Confused Cato

By coincidence I was recalling this Cato-hosted essay by Peter Thiel, in which he states: “I no longer believe that freedom and democracy are compatible.” It isn’t a message the Cato Institute is able to digest.

Consider this article by Juan Carlos Hidalgo (from the Cato Institute’s Center for Global Liberty and Prosperity). Headlined ‘How socialism has destroyed Venezuela’ it tracks the descent of what “was once South America’s richest country” into a hellish, crime-wracked, economic ruin. Socialist insanity is, of course, the immediate cause. How, though, did socialism become Venezuelan public policy? This is a question Hidalgo seems unable to imagine, let alone answer.

The account, as far as it goes, is unexceptionable:

Driving the unrest is a large segment of the population that is fed up with the country’s rapidly deteriorating economy. Despite receiving over $1 trillion in oil revenues since 1999, the government has run out of cash and now relies heavily on printing money to finance itself. The result is the highest inflation rate in the world: officially 56 per cent last year, although according to calculations by Steve Hanke of Johns Hopkins University, the implied annual inflation rate is actually 330 per cent.

The government reacted to skyrocketing inflation by following the typical socialist script: it imposed draconian price controls and has been raiding businesses it accuses of hoarding. As a result, there are widespread shortages of food and medicines, and people have to endure hour-long lines in supermarkets. The scarcity index produced by Venezuela’s central bank reached 28 per cent in January, meaning that one out of four basic products is out of stock at any given time. Somehow, toilet paper is now more valuable than paper money.

The productive sector has been decimated after hundreds of nationalisations and expropriations. Oil now accounts for 96 per cent of export earnings, up from 80 per cent a decade ago. Moreover, due to gross mismanagement at PDVSA, the state oil monopoly, production has dropped by 28 per cent since 2000, the only major energy producer in the world to experience a decline in the last quarter of a century.

The economic hardship faced by Venezuelans is compounded by a horrific rise in crime. The country is now one of the most dangerous places in the world, with almost 25,000 homicides in 2013 – a murder rate of 79 killings per 100,000 inhabitants. One of the reasons the protests are growing, despite the government’s brutal repression, is that the country is quickly becoming unlivable and many Venezuelans think that they have nothing to lose.

We get it (really); socialism is the path to chaotic ruin. And the path to socialism? Here Hidalgo switches without the slightest hint of reflective awareness from perceptive acuity to self-subverting cognitive confusion:

For many years [Venezuela] was also a remarkable democracy in a region where most nations were ruled by military dictatorships. Today, socialism has turned Venezuela into an authoritarian basket case that thousands try to escape every year. With millions of Venezuelans no longer willing to put up with deteriorating living conditions, and a government willing to take whatever means necessary to hold on to power, it looks like the worst is yet to come.

So over the course of “many years” democratic Venezuela transformed into a socialist catastrophe. Are the Cato story tellers going to suggest a narrative for this, or are they going to let us do it for them?

ADDED: Maduro’s war on “fascism” driven by invincible idealism: “We will guarantee everyone has a plasma television.”

ADDED: From the Left: “What has emerged in Venezuela is a new bureaucratic class who are themselves the speculators and owners of this new and failing economy.” (Weird the way that always happens.)

February 26, 2014admin 24 Comments »
FILED UNDER :Political economy , World

TAGGED WITH : , , , ,

24 Responses to this entry

  • Kgaard Says:

    Well, the core of the problem stems back to the 80s and 90s, when the two political parties were run by Euro-Latin elites — and BOTH were spectacularly corrupt and incompetent.

    The other thing that killed Venezuela was the devaluation of the USD in 1971, which led to a stratospheric advance in gold and oil prices — followed by the plunge in oil when Volcker tightened hard in the early 80s. Venezuela’s finances were sent into a tailspin. Plus, I don’t think tax rates were indexed for inflation so effective tax rates soared.

    These two dynamics led to the rise of Chavez. I’m sure dysgenic reproductive patterns didn’t help.


    Posted on February 26th, 2014 at 5:46 pm Reply | Quote
  • peppermint Says:

    I believed in Chavez’s Christian Socialism when I was 22 and we started hearing about how he was taxing oil revenues to spread literacy and medical care, and then how he was demanding through tariffs production of consumer goods in Venezuela.

    Looking back as a neoreactionary, I still think those are largely good ideas. I believe that the neoreactionary state would also tax oil revenues – who owns the land? – to promote human capital development – who owns the people? – and try to get some economic diversity.

