I’m Venezuelan, attended university in USA and have worked as an Economist, so this issue is close to my heart.
There are so many examples of destructive behavior by the Chavez/Maduro government that it is difficult to begin describing them all. But you have made a good start.
It is worth mentioning the opaque funds started by Chavez, for example the $100 Billion FONDEN fund from the proceeds from international oil sales above the national budget’s reference price. These funds had zero oversight; nobody knows what happened to that money. Over a Trillion dollars in oil exports were received during 25 years of the Chavez/Maduro era, and what remains is an ash heap with a $154 Billion mortgage.
Oil money was used to buy loyalties within and outside the country, just look at yesterday’s shameful failure by the Organization of American States to even initiate an impartial probe into Venezuela’s July 28 election. The 35-member OAS needed 18 votes to pass the motion but only mustered 17 votes.
I lived in Venezuela in 2010 after graduating college (ostensibly to learn Spanish, mostly learned how to party harder than I thought possible), but what struck me the most is all the 'socialism' was sort of run-of-the-mill government spending being promoted as some sort of radical political project. It honestly reminded me of how the GOP calls things like SNAP or Section 8 housing vouchers socialism--like no, thats what a functioning government was supposed to do! I also learned that essentially what Chavez did was expropriate businesses from his political opponents and give lucrative government contracts to his political friends, essentially just shifting who got to be the oligarch. There was a guy in my neighborhood whose bakery got a government contract and he drove around in an electric blue 911 GT3 when he wasn't driving his Cayenne.
I always find it strange when leftists blame American sanctions for economic troubles in "socialist" countries. Do their economic darlings have to suck on the American capitalist teat to function? Can't they turn to the many other friendly countries instead?
Dont forget the 8 million people who left who were either the people making the place work or 20 something’s that wanted a better life and were willing to work for that.
It always galls me how EU-style Socialism--free college, single payer healthcare, a livable wage, etc.--is falsely conflated by American conservatives with partial or full Marxist-Leninist economies, like those in Venezuela and Cuba. Countries that made their "revolutions" more or less inevitable by combinations of extreme wealth inequalities and economic incompetence.
It's only by virtue of our democratic form of government that the near-revolutions of our previous two Gilded Ages were resolved by ballots and not bullets. Our current Age is replete with Monopolies, Duopolies and Oligopolies; entities that stifle entrepreneurialism, depress wages, and increase household expenses. All to concentrate wealth in the hands of the 0.01%, and produce more billionaires to bribe Supreme Court Justices.
Find the political will to fairly Bust these Trusts, supercharge the Small Business Administration--and watch as as ten thousand new startups supercharge American innovation.
Actually most EU countries don't have single payer healthcare. It is only American progressives who think they do. Single payer with no private insurance is very much a Canadian/British thing.
A lot of Brits have private health insurance too, especially growing fast in the last few years as the NHS collapses much faster than before. British government healthcare looks a bit like Venezuela: widespread shortages of basics like GP appointments, dentists and ambulances that turn up. There's strikes, cronyism, incompetence and it's all propped up with inflating the value of the currency away.
The thing that tends to surprise Americans the most though, after the prevalence of multi-hour queues for ambulances to actually drop injured people off at ER, is that so many treatments aren't available at all. The USA is well ahead in medical technology by this point and there are quite a few conditions where Americans actually go back to the US to get treated because that's the only place where you can get treated.
If you've got lots of money, the US is a great place to get sick or injured. But ONLY if you live in or near a major metro area. GOP policies have caused or contributed to an ongoing crisis in rural county hospital closures, turning much of our hinterland into healthcare deserts.
Medical challenges are also the SECOND leading cause of personal bankruptcy in the US. Our healthcare costs roughly twice the EU average; but delivers perhaps two-thirds the quality. Your UK seems to be an outlier compared to other rich EU countries, mainly due to conservative blunders like Brexit. Defending the highly inefficient US system over those of Western Europe seems like a curious hill to want to die on.
Sigh. The state of the NHS has nothing to do with Brexit. The EU doesn't have any influence on healthcare policy. If anything the NHS got the money previously spent on membership fees (not that money is its biggest problem).
But I get that certain parts of the US media like to claim since 2016 that everything in Britain is awful and it's all because of Brexit. I've seen what the NYT writes, for example, and it's far away from reality.
Irregardless, our US system is extremely inefficient, possibly the single greatest drag to of our current and future prosperity. It's not sustainable.
We actually have an opportunity to create something new that combines the best of the industrialized world's communal and private systems. But there is not and perhaps never will be the political will to do so.
