Tag Archives: Venezuela

How a small third world country became the top economy in Latin America

South America Map
South America Map

So, I’ve been watching the Democrat debates, and I’ve noticed that all of their candidates are proposing economic policies that they say will improve the lives of Americans. But have the candidates ever been able to try out these policies, and proven that they work? One way to evaluate policies is to look at other countries that have tried them, to see if those policies are proven to work.

I’ve been reading a book called “Money, Greed and God” with my friend Carla, which talks about what does and does not work to alleviate poverty. The author basically outlined two approaches. In the first approach, the government 1) confiscates the wealth of the most productive workers, 2) nationalizes (takes control of) the businesses of the most successful entrepreneurs, 3) restricts trading between citizens and with other countries, with minimum wage, price controls and tariffs. In the second approach, the government does the opposite: 1) lowers taxes on the most productive workers, and 2) lets entrepreneurs compete to provide goods and services to consumers, and 3) lowers restrictions on internal trading and trading with other countries, e.g. – eliminating minimum wage, tariffs and price controls.

Let’s take a look at two Latin American countries that went in opposite directions. Venezuela and Chile. Then we can finally find out which policies actually achieve results for the people.

Here is how Chile started out in 1973.

PROBLEM: Price controls and tariffs:

Prices for the majority of basic goods were fixed by the government in 1973. Even though Chile was and still is a small economy, the level of protection­ism was high. By the end of 1973, the nominal average tariff for imports was 105 percent, with a maximum of 750 percent. Non-tariff barriers also impeded the import of more than 3,000 out of 5,125 registered goods. Just as economic theory predicts, large queues in front of stores were usual in Santiago and other cities in Chile as a result of the scarcity caused by price controls.

PROBLEM: Government taking over private businesses:

The decline in GDP during 1973 reflected a shrinking productive sector in which the main assets were gradually falling under government control or ownership through expropriations and other government interventions in the economy.

PROBLEM: Deficit spending and government printing money:

The fiscal situation was chaotic. The deficit reached 55 percent of expenditures and 20 percent of GDP and was the main cause of inflation because the Central Bank was issuing money to finance the government deficit.

SOLUTION: lower or eliminate restrictions on trade:

The most important economic reform in Chile was to open trade, primarily through a flat, low tar­iff on imports. Much of the credit for Chilean eco­nomic reforms in the following 30 years should be given to the decision to open our economy to the rest of the world. The strength of Chilean firms, productive sectors, and institutions grew up thanks to that fundamental change.

SOLUTION: let competing entrepreneurs in the private sector provide goods and services to consumers:

A second fundamental reform was to allow the private sector to recover, adding dynamism to the economy. In fact, important sectors such as elec­tricity generation and distribution and telecommu­nications were still managed by state companies. After we implemented a massive privatization plan that included more than 50,000 new direct share­holders and several million indirect (through pen­sion funds) shareholders, these companies were managed by private entrepreneurs that carried out important expansion plans.

SOLUTION: let people take responsibility for their own lives instead of depending on government:

The 1981 reform of the Chilean pension fund system deserves special mention. Under the leader­ship of Minister José Piñera, an individual capitali­zation account program was designed with specific contributions, administered by private institutions selected by the workers. The Chilean Administra­doras de Fondos de Pension (Pension Fund Administrators or AFP) has been replicated in more than 20 countries, and more than 100 million workers in different parts of the world use these accounts to save for retirement.

SOLUTION: allow parents to choose the school that fits their needs from competing education providers, and push school administration down from the federal government to the municipal level, where it would be more responsive to voter’s needs:

In 1981, Chile introduced a universal educational voucher system for students in both its elementary and secondary schools. At the same time, the central government transferred the administration of public schools to municipal governments…  The financial value of the voucher did not depend on family income.

RESULTS: And I was able to find a nice short, description of how all that worked out for them on the far-left Wikipedia, of all places:

The economy of Chile is a high-income economy as ranked by the World Bank, and is considered one of South America’s most stable and prosperous nations, leading Latin American nations in competitiveness, income per capita, globalization, economic freedom, and low perception of corruption.

In 2006, Chile became the country with the highest nominal GDP per capita in Latin America. In May 2010 Chile became the first South American country to join the OECD. Tax revenues, all together 20.2% of GDP in 2013, were the second lowest among the 34 OECD countries, and the lowest in 2010. In 2017, only 0.7% of the population lived on less than US$1.90 a day.

According to the Heritage Foundation, Chile is ranked as the 18th freest economy in the world. The World Bank ranked Chile as the 50th highest GDP per capita for 2018, just below Hungary and above Poland.

Now, you can contrast those results with Venezuela. I have been blogging about Venezuela for years on this blog, and documenting how they raised taxes, banned guns, nationalized private sector companies, raised tariffs, and increased regulations. They are now ranked JUST ABOVE NORTH KOREA for economic freedom – #179 out of 180 countries measured. Basically, they did the opposite of everything that Chile did – transferring power away from parents, workers, business owners, churches and municipal governments to the powerful centralized federal government.

Wikipedia explains how Hugo Chavez took over in 1999 and enacted a communist revolution.

More:

Since the Bolivarian Revolution half-dismantled its PDVSA oil giant corporation in 2002 by firing most of its 20,000-strong dissident professional human capital and imposed stringent currency controls in 2003 in an attempt to prevent capital flight, there has been a steady decline in oil production and exports. Further yet, price controls, expropriation of numerous farmlands and various industries, among other government authoritarian policies… have resulted in severe shortages in Venezuela and steep price rises of all common goods, including food, water, household products, spare parts, tools and medical supplies; forcing many manufacturers to either cut production or close down, with many ultimately abandoning the country as has been the case with several technological firms and most automobile makers.

They confiscated private property, took over private sector businesses, implemented tariffs and price controls, redistributed wealth via massive welfare programs, and pushed all decision-making out of families and municipal governments up to the federal government. By depriving the producers of their earnings, the country caused massive shortages of goods and services, to the point where people are fleeing the country, consuming zoo animals, and selling their bodies as prostitutes in order to get food and water.

Application

In the next election, we are not picking a tribe because of how they make us feel about ourselves. We are not choosing in order to see ourselves as “nice” and “not nice”. We need to look at specific policies being proposed, and see what works and what doesn’t work. The examples of Chile (rags-to-riches) and Venezuela (riches-to-rags) are helpful for voters who want to get RESULTS instead of FEELINGS.

I’ll leave you with a list of links from previous posts so you can see how communism worked out for Venezuela.

Related posts

 

Before socialists in Venezuela could run over protesters, they had to ban gun ownership

Three socialist fools: Barack Obama, Nicolas Maduro, Hugo Chavez
Three socialist fools: Barack Obama, Nicolas Maduro, Hugo Chavez

I watched a very sad video from Venezuela, where the socialists who ran the country into the ground are trying to hold onto power by using violence against the people. I feel that it is important for people who were cheering for socialism in Venezuela to see for themselves what happens after socialists take power.

Here is the video:

How can the government have such little respect for the people that they were elected to serve? Answer: they can do that because they don’t think that the people can do anything about it.

Fox News explains:

As Venezuela continues to crumble under the socialist dictatorship of President Nicolas Maduro, some are expressing words of warning – and resentment – against a six-year-old gun control bill that stripped citizens of their weapons.

“Guns would have served as a vital pillar to remaining a free people, or at least able to put up a fight,” Javier Vanegas, 28, a Venezuelan teacher of English now exiled in Ecuador, told Fox News. “The government security forces, at the beginning of this debacle, knew they had no real opposition to their force. Once things were this bad, it was a clear declaration of war against an unarmed population.”

Under the direction of then-President Hugo Chavez, the Venezuelan National Assembly in 2012 enacted the “Control of Arms, Munitions and Disarmament Law,” with the explicit aim to “disarm all citizens.” The law took effect in 2013, with only minimal pushback from some pro-democracy opposition figures, banned the legal commercial sale of guns and munitions to all – except government entities.

Chavez initially ran a months-long amnesty program encouraging Venezuelans to trade their arms for electrical goods. That year, there were only 37 recorded voluntary gun surrenders, while the majority of seizures – more than 12,500 – were by force.

In 2014, with Nicolás Maduro at the helm following Chavez’s death but carrying through his socialist “Chavista” policies, the government invested more than $47 million enforcing the gun ban – which has since included grandiose displays of public weapons demolitions in the town square.

