Better to make more money than you can spend than to spend money you didn’t make.
Venezuela descends into a uniquehell, one made partly of its own craftsmanship. Yet, one also made partly of the nation’s arrogant failure to insulate itself from a powerful adversarythat had embarked on the task of the weaker’s downfall. The economy crumbled into itself; the nation’s politics follow suit. Emergency and exigency is the ordinary condition. Shortages of food, goods and solutions abound. Animosity and recrimination occupy much of the national space. Social fissures as old as the nation itself and, in fact, born of the same birth as the nation have been whetted. These division are razor sharp and now pierce the national fabric faster than anyone can knit its repair.
Conventional wisdom would have you believe Venezuela’s deep blues arepreordained. We are told such is a nation’s fate when leftist, progressive economics hold sway.Conservatives smile with open malice at the depths to which Venezuela has so fast fallen. Wisdom counsels us to be wary of simplistic verdicts pasted to complex social circumstances. If the misfortune of Venezuela represents the inherent miscue of progressive economics then the same conclusion must attach to modern capitalism/financialism. The 2009 global recession and the ongoing chronic recession in several European nations must be said to stand with equal veracity as living witnesses against orthodox economics. If the demise of Greece and other nations does not compel a rejection of mainstream economics,the Venezuelan tragedy does require progressive economics to walk the plank.
In truth, the edifice constructed by late president Hugo Chavez was not of the mortar and brick of progressive economics. To rid oneself of imprecise ideas is a good thing when trying to discern world events. Sadly, imprecision is readily commerced by those who would trap us in the realm of facile conclusions easily understood yet disconnected fromreality. That way they keep us knocking the wrong door and seeking there solutions to problems that this door shall never permit. They wish that we expend ourselves in futility because our futility is as useful to the power elite as the money and power they hold. It is our futile search for solutions in abject places that guarantees they shall be the above and wethe below. Beware when the elite counsel us on economics. We must consider whether he has his present advantage or our future welfare at heart.
That Chavez was in conflict with the American government does not make him progressive. All you can rightfully discern from the dispute is that he refused to do as he was told. That he declared independence from Washington is not a sign of being progressive. The former slaves declared their independence from America by forming Liberia. Only they turned against the indigenous Africans found there, treating the African in the same rude manner America had treated the former slave. A break between ruler and servant may be more concerned with the allocation of power than the establishment of right over wrong.
Many claims to independence are fueled by the desire of the person or nation to be able to commit the wrongs of his own design instead of being the dupe of the wrongs of another. While independence from conservative power is a requisite to progressive governance, that independence has been achieved does not mean the one claiming independence is progressive.
One may claim with some accuracy the international politics of Chavezwere left-leaning. But his domestic economic policy was a different matter. In that arena, he was more populist than progressive. He did not belong to any true economic school of thought. His economic ideas were driven more by the socio-cultural dynamic of his nation. His economic program resided as much in the penumbra of the social psyche of this nation, in its collective subconscious, as it did in any attempted intellectual framework. In short, Chavez’s economic program was as much an emotional outburst against the status quo he encountered as that status quo was a monument to injustice and the evil control over the hapless many by a select few.
Chavez’s economics was not a rational exercise in progressive ideas. It was more akin to what takes place if a mistreated servitor is told he may play king for a day. Ancient Rome celebrated Saturnalia during the winter solstice. During this period, master would serve slave or at least treat him as an equal. Chavez was Saturnalia come to Venezuela.
Chavez, and now President Maduro after him, did not reform the politicaleconomy. They merely added another layer to it. As long as oil price were high, Chavez could finance the extra layer. That Chavez was removed from the scene by illness prevented him from seeing his edifice crumble. Now Maduro is left to foot the bill but with insufficient fundsto do so.
The Chavez model did not dismantle the old elite. Chavez tried to give the average person the same life in miniature. Thus, he did not use the money to deepen and broaden the economy and its wealth producing capacity. He did not invest much in the manufacturing sector or in other processes that would ensure adequate employment of men and machine in productive ways. He tried to win the masses by allowing them a level of consumption never before enjoyed.
He did not abolish the rentier economy that had been the preserve of the elite. This is what a progressive would have attempted. Instead, he nationalized the phenomenon. Everyone could be a rentier, the average man would simply do so on a smaller scale. The local currency, the bolivar, was overvalued to make imports cheaper than they ought. A corrosive regime of multiple exchange rates also encouraged certain imports. Average people were able to spend money on frivolities usually the province of the rich. For example, Venezuela had one of the highest rates of cosmetic surgery in the world.
Consumption was skewed toward expensive imports and away from home-grown products. A false sense of prosperity hovered above. The people thought it the shine of a sun that never set. It was actually the glistening blade of the sword of misgiving. It would descend at the first sign of trouble.
Again, this was not progressive economics for it lacked discipline and did not place independent productive capacity in the hands of the people. Moreover, it lacked the awareness that the domestic and international forces Chavez had fought would gather to test the resilience of his construct. When you chase the master from the plantation but fail to pursue him to the end, you must realize he will return in full vengeance. There is no time to celebrate.Defensive vigil is in order.
The overpriced currency and exchange rate manipulations effectively subsidize imports, giving the average person a taste of affluence that would have been foreclosed by more prudent economics, whether conservative or progressive. Such a scheme was dependent on global forces beyond the control of Chavez. The price of oil, more determined by American demand than the wishes of Chavez, was the foundation upon which this economy depended. As such, it was false bravado for Chavez to thump his chest at America and think his tendency could flourish in the long-run.
To stand contrary to America meant he should have abandoned his economic model for one of greater domestic production, industrial strength and lesser dependence on imports, particularly food. This would have lowered his reliance on oil and the dollar. To keep to this import-oriented economic model, meant he should have cultivated warm relations with Washington. Chavez must have realized the contradiction in his position. Yet he was powerless to change it one way or the other. He had become locked into contradiction by his inability to transcend the currents that comprise the history of his nation. As such he was more an artful tactician than a strategist given to a long-term perspective. He thought the short-term would never expire. Everything would stay as it was. He perhaps deluded himself away from the obvious frailty of his long-term position into believing himself so clever as to be able to engineer a revolt financed entirely by his more powerful archenemy while publicly upbraided that very enemy.
I dare not be too harsh toward Chavez. The system he envisioned was perhaps a natural outcrop of national history. The mainstream media never mentions the plight of Venezuela before Chavez/Maduro. They want you to assume all was well. It was not. The nation suffered recurrent crises. The years over which Chavez presided were relatively golden ones. The fatal problemswere that this model did not accord with Chavez’s geopolitical positioning nor did it adapt quickly to the reality of global oil supply and demand.
However, what Chavez erected had its roots in the very origins of the nation. The Bolivarian revolution of the 19th century that gave rise to the nation was but a partial step. The nation tossed aside Spanish imperial control. A republic was born but it was a republic mainly in name. This served the domestic elite. They assumed the dominant role the Spanish had occupied and acted much like them. The people’s life did not change. The dichotomy between powerful and peasant, replete with racial and cultural overtones, would define much of the nation’s history and its economic relationships.
The rise of Chavez was a rejection of this dichotomy. It rejected the stark dichotomy not by bringing the rich closer to the poor but by trying to bring the poor closer to rich. The poor would be given a trickle of money that they may mimic the wealthy as best they could. This was less economic program than a measure of collective psychological therapy that lasted too long for the patient’s good.
During the course of the nation’s history, the poor hated what the rich had done to them but they were also taught from childhood to idolize the affluent.In this pseudo –caste system, the rich were as secular gods.The poor may have hated them but also held them in awe and fear. Against their own interests and even wishes, the poor subconsciously came to love them in the perverse manner an illegitimate son does a steel-hearted but accomplished father. In such an instance, one does not gain legitimacy by killing the parent. One thinks he may gain legitimacy by acting like the father long enough that even the coldest heart may melt and accept you. Rarely does this mercy come to pass;stillits unlikelihood never prevents the unfortunate from believing that kindness shall sprout from a heart where goodness never entered.