Well they're differences of extremes but not of policies.
Some European countries have free or extremely cheap college. But it's affordable only because so few people actually go. You may also notice that such countries have very few famous universities, or none.
Single payer healthcare in the UK does now resemble what's happening in Venezuela. See my reply to Tim.
Not sure what livable wage means, but wages are much lower in Europe than in the USA. In the tech industry differences are especially stark: wages in European countries other than Switzerland are often 1/4 to 1/5th of the size of tech wages in the USA. Europe is increasing treated as a viable candidate for cheap offshoring and not only former Soviet states like Poland, but even Spain or Germany.
American conservatives are one of the reasons America does so well. Their pushback may be irritating or seem heavy handed sometime, but look at how things are in places that don't have them. It's not merely different. In most ways it's genuinely worse.
Switzerland actually has an even more "conservative" system than the US for healthcare. Employer provided health insurance in Switzerland is subject to tax and thus most employers don't provide it(More like no employers provide it). Instead almost all of the public buys private health insurance on there own using after tax dollars. There is however, since the 1990s an Obamacare/Romneycare style mandate that all Swiss residents have private health insurance or pay a penalty to the govt. Switzerland has no price controls on health care either and such controls have been rejected by referendum as recently as just a few months ago. To the extent there was a model to follow with Obamacare and Romneycare it was Swisscare but neither Romney nor Obama had the courage to change the tax status of employer provided healthcare.
**Actually Romneycare/Obamacare is significantly worse than Swisscare in this regard. Both require all employers over a certain size to provide employer provided health insurance. In fact this part of Obamacare was the one element that was never challenged during the Trump Admin. None of the GOP repeal proposals for Obamacare repealed the employer mandate which tells you a lot about the illiberalism of Trumpism.
Switzerland is probably the one place in Europe where wages tend to come close to American levels. They were also one of the only countries/central banks not to suffer from this recent bout of inflation.
Just one other note on the "sanctions destroyed Venezuela" canard - let us assume for a moment it were actually true. Sanctions are a restriction on global capitalism. So if restrictions on global capitalism can ruin a country... global capitalism must be a good thing, especially for developing economies? It's an argument that implicitly undermines the entire Chomskyan worldview, and reveals it to be the west-hatred that it is rather than any consistent theory of economics and geopolitics.
Re: PDVSA I read a book once about the Soviet Union in the 20s and apparently the had a huge issue with the old upper class rising back to the top. Apparently things needed to get done and they kept coming back to the same class of people who had a nack for getting things done. Similarly today in China you’ll find that many of the current rich are decedents of the pre-revolution rich. And keep in mind the old rich were entirely disposed, sent into the field with nothing, etc. But yet they rise…
I assume part of the rage in Venezuela that lead to the mismanagement of the state oil company was the result of a tremendous desire to prove that “the rich” aren’t better than us. We “the poor” can run PVDSA just as well as the current assholes in charge.
You get a whiff of that with leftist attacks on Elon Musk (as crazy as he is.). They say, “He’s nothing special - anyone could have done that.” And I think, “You’re anyone, why didn’t you do it?”
My life interests are in things that have no commercial value. I used to think perhaps I should take a few years off to make some money, but then I realized I had no talents that could be commercialized successfully.
Elon Musk is something special. You have to be an exceptional fumblenuts to troll Twitter's board and say "I'll buy your social media platform for $44 billion lol". Now of course, Twitter would say "The $44 billion constitutes an offer. FYPU." Sure enough, Musk blustered himself into a bad purchase. In a highly leveraged purchase, Musk pays $44 billion for Twitter and remodels it into a Nazi bar.*
Musk has destroyed anywhere from 60% to 90% of Twitter's value, and it's causing splash damage to Tesla as well. The people buying his cars want nothing to do with his politics, and his bluecheck fandom is disinclined to buy an electric vehicle to own the libs.
Musk might be doing splash damage to social media as well. Engagement is falling among all major platforms since 2022, and younger people are leading the decline. Twitter's fall is almost a vertical decline.
I remember when PDVSA professionals fled to Canada. Boy, did that pay off for Venezuelans and Canada. The Venezuelan expertise with viscous oil paid off when the oil tar sands came alive in the period of high oil prices.
I just wanted to say that I very much appreciated this post. I've made some sporadic efforts in the past to try to understand the details of how Venezuela's economy was destroyed but (prior to reading this piece) had found it harder than I expected to find a good summary with the kind of concrete detail I wanted.
The articles you cite from the New York Propaganda Times and WaPo are perfect examples of why those publications have lost all credibility. Utter dreck; stupid, wrong, and damaging.
