that I can denounce Chavez without endorsing his predecessors, Venezuela does deserve better and we know for a fact that better was/is possible.
Bolivia had horrific previous rulers but Morales managed to both help the poor (more than Chavez helped his*), economically develop his country AND generally refrain from throwing his political opposition into jail en masse.
*Except for the shell game of inequality but the less said about that the better.Report
the oil extraction infrastructure in Venezuela is crumbling
That happens when you nationalize all the equipment without a good team of people to keep it running.Report
MRS, it’s the people’s equipment and it’ll maintain itself or else it’ll answer to the people.Report
@north
I saw a video once of a People’s C-130 that failed the people (blown gasket, but no one capable of fixing it), and inside of a day, the people had stripped it bare.Report
Those were not the People MRS, those were capitalist running dog thugs in the pay of western imperialists. They probably sabotaged the gasket too.Report
@newdealer
The counterfactual isn’t well defined (a Czarist regime that somehow survived WWI – maybe a miracle success at Gallipoli leading to a status quo ante peace in 1916?), but I take it to be your position that the Bolshevik regime was at minimum not clearly worse for the median citizen’s welfare than a hypothetical post-WWI Czarist continuation. Correct?
If so, I disagree. I’d probably use something like the geometric mean of Romania and Finland as my comparison point (i.e. compare the GM of Romania and Finland on the various metrics like literacy, infant mortality, life expectancy, PPP median per capita income, chance of arbitrary imprisonment … say over 1870-1914 versus Russia minus Finland over the same period to get a relative baseline) through 1939 (alt-WW2 being totally different in the counterfactual). From a Rawlsian original position I would definitely take living in alt-Czarist Russia over the actual USSR.
As my reference to Romania indicates, I’m not sure I would choose the same way if my original position was limited to being Jewish – there’s a highly plausible case that the alt-Czarist regime would have become more anti-Semitic with time if we look at the interwar history of most of Eastern Europe.
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@scott-the-mediocre
I am Jewish, so I have very little patience with people who romanticize the old Russian aristocracy. These are the people who printed the pernicious and cancerous Protocols of the Elders of Zion.
This is not to say that the Soviets were good to the Jews, they largely weren’t but I am an anti-monarchist and have very little patience with romanticizing any sort of former Imperial past.Report
@newdealer
Yes, I know you are Jewish (I’m not, but I’m definitely philosemitic; my wife is pure Ashkenazi – 3rd generation, secular, from outside Kiev on her mother’s side, 2nd generation, Orthodox, from Galicia on her father’s side). I assure you that I have no romanticism whatsoever for the Czarist regime, nor any great love for Orthodox civilization generally (I meant Eastern Orthodox, but I could do without the haredim too :} – I miss what I had hoped Shinui would become).
But I strongly disagree that it implies any whitewashing of the Czarist regime, pogroms and all, to say that the Bolsheviks were clearly worse for some sort of weighted average median citizen. The Holodomor was no stroll in the park either. n.b. I don’t mean to be hippie-punching: while I disagree, I think a colorable case could be made that warts and all, Castro and co were better for the median citizen than the alternate universe extension of the Batista regime (e.g. say that the Granma sank in open water and everybody on board drowned – what would Cuba be like today?).
In an original position, would you really prefer the Bolsheviks to the hypothetical continuation of the Czars’ regime (which I strongly suspect would have morphed into a larger version of the typical interwar east european antisemitic-but-not-insanely-so authoritarian regime like Horthy’s or Pi?sudski’s)? If so, why?
1) You don’t believe my model of how Czarist Russia would have evolved, and you do think it would have become insanely antisemitic (to avoid Godwining, let’s say Iron Guard or Arrow Cross) rather than “sanely” so as in my examples? There is certainly a case to be made that your projection is more realistic than mine.
2) You don’t think the Bolsheviks were that bad for the median citizen.
3) You think even my possibly-optimistic estimate of the antisemitism level results in a society so awful would be net worse for the median citizen than living under the Bolshevik regime.
4) Some other possibility that I haven’t thought of (if so, what is is, if you would please?).
