Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

How Venezuela went from a rich democracy to a collapsing dictatorship

vox.com

Post reply on HN
Print view View original

11–20 of 71 posts

Re: How Venezuela went from a rich democracy to a collapsing dictatorship

#11

Post by coliveira »

padobson wrote: post #6

I thought this paragraph was the most enlightening: Chávez was an innovator in how he spent money, but he did little to improve how Venezuela actually makes money. He paid no attention to diversifying the economy or investing in domestic production outside of the oil sector. The country relies on imports for many of its most basic goods and services, include food and medicine. You could probably put the greatest econ…

It is funny that people accuse the Venezuelan regime of being socialist, but then claim that the problem is that they didn't reshape the economy enough. In other words, their failure was in not planning the economy as much as their critics want! No standard capitalist regime would be able to do that anyway so you have here a clearly bogus criticism.

Re: How Venezuela went from a rich democracy to a collapsing dictatorship

#12

Post by lend000 »

danharaj wrote: post #9
0x27081990 wrote: post #5

Earlier quoted context omitted.

If their economy wasn’t centrally planned and controlled by the government, it would be more resilient

This same thing happened under a more liberal capitalist government before. That's literally how Chavez got into power. The biggest difference between then and now is the severity of the oil price drop. An exacerbating factor is that the same forces that tried to coup Chavez in 2002 are of course still politically active and, rationally given their interests, using their economic connections to exacerbate the economi…

> This same thing happened under a more liberal capitalist government before. That's literally how Chavez got into power.

That's not true at all. The previous government was socializing the economy, starting with nationalizing oil in 1976. From Wikipedia: "The election of Carlos Andrés Pérez in 1973 coincided with the 1973 oil crisis, in which Venezuela's income exploded as oil prices soared; oil industries were nationalized in 1976. This led to massive increases in public spending, but also increases in external debts, which continued into the 1980s when the collapse of oil prices during the 1980s crippled the Venezuelan economy. As the government started to devalue the currency in February 1983 to face its financial obligations, Venezuelans' real standards of living fell dramatically. A number of failed economic policies and increasing corruption in government led to rising poverty and crime, worsening social indicators, and increased political instability."

Re: How Venezuela went from a rich democracy to a collapsing dictatorship

#13

Post by padobson »

ue_ wrote: post #8
padobson wrote: post #6

I thought this paragraph was the most enlightening: Chávez was an innovator in how he spent money, but he did little to improve how Venezuela actually makes money. He paid no attention to diversifying the economy or investing in domestic production outside of the oil sector. The country relies on imports for many of its most basic goods and services, include food and medicine. You could probably put the greatest econ…

>Markets are necessary for successful diversification - avoiding shortages and economic collapses when key industries suffer downturns. Out of interest, why do you think this is true? (Edit: Why does this comment have a score of -2? What can I do to improve the quality or relevance of my comments? Will the downvoters explain, please?)

Theoretically I think it's true because there are far too many variables at play in economies of any decent size for a national government to efficiently organize it.

Historically I think it's true because broad central planning has generally led to unstable economies.

I think the Nordic states best figured out how to provide widespread social programs funded by taxation of market economies - with national programs working alongside of self-organizing markets instead of trying to organize production directly.

Re: How Venezuela went from a rich democracy to a collapsing dictatorship

#14

Post by danharaj »

sremani wrote: post #10
danharaj wrote: post #9

Earlier quoted context omitted.

This same thing happened under a more liberal capitalist government before. That's literally how Chavez got into power. The biggest difference between then and now is the severity of the oil price drop. An exacerbating factor is that the same forces that tried to coup Chavez in 2002 are of course still politically active and, rationally given their interests, using their economic connections to exacerbate the economi…

A quick refresher for my liberal friends, Oil Prices in 2012: https://www.eia.gov/todayinenergy/detail.php?id=9530 Food Shortages in Venezuela in 2012 Source from NYT: http://www.nytimes.com/2012/04/21/world/americas/venezuela-f...

https://en.wikipedia.org/wiki/History_of_the_Venezuelan_oil_...

#First_Dutch_Disease #Second_Dutch_Disease #Third_Dutch_Disease

But what about free markets? Why don't they just have free markets? This alternative is just pure rhetoric hardly explicated in its material form: Sell the country off to international corporations, saddle your country with unmanageable debt, and beg the international financial system to keep you alive so long as you have resources worth extracting.

Honestly, it would be fine if people were just forthright in proposing those policies. It's always dressed up in the language of freedom and liberty in the most dishonest way. Venezuela is failing now, I can point to several other nations that did exactly what they were supposed to according to the interests of Capital, and they aren't looking so hot either.

Re: How Venezuela went from a rich democracy to a collapsing dictatorship

#15

Post by MarkPNeyer »

coliveira wrote: post #11
padobson wrote: post #6

I thought this paragraph was the most enlightening: Chávez was an innovator in how he spent money, but he did little to improve how Venezuela actually makes money. He paid no attention to diversifying the economy or investing in domestic production outside of the oil sector. The country relies on imports for many of its most basic goods and services, include food and medicine. You could probably put the greatest econ…

It is funny that people accuse the Venezuelan regime of being socialist, but then claim that the problem is that they didn't reshape the economy enough. In other words, their failure was in not planning the economy as much as their critics want! No standard capitalist regime would be able to do that anyway so you have here a clearly bogus criticism.

> their failure was in not planning the economy as much as their critics want

The argument for capitalism is that _no single entity can do this_ planning. It's not as if capitalist economies have a 'capitalist planner' who's better at planning that the socialist planner. Capitalist economies don't have one person - or agency - in charge of planning or shaping the economy. Bottom up, not top down.

Re: How Venezuela went from a rich democracy to a collapsing dictatorship

#16

Post by SilasX »

padobson wrote: post #6

I thought this paragraph was the most enlightening: Chávez was an innovator in how he spent money, but he did little to improve how Venezuela actually makes money. He paid no attention to diversifying the economy or investing in domestic production outside of the oil sector. The country relies on imports for many of its most basic goods and services, include food and medicine. You could probably put the greatest econ…

It was diversified ... until they slapped on price controls for everything, with its predictable effects.

Re: How Venezuela went from a rich democracy to a collapsing dictatorship

#17

Post by CryptoPunk »

danharaj wrote: post #9
0x27081990 wrote: post #5

Earlier quoted context omitted.

If their economy wasn’t centrally planned and controlled by the government, it would be more resilient

This same thing happened under a more liberal capitalist government before. That's literally how Chavez got into power. The biggest difference between then and now is the severity of the oil price drop. An exacerbating factor is that the same forces that tried to coup Chavez in 2002 are of course still politically active and, rationally given their interests, using their economic connections to exacerbate the economi…

>>This same thing happened under a more liberal capitalist government before. That's literally how Chavez got into power. The biggest difference between then and now is the severity of the oil price drop.

There were plenty of petro-states which didn't see the kind of economic devastation Venezuela did when oil prices plummeted. The key difference was that other petro-states had a robust private sector, which not only meant they had more private savings that halped the economy absorb the shock from low oil prices, but also meant they were more diversified.

The drop in oil prices should never have led to mass malnutrition. Venezuela even with low oil prices is a middle income country. It was socialist policies like price controls that led to the long food lines and empty supermarket shelves.

>>An exacerbating factor is that the same forces that tried to coup Chavez in 2002 are of course still politically active and, rationally given their interests, using their economic connections to exacerbate the economic collapse through various means. The United States recently freezed some Venezuelan government finances which is obviously intended to further destabilize the government.

This is what the Venezuelan government is blaming its economic problems on, but there is actually no evidence at all that the intervention of the US government is anywhere near enough to be responsible for any significant portion of the economic decline of Venezuela.

There are no significant sanctions on Venezuela and the US imports much of its oil from the country.

Re: How Venezuela went from a rich democracy to a collapsing dictatorship

#18

Post by coliveira »

MarkPNeyer wrote: post #15
coliveira wrote: post #11

Earlier quoted context omitted.

It is funny that people accuse the Venezuelan regime of being socialist, but then claim that the problem is that they didn't reshape the economy enough. In other words, their failure was in not planning the economy as much as their critics want! No standard capitalist regime would be able to do that anyway so you have here a clearly bogus criticism.

> their failure was in not planning the economy as much as their critics want The argument for capitalism is that _no single entity can do this_ planning. It's not as if capitalist economies have a 'capitalist planner' who's better at planning that the socialist planner. Capitalist economies don't have one person - or agency - in charge of planning or shaping the economy. Bottom up, not top down.

Since most capitalist economies have never fully developed (especially in Latin America), this cannot be traced something that Venezuela did of not. It is, again, a bogus criticism.

Re: How Venezuela went from a rich democracy to a collapsing dictatorship

#19

Post by scythe »

coliveira wrote: post #11
padobson wrote: post #6

I thought this paragraph was the most enlightening: Chávez was an innovator in how he spent money, but he did little to improve how Venezuela actually makes money. He paid no attention to diversifying the economy or investing in domestic production outside of the oil sector. The country relies on imports for many of its most basic goods and services, include food and medicine. You could probably put the greatest econ…

It is funny that people accuse the Venezuelan regime of being socialist, but then claim that the problem is that they didn't reshape the economy enough. In other words, their failure was in not planning the economy as much as their critics want! No standard capitalist regime would be able to do that anyway so you have here a clearly bogus criticism.

>but then claim that the problem is that they didn't reshape the economy enough.

Another way to express this which lacks the apparent contradiction is: their socialist policies inhibited the natural tendency of the economy to reshape itself.

However the real problem in Venezuela was not "socialism" per se nor a lack of diversification -- in fact several countries, particularly Brazil and Argentina, experienced problems when they tried to forcibly diversify their economies (Peronism/import substitution), whereas Chile went all in on copper, and while they've suffered downturns, their long-run growth has more than made up for it, making them today the richest country in Latin America. And precisely this pattern (comparative advantage) is how capitalism usually succeeds, and Chile today is diversifying at a natural/gradual pace. But in Venezuela the biggest problem was that Chavez appointed his friends to run the oil companies, and refused to cooperate with the previous administration and employees of the oil companies, which resulted in a lot of skilled people in Venezuela's oil industry taking their ball and going home. In other words, the problem was not that Chavez was a socialist but that he was a strongman who had no respect for democracy, the rule of law, or the desires of anyone but himself, which was also reflected in his later attempts to silence his critics in the media and to sabotage the Venezuelan Constitution and its legislature. I think this is why we've seen post-Chavez socialists like Mujica and Moreno taking a more measured approach to economic reforms and working with, rather than against, preexisting institutions.

Re: How Venezuela went from a rich democracy to a collapsing dictatorship

#20

Post by padobson »

coliveira wrote: post #11
padobson wrote: post #6

I thought this paragraph was the most enlightening: Chávez was an innovator in how he spent money, but he did little to improve how Venezuela actually makes money. He paid no attention to diversifying the economy or investing in domestic production outside of the oil sector. The country relies on imports for many of its most basic goods and services, include food and medicine. You could probably put the greatest econ…

It is funny that people accuse the Venezuelan regime of being socialist, but then claim that the problem is that they didn't reshape the economy enough. In other words, their failure was in not planning the economy as much as their critics want! No standard capitalist regime would be able to do that anyway so you have here a clearly bogus criticism.

No standard capitalist regime would be able to do that anyway

I'm not entirely sure what you're saying.

If you're saying that no pro-capitalist government could have diversified Venezuela's economy, then I completely agree with you.

If you're saying that nurturing a market economy in Venezuela would have failed to diversify it's economy, then I have to disagree.

Markets tend to diversify on their own as entrepreneurs recognize new demand and respond to meet it. Because of the limitless variables that drive how this happens in different regions and industries in any given country, government administrators are not well suited to recognize and respond to such needs at a national level.

Government should instead cultivate market economies that produce economic surplus, and then tax some percentage of that surplus to provide the social programs their citizens request.

Post reply on HN