    (a neoreactionary state with Exit would not be as interested in human capital development, as the people would be sharecroppers instead of slaves. It might even suppress human development while promoting fertility, thereby sending colonists to naïve nearby Patches, who would send home remittances while quietly asserting physical control over formerly undisputed territories)

    I never really saw what went wrong in Venezuela, but I think it had to do with unions and government regulators and businesses themselves being taken over by communists. Which I also supported, because I thought that it was a necessary corrolary to what I liked in the Bólivarian state.


    Posted on February 26th, 2014 at 7:29 pm Reply | Quote
  • spandrell Says:

    Venezuela is half black. Even with oil it couldn’t last much longer as a civilized country.

    Surprise! It didn’t.

    But yeah, of course the crime rate is due to socialism. Right. Pyongyang must be a cesspool of robbery and murder.

    So yes let me propose a narrative:

    [Venezuela] was also a remarkable democracy in a region where most nations were ruled by military dictatorships.

    I wonder how that socialism happened! Oh wait.


    handle Reply:

    Makes a certain contrast with democratic socialist oil revenue redistributing … Norway.


    Dan Reply:

    Norway maintains private ownership. Chavez nationalized everything. There is no human stock that is hardy enough to thrive under Marxism.


    Dan Reply:


    From wiki:

    “According to an autosomal DNA genetic study conducted in 2008 by the University of Brasilia (UNB) the composition of Venezuela’s population is: 60.60% of European contribution, 23% of Amerindian contribution and 16,30% of African contribution.[4]”

    Democracy and socialism (Marxism really) ruined Venezuela. Chavez nationalized everything. Plenty of countries full of white people or northeast asians were destroyed and impoverished by that. Russia, East Germany, North Korea, etc etc.


    spandrell Reply:

    Color me skeptical.

    Even if it were true, 40% of Amerindian + African seems to suffice to break civilization. Also note the Amerindians of Venezuela weren’t particularly civilized, unlike their Maya or Inca cousins, which whatever their faults and propensity towards eating children hearts on top of stone pyramids, they had an organized society.

    And anyway, there was nothing in Russia, East Germany or North Korea looking even remotely close to the present return to the jungle murder spree in Venezuela today. So it’s not Marxism.


    Hurlock Reply:

    Yeah, because in Russia, East Germany and North Korea you will get a crackdown the moment someone even thinks about saying something against the regime. Not to mention that their propaganda machine was stronger. North Korea keeps their population in total isolation from the outside world in a constant martial law state in order to keep things stable. In the eastern block the thought police of the KGB would be on your ass the moment they suspect that you are thinking about (vocally) being unhappy about the the shithole you are living in. And then in less than 24 hours you would be just another name on the “gone missing” list.
    If anything, what is going on in Venezuela right now, shows that apparently their internal intelligence agencies are shit and Chavez doesn’t know how to properly setup a police state.
    By the way, I am not saying that race doesn’t have anything to do with why Venezuela is a shithole, but it would be much less of a shithole if not for socialism.

    admin Reply:

    “Pyongyang must be a cesspool of robbery and murder.” — Good point. The chaotic criminal disorder should definitely have been shunted into the democratic vibrancy column.


    Lou Groopin Reply:

    Won’t last much longer as a civilized country? Because of the people who live there?

    Who lived there when it became one, and remained one for a while? Their ancestors. The population of Venezuela hasn’t changed very much in centuries.

    No latin american country seems able to maintain a stable and competent government — post Allende Chile may be the record holder, and it hasn’t been long. Spain can do it, but their colonies can’t, as far as I’m aware.

    But they do seem able to maintain civilization. Unless you redefine it.


    Posted on February 26th, 2014 at 8:15 pm Reply | Quote
  • VXXC Says:

    NRx will be ahead of curve if it starts thinking our politics as Bankruptcy Settlement, instead of Progressive Religion vs Reality.#DaRealPlay

    Debating the finer points of Progressive Religion and what went wrong won’t matter if we get the same deal Venezuela, Ukraine, Russia et al got from the Federal Reserve acting as IMF, and that’s the Crew we got at the Fed.

    It’s like the Police. In real life the victims and surviving families don’t really give a fuck about their cases, nor do the Lawyers who care not for the merits but only winning. Only the Police care about the case.

    So…what does NRx have to say about IMF Austerity and Shock Doctrine, complete no doubt with National Resource looting of the United States as it is nearly certain coming?

    The USG owns 30% of the United States and is the Majority landowner of the West, in a line from Montana to New Mexico, including Alaska. AK alone is worth several..Norways.

    Or at least begin to differentiate our actual politics – Power and Money – from the Progressive Televanglist TV show and Racial, Gender Theological debates that so consume our time. Which doesn’t even give NRx one degree of separation from Conservatives.

    Progs are still setting the agenda.

    And dare I say postulating about a King or the Biggest Balkans in the world isn’t thinking outside the box, it’s thinking outside reality.

    We quite know it went wrong. We can probably agree on how and where, when, who.

    That’s sweet. Wonderful. Now could we possibly set an agenda that deals with where we go next based on The Next Big Thing, America’s National Bankruptcy Settlement?

    Which has of course Global Implications. Not that I care about the rest.


    Posted on February 26th, 2014 at 11:13 pm Reply | Quote
  • VXXC Says:

    While you were debating Patchwork the Fed is setting it up – Red parts get sold, probably to Prog power brokers.

    Ready to live in the Emirate of Tammy Haddad? I doubt she’ll allow exit, unless you’re so ugly you can’t even be seen as a domestic at her Parties.

    I wonder which Patch Carlos Slim will allow you Exit into? Or out of ?

    Perhaps some would prefer Soroslovakia?

    We know the Clintons will end up with something? King Billy? Or Queen HIllary? They can finally dump each other.

    I don’t see the Koch Brothers winning in this, sorry.

    Here’s the actual Future, just about here. May I suggest in all humility…start planning?


    Posted on February 26th, 2014 at 11:29 pm Reply | Quote
  • VXXC Says:

    NRx Gnomes plan for a better world

    Step one – Steal Prog’s underpants
    Step two – ??????????????????
    Step three – Patchwork of Monarchies and City States, Corporate Charters, et al.

    Your likely patchwork can be found NOW, it’s the people who have Power NOW, they’ll carve it up…not you.

    Not without some kind of strategy other than mocking those without shame by those without power.

    Having established that we are quite the Whom, start thinking about how to become WHO.

    PS – any comment of mine awaiting moderation awaits the Crack of Doom.



    Posted on February 26th, 2014 at 11:33 pm Reply | Quote
  • Kgaard Says:


    Not to re-hash a previous debate, but it’s important to keep in mind that the defining factor in the hosing experienced by Russia, Venezuela et al in the past at the hands of the multilateral agencies is that they owed money IN FOREIGN CURRENCIES. The US owes money in dollars. In other words, it owes money to itself. This is not a big problem. I know it is fashionable to predict bankruptcy, end of the world etc etc, but it’s not happening. Stock market is making record highs, unemployment is falling, interest rates are still super low, home starts zooming, gold down hard. This is not consistent with the doom-is-nigh scenario. It’s consistent with the Bernanke-was-right scenario.

    That’s not to say the progs won’t cause problems on any number of fronts. It’s only to say that the way the doomsdayers spell out their doomsday scenario is not at all consistent with what’s actually happening right now.

    Venezuela is very, very different. Maybe the US gets worse. But for now it’s getting somewhat better.


    VXXC Reply:


    What is Stanley Fischer doing at the Fed, if not what Stanley Fischer does?

    BTW as far as I know, I’m the only one saying anywhere it’s going to be Shock Doctrine.

    I don’t follow Fashion, I do follow History. Market gyrations don’t impress me, and certainly not our statistics [BLS? really?].

    If we indeed owe all that money to ourselves, how do we pay it? And who pray tell will get paid by the eternal whom’s?

    I put the map up to demonstrate the Federal Govt could indeed make itself solvent – probably what FDR was thinking as a last ditch. I am saying they are likely to do again what they’ve done before, our debts can either be voided or paid.

    I’m saying they’ll be paid indeed. Power will pay itself. This is what these people now do, they’re in business for themselves with the nation being treated as a conquered province to be looted. America having never endured this ancient malady apparently has to experience it.


    admin Reply:

    I’m more persuaded by this.


    Posted on February 27th, 2014 at 1:14 am Reply | Quote
  • Ex-pat in Oz Says:

    I just googled Tammy Haddad– next time, please provide eye bleach warning!


    VXXC Reply:

    “This Town” by Mark Leibowitz. “The Tamster” is a very, very important hostess.

    If you’re in AU stay there, looks like they wanna make it.


    Posted on February 27th, 2014 at 1:58 am Reply | Quote
  • Contemplationist Says:


    Than you’re still a dumbass.


    Posted on February 27th, 2014 at 5:16 am Reply | Quote
  • spandrell Says:

    By the way, I am not saying that race doesn’t have anything to do with why Venezuela is a shithole, but it would be much less of a shithole if not for socialism.

    Race has everything to do with why they can’t even do socialism properly and crackdown on protesters.

    And democracy + race has everything to do with why they turned out socialist. The capitalist virtues of thrift and long term planning are a hard sell to certain populations.


    Posted on February 27th, 2014 at 9:04 am Reply | Quote
  • Igitur Says:


    I’ve been lurking this blog since it became clear that my own politics isn’t really “neoreactionary” as understood by the reactoblogosphere; but bravo for “Progs are still setting the agenda”.


    Posted on February 27th, 2014 at 10:22 am Reply | Quote
  • Alat Says:

    I’ve lived about a year in Venezuela near the end of Chávez’s presidency, and retain many friends and interests in the country. With all the expertise that these months have given me (heh), here’s my $2c.

    First, Mr. Hidalgo’s description, while generally correct, does include some unnecessary exaggerations. No, the Venezuelan currency is not worth less than toilet paper. Crime levels are unbelievable, but have been so since well before Chávez became president. The “brutal repression” is true but has to be contextualized, for all sides have militias they do not fully control and chavistas have also been murdered both in the current protests and the many such that have happened in the last ten years. It’s very, very far from “the government is shooting unarmed demonstrators!”.

    Second, yes, Venezuelans are generally a mixed-race people, i.e., most people you see on the street will be mestizos, some also with a noticeable black admixture. But there is a very large European minority, because received large numbers of European immigrants, mainly Italian, Portuguese and Spanish, with some Germans and Eastern Europeans, from the 1950s to late 1960s. By “large” I mean figures in the mid or upper hundreds of thousands, at a time when the country as a whole had less than five million people. Because of this, Venezuela has a very large pure white minority, more than enough to maintain “civilization” or a veneer of it if it weren’t for other conditions.

    Third, chavismo was made possible by the extraordinary rapacity of the Venezuelans’ previous democracy and capitalism. Here’s a country so corrupt that its elite managed to squander enough money, after the oil crisis of 1973 (which was a boon to Venezuela as an oil exporter), that it still was caught up in the Latin American debt crisis of the 1980s. Ain’t that an achievement? In any case, I don’t think any neoreactionary here will need to be convinced that Venezuela has been in trouble since about ever.

    Fourth, chavismo is an interesting experiment in establishing a traditional socialist revolutionary state through democratic means. It’s a lie to say that Venezuela is a dictatorship unless you include very many qualifications. There are no political prisoners. There isn’t any officially enforced orthodoxy, and most of the press is controlled by opposition interests. The opposition parties are run normally, with official headquarters, permits to make gatherings – such as the ones that began the current series of demonstrations, etc. They contest elections and hold public office, including the largest and most important state of the federation (Miranda).

    How, then, do we get the “dictatorship” feeling? Here’s where things get very interesting from a NR point of view. It’s the democracy! The chavista majority – and a majority it still is, even if dwindling – has won national power fair and square. So they just approve and apply the laws they want. I said there are no political prisoners; well, not exactly, but if the country’s legislation is a pile of paper ten miles long, is it surprising that opposition politicians are very easily found to have broken some law, any law, at some point in their lives? If they are arrested, or fined, or harassed, well, it’s just the police and the courts doing their damn job! There is complete freedom of the press, I said, and what I mentioned about the newspapers being opposition organs is true; BUT their readership is very small. After a long process which has taken almost a decade, television and radio is now much more tightly controlled by chavista interests, all very democratically – or isn’t a government entitled to regulate who can use the country’s television and radio spectrum? And if opposition media are found to have broken some law and have to be closed, well, that’s just the system working as it should…

    You get the point. If the government of just about any contemporary country really wanted to enforce the laws that exist, the result would be not only a dictatorship, but an almost complete paralysis. So laws must be enforced at the discretion of the authorities – in most cases, the permanent civil service. Some are persecuted for political reasons, but mostly this situation results in corruption and enrichement of officials. But if the Cathedral’s permanent civil service were to fall from effective power, as Venezuela’s did in the first four to five years of Chávez’s rule, then rule enforcement could easily become targeted only against whoever lost the (fully democratic) elections. It’s the endpoint of anarcho-tyranny, right there before us. Venezuela got there really fast because the opposition’s immensely stupid decision not to contest the 2004 elections, giving Chávez 100% of Congress and with it 100% of law-making powers. You can guess how he used it. The opposition finally took notice of its blunder and returned to the elections in 2006; in 2007, it managed to win a national referendum, thereby dooming a new constitutional reform which would quicken the pace of “socialist transformation”.

    Chile’s Allende was the first attempt at socialist revolution through democratic means, and we know how it ended. Chavistas are well aware of that precedent, so I think it most unlikely that there will by any Venezuelan Pinochet. The Bolivarian Revolution will fall, but in some other way. And what will succeed it will be even worse.


    admin Reply:

    Fascinating, thanks.

    “And what will succeed it will be even worse.” — always the mark of a realistic analysis.


    Lou Groopin Reply:

    You’ve reinforced my belief that American progs are learning from those clowns. Depressing.


    Posted on February 28th, 2014 at 1:28 am Reply | Quote

Leave a comment