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I think the better comparison is what the Bolsheviks offered the median citizen compared to what they knew they had gotten from the Czar. If you were Ivan Q Citizen in 1916 you knew you were royally screwed from now until forever under the Czar. The B’s offered a radical change and the possibility something might get better. It seems easy to see why lots of people could see the B’s as worth a chance. That they drastically underperformed and also were just another flavor of Russian dictator is a tragedy.Report
As a Kulak, I can’t help but think that we’re leaving out something very important in our discussions here.Report
The problem with counterfactuals is that we can always conjure a million counterfactuals that would be better than the history we know; Scott, you can argue that an Alt-Czarist regime would be than the Bolsheviks. I can argue that it was Stalin that caused things really to get screwy with his drive towards collectivization and socialism in one country. If the Right Bolsheviks like Nikolai Bukharin and Alexei Rykov, the ones that wanted to continue NEP indefinitely, than that Alt-Bolshevik regime would be better than an Alt-Tsarist regime.
@greginak, in 1916 nobody ever imagine that the Bolsheviks would take over Russia. There were two Russian Revolutions in 1917. The Bolsheviks gained power in October 1917 after overthrowing the Provisional Government of Alexander Kerensky, not the Tsarist Regime. They seized control of a a nascent Russian Republic.Report
@leeesq Well yeah factually that is all true but how does that matter? I kid. Yes that is correct, but i still think the point stands. For lots of screwed over peasants in Russia and many other places around the world, sadly, tragically, communism has offered more hope then royal families or crony capitalism/kleptocracies have.Report
Lee,
I probably shouldn’t jump into this discussion, especially with the comment I’m jumping with but this
The problem with counterfactuals is that we can always conjure a million counterfactuals that would be better than the history we know
isn’t quite the target I took Scott the M to be getting at. I think he was responding to ND’s reduction of the issue to a single metric: how it effects Jews. And it was in response to that reduction that he suggested that as a matter of observation (and not counterfactually) things were arguably worse for “the median citizen” (I think that was his term) under Bolshevism than under the Czar.Report
@leeesq @stillwater
I ran down this rabbit hole originally by objecting to what I took to be ND’s view that it was more or less clear to any right thinking person that the actually existing Bolshies, bad as s/he agrees that they were, were clearly better than any plausible continuation of the Czarist regime. I disagree. I tried to come up with what a most probable continuation might look like, not an optimistic case (an optimistic case is something like Stolypin stays in power and as a result the economy is just enough stronger than in real life that the wheels don’t completely fall off in 1916/1917, the WW1 general staff isn’t quite as bad – maybe Wrangel rises faster – and as a result either the Czar or the Provisional Republic manage to just barely hold together until the spring of 1918 when Germany starts collapsing). I don’t think comparing alt-Russia to interwar Romania is all that optimistic. Maybe using Finland as my proxy for the more advanced and industrialized parts of Russia was a bit optimistic – how about say interwar Poland+Romania instead?
Stillwater, I wasn’t trying to make a factual comparison between the time averaged median standard of life between the pre-1939 USSR and the actual equivalent standard in the late Czarist regime, but rather between the former and the most probable form of the latter 1921-1939. To balance out the general level of destruction versus what the real life Bolsheviks inherited, let’s say somehow Alexeev isn’t killed, he and Wrangel rather than Denikin command the southern Whites and coordinate better with Kolchak and as a result the Whites win the Civil War in the summer of 1919 – I submit that’s not inherently more improbable a scenario than Lee’s victory for the Right Opposition (BTW, Lee, I agree that the Bukharin/Rykov/Tomsky axis would have been far better for the USSR and the rest of the world, not only than Stalin, but the Left Opposition: Trotsky, Zinoviev, and Kamenev too).
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Scott, your right but I’m not really a fan of counter-factual historical arguing. I tend to agree. The only group that an Alt-Czarist or White Russian regime would be horrible for en masse would be the Jews of the Russian Empire. The Pale of Settlement and all the regulations against the Jews would continue for the forciable future. On the other hand, the Alt-Czarist regime would smack down on Jewish culture and religion in the same way that the Bolsheviks did, especially after Stalin took over.
In many ways I think a Trotsky regime would be even worse for the world than a Stalin regime. Trotsky was much more prone to military adventurism than Stalin and I can’t see him as havng patience for th boring tasks of day to day administration that Stalin did. Stalin’s industrailization regime was a human rights disaster but he did manage to complete most of his goals and effectively industrialize the USSR. I imagine that Trotsky’s domestic policy would look more like Mao’s, a human rights disaster with high levels of ineffectiveness and failure in achieving goals.
Under Bukharin, Rykov, and Tomsky, I see the USSR evolving into something like what the PRC is now. Politically it would be a one party state but I imagine that there would be a lot of power sharing and rotation of positions within the Communist Party like there is in the current CCP. That would be a lot better than the Soviet system. The economy would be heavily state controlled on the higher levels of the economy like heavy industry but light industry and services would be more or less run on a market basis resulting in higher standards of living. The USSR would have been spared the disaster of collectivization, meaning that their agricultural sector would be better and there would tens of millions more people in the world because of no mass deaths from starvation. Bukharin, Rykov, and Tomsky would be even less prone to military adventurism than Stalin and Trotsky would have been, which might help avoid the Cold War.Report
In one of PJ O’Rourke’s books – can’t remember which one, it was written before he got boring – he was in some country that had just held a revolution and he was talking to a peasant who said something like: Before I was oppressed and poor. Now I am just poor.
I would not rule out the intense psychological oomph a lot of developing nation residents get from a demagogic leader really kicking the wealthy class right in the slats while claiming to be the voice of the underclass. The members of the underclass don’t believe it, of course, but it sure is great to see the top dogs getting theirs good and hard at least some of the time.
And was it any different in America not too long ago? Huey Long didn’t do much for Louisiana long-term but he had the common touch and many poor people loved him.Report
Chavez also kicked the US in the slats, which, so long as the US continues to act like the US, is going to be pretty popular.Report
Well, if Americans continue to take the approach that foreigners act in ways that are just too dang, you know, foreign, for normal human consumption, then yes, that’s true. But as I pointed out with my Huey Long example, Americans don’t have to search too far into the past to find domestic examples they should be able to relate to.Report
related
(the links in the OTB piece paint a picture that the poor still like Chavez & Chavezism well enough)Report
I think the last sentence is illuminating. Does the opposition merely wish to return to the pre-1999 elite driven order? Are they ancien regime Bourbons who remembered everything and learned nothing?
It seems like a distinct possibility.Report
Taylor doesn’t provide any evidence to suggest that the opposition is just looking to do that. Indeed, I’m not entirely sure he’s even suggesting that – to the contrary, his primary point is that the opposition is incoherent and splintered. The one time the opposition actually united, though, it united behind Henrique Capriles, who has repeatedly claimed to be part of the center-left and who campaigned on modeling his policies after Brazil’s. Maybe he’s full of it, but the fact that he was able to win a number of elections in the country’s largest city suggests otherwise.Report
It is important to note, that unlike America, in many other parts of the world, including Europe and South America, conservatives win cities, because that’s where the money is, while socialist/left-leaning parties run their numbers up in the rural areas. So, Capriles winning an election in probably the richest part of the country is neither an endorsement or a reprudation of his ideas.Report
As applied to South America, you’re no doubt largely correct, though let’s not overstate that point either. However, as applied to Europe, that’s not typically the case – rural France, for instance, is Le Pen territory.Report
On economics, Le Pen’s party is fairly leftish, along as you’re ethnically French. But, if I remember, many major cities in Europe are ran by the center-right party of the nation, largely because most of the parties are socially moderate and fiscally conservative.
Now, there are coutries that run closer to our rural/urban divide (ie. Germany), but there are still countries like Sweden where the Social Democrat’s are still piling up the seats in rural districts.Report
In the UK, I think it depends on the city or section of the city. Industrial, northern cities vote Labor. London splits between the Conservatives, Labor, and maybe even a handful of Liberal Democratic votes.
Japan is also all over the map with their rural and urban divide.
But I imagine that if cities could be more up for grabs if the GOP managed to find a sensible urban policy and allowed for social liberalism or at least moderation. As it stands, San Diego and some Midwestern cities seem to be the only ones in the US that can go GOP every now and then to frequently.Report
@newdealer
As it stands, San Diego and some Midwestern cities seem to be the only ones in the US that can go GOP every now and then to frequently.
AFAIK, that’s largely true (e.g. before he went to the Senate, Dick Lugar was mayor of Indianapolis), although you seem to be leaving NYC out 🙂 – remember that Lindsay originally won the office as a Republican.
Re San Diego, it’s worth noting that Carl DeMaio, who unfortunately lost (by five points) to the expletive deleted Bob Filner in the 2012 San Diego mayoral election, is openly gay, which is rather rare in Republicans. Somehow the San Diego mayoralty attracts that vanishing breed, sane and competent Republicans :).
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NewDealer,
that’s because the Vast Rightwing Conspiracy supports Democrats for the mayoral.Report
Forth Worth votes Republican consistently for pretty much everything.Report
I think the GOP’s urban struggles are an indicator of the vacancy within the center-right. I remember a while back someone ran some numbers and determined that there is a larger partisan gap in congress than there has been in some time and that is due the GOP moving rightward while the Democrats have remained static. I have some questions about methodology, but I think there is some truth there. If true, what it tells us is that there is a huge gaping hole where the center-right should be, abandoned by the Republicans though not absorbed by the Democrats. It’s these ranks from which Republican mayors would come from (as Paris would elect Jacques Chirac but not Le Pen – and over here Riordan, Bloomberg, Giuliani, etc).Report
Of course, another issue in the US compared to other places is that the US is suburb-heavy and the suburbs tend to have their own mayors (or live in unincorporated areas). If mayors were elected by metro area, you’d probably see more Republican ones. From what I recall JMc saying, Rob Ford was elected in good part to people who wouldn’t be in an American mayor’s electorate.
Another reason to do away with cities.Report
Scott, Lindsay was a Republican but he was of a generation where the words Liberal Republican was not an oxy moron. You can’t find anybody like Lindsay or the other Liberal Republicans in the GOP today. Giuliani was a Republican but his initial election had more to do with running against Dinkis, who was a non-entitty as mayor and ineffective than being a Republican. He was the only other choice available. Bloomberg only became a Republican because he couldn’t win the Democratic primary for Mayor.
Will, I think that there has long been anti-urban bias in the GOP since its creation in the 1850s. The idea of the GOP has a party of farms and small towns while the Democratic party represents the urban vote traces back to the mid-20th century. The GOP’s political predecessors like the Whigs and Federalists also did better in rural areas. During most of the 19th and first half of the 20th century, the GOP was able to suppress this out of political necessity. Suburbs as we know them didn’t exist and the big cities were appearing all over the country and growing in power. The suburbinzation waive that occurred after WWII allowed for the GOP to have a more urbanized base while ignoring the cities.Report
@scott-the-mediocre
Bloomberg became a Republican because the Democratic Party wouldn’t give him the nomination but he was an independent during his last years in office. I doubt that NYC will elect another Republican anytime soon. Maybe they will go more moderate like Quinn in the future but I don’t think a Giuliani has a chance these days.
San Diego seems to be filled with retirees, the military, hippies, and college students so the demographics skew very differently.
@will-truman
This is seemingly spot on. I think an old-school Rockefeller Republican could win the mayorship in most cities. They would need to be socially liberal or moderate (or at least shut up about social issues) and fiscally moderate and support deregulation but also see the need for social welfare spending. Mayor’s deal with nuts and bolts issues.Report
Lee and ND, yes, I know the story about Bloomberg, hence the smiley on the reference to NYC plus the chuckle about Lindsay (for that matter, IIRC Lugar governed Indy as a reformer). Giuliani, on the other hand …I’m not as sure that another Giuliani/Christie type couldn’t win in NYC, but I don’t follow the local politics there so I’ll defer to those more knowledgeable.
Re Rockefeller Republicans, isn’t that pretty much what Boomberg was, regardless of party label? I would argue that Rockefeller Republican is a pretty good label for most of the San Diego mayors (Fauconer for sure), and Riordan too for that matter (going way back, I wouldn’t call Yorty a Rockefeller Republican 🙂 but the suburbs inside city limits that used to be the San Fernando Valley have had a huge demographic shift). One of the differences in the dysfunction of the California GOP is that there no longer is a career path from big city mayor – at this point San Diego is probably the only remaining launch point – to statewide office: anybody who could win for mayor will get killed in the primary for statewide office, cf Riordan versus Simon.
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Latin American countries have had many, many leaders over the past several decades who campaigned as centre-left and then proceeded to implement right-wing policies as soon as they got into office (some of them had no other choice, due to IMF and World Banks pressures). And the non-Bolivarian parties of Venezuela have a long record of right-wing, low-spending, low-social-programs, high-poverty policies.
Therefore, the poor of Venezuela have little reason to believe any opposition party that claims to be on the side of the poor but runs to the right of Maduro. Whether Capriles actually does believe in policies along the lines of da Silva’s or whether he intends to go back to the old ways, I can’t say, but it would be a major gamble, and one unwarranted by Venezuelan history, for lower-income Venezuelans to trust him. If the “centre-left” can win seats at the municipal and regional level, and if they’re sincere and implement their own type of progressive policies through those positions, they may be able to build up some trust.Report
OK, who wants to try to reconcile the data in figures 4, 5, and 6 from the linky?
Whatever is going on there seems to be the crux of the problem, it seems to me.Report
It’s stagflation cause by a combination of Dutch Disease effects and poor economic policy by the government. Venezuela experiences an oil windfall. Lots of revenue flows to the government, which the government funnels it into bad investments to politically connected firms and poorly-planned social spending.
All that money flowing into the economy is going towards consumption, which pushes up prices in the non-tradables sector. That, in turn, diverts investment away from tradables to goods and services for domestic consumption, but there’s more and more money chasing those goods and services so inflation goes up while real GDP growth stagnates.Report
j r,
I’ll ask the question a bit differently: what specific policies distinguish Morales from Chavez? (Remember, I’m not an economist!)Report
I know a bit about resource curses, but I’m no expert on either country. My guess would be that the size of Bolivia’s commodity endowments is much smaller, so the resource curse effects were much smaller.
Also, I don’t think that Morales was able to remake Bolivia’s political and economic landscape to anywhere near the level that Chavez was in Venezuela. From what I understand, there is still a very powerful ethnically Spanish minority that still holds a lot of sway, especially in the areas where the natural gas is, in Bolivia.Report
I’m no expert on this – just going off a few minutes of Googling, but there are a couple of huge differences that I found pretty quickly. First, while Morales has nationalized some elements of the resource economy, he’s left quite a bit of it in private hands; as importantly, it doesn’t appear that he’s made widespread seizures of privately-held land, particularly privately-held farmland. In general, it doesn’t seem like Morales has tried to do much that would undermine trust in property rights and the rule of law, two things that are hugely important if you want a sustainable economy. Second, while Morales did institute some price controls, he’s been willing to undo them despite the fact that doing so angers his supporters, and never seems to have imposed them to nearly the widespread extent as Chavez.
From what I can tell, there’s actually been a lot of criticism of Morales from the left that he’s a neoliberal in socialist clothes. I don’t think anyone ever accused Chavez of that.Report
Mark, those seem like indirect causes of the difference in outcomes, it seems to me. If the argument is that Chavez’ policy of relatively more aggressive nationalization as compared to Morales accounts for the disparities we’re talking about in the linky, then what’s the mechanism? Decreased confidence amongst domestic and foreign investors leading to lack of job growth, wage increases, rising GDP, etc? (Also, why would that account for figure 9? I’m not saying it wouldn’t, I’m just not clear on why it would.)
In other words, if we’re criticizing Chavez for not delivering on his promises, it seems to me we need to identify specifically what his policies were such that we can pin the blame specifically on him. Eg, did he (and his wealthy cronies) just take the oil revenues and put them in a Swiss bank account rather than reinvest those profits in domestic businesses and banks?Report
A few minutes of searching shows that folks blame Venezuelan inflation on “strict price controls” but don’t outline the breadth of those controls, or how they were different than Morales policies.