Beyond that, I’m a little baffled by how you can cite the GDP performance of Venezuela’s socialist South American compatriots as anything OTHER than evidence that, yes indeed, socialism always fails. The other countries’ GDP hasn’t plummeted as has Venezuela’s; they’ve ALWAYS been at the same miserable level of poverty.
The Times’ assertion that the fact that “a small state-connected minority control[s] much of the nation’s wealth” is a function of CAPITALISM is just breathtakingly incompetent, even for the Times. That situation is the inevitable and demonstrable result of socialism everywhere, and is but one central reason why socialism always fails. Rewards in the socialist system go not to those who add value; they go to the cronies of the political leaders, in whose hands all power lies.
How much proof is necessary before people finally learn this lesson??
I do think too much weight is put onto "structural" aspects of economies like socialism vs capitalism.
Leadership quality matters. Good people will do a much better job trying to do communism, than idiots will do trying to implement capitalism. Chavez/Maduro might be socialists, but they are also idiots.
Hmm. In that case it seems like every leader of a communist regime has been an idiot. Maybe the ascension of idiots under such regimes is itself a structural problem?
PDVSA was always a patronage mill but you are right, it got so much worse, packed with incompetent cronies under Chavez et al, and completely lost sight of its mission.
Thank goodness America has only done this with its education system 😊 .
"Lots of people say, 'Socialism always fails.' But that’s too simplistic of an answer. "
The Venezuelan case may look different, but the state ownership of large swathes of the economy always ends up descending into plutocracy. Because "the state" means "a set of people", and invariably, that set of people ends up enriching themselves.
I’m Venezuelan, attended university in USA and have worked as an Economist, so this issue is close to my heart.
There are so many examples of destructive behavior by the Chavez/Maduro government that it is difficult to begin describing them all. But you have made a good start.
It is worth mentioning the opaque funds started by Chavez, for example the $100 Billion FONDEN fund from the proceeds from international oil sales above the national budget’s reference price. These funds had zero oversight; nobody knows what happened to that money. Over a Trillion dollars in oil exports were received during 25 years of the Chavez/Maduro era, and what remains is an ash heap with a $154 Billion mortgage.
Oil money was used to buy loyalties within and outside the country, just look at yesterday’s shameful failure by the Organization of American States to even initiate an impartial probe into Venezuela’s July 28 election. The 35-member OAS needed 18 votes to pass the motion but only mustered 17 votes.
It has been credibly argued that Venezuela’s point of no return was the 2004 packing of Venezuela’s Supreme Court by Hugo Chavez: https://www.caracaschronicles.com/2009/04/27/thoughts-on-the-eve-of-the-fifth-anniversary-of-1m/
I lived in Venezuela in 2010 after graduating college (ostensibly to learn Spanish, mostly learned how to party harder than I thought possible), but what struck me the most is all the 'socialism' was sort of run-of-the-mill government spending being promoted as some sort of radical political project. It honestly reminded me of how the GOP calls things like SNAP or Section 8 housing vouchers socialism--like no, thats what a functioning government was supposed to do! I also learned that essentially what Chavez did was expropriate businesses from his political opponents and give lucrative government contracts to his political friends, essentially just shifting who got to be the oligarch. There was a guy in my neighborhood whose bakery got a government contract and he drove around in an electric blue 911 GT3 when he wasn't driving his Cayenne.
I always find it strange when leftists blame American sanctions for economic troubles in "socialist" countries. Do their economic darlings have to suck on the American capitalist teat to function? Can't they turn to the many other friendly countries instead?
I like your screen name
Dont forget the 8 million people who left who were either the people making the place work or 20 something’s that wanted a better life and were willing to work for that.
It always galls me how EU-style Socialism--free college, single payer healthcare, a livable wage, etc.--is falsely conflated by American conservatives with partial or full Marxist-Leninist economies, like those in Venezuela and Cuba. Countries that made their "revolutions" more or less inevitable by combinations of extreme wealth inequalities and economic incompetence.
It's only by virtue of our democratic form of government that the near-revolutions of our previous two Gilded Ages were resolved by ballots and not bullets. Our current Age is replete with Monopolies, Duopolies and Oligopolies; entities that stifle entrepreneurialism, depress wages, and increase household expenses. All to concentrate wealth in the hands of the 0.01%, and produce more billionaires to bribe Supreme Court Justices.
Find the political will to fairly Bust these Trusts, supercharge the Small Business Administration--and watch as as ten thousand new startups supercharge American innovation.
Actually most EU countries don't have single payer healthcare. It is only American progressives who think they do. Single payer with no private insurance is very much a Canadian/British thing.
A lot of Brits have private health insurance too, especially growing fast in the last few years as the NHS collapses much faster than before. British government healthcare looks a bit like Venezuela: widespread shortages of basics like GP appointments, dentists and ambulances that turn up. There's strikes, cronyism, incompetence and it's all propped up with inflating the value of the currency away.
The thing that tends to surprise Americans the most though, after the prevalence of multi-hour queues for ambulances to actually drop injured people off at ER, is that so many treatments aren't available at all. The USA is well ahead in medical technology by this point and there are quite a few conditions where Americans actually go back to the US to get treated because that's the only place where you can get treated.
If you've got lots of money, the US is a great place to get sick or injured. But ONLY if you live in or near a major metro area. GOP policies have caused or contributed to an ongoing crisis in rural county hospital closures, turning much of our hinterland into healthcare deserts.
Medical challenges are also the SECOND leading cause of personal bankruptcy in the US. Our healthcare costs roughly twice the EU average; but delivers perhaps two-thirds the quality. Your UK seems to be an outlier compared to other rich EU countries, mainly due to conservative blunders like Brexit. Defending the highly inefficient US system over those of Western Europe seems like a curious hill to want to die on.
Sigh. The state of the NHS has nothing to do with Brexit. The EU doesn't have any influence on healthcare policy. If anything the NHS got the money previously spent on membership fees (not that money is its biggest problem).
But I get that certain parts of the US media like to claim since 2016 that everything in Britain is awful and it's all because of Brexit. I've seen what the NYT writes, for example, and it's far away from reality.
Irregardless, our US system is extremely inefficient, possibly the single greatest drag to of our current and future prosperity. It's not sustainable.
We actually have an opportunity to create something new that combines the best of the industrialized world's communal and private systems. But there is not and perhaps never will be the political will to do so.
True; but most Americans can't really grasp the distinction.
Honestly the word "socialism" is too broad to be useful if it can describe the economies of both France and North Korea.
Well they're differences of extremes but not of policies.
Some European countries have free or extremely cheap college. But it's affordable only because so few people actually go. You may also notice that such countries have very few famous universities, or none.
Single payer healthcare in the UK does now resemble what's happening in Venezuela. See my reply to Tim.
Not sure what livable wage means, but wages are much lower in Europe than in the USA. In the tech industry differences are especially stark: wages in European countries other than Switzerland are often 1/4 to 1/5th of the size of tech wages in the USA. Europe is increasing treated as a viable candidate for cheap offshoring and not only former Soviet states like Poland, but even Spain or Germany.
American conservatives are one of the reasons America does so well. Their pushback may be irritating or seem heavy handed sometime, but look at how things are in places that don't have them. It's not merely different. In most ways it's genuinely worse.
Switzerland actually has an even more "conservative" system than the US for healthcare. Employer provided health insurance in Switzerland is subject to tax and thus most employers don't provide it(More like no employers provide it). Instead almost all of the public buys private health insurance on there own using after tax dollars. There is however, since the 1990s an Obamacare/Romneycare style mandate that all Swiss residents have private health insurance or pay a penalty to the govt. Switzerland has no price controls on health care either and such controls have been rejected by referendum as recently as just a few months ago. To the extent there was a model to follow with Obamacare and Romneycare it was Swisscare but neither Romney nor Obama had the courage to change the tax status of employer provided healthcare.
**Actually Romneycare/Obamacare is significantly worse than Swisscare in this regard. Both require all employers over a certain size to provide employer provided health insurance. In fact this part of Obamacare was the one element that was never challenged during the Trump Admin. None of the GOP repeal proposals for Obamacare repealed the employer mandate which tells you a lot about the illiberalism of Trumpism.
Switzerland is probably the one place in Europe where wages tend to come close to American levels. They were also one of the only countries/central banks not to suffer from this recent bout of inflation.
https://www.youtube.com/watch?v=L92eadRu6zE
good one... learned quite a bit about Venezuela
> a reflection of the ongoing internal cultural problems at the paper
imo, a far bigger problem is the access and gossip journalism, which went up substantially after many ex-POLITICO journalists were hired.
Just one other note on the "sanctions destroyed Venezuela" canard - let us assume for a moment it were actually true. Sanctions are a restriction on global capitalism. So if restrictions on global capitalism can ruin a country... global capitalism must be a good thing, especially for developing economies? It's an argument that implicitly undermines the entire Chomskyan worldview, and reveals it to be the west-hatred that it is rather than any consistent theory of economics and geopolitics.