[…]The punishment for illicit carrying or selling a weapon now is 20 years behind bars.

I have this big quote there so that people can sort of get the picture of how socialists work. The socialists never come right out and say that they’re going to confiscate all the guns so they can run you over with an armored vehicle. They start with “gun surrender” programs, where people turn in their guns for nothing. Then they do “gun buyback” programs, where they give you back some of the money that you paid them in taxes in order to get your guns. It’s only later when they feel safe that they go door to door with armed men and confiscare the rest of the guns. At that point, there is nothing that you can do to them when they seize all the water, food, electricity, etc. for themselves. And that’s what happened in Venezuela: the rich socialist politicians have everything, the people who voted for them have nothing.

Ben Shapiro wrote about the how the socialists destroyed the Venezuelan economy in The Daily Wire from 2017.

Excerpt:

On Tuesday, Maduro dragged opposition leaders Leopoldo Lopez and Antonio Ledezma off to prison; on Sunday, the dictatorship killed some ten people during election riots.

[…]Maduro is, of course, the successor to thug dictator Hugo Chavez, who seized power in January 1999 through election, and then proceeded to nationalize foreign oil projects, socialize virtually every other industry, institute price and wage controls, ratchet up tariffs, and entirely destroy the economy of one of the most natural-resources-blessed countries on the planet. Chavez took office with promises to end income inequality in the country. Instead, his brutish regime exacerbated poverty to the point of crisis – but at least they minimized income inequality! Just for good measure, Chavez also essentially destroyed the free press and made employment in key industries contingent on loyalty to his regime.

The consequences: no bread, no sugar, no toilet paper, ordinary citizens hunting dogs in the streets and waiting in line outside bakers not for bread, but for the ability to comb through the garbage for crumbs. Hyperinflation has set in: according to CNBC, “On Friday, $1 equaled 10,389 bolivars. Earlier this week, on Monday, it was worth 8,820 bolivars. At the start of this year, $1 equaled 3,164 bolivars, according to the unofficial exchange rate calculated by dolartoday.com, which millions of Venezuelans use.” Venezuelan hospitals lack gloves, soap, water, paper. Electrical blackouts aren’t infrequent. Caracas has become the most violent city in the Western hemisphere.

And what did all this nationalizing of industry and redistribution of wealth from productive people to non-productive people achieve?

The Daily Wire reports:

A Fox News report from journalist Hollie McKay exposed the socialism-induced horror show on the trail from Venezuela to neighboring Colombia. “Thousands upon thousands of Venezuelans pour into Colombia over the crowd cross-country bridge, their faces gaunt, carrying little more than a backpack. Rail-thin women cradle their tiny babies, and beg along the trash-strewn gutters. Teens hawk everything from cigarettes to sweets and water for small change,” McKay reports.

Malnourished girls and women are selling anything they can, including their bodies, breast milk, and hair, to survive, reports McKay. Females as young as 14 are receiving a reported seven dollars on average “per service”; a woman’s hair might be sold in exchange for a measly $10-30.

And as desperate Venezuelans hand over their papers and identification to “pimp types,” sex trafficking has become the norm. Men are selling themselves, too: straight men, some being trafficked, are performing gay sex acts in exchange for money.

[…]Last year, The Daily Beast reported that starving Venezuelans had resorted to killing pets and zoo animals for food while dictator Nicolas Maduro and his fellow chubby elites maintained access to everything they need. 

[…]Back in Venezuela, suicide is up, particularly with children and teens, health care is basically nonexistent since an estimated 55% of the nation’s medical professionals have fled the country, and at least 70% of the population are estimated to be suffering from acute malnutrition and starvation.

Venezuela elected a socialist who had zero achievements at pleasing customers. He had no experience helping people to get jobs. He had no demonstrated ability at producing more doctors, more nurses, etc. All he had was the promise that he would take from the wealthy, and give to the poor.  And now we know the result of that rhetoric for the stupid, economically-illiterate people who voted for appearances, words and feelings, instead of concrete achievements.

If you vote because someone makes you feel that your own problems are someone else’s fault, you will lose.

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How well is Alexandria Ocasio-Cortez’s socialism working out in socialist Venezuela?

Alexandria Ocasio-Cortez has some ideas about proper economic policy
Alexandria Ocasio-Cortez says Socialism loves you, and has a wonderful plan for your life

Well, it looks like young people are getting more and more exciting about the prospect of voting in socialism. We have a $22 trillion debt, we’re running $1 trillion plus deficits, and now’s the time for the government to take over the economy and give everybody free everything!!! Well, trouble is, that’s actually been tried… in Venezuela.

The Daily Wire reports:

Once considered the wealthiest country in Latin America, Venezuela has become a socialist hellhole where girls as young as 14 are selling their bodies in exchange for a few bucks a “service” and heterosexual men are prostituting themselves out on the gay sex market. These desperate souls are trying to escape the economic policies advocated here in United States by the Left’s increasingly mainstream Bernie Sanders/Alexandria Ocasio-Cortez wing.

A Fox News report from journalist Hollie McKay exposed the socialism-induced horror show on the trail from Venezuela to neighboring Colombia. “Thousands upon thousands of Venezuelans pour into Colombia over the crowd cross-country bridge, their faces gaunt, carrying little more than a backpack. Rail-thin women cradle their tiny babies, and beg along the trash-strewn gutters. Teens hawk everything from cigarettes to sweets and water for small change,” McKay reports.

Malnourished girls and women are selling anything they can, including their bodies, breast milk, and hair, to survive, reports McKay. Females as young as 14 are receiving a reported seven dollars on average “per service”; a woman’s hair might be sold in exchange for a measly $10-30.

And as desperate Venezuelans hand over their papers and identification to “pimp types,” sex trafficking has become the norm. Men are selling themselves, too: straight men, some being trafficked, are performing gay sex acts in exchange for money.

Well, is it really that bad to let strangers with STDs rape you in exchange for food? That sounds like a sex-positive socialist paradise to me!

But wait! There’s more socialist paradise:

Last year, The Daily Beast reported that starving Venezuelans had resorted to killing pets and zoo animals for food while dictator Nicolas Maduro and his fellow chubby elites maintained access to everything they need. “One morning in August at the metropolitan zoo in the torrid city of Maracaibo, workers were shocked to find the bones of a buffalo and some wild pigs inside their cages with clear signs of mutilation. Thieves allegedly stole the meat to eat what they could and sell the rest on the local market,” said the report.

Back in Venezuela, suicide is up, particularly with children and teens, health care is basically nonexistent since an estimated 55% of the nation’s medical professionals have fled the country, and at least 70% of the population are estimated to be suffering from acute malnutrition and starvation.

Wow, talk about animal rights. They’re so far ahead of us that they stopped keeping animals in cages! Yay, animal rights. And think of how good all these suicides are for the overpopulation problem? Venezuela has global warming on the run. After all, dead people can’t drive cars and emit greenhouse gasses. Everything is awesome when socialists rule. We should definitely elect people who want us to be like Venezuela. And Cuba. And North Korea.

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Ben Shapiro remembers the leftists who praised socialism in Venezuela

Two socialists shake hands: Barack Obama and Hugo Chavez
Two socialists shake hands: Barack Obama and Hugo Chavez

There is a podcast to go with this post in the video below, for those who don’t want to watch the podcast on The Daily Wire.

Excerpt:

On Tuesday, Maduro dragged opposition leaders Leopoldo Lopez and Antonio Ledezma off to prison; on Sunday, the dictatorship killed some ten people during election riots.

[…]The latest controversy in Venezuela arises thanks to Maduro’s brutish attempt to overthrow the legitimate legislature of the country in favor of a constituent assembly that would essentially allow Maduro to redraw the constitution. Maduro is, of course, the successor to thug dictator Hugo Chavez, who seized power in January 1999 through election, and then proceeded to nationalize foreign oil projects, socialize virtually every other industry, institute price and wage controls, ratchet up tariffs, and entirely destroy the economy of one of the most natural-resources-blessed countries on the planet. Chavez took office with promises to end income inequality in the country. Instead, his brutish regime exacerbated poverty to the point of crisis – but at least they minimized income inequality! Just for good measure, Chavez also essentially destroyed the free press and made employment in key industries contingent on loyalty to his regime.

The consequences: no bread, no sugar, no toilet paper, ordinary citizens hunting dogs in the streets and waiting in line outside bakers not for bread, but for the ability to comb through the garbage for crumbs. Hyperinflation has set in: according to CNBC, “On Friday, $1 equaled 10,389 bolivars. Earlier this week, on Monday, it was worth 8,820 bolivars. At the start of this year, $1 equaled 3,164 bolivars, according to the unofficial exchange rate calculated by dolartoday.com, which millions of Venezuelans use.” Venezuelan hospitals lack gloves, soap, water, paper. Electrical blackouts aren’t infrequent. Caracas has become the most violent city in the Western hemisphere.

According to Hannah Dreier of Associated Press:

The government of President Nicolas Maduro blames the U.S. and right-wing business interests for the economic collapse, but most economists say it actually stems from government-imposed price and currency distortions. There often seemed to be a direct line between economic policy and daily hardship. One week, the administration declared that eggs would now be sold for no more than 30 cents a carton. The next week, eggs had disappeared from supermarkets, and still have not come back…. People started digging through the trash at all hours, pulling out vegetable peelings and soggy pizza crusts and eating them on the spot. That seemed like rock bottom. Until my local bakery started organizing lines each morning, not to buy bread but to eat trash.

It’s worth noting that the American Left praised both Chavez and Maduro for decades as halcyons of humanitarian redistributionism. As I noted at Breitbart at the time, when Chavez died in 2013, Rep. Jose Serrano (D-NY) called him “a leader that understood the needs to the poor. He was committed to empowering the powerless.” Former President Jimmy Carter praised Chavez’s “commitment to improving the lives of his fellow countrymen,” adding that he would “be remembered for his bold assertion of autonomy and independence for Latin American governments and for his formidable communications skills and personal connection with supporters in his country and abroad to whom he gave hope and empowerment.” Eugene Robinson of The Washington Post called Chavez “quick” and “popular.” Larry King called him “huggable.” The Associated Press called him a “fighter.” The Atlantic stated, “Passionate and charismatic, Chávez slipped comfortably into the role of romantic Latin American revolutionary, championing the poor against an unfeeling local oligarchy and its imperial paymasters….Today millions of Venezuelans will weep tears of genuine anguish at his passing.” ABC News and Univision said he was “revered by Venezuela’s poor, who considered him one of their own.” And The New York Times sounded off, of course, calling him a “dreamer with a common touch and enormous ambition” who “maintained an almost visceral connection with the poor.”

During his tenure, Chavez received praise from Oliver Stone and Noam Chomsky, from Danny Glover and Nobel prize-winning economist Joseph Stiglitz, who said, “Venezuelan President Hugo Chavez appears to have had success in bringing health and education to the people in the poor neighborhoods of Caracas, to those who previously saw few benefits of the countries oil wealth…. It is not only important to have sustainable growth, but to ensure the best distribution of economic growth, for the benefit of all citizens.”

The Left owns Venezuela.

When you see people lining up to go through trash looking for food in Venezuela, remember the people who praised the damnable economic system that caused it.

Here is the podcast featuring Ben Shapiro:

Indeed. The first post I ever wrote on this blog about Venezuela’s descent into destruction was on February 8, 2009. I’ve been writing about this for over 8 years, and following Venezuela’s every little step down the road to socialism. Make no mistake.Your children are being told that socialism is the greatest economic system ever. And they think socialism is great, even though they’ve never set foot in any country that has actually tried it, like Venezuela.

What American schools produce:

Socialism is great, and they’ll vote for it, but they have no idea what they are voting for. Their unionized public school teachers and their celebrity masters taught them how great it is, but they never mentioned anywhere that it’s actually been tried.

Related posts

Why don’t young Americans understand the effects of socialist policies?

Supermarket shelves empty thanks to socialist policies
Supermarket shelves empty thanks to socialist policies

Here is an interesting article by Kathryn Blackhurst, writing for LifeZette.com. The article reports on how the mainstream media has covered the situation in Venezuela, which has been under socialist rule for decades.

Kathryn explains:

Out of approximately 50,000 total evening news stories on ABC, CBS and NBC combined in the last four years, just 25 have covered the ongoing crisis in socialist Venezuela, according to a Media Research Center study published Tuesday.

