As a consequence, the money that Chavez used to paper over the cracks in his socialist paradise has vanished, and the cracks are deepening:
President Hugo Chávez has been facing a public outcry in recent weeks over power failures that, after six nationwide blackouts in the last two years, are cutting electricity for hours each day in rural areas and in industrial cities like Valencia and Ciudad Guayana. Now, water rationing has been introduced here in the capital.
The deterioration of services is perplexing to many here, especially because the country had grown used to cheap, plentiful electricity and water in recent decades. But even as the oil boom was enriching his government and Mr. Chávez asserted greater control over utilities and other industries in this decade, public services seemed only to decay, adding to residents' frustrations.
With oil revenues declining and the economy slowing, the shortages may have no quick fixes in sight. The government announced some emergency measures this week, including limits on imports of air-conditioning systems, rate increases for consumers of large amounts of power and the building of new gas-fired power plants, which would not be completed until the middle of the next decade.
This comes on top of the sporadic food shortages that result from price controls combined with high inflation.
Chavez's solution to these problem has been to go militaristic on neighboring Columbia. Apparently, he's stepping up the rhetoric:
So few were terribly surprised Sunday when Mr. Chávez sidestepped those subjects on his weekly television show -- and instead appeared to declare war on neighboring Colombia. "Let's not waste a day on our main aim: to prepare for war and to help the people prepare for war," the strongman told his military leaders.
The bluster was taken in stride by most Venezuelans, who according to a recent poll oppose conflict with Colombia by a margin of 4 to 1. Venezuela's largest newspapers played the story below other news. Even the Colombian government's response was relatively low-key, though it talked about appealing to the United Nations and the Organization of American States. The State Department blandly suggested "dialogue" between the two countries.
We'll accept that this is just another instance of Mr. Chávez's buffoonery. Still, it's worth noting: This is the second time in less than 18 months that Mr. Chávez has ordered troops to the Colombian border and suggested that hostilities were imminent. In the past few years he has spent more than $4 billion on arms purchases from Russia alone. He claims to be worried that a recent U.S. agreement with Colombia, under which U.S. Air Force and Navy units will have expanded access to military bases, is meant to facilitate a U.S. invasion of Venezuela. In fact, he has something to worry about: The bases will be used for U.S. drug surveillance flights, and Mr. Chávez is known to be cooperating with terrorist organizations that are trafficking drugs from Colombia through Venezuela.
No one thinks war is imminent; they think it's just bluster to stir up patriotism and channel it through the figure of one Hugo Chavez. But then, as the article points out, no one really thought Argentina would invade the Falklands, either. Desperate times make desperate men. And while he's still popular now, his polls are slipping rapidly, showing him close to, or under, the critical 50%.
Couldn't have happened to a nicer guy.
While true, nobody really gives a fuck what's going on a thousand miles away when we have our own little socialist right here in the United States destroying our economy by emulating his policies.
Could this be one of the causes for Raul Castro's recent proclamations that Cuba is facing a severe energy shortage?
I believe that Chavez has been sending him oil at below market price for quite a while.
That same thought crossed my mind when I read about Cuba. No way of knowing, but an interesting coincidence.
Three points:
1) This is clearly an unfortunate abberration. An unforseeable and incredibly unlikely "perfect storm" of events conspired to create the incredibly rare conditions that would befuddle a bold, progressive agenda. No broader lessons can be drawn from it.
2) Obviously, evil enemies of the people are creating these shortages for their own nefarious ends. They are trying to destroy the enormous popular support that Chavez has built up through his creation of a veritable utopia for the common man. They are most likely doing this because they hate poor people. Hopefully Chavez will be able to uncover & destroy them before they suceed in undoing all of the positive change he has wrought.
3) Yes, it's possible that Chavez's policies are leading Venezuela into utter destitution and destroying the value that once existed there, but this is far too narrow a lense through which to view the situation. Think of all the positive change he has brought to the poor of Venezuela, many of whom had never enjoyed conditions as wonderful as those he created. The hope he has inspired in millions would not exist without his noble actions.
Related to all of these points is the simple fact that this destruction of Venezuela was unavoidable and would have been far worse had Chavez's emphasis on forward-thinking socialist policies not been in effect. Without his bold progressive leadership, the country would have suffered through far worse -- particularly the poor.
As ever, his enlightened rule is the one hope the country has of entering a period of lasting and widespread prosperity. Viva la revolution!
I agree. This is just like when the Soviet Union had 70 years of bad weather, which caused their crop yields to fall.
I think we can all agree we don't want a repeat of when the Soviet Union collapsed and millions of people lost their social safety net.
Absolutely true, all of it. And don't forget subversion of Chavez's progressive agenda by Western Capitalist (insert bad word here). And George Bush. Much of this is his fault. And Dick Cheney, too, of course.
Kidding aside, I just hope that this clown DOESN'T start a war. Talk about a completely useless waste of life.
And isn't it reassuring to see the Soviet Union... I mean "Putin's Russia," sidling up to this clown and offering him all kinds of military toys? Just like the good old days.
Not to worry. Chavez and Obama appear to be part of a book club, or something. I'm sure they'll work it out over a beer in the backyard of the White House, or something like that.
"Talk about a completely useless waste of life."
Sadly, that describes most attempts at establishing socialist utopias. Venezuela isn't in as bad shape as Zimbabwe yet, but Chavez is certainly working towards the same goals. What a waste.
Dude, it was hackers ... not Chavez policies, caused the blackout.
Yea ... it was those hackers!
In the back of the Economist, you can get a regular update on Venezuela's inflation, and it's routinely been above an annual rate of 25% for many years.
If you go to the Penn World Tables and take a look at the series for "Real GDP per capita (Constant Prices: Chain series)", you can see that the average Venezuelan is no richer in real terms that they were in 1970 - 40 years ago - despite the country's oil export revenue (though a large factor in the drop was the debt-crisis of the early 80's, which dropped living standards nearly 30% in just a few years and stagnated since, slowly dropping until it hit rock bottom in 2003 (as poor as 1956!).
Unfortunately, the Penn data only goes to 2007, and from 2003 to 2007, it looks like living standards rise back to 1970 levels by an impressive 25% - but my estimate is that almost all of this boom was petroleum related and temporary, and has been eaten up in the last two years or so by the steady hyperinflation, lower oil production, and lower oil prices. It's entirely possible that today, Venezuelans are no richer than they were half a century ago.
I suppose I should add, that Venezuela was not historically a "much poorer country" than the US with levels of economic growth being of comparable speed. From 1950 as recently as 1975, US living standards as measured by that "Real GDP per capita (Constant Prices: Chain series)" metric, tended to be only about 60% higher here than in Venezuela.
And then the dam broke, and today the difference is around 250%. The point is that given their substantial natural factor endowments and decent education system, there was every indication that Venezuela today should have remained a comparably wealthy country. That, alas, did not happen for two lost generations.
IIRC, that is also true for Cuba. When Castro took over they weren't that far behind the U.S.; now they're much poorer.
I've read that when Castro took over, Cuba was the richest country per capita in Central or South America. Now it's the poorest.
Same is true of the US over the last 10 years, according to Slate:
http://www.slate.com/id/2235377/
The "median household income" argument is extremely deceptive because it says 5 people in a household earning a combined $60,000 are doing better than a household with one guy earning $50,000.
The best number to look at is PPP GDP per capita.
Let's do that, in constant 2005 dollars, and even including the financial crisis up to this summer.
In July, 1999 - Real GDP was $10,820 Billion, and the population was around 279,300,000 - Real GDP per capita of $38,740.
In July 2009 - Real GDP was $13,014 Billion, and the population was around 307,000,000 (give or take) - Real GDP per capita of $42,390. An increase in "wealthiness" of 9.4% - not too shabby.
Of course, if growth is weak and then we enter a double-dip in late 2010, then by the bottom of that recession - we could possibly have a lost decade of stagnating living standards.
"...and Socialist governments traditionally do make a financial mess. They [socialists] always run out of other people's money. It's quite a characteristic of them."
- M-Thatch
Talk about a Harvard Case Study on the futility of Statism and Centralized Government...
Exxon, BP, or any other serious petroleum company could have not only kept those fields producing, but increasing yield. Sour crude has been around a long time, and these companies are in the business of business - as in "make a profit by figuring it out."
