How Venezuela went from a rich democracy to a collapsing dictatorship • Hacker News Board

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

#41

Post by platz » Thu, Sep 21, 2017, 12:28 AM UTC

ue_ wrote: post #24

CryptoPunk wrote: post #17

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. 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…

In my view it is a sign more of the fact that Venezuela thought it could depend so much on oil that it failed to diversify rather than a failure of its mode of planning, though that's not without criticism, one would have hoped they learned from the disaster of the USSR's Five Year Plan. Price controls aren't really a Socialist policy - the Socialist policy in this case would be the gradual change from the production…

correct, Socialism according to Marx is not 'the government does stuff'. 'the government does stuff', when the private sector is replaced by government functions, is really State Capitalism (because the state controls the means of production, not the workers). In fact, it was Stalin that declared 'when the state is in charge, we got socialism'. It confused everybody but it's wrong.

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

#42

Post by CryptoPunk » Thu, Sep 21, 2017, 12:29 AM UTC

ue_ wrote: post #24

CryptoPunk wrote: post #17

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. 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…

In my view it is a sign more of the fact that Venezuela thought it could depend so much on oil that it failed to diversify rather than a failure of its mode of planning, though that's not without criticism, one would have hoped they learned from the disaster of the USSR's Five Year Plan. Price controls aren't really a Socialist policy - the Socialist policy in this case would be the gradual change from the production…

Venezuela's socialist policies made the entire economy dependent on the wisdom of the state. When the state erred, it meant a much more systemic collapse than would otherwise have happened. If the private sector had been allowed to retain a significant role in the economy, the economy would have had more decorrelated economic forces, which would have made a systemic collapse less likely.

>>I'm not sure where you're getting the idea from other than the oft-repeated myth that Socialism is merely when the government "does stuff".

When Venezuela's economic ministers say things like "the law of supply and demand is a lie" to justify price controls, I assume it's motivated by their socialist ideology, and blame the policy on that ideology.

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

#43

Post by CryptoPunk » Thu, Sep 21, 2017, 12:34 AM UTC

platz wrote: post #41

ue_ wrote: post #24

Earlier quoted context omitted.

In my view it is a sign more of the fact that Venezuela thought it could depend so much on oil that it failed to diversify rather than a failure of its mode of planning, though that's not without criticism, one would have hoped they learned from the disaster of the USSR's Five Year Plan. Price controls aren't really a Socialist policy - the Socialist policy in this case would be the gradual change from the production…

correct, Socialism according to Marx is not 'the government does stuff'. 'the government does stuff', when the private sector is replaced by government functions, is really State Capitalism (because the state controls the means of production, not the workers). In fact, it was Stalin that declared 'when the state is in charge, we got socialism'. It confused everybody but it's wrong.

Curiously enough, Chavez had similar things to say about state capitalism:

>>“It is impossible, within the framework of the capitalist system, to solve the grave problems of poverty of the majority of the world’s population,” the Venezuelan leader said. “We must transcend capitalism. But we cannot resort to state capitalism, which would be the same perversion of the Soviet Union. We must reclaim socialism as a thesis, a project, and a path, but a new type of socialism, a humanist one which puts humans and not machines or the state ahead of everything."

Socialism is always one execution away from utopia.

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

#44

Post by padobson » Thu, Sep 21, 2017, 12:35 AM UTC

flukus wrote: post #36

hueving wrote: post #23

Earlier quoted context omitted.

There has never been a successful centrally planned economy. Perhaps with the assistance of massive computation and information spread via the Internet it could be conceivable. But without that it seems like every toy model a central planner uses is going to fail miserably.

How about ancient egypt ( http://www.reshafim.org.il/ad/egypt/economy/ )? A planned economy that lasted far longer than capitalism has existed.

Oh man, awesome reference!

I read biographies on Cleopatra and Julius Caesar a couple years back and was amazed how much planning went into Egypt's economy.

The similarities to Venezuela can be pretty interesting! In the ancient world when economies were highly reliant on wealth created by agriculture, the Nile delta was the most fertile land in thousands of miles in any direction. Each year the Nile flooded predictably. When irrigation was plentiful, all of Egypt prospered. When the Nile went through a dryer year, all the peasants working the land starved.

Excellent reference!

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

#45

Post by guelo » Thu, Sep 21, 2017, 12:36 AM UTC

wmccullough wrote: post #28

guelo wrote: post #27

Earlier quoted context omitted.

And America is showing that if you don't tax wealth enough the inequality causes instability.

Not disagreeing, just curious. How much taxation is appropriate for the wealthy? When explicitly does the label of wealthy apply?

Who knows. I'm sure there are many economics papers addressing the question. But it's somewhere before you get to the historic inequality levels of today https://fred.stlouisfed.org/series/GINIALLRF

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

#46

Post by Iv » Thu, Sep 21, 2017, 12:38 AM UTC

hueving wrote: post #23

ue_ wrote: post #8

Earlier quoted context omitted.