Re: PDVSA I read a book once about the Soviet Union in the 20s and apparently the had a huge issue with the old upper class rising back to the top. Apparently things needed to get done and they kept coming back to the same class of people who had a nack for getting things done. Similarly today in China you’ll find that many of the current rich are decedents of the pre-revolution rich. And keep in mind the old rich were entirely disposed, sent into the field with nothing, etc. But yet they rise…
I assume part of the rage in Venezuela that lead to the mismanagement of the state oil company was the result of a tremendous desire to prove that “the rich” aren’t better than us. We “the poor” can run PVDSA just as well as the current assholes in charge.
You get a whiff of that with leftist attacks on Elon Musk (as crazy as he is.). They say, “He’s nothing special - anyone could have done that.” And I think, “You’re anyone, why didn’t you do it?”
My life interests are in things that have no commercial value. I used to think perhaps I should take a few years off to make some money, but then I realized I had no talents that could be commercialized successfully.
Elon Musk is something special. You have to be an exceptional fumblenuts to troll Twitter's board and say "I'll buy your social media platform for $44 billion lol". Now of course, Twitter would say "The $44 billion constitutes an offer. FYPU." Sure enough, Musk blustered himself into a bad purchase. In a highly leveraged purchase, Musk pays $44 billion for Twitter and remodels it into a Nazi bar.*
Musk has destroyed anywhere from 60% to 90% of Twitter's value, and it's causing splash damage to Tesla as well. The people buying his cars want nothing to do with his politics, and his bluecheck fandom is disinclined to buy an electric vehicle to own the libs.
Musk might be doing splash damage to social media as well. Engagement is falling among all major platforms since 2022, and younger people are leading the decline. Twitter's fall is almost a vertical decline.
*What we mean when we say "Nazi bar": https://www.techdirt.com/2023/05/04/on-social-media-nazi-bars-tradeoffs-and-the-impossibility-of-content-moderation-at-scale/
Good post Noah, keep it up
I remember when PDVSA professionals fled to Canada. Boy, did that pay off for Venezuelans and Canada. The Venezuelan expertise with viscous oil paid off when the oil tar sands came alive in the period of high oil prices.
Such a deeply dispiriting read, such an avoidable tragedy.
I just wanted to say that I very much appreciated this post. I've made some sporadic efforts in the past to try to understand the details of how Venezuela's economy was destroyed but (prior to reading this piece) had found it harder than I expected to find a good summary with the kind of concrete detail I wanted.
Noah isn't infallible, but sometimes he comes pretty close.
The articles you cite from the New York Propaganda Times and WaPo are perfect examples of why those publications have lost all credibility. Utter dreck; stupid, wrong, and damaging.
Beyond that, I’m a little baffled by how you can cite the GDP performance of Venezuela’s socialist South American compatriots as anything OTHER than evidence that, yes indeed, socialism always fails. The other countries’ GDP hasn’t plummeted as has Venezuela’s; they’ve ALWAYS been at the same miserable level of poverty.
The Times’ assertion that the fact that “a small state-connected minority control[s] much of the nation’s wealth” is a function of CAPITALISM is just breathtakingly incompetent, even for the Times. That situation is the inevitable and demonstrable result of socialism everywhere, and is but one central reason why socialism always fails. Rewards in the socialist system go not to those who add value; they go to the cronies of the political leaders, in whose hands all power lies.
How much proof is necessary before people finally learn this lesson??
I do think too much weight is put onto "structural" aspects of economies like socialism vs capitalism.
Leadership quality matters. Good people will do a much better job trying to do communism, than idiots will do trying to implement capitalism. Chavez/Maduro might be socialists, but they are also idiots.
Hmm. In that case it seems like every leader of a communist regime has been an idiot. Maybe the ascension of idiots under such regimes is itself a structural problem?
PDVSA was always a patronage mill but you are right, it got so much worse, packed with incompetent cronies under Chavez et al, and completely lost sight of its mission.
Thank goodness America has only done this with its education system 😊 .
Yeah, thank goodness ...
"Lots of people say, 'Socialism always fails.' But that’s too simplistic of an answer. "
The Venezuelan case may look different, but the state ownership of large swathes of the economy always ends up descending into plutocracy. Because "the state" means "a set of people", and invariably, that set of people ends up enriching themselves.
Socialism does always fail. The rest is just details.
"The rest is just details."
and counting dead bodies ...
I agree. If it wasn't clear, I was quoting Noah.