After Venezuela’s former socialist president, Hugo Chávez, passed away in March 2013, the country has spiraled into economic disaster and civil chaos. So far in 2017, more than 50 Venezuelans have been killed during protests against current Venezuelan President Nicolás Maduro and his socialist policies. Many Venezuelans are starving due to shortages of food and other essentials. The country’s inflation rate is set to surpass 700 percent and 25 percent of Venezuelans will be unemployed.

“Yet the Big Three evening newscasts have tried to pretend this crisis does not exist, offering virtually no coverage as the situation has deteriorated over the past four years,” MRC Research Analyst Mike Ciandella wrote.

“The networks have also been reluctant to attach the ‘socialist’ label to Venezuela’s government, and have utterly failed to criticize liberal politicians and celebrities who have praised the Chávez and Maduro regimes,” Ciandella added.

Indeed, out of the 50,000 total evening news stories on the three networks, just 25 covered Venezuela, and only seven mentioned “socialism.” In addition, NBC Nightly News only broadcast 13 stories spanning 16 minutes and 54 seconds, ABC’s World News only covered 8 minutes and 34 seconds over seven stories, and CBS Evening News only offered 3 minutes and 11 seconds over five stories.

“The network evening news programs seem allergic to reporting on the ongoing crisis in Venezuela,” Ciandella told LifeZette in an email. “Even worse, the few times they have managed to cover the widespread poverty, starvation and government oppression in that country, they somehow find ways to do that without mentioning the word ‘socialism.’”

That’s why your children can go through public schools and consume mainstream media news without ever understanding what effects follow from left-wing socialist economic policies. There just isn’t anyone intelligent and honest enough in the mainstream media to give the historical context that explains what policies were tried in the past, which resulted in the effects in the present.

Over 100,000 Venezuelans pouring into Colombia from the Venezuela in order to buy food
Over 100,000 Venezuelans pouring into Colombia from the Venezuela in order to buy food

Economist Stephen Moore has more about the situation in Venezuela, in this Investors Business Daily article.

He writes:

Venezuela is a human rights crisis of epic proportions ‎with mass hunger, mass poverty, despair, ghetto upon ghetto, and a mass exodus of private businesses and anyone with money. There are no rich and no evil corporations to loot anymore. The inflation rate is almost 500% as the currency is now about as valuable as Monopoly money.

The Wall Street Journal reports that Venezuela now employs 100,000 security forces — not to repel foreign threats or invaders, but to keep the government leaders like corrupt president Nicolas Maduro safe from their own citizens. Adjusted for population size, this would be the equivalent of one million Americans employed every day to stop riots in the streets. More than 40 protesters have been shot so far this year by the guardsmen.

The average pay has fallen to less than $50 — not per day, or per week, but per month. How’s that for a minimum wage?  ‎The people eat dogs if they can find them and the world was shocked by the story earlier this year of the raid on the municipal zoo to eat the animals. How bad off does a population have to be to start carving up elephant meat?

The burgeoning resistance throws molotov cocktails, rocks and even human feces at the security forces during the nonstop rioting. It’s like a scene out of an HBO movie. “I don’t fear death because this life is crap,” one protester told the WSJ.

[…]What is stunning about this story is that this is a nation that was once one of the wealthiest places in South America. Unlike places such as Subsaharan Africa where extreme poverty is the norm,  there is no excuse for Venezuala’s steep fall into the abyss because this is a resource-rich nation.

Under thug Hugo Chavez the former socialist dictator, Venezuela began its relentless conquest of private wealth and it’s process of nationalizing private enterprises. Chavez was lionized by the American left and the Hollywood elite — Sean Penn and Chavez were BFFs — for his “progressive” policies.

There’s literally no difference between the views of Chavez and Maduro and mainstream Democrat economic policy in the United States. They’re just further along the road to serfdom than we are, because their population is less economically literate than we are. For now.

I’d be willing to bet that many of these starving protestors in Venezuela voted over and over again for the socialists. That’s what happens when people vote with their feelings instead of knowledge of basic economics. But where would ignorant Venezuelans have picked up a knowledge of basic economics? Come to think of it… where would ignorant American millenials, who hold entire conversations in memes, pick up a knowledge of basic economics? They certainly wouldn’t get it from public schools teachers or the mainstream media “journalists”.