Chavez rose to power in 1999. His original base of support was created among the people who worked in the informal economy, which had blossomed in the 1980s after the end of an oil boom. To this base, he added a growing army of public-sector workers. Under Chavez, the public payroll almost doubled, to 2.4 million. That buys a lot of support. You don’t bite the hand that feeds you.
In addition to the political support that Chavez garnered which was merged into the Venezuelan United Socialist Party (PSUV), he also created 2 other instruments of control:
- 1. A private militia of approximately 125,000 which answered to him directly rather than the regular army command
- 2. A network of community councils which usurped many of the revenues and functions of local governments.
This set up was described by foreign academics as an empowering “direct democracy”. Instead however, it functioned more like a top-down governing body with all power held by the president.
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Behind the propaganda was a corrupt and mismanaged government. Oil became the primary driver of the economy. According to the Economist:
“State takeovers of farms cut agricultural output. Controls of prices and foreign exchange could not prevent persistent inflation and engendered shortages of staple goods. Infrastructure crumbled: most of the country has suffered frequent power cuts for years. Hospitals rotted: even many of the missions languished. Crime soared: Caracas is one of the world’s most violent capitals. Venezuela has become a conduit for the drug trade, with the involvement of segments of the security forces.
Brazil’s left-wing presidents, while governing as moderate social-democrats, found it useful to indulge Mr Chávez. They appeared to see him as a means to blunt US influence in the region, while his economic mismanagement gave Brazilian business the chance to supply the goods and services that Venezuela ceased to produce.
Further afield, Mr Chávez delighted in embracing the world’s autocrats and dictators. He forged an alliance with Iran, which offered opaque “technical co-operation”. He agreed to buy arms worth some $15 billion, mainly from Vladimir Putin’s Russia. He made friends with Saddam Hussein, Robert Mugabe, Muammar Qaddafi and Bashar Assad.
The 2008-09 world economic slowdown exposed the weaknesses of chavismo. While much of the rest of Latin America recovered quickly, Venezuela remained in recession for two years.
After a pre-election spending binge last year, the economy is slowing again. Faced with shortages of many goods, including hard currency, Mr Maduro devalued the currency by 32% in February. Venezuela comes towards the bottom of just about every league table for good governance or economic competitiveness.”
“What has Chávez bequeathed his fellow Venezuelans? The hard facts are unmistakable: The oil-rich South American country is in shambles. It has one of the world’s highest rates of inflation, largest fiscal deficits, and fastest growing debts. Despite a boom in oil prices, the country’s infrastructure is in disrepair—power outages and rolling blackouts are common—and it is more dependent on crude exports than when Chávez arrived. Venezuela is the only member of OPEC that suffers from shortages of staples such as flour, milk, and sugar. Crime and violence skyrocketed during Chávez’s years. On an average weekend, more people are killed in Caracas than in Baghdad and Kabul combined. (In 2009, there were 19,133 murders in Venezuela, more than four times the number of a decade earlier.) When the grisly statistics failed to improve, the Venezuelan government simply stopped publishing the figures.”
Here are what some of the people are saying about Chavez:
Carlos on the marketmonatarist.com 3/7/13
“Keep in mind that all the numbers you are discussing are completely unreal-fake. Venezuela has been under a strict currency exchange control since +10 years, and all the figures the government sends out to the IMF and World Bank are under the fake official fx rate, e.g. real market fx is at +20 per USD, while the figures you are seeing are under the official 4.3 per USD. No wonder all our unit econ. look excellent!
Reality is much much different here.
We DO NOT have the best GDP per capita, we DO NOT have the best minimum salary in Latin America. Anyone who at believes that is in wonderland. Unemployment has not gone down; government just decided to count in street vendors (thousands) as officially employed.
Regarding crime, I respect your opinion, but also respectfully tell you that what your saying is not true. Crime has gone up and up, everyone is doing it and everyone is becoming a victim of it, poor or rich (more the poor than the rich). Police is as corrupt as ever. Narco politics are as big as ever. If you do not believe me I invite you to come here and I’ll show you how easy it is.
At the end, It’s all a matter of numbers and semantics + political rubbish.”
So while the push goes on to convert our once but no longer free market here into a similar controlled economy, the reality is that the legacy of Chavez is an object lesson on the failure of applied socialism.
One Reason Socialism Will Always Fail (Among Others)
Socialism will always fail because it is a utopian idealism which goes against the normal human desire for freedom. To work socialism always uses force and always results in economic and moral decline. Study its footprint in history and you will always find human oppression and economic disaster.
Venezuela is a good example of what happens to a nation with the application of idealist Marxist utopianism. Study and take heed. It may be coming to a country near you real soon. (Shhhhh…….don’t tell anyone but it is already here. Just ain’t growed up yet.) For further reading on socialism check out the following book: