By Michael J. Economides
Venezuela’s Hugo Chávez has passed away after a very public illness, evoking sympathy by all those in the world admiring his firebrand rhetoric against the devil incarnate himself, the United States (Chávez own preferred allegory.) The most prominent will be Iran’s Mahmoud Ahmadinejad who will fly to Venezuela to pay his respects to his “hermano”.
Crying women in the ranchitos surrounding Caracas, lamented the loss of their leader who cast a much bigger shadow than a normal politician; “We have Jesus Christ and we had Hugo Chávez.
Most people in the world thought that populism had died with communism an ignominious death 25 years ago. Not quite in South America and for certain not so in Venezuela. It has infected other countries in the neighborhood such as Bolivia, Ecuador and the mother lode of them all, Argentina, whose modern manifestations have been Mr and Mrs Kirchener, and where it all started with Juan Péron, more than 60 years ago. Chavismo has proven resilient, perhaps in need of a new standard bearer. It will not be that simple but getting rid of it will be even more difficult.
Mindless populism is at issue here, the notion that all wealth generating resources belong to the “people.” Few populists would imagine re-investments, building infrastructure, training people, taking advantage of the multiplier in the economy.
One would think that after 14 years of undisputed governance, ten of which with persistent $100 oil prices and more than a $trillion in revenues, Venezuela should be at the top tier of, at least South American countries. It is not. Many countries have higher growth rates and the Bolivar whose official rate against the cursed dollar is 6.3, trades at almost 30 in the black market. Inflation runs at 20%, minimum. Venezuela produces today less oil than during the first nationalization in the 1970s.
PDVSA, the national oil company has been decimated after a decade-ago strike and the wholesale firing of practically every professional. The result is a dire shortage of skills in the country’s vital oil industry. On the other hand in far-flung places such as Nizhnevardovsk in Western Siberia or Queensland in Australia, dozens of Venezuelans from the PDVSA diaspora toil their crafts for foreign companies.
One may ignore macroeconomics, the purview of economic conservatives. Populism which dominates a large portion of US political thought and is even bigger in South America, is not supposed to be too concerned about capitalism, free enterprise and market forces. Welfare giveaways should be sufficient. There is not much difference in the attitudes of many American politicians, regulators and even academics who ought to know better.
But stripping the ideological and economic debate it is hard to make any positive-spin case for Venezuela, a society whose institutions have fallen apart and where the murder rate increased by 250% since Chávez took over. Corruption in this populist utopia has run rampant. In Transparency International’s latest rankings of most corrupt countries in the world, Venezuela ranks 165 out of 174.
On a personal note, I have spent some of the best times of my career working in that country. Wonderful colleagues, great people, warm, fun and hospitable. They deserve a better future.
Michael Economides is Editor-in-Chief of the Energy Tribune