Just like the Shale Fields, the Ultra Deep Seabed Drilling, etc. There are solutions to these problems. It's what human beings will do, and often enjoy doing, when offered the opportunity to profit by it.
Communism crushes not only economies and qualities of life, but the human spirit. Imagine working those oil fields knowing that a REAL oil company would do it better, but you're not allowed to? Demoralizing...
where is Sean Penn and Kevin Spacey when you need them......
don't forget Harry Belefonte and Naomi Campbell
That one killed me...
Paging Oliver Stone. Oliver Stone, there's a phone call for you in the lobby. Please bring your Visa, because Hugo doesn't like the name "American Express..."
And while he's still popular now, his polls are slipping rapidly, showing him close to, or under, the critical 50%.
It probably doesn't matter how unpopular he is, the Venezuelan voting machines are rigged. Doug Schoen (Clinton's pollster) was adamant that the recall election was stolen, and an analysis by some math guys at MIT showed that violations of Benford's Law made it 99% likely Schoen was right.
Even if Chavez falls below 30%, his good buddies in Iran just proved how easy it is to nakedly steal an election. And after how they treated Zelaya's entirely legal removal from office, I wouldn't expect the Obama admin to do anything about it.
It's not as if laws have slowed him down so far. Just ask the Venezuelan Press. All 3 of them.
Unfortunately he's not the first or probably last dbag to ruin a Latin American country. He's just a little more in love with himself (mostly the sound of his own voice) than the others.
all this back and forth on ayn rand recently reminds me that, despite some very obvious flaws in her thinking, atlas shrugged is a pretty spot on depiction of a society in decline. absent the support of the international community, how long would it take venzuela to completely devolve into north korea? ten years max?
Great post. I wonder if Brazil is Venezuela-light and will eventually follow its footsteps, or if they are a different (albeit leftist) animal.
They seem to have a much sounder economic policy, relying less heavily on oil revenues. OTOH, Lula has created and has been expanding a gigantic welfare program (bolsa-familia). Needless to say, Lula and Chavez also get along very well.
The problem is that a war would be a huge boon to Chavez and most likely buy him another decade. Two years ago under Bush it would have crazy because the US would have stepped up and stopped it. Today under Obama I'm not so sure. This is the problem with soft glove diplomacy in a dog eat dog world.
Mmm. Yeah, I'm not so sure, either, but if Colombia invoked the Rio Pact (TIAR), it would help overcome resistance.
Where is Nimed & stonetool to tell us how wonderful Chavez is? The joys of socialism...
Same place movertyperguy is to reply to every single comment with an obscene statement that Barack Obama wants all white pople in chains. And there should be a govenment program to pay an employer to hire him. Or something.
I will point out that it is only the biased Rasmussen poll that has him below 50%. The New York Times/CBS poll has him at 103% approval.
Aside from the problems pointed out with Venezuelan crude, it's also worth mentioning that alongside Chavez soaking PDVSA for social goodies he hasn't reinvested anything into the company's infrastructure, so production capacity has steadily declined.
BTW, there is no way Chavez is going to war with Colombia. Even he isn't so dense as to fail to realize that he's vastly outmatched.
"In the past few years he has spent more than $4 billion on arms purchases from Russia alone."
Chavez can kiss that money goodbye if the battlefield gets hot.
Russian (Soviet) equipment doesn't stand up too well when faced against a well trained force using US weapons. Just ask Syria...and if he was around, Saddam.
The most telling statistic is that zombie attacks are up 32% YoY from this point in 2008. At this rate, all the brains in Venezuela will have been consumed by fall of 2012. Columbia better start building walls and moats of boiling oil.
If Chavez invades Columbia, does anyone really think that our president will aid Columbia? At best, we might hope he would stay neutral, and envoke various international agencies to mediate the dispute after the war is done.
Hmm...Venezuela, Columbia, Panama Canal;
Looks like about 500 miles, but no;
Russia would not sell Chavez any weapons
with that much range, and Chavez would
never use them.
SF ref: Keith Laumer' Retief stories,
based on actual experience as a
military attache to diplomatic missions
in S.E. Asia during the Cold War, when
US and USSR were competing by bribery
for the support of the local governments.