>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?)

There has never been a successful centrally planned economy. Perhaps with the assistance of massive computation and information spread via the Internet it could be conceivable. But without that it seems like every toy model a central planner uses is going to fail miserably.

To be more precise, there were successes of centrally planned economies, but all in the same circumstances: under-developed countries trying to modernize themselves. It is hard for a central planner to be an innovator, but it is easy to be a follower.

USSR industrialized itself very quickly. China had some success and did not shut down its central planning but hybridized it. South-Korea's steel production is an example of success in state-planning that contradicts market logic. Depending on your metric for success, you can also cite Cuba's life expectancy as it planned to become a medical nation.

Central planning fails when you have to invent new things. New services, new products can't be planned. Very few anticipated internet, almost no one expected cell phone and then smartphones to be that prevalent.

But do not throw away central planning as a systematically failed decision process. It works for :

- big scale infrastructure projects that require little innovation. - wars - big research programs: Apollo, Operation Manhattan

Actually, I think that with a public funded, government-supported centrally planned program, we could have deployed a self-driving cars network as early as the 90s.

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

#47

Post by hetman » Thu, Sep 21, 2017, 12:39 AM UTC

wmccullough wrote: post #28

guelo wrote: post #27

Earlier quoted context omitted.

And America is showing that if you don't tax wealth enough the inequality causes instability.

Not disagreeing, just curious. How much taxation is appropriate for the wealthy? When explicitly does the label of wealthy apply?

Rather than a single cut-off you just scale this gradually so there is no single wealthy/not wealthy divide but an increasing expectation to carry social responsibility as your wealth increase.

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

#48

Post by platz » Thu, Sep 21, 2017, 12:42 AM UTC

CryptoPunk wrote: post #43

platz wrote: post #41

Earlier quoted context omitted.

correct, Socialism according to Marx is not 'the government does stuff'. 'the government does stuff', when the private sector is replaced by government functions, is really State Capitalism (because the state controls the means of production, not the workers). In fact, it was Stalin that declared 'when the state is in charge, we got socialism'. It confused everybody but it's wrong.

Curiously enough, Chavez had similar things to say about state capitalism: >>“It is impossible, within the framework of the capitalist system, to solve the grave problems of poverty of the majority of the world’s population,” the Venezuelan leader said. “We must transcend capitalism. But we cannot resort to state capitalism, which would be the same perversion of the Soviet Union. We must reclaim socialism as a thesis…

And did he achieve this stated goal? no... so you can't pretend like he did achieve it, and then somehow the failed outcome proves that the goal is itself invalid.

I don't think that what politicians claim is a sound method to understand the definition of something, especially when we _do_ have the definition already (again, what Marx described).

Just because Chavez made claim X, that doesn't mean that the original definition is somehow altered.

And remember, your original claim was that price controls are socialist, which still doesn't make sense; pivoting to something Chavez said doesn't correct this.

I am no fan of what Venezuela or Chavez is doing, and I don't support their policies.

If you want an example of something that is more faithful to what Marx described, take a look at the Mondragon Corporation, https://en.wikipedia.org/wiki/Mondragon_Corporation which is a competitive worker cooperative based in Spain. Notice that this has nothing to do with the government.

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

#49

Post by nerfhammer » Thu, Sep 21, 2017, 12:43 AM UTC

padobson wrote: post #39

coliveira wrote: post #25

Earlier quoted context omitted.

This is unsupported by facts. China has a very tight control on areas that they want to develop or open to outside capital, and their growth has been stunning. On the other hand, undeveloped countries that have open their markets with little oversight have suffered tremendous economic problems, Mexico is a case in point. There is no correlation whatsoever between lax oversight of markets and robust economic growth, a…

If you'll notice in all of my comments here, I've been careful to say "markets" and not "free markets". I've also tried to steer clear of specific opinions about levels of regulation or taxation or the value provided by certain social programs. If you want to discuss the merits of a specific regulation, tax or social program, I'm happy to do that, but I haven't addressed any of those things as of yet. Since China swi…

this is why the term "competitive market" better captures what may intended by the term "free market".

"free" would seem to exclude regulation that increases market competition but would not seem to exclude subsidies that might decrease competition. All of the benefits of markets come from competition, not "free"-ness.

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

#50

Post by whb07 » Thu, Sep 21, 2017, 12:43 AM UTC

guelo wrote: post #27

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…

And America is showing that if you don't tax wealth enough the inequality causes instability.

Well Venezuela has an income inequality of almost 0. I can’t look up the Gini coefficient but I can guarantee you that they are all equal save for the government cronies.

Income inequality is always parroted as the measurement for a healthy economy, but as my previous point suggests it’s not the end be all.