The elite suffer no similar delusions. They are used to the manipulation of power and of man. The loss of political control and economic domination to someone of the social originsof Chavez embittered them. That the Chavez machine did not seek their demise did not mean they would not seek the demise of what Chavez had constructed.
The fall in oil prices opened the door. The elite would join with the American government in toppling the Chavez machine. The local elite wanted their position back. America wanted to discredit and banish from the American hemisphere any form of governance that did not bear Washington’s tag of approval. The Monroe Doctrine, that nearly 200 years ago proclaimed the western hemisphere as Washington’s backyard, remains a living bulwark of American foreign policy. Those who violate the Doctrine do so at their own peril.
The squeeze has been put on the Maduro Government. The Chavez economic model is unviable in this era of secular low oil prices. However, it will take years to reform the economy. Maduro compounds the danger by failing to be honest with the people and letting them know what will be required of them in the coming years. He is reluctant to correct the economic model left by his benefactor. Maduro places his hopes that political maneuvers may cover if not cure things; but his troubles are economic in nature. By wrapping himself in a wet blanket, he thinks he can save a house afire. He hoists the wrong the sail to escape the storm that confronts him.
America fuels and funds the opposition. The media sides with the opposition because both opposition and mainstream media are of the same elite. The stories of peaceful protests being met with government strong-arm tactics are misleading. Objective reporters note that armed militias regularly challenge government police. Then the armed men mingle in with the protesters. The media then shows the scenes of government violence without mentioning its predicate. This is a tried and truth tactic that American intelligence agencies have taught and financed in Libya, Syria, and Ukraine. The objective is to chase Maduro from office as was done in Ukraine by a “democratic coup.” However, the opposition is having a difficult time gaining traction despite the favorable media reports. No matter how bad things are under Maduro, the people still fear the return of the elite for not enough time has passed for people to forget the old days. If Maduro is ineffective at least he is still of and possibly for them. Thus, the bulk of the people may be disenchanted but they are not ready to return dominion to their former overlords. They pray for a miracle that will rescue their future from both the past and the present.
Through all of this the people of Venezuela suffer shortages of the most basic necessities when they were sampling bits of luxury but a few years ago.
This is a lesson to African nations for the crisis of Venezuela is essentially one of economic leadership. Like Venezuela, most African nations refuse to industrialize and to establish manufacturing sectors that employ sufficient numbers of people in wealth-creating endeavors. Our nations stubbornly adhere to thetorn model of selling raw material to obtain cash to import finished goods. Our nations manipulate exchange rates, usually with the objective of holding the local currency to a value higher than it ought to be. In the short-term, this makes imports cheaper and minimizes discomfort. But this is all in this short term. In actuality, it simply postpones the day of reckoning. Each day of postponement amplifies the severity of the reckoning when it does come.
As time progresses, the value of raw material relative to finished goods will diminish even if the absolute price of the raw material increases. This is because of the evolution of finished goods. They are more and more complex but the essence of raw material remains unalterable. The only things the raw material exporter can pray for are high demand or a slack in supply by other exporters. These are thin beams upon which to rest a nation’s future.
Nigeria and other African nations should look at Venezuela’s plight with concern and not relief in the false belief that they have escaped Venezuela’s ordeal. The special circumstances of that nation’s history and geopolitics led it to gallop toward disaster as if in a sprint. The circumstances of most African nations point them in the same direction that Venezuela has traversed. The sole difference is that while Venezuela raced to calamity African nations walk toward it. We sadly mistake our different pace for a difference in ultimate direction. Waiting at the end of this mistake is tragedy we can ill afford.
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