I don’t disagree with the claim, of course. I’m just trying to figure out what the substantive different between Chavez and Morales is.Report
Look up natural resource curse or Dutch Disease. An increase in commodity wealth, particularly a commodity priced in dollars, has distortionary effects on the domestic currency and the domestic economy.
Chavez’ government probably lost a fair amount of revenue to graft and corruption; however, that’s likely not the real culprit. Chavez used the oil revenue windfall to drastically expand fiscal spending, particularly social spending. All of that spending drives up the demand for domestic goods and services, while at the same time there’s not much being invested in increasing domestic capacity to meet those demands. More money chasing fewer goods and services leads to inflation.
By the way, a very similar thing happened in the United States during the 1960s as Great Society and the Vietnam War drastically expanded the U.S.’s fiscal expenditures. The same thing happened: stagflation.Report
j r,
From what I can figure out, Morales has engaged in the exact same types of policies, yet he’s the comparison by which we’re measuring the failures of Chavez. I’m just looking for the distinction between the two such that the comparison makes sense. IE., what policy differences differentiate the two such that differences in outcomes can be attributed to something Chavez has done or failed to do.Report
@stillwater From what I’ve been able to gather, Chavez’s price controls were initially on hundreds of food items, but eventually reached the entire economy. E.g, http://www.economist.com/node/21526365 ; see also here, which indicates the initial price controls were on 400 items: http://www.outsidethebeltway.com/four_years_of_price_controls/
From what I’ve been able to gather, Morales’ price controls were just on a handful of items, utilities, and government services.
Additionally, Chavez instituted tight currency controls that made it generally illegal to exchange bolivars for other currency. And, inevitably, repeatedly devalued the bolivar.
Seizing farmland shouldn’t be underestimated here, either – it’s not as if handing farmland to political cronies is a good way to make the land more productive (and thus mitigate the effects of inflation).
All told, it’s as if Chavez read Hayek’s Road to Serfdom and decided to prove Hayek’s point.Report
Mark, thanks for those linkies, especially the one from the Economist. “Phantasmogoric hallucinations.” Heh.Report
j r – Stagflation happened because of the oil crisis. The supply of a basic good decreased and its price increased. As a result, GDP fell while prices increased. This is different from the situation caused by an increase in demand, where prices increase and GDP rises.
It had nothing to do with government spending.Report
Katherine,
In the US, stagflation began prior to OPEC reducing energy supplies (which, of course, exacerbated the problem).
Stagflation is believed to also be caused by bad macroecon policy choices. One of those is excessive growth in the money supply, which ocurred in the ’70s because of a mistaken belief that inflation was not responsive to monetary policy (see a href=”http://elsa.berkeley.edu/~cromer/Dangerous_Idea.pdf”>Romer and Romer).
The U.S had the misfortune of getting hit with a double whammy, bad policy and a supply shock.Report
Venezuela’s lower GDP growth than Bolivia is most likely caused by starting from a higher baseline. In nominal terms, Venezuela’s economy is almost 20 times larger than Bolivia’s. More importantly, the nominal per capita GDP is about 5x bigger for Venezuela (12K vs 2.5K USD).
Additionally, I believe Venezuela’s resource extraction is more mature than Bolivia’s, but that means it is also starting to age and all accounts are that the government isn’t re-capitalizing the industry well enough. Particularly since it has the high-sulfur crude which isn’t as marketable on the world market.Report
This is a good book for anyone who wants to understand why people like Chavez remain popular in the developing world:
http://en.wikipedia.org/wiki/Hannah_Arendt#On_Revolution
Arendt argues that the reason for the success of the American Revolution success was because the revolutionaries never lost site of their goals and they did not have to deal with the “social problem”. Namely poverty. America was largely a prosperous nation at the time of her revolution. France and other countries were not.Report
I suppose the devil is in the details and what do mean by prosperous. There have been several re-examinations of the economy and society of France and Russia on the eve of their Revolutions. France was not a nation filled with urban beggars and landless serfs living in extraordinary poverty by the standards of the time. The 18th century was a very prosperous time for France. Though its colony of San Domnique, France basically produced nearly all of the world’s coffee and a decent amount of its sugar in a time when coffee and sugar consuption was on the rise in Europe and the Americas. The average French peseant was more likely to own his land than an English farmer. The luxury goods of France were in high demand. France was also industrializing at a decent pass compared to most other continental European powers. The decade before the French Revolution wasn’t that great economically but it wasn’t an absolute disaster either.
Russia was also improving rapidly economically. The entire reign of Nicholas II was an economic boom for Russia up until the outbreak of WWI. Most of Tsar Alexander III’s reign was also a boom. There were no famines and the population increased by 1/3 from the first Russian Imperial Census of 1897 to 1917 by natural increase alone. More and more peseant’s were beginning to own their land thanks to Stolypin’s Reforms and thats really all that they wanted, to own their own land.Report
I think the Russian Revolution was largely because of WWI giving Lenin a hand in backroom negotiations with the Germans over pulling out of the Eastern Front.Report
“nearly all the world’s coffee”???
http://cwh.ucsc.edu/brooks/coffee-site/1400-1800.html
that’s just wrong.Report
“By 1788, for instance, French colonies, especially St. Dominique (soon to become the independent nation of Haiti), produced fully two-thirds of the world’s coffee.”
Kim, you should read your own sources.Report
Would Kim be Kim if she read her own sources?Report
@leeesq
It’s been a while since I’ve read up on Stolypin. Assuming that he wasn’t assasinated (and further that the forces behind the assasination weren’t really an aristo conspiracy as many think), I’m still not sure how long he could have stayed in power given the number of enemies he had (on both left and right). While the trendline was definitely positive, the fraction of the Russian agricultural sector that was actually modernized in 1911 (in terms of land tenure, market access, crop rotation, etc., to say nothing of technology) to the level of let’s say a smallholder in Silesia was what? Probably less than 10% IIRC.
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It doesn’t matter whether Stolypin remains in power or not. What matters whether or not is policy remains in effect because of bureaucratic inertia. Even under autocratic systems, reversing policy once made is not that easy. Alexander III could limit and rollback the reforms made by his father but he never managed to outright eliminate them.Report
Best for Venezuela: a Swedish left wing gov’t that isn’t corrupt.
Worst for Venezuela: pre-Chavez
Chavez is better than worst, not that great by left wing standards.
Dutch disease is a huge factor here, too, as jr points out, I think.Report
Dutch disease is a huge factor here, too, as jr points out, I think.
I don’t think it is, actually. Or maybe it is in the short term, but long term not so much. If you have an influx of bolivars into the economy, over time you should see lots of businesses competing for them by increasing the production of domestic goods and services. That didn’t happen. I think price controls were the primary killer of the Venezuelan economy, myself (with stipulations that I’m not an economist and all that).Report
I will just leave this here:
I was looking for a more academic source, but this does a great job of explaining in plain English. More here: http://www.foreignpolicy.com/articles/2013/03/07/the_house_that_chavez_builtReport
j r,
I’m not claiming Dutch Disease wasn’t a factor, but as the article says, Chavez response to it exasperated the underlying problems. This is the definition of DD from Wiki:
The mechanism is that an increase in revenues from natural resources (or inflows of foreign aid) will make a given nation’s currency stronger compared to that of other nations (manifest in an exchange rate), resulting in the nation’s other exports becoming more expensive for other countries to buy, making the manufacturing sector less competitive.
Here’s how it seems to me, tell me where I’m wrong: DD is defined by an inverse correlation between resource-based income and exports over time, a problem which would have been a self-correcting domestic markets weren’t locked down by price controls. That is, if that revenue were used to develop the domestic economy rather than strangle it trade opportunities would eventually emerge (either as a result of higher efficiency or the production of new products).Report
The thing that you are trying to do isn’t really a thing. In other words, the policy response to resource inflows is itself a part of the set of phenomena that we refer to as Dutch Disease.
Venezuela is a classic case of Dutch Disease because of the the failure of Chavez and his government. In contrast, Norway was able to escape the natural resource curse, in part, because of an adequate policy response.
As a matter of fact, economists don’t generally refer to Dutch Disease as a condition that an economy either has or does not have. Rather, they refer to Dutch Disease effects, things like: a misaligned exchange rate, lack of development in the export sector, faulty monetary policy transmission channels, etc.Report
Divorcing revenues from expenditures to finance a gigantic military buildup.Report
“Both countries do it.”Report
Yeah, to say it is Dutch Disease doesn’t leave Chavez blameless. It means he failed to correct a problem that had a fix.
He could’ve been a socialist leftist with redistribution and dealt with the Dutch disease. Could he have been as redistributionist? Meh, I don’t know. Maybe he could’ve been more redistributionist. It’s a tough call.Report
I went to read Dorothy Kronick’s article. It was interesting but felt really incomplete. As others have argued above, it’s likely that the natural resources markets faced by Bolivia and Venezuela also have an important impact on the performance of each nation’s economy overall and within specific sectors and classes. Without a better and broader analysis, it’s difficult for the reader to have a sense of *why* Bolivia’s done better. (Note: I’m fairly lefty, but no fan of Chavez, who certainly became the stock-in-trade cult-of-personality anti-democratic tyrant.)
Of very little importance, Kronick uses a really poor analogy. She points out that Chavez took office at the time when the price of oil exploded, and then says: “Saying that the Venezuelan economy fared better under Chávez than it did before him is like saying that gardens grow better with water than without.” Chavez is the water? Isn’t that actually the idea the Kronick is trying to knock down? This really irks the pedant in me.Report
Oil money is the water.Report
I get that, but she didn’t really structure it that way.Report
So the argument is not that Chavez did no good, but that he did less good than he could have. His measures to substantially increase the amount of Venezuela’s oil revenues that went to the government rather than to foreign companies, and his spending of that money on social programs, still did improve social outcomes. Pointing out that other countries did more with less is a very valid point, but he still made valuable achievements; achievements that would not have been made under Venezeula’s previous ruling right-wing parties, because Venezuela’s government wouldn’t have had nearly so much oil revenue, or so much commitment to social spending.
FiveThirtyEight is also essentially arguing that Venezuela could have done better under a theoretical Luis da Silva than they did under Chavez. But Venezeula didn’t have a Luis da Silva available. They had the previous parties – whose policies had seriously failed, and whose policies FiveThirtyEight acknowledges had failed – and they had Chavez. And Chavez improved things over the previous parties. And to a significant extent, it was that improvement and that radicalism – Chavez was the first major shift towards the left that Latin America had seen since the rise and dominance of neoliberalism in the 1980s-90s – that opened the way for other Latin American leaders, like Morales and da Silva, to reject the previous neoliberal consensus pursue more progressive policies.
I have been very, very impressed with Evo Morales and how much he’s improved things in Bolivia, and how effectively he’d negotiated a dangerous situation with an extremely hostile and sometime violent right-wing opposition, but if it wasn’t for the example of Venezuela it’s much less likely that the popular movement which transformed Bolivia over 2000-2006 (the rejection of water privatization, the demand for national control of natural gas resources) and brought Evo to the presidency would have succeeded. Whether or not you like Chavez’ policies, he’s the one who got the ball rolling on the progressive wave that has transformed Latin America for the better over the last 10-15 years.Report
It’s also worth noting that after saying this:
We can also compare Chavismo with the rest of the region on the outcomes that Chávez emphasized: poverty, inequality, health and education. “What good is macroeconomic stability if, in the end, there is more poverty and hunger?” Chávez asked in a speech early in his presidency (my translation). “How many kids are going to school? How is infant mortality? Those are the big questions.”
FiveThirtyEight only looks at one social indicator – infant mortality – and spends the rest of its analysis on GDP, inflation, and budget deficits. It’s also notable that Venezuela has lower infant mortality than the other countries (e.g., Brazil) to start with, and thus less of a percentage decline would be expected (Canada, an substantially richer country, would have an even lower percentage reduction in infant mortality over that time).
Reducing poverty by half is going to make you popular among the poor (and especially the formerly-poor). “Hugo Chavez: Not as Much Of A Hero To The Poor As He Could Have Been, Maybe”, would be a more accurate title.Report