Where is Ambassador LongSpoon, of the
Corp Diplomatique Terrestrienne, when
you need him ? :)
I think what most of the left claims about Allende is (1) that he was democratically elected and therefore the coup was illegitimate, (2) Pinochet had an awful human rights record and specifically oppressed the left in Chile as well as many who were even perceived to be political enemies, and (3) the events in Chile exposed a lot of right-wing hypocrisy about democracy-- i.e., if someone implemented Milton Friedman economic schemes, it didn't matter to the right how he got to power or how many people he tortured at the soccer stadium.
The other thing I would say about Allende (and Chavez and Castro, for that matter) is that the right seems quite blind about the relationship between income and wealth distribution and these sorts of governments coming to pass. In Chile, Cuba, Bolivia, Venezuela, Nicaragua, Haiti, and many other places, left-wing governments came into power to replace incredibly corrupt, kleptocratic right-wing governments which may have achieved economic growth but which siphoned off all the money for friends of the regime and didn't redistribute enough or deal with intense third-world poverty which existed in those countries. The surest way to get a Castro is to have a Batista.
What developing nations need-- and which seems very hard to achieve-- is governments which follow conservative/neoliberal/capitalist approaches to economics and growth and trade while also attempting to improve the standards of living of those in poverty and fighting corruption and the siphoning of funds and resources to those with connections. THAT's the model you want to follow.
@ Dilan Esper:
The perfect Model of a
modern developing nation.
I used to think the same:
"But I was so much older then;
I'm younger than that now."
The reason 3rd world nations
are ruled by tyrants, is because
that is the only sort of ruler
that can survive amongst that
sort of people.
It may be possible, in future,
to impose from outside the sort
of controlled environment and
guided growth needed to count
down from 3rd, to 2nd, to 1st
world status, over that many
generations. Maybe; "Uplift"
is a corrupting concept for
mere mortals.
M:
FYI, I spend a fair amount of time in Peru, and neither Alan Garcia nor his predecessor Alejandro Toledo is a tyrant, and both have run the country reasonably well.
You really shouldn't generalize about these things.
As I said a few years back, Chavez gives us a chance to settle the question of whether the Chileans would have been better off under Allende, as leftists have been claiming for the last 35 years. Well, now we have our answer, not that it wasn't obvious all along to anyone with a lick of economic sense, and not that it's going to shut them up anyway.
And let us not forget that right now the Obama administration is trying to pressure the Honduran government to put one of Chavez's cronies back into power in violation of their own Constitution. This is a truly shameful chapter in the history of American foreign policy.
When you're an oil-producing country, these tantrums might work. http://www.newsy.com/videos/fighting_words_in_south_america
Haha, this is awesome. So we learn that Chavez is screwing his country. Well, the fools elected him, in huge margins. So guess what, they deserve him. Chavez and Venezuela deserve each other, and until such time as Venezuela elects a better leader, it doesn't deserve better economic conditions.
That's not fair. There are millions of decent people in Venezuela who voted against Chavez every time, and they do deserve better.
Totalitarian socialism inevitably turns militaristic. I'm surprised it took so long.
"The State Department blandly suggested "dialogue" between the two countries."
They're about as useless as you'd expect of a group who believes Venezuela and Iran are fine but Fox News is the enemy.
McArdle! Not you too. The country is Colombia, not "Columbia."
@ ian: Peruvian Proof
My claim was absolute, so your counter example
does disprove it, for the last two administrations;
During the day of The Shining Path, and the Govt.
response, not so much.
One can find an exception, to some degree, and
for some time, to any general rule; That does
not change the way one should bet, as to what
will happen in the next instance of a situation
covered by the rule.
As an aside, if it takes them 5+ years to build a natural-gas-fired power plant (presumably a combined cycle plant), then no wonder they have problems. There are a lot of gas turbines for sale, never been used, because so many power plants were cancelled. It shouldn't take more than 3 years max to put a plant into operation from today.
Chavez is such a classic caricature of one of the socialist "looters" in of Ayn Rand's "Atlas Shrugged" that it is sometimes hard to believe that he is real. Unfortunately, he is.