The socialist nightmare – Venezuelan edition

This is about the collapse of the Venezuelan economy post-Chavez. It has seemingly taken place almost out of nowhere. Things limped along for a longish while and then, almost overnight, fell apart.

The problem in being unable to recognise what’s going on is due in large part to our economic notions now so firmly based on “flows” rather than “stocks”. We look at how much we are able to buy and not at the underlying productive apparatus. A bridge collapses and the effect on GDP is either nothing at all or perhaps even leads to an increase in output as more effort is required to get from place to place while there is activity in re-building the bridge. That’s the flow side of the story. The stock side, however, is to note that the actual productive apparatus of the economy has been impaired. It cannot produce as much as it could the day before the collapse.

What happens in a socialist economy like Venezuela, or the US at the moment, is that there is a time during which the capital is being run down and there is little recognition that there is major structural damage taking place. Then, in what seems almost inexplicable, the entire economy falls apart all at once. This is from an article on the collapse of the Venezuelan economy.

Welcome to Hugo Chavez’s Venezuela, a country with the fifth largest oil reserves in the world and absolutely broke. It’s a remarkable achievement for Chavismo. A just-wow moment. Socialism is useless at everything except for smashing things in record time. There it excels. It’s hard to imagine that as late as the 1980s Venezuela had the highest standard of living in Latin America. But then in 1960 Detroit was the richest city in the world in per capita income. Now it’s well … Detroit. . . .

The genius of the Left — Chavez’s for example — is that it destroys things from the inside out. They pervert religion, collapse the mores, abolish the family, shred the constitution and gradually expropriate the property. The differences from one day to the next are apparently imperceptible, but it is harder and harder to go back until finally there is no reversal of ‘progressive gains’ possible at all. The public is finally faced with the stark choice between chaos or authoritarianism. And most people will chose the Boss over the Mob.

The capital, both physical and social, is eaten away and then completely breaks down. Building is hard and requires patience. Destruction from the inside by socialists looks great for a while while the wealth is spread around. But when it falls, not only does it crumble, but no one knows how to put it together again, least of all the socialists who promise everything but deliver nothing but misery in the name of equity and justice.

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37 Responses to The socialist nightmare – Venezuelan edition

  1. steve

    there ought to be a way to make the scumbags pay for what they did.

  2. Ellen of Tasmania

    The differences from one day to the next are apparently imperceptible, but it is harder and harder to go back until finally there is no reversal of ‘progressive gains’ possible at all.

    Salami tactics. But now everyone will be too frightened to live without the nanny government. Big government breaks your leg and then are seen as the heroes for handing out crutches.

    How far behind are we, really?

  3. Andrew

    our economic notions now so firmly based on “flows” rather than “stocks”

    Yep. Unbelievably, I’m STILL encountering scumbags who believe the $30bn flushed to date on giving 70,000 people slightly better cable than they could have got from Foxtel for the last 20 years was a GOOD thing because the grubiment was “investing.” If “investing” $4bn on broadband is a good thing, then planning to throw 20x as much must be 20x as good. Doesn’t matter that the cable to these very few houses cost more than the HOUSE AND THE LAND IT’S ON in many cases – all that mattered was “doing something.”

  4. Baldrick

    What happens in a socialist economy like Venezuela, or the US at the moment …

    Noice one ;)

  5. Baldrick

    It’s not too late:

    “Registrations are now open for the Australia-Venezuela Solidarity Network’s next solidarity tour to revolutionary Venezuela. The tour, to run from Tuesday December 2nd to Saturday December 13th, 2014 (inclusive) – will be a unique an opportunity to observe first-hand, learn about and be inspired by a grassroots movement that is transforming not only Venezuela, but all of Latin America, and is challenging the greed and destructiveness of global capitalism by showing that a better world is possible.”

    A better world is possible … just not with Socialism.

  6. Bear Necessities

    http://venezuelasolidarity.org/?q=node/317

    Thanks Balders. I see that the ACTU endorsed Hugo’s revolution as well. Seconded by one Joe de Bryun.

  7. How many times does it have to be rubbed in peoples faces that Socialism DOES NOT WORK?

  8. Fisky

    Seconded Joe De Bruyn.

    There’s one of your “right-wing” unionists that you might read about in the media. Yeah, real right-winger that one – seconding solidarity motions with Huggy Chavez.

  9. thefrollickingmole

    http://venezuelasolidarity.org/?q=category/1/11

    ACTU gets a gurnsey as well as the maritime workers…

  10. Chris M

    Venezuela, a country with the fifth largest oil reserves in the world and absolutely broke.

    Well socialism does this really well but compare also to most African countries -fabulously wealthy in natural resources and with good populations including plenty of young people. But completely busted-ass due to corruption and indolence.

    The Labor trade union party is like a combination of the two: a troika of corruption, socialists and lazy unionists.

  11. Andrew

    How many times does it have to be rubbed in peoples faces that Socialism DOES NOT WORK?

    I think it’s more a turkey-slapping action than a rub.

  12. The Pugilist

    There’s one of your “right-wing” unionists that you might read about in the media. Yeah, real right-winger that one – seconding solidarity motions with Huggy Chavez.

    Fisky, I think that the so-called ‘right wing’ of the labor party/union movement are just the kleptocrats that are open about their desire to rob their fellow man blind and keep the proceeds. The ‘left wing’ is the same except they lie about wanting to distribute the loot to the less fortunate…

  13. Bruce of Newcastle

    It has seemingly taken place almost out of nowhere.

    No toilet paper in the shops was a pretty good sign IMO.

    The stock side, however, is to note that the actual productive apparatus of the economy has been impaired. It cannot produce as much as it could the day before the collapse.

    The productive apparatus was all there, but the poor buggers couldn’t make a profit by running it. So they stopped. They couldn’t do anything else, until the army went in and made them restart the plant.

    My neophytic view on this, never having studied economics (this being not necessarily an entirely bad thing in a world full of Keynesians) is that people will produce when the production generates a surplus. They can eat their fill and sell the surplus. The Assyrians conquered because they had a surplus available to feed their charioteers. The Venezuelan toilet paper manufacturers could not make toilet paper and profit.

    Argentina next. Axel Kicillof their Economy Minister used to be an actual Professor of Marxist Economics. I’m sure he’s been working out well.

  14. Fisky

    The main faultline in the Labor Party factions is that the Right mostly involve themselves with run-of-the-mill crime like stealing, robbery, graft, looting, rape and drug dealing. They are genuinely uninterested in anything else. The Left are obsessed with controlling people for ideological reasons, as well as helping to distribute some of the loot which the Right are experts at getting their hands on. The quid pro quo is that so long as the Right tolerate the Left’s ideological crusades against the common man, the Left won’t expose the Right for their corruption (as Gillard said of Craig Thomson – “he’s doing an excellent job…”).

  15. Fisky

    I think, in hindsight, the entire reason for the Hawke/Keating reforms was to open up opportunities for looting and thievery. Certainly, unleashing the financial sector and then setting up compulsory union-controlle super boards was a stroke of genius by the Liars Party.

  16. Ripper

    Argentina next. Axel Kicillof their Economy Minister used to be an actual Professor of Marxist Economics. I’m sure he’s been working out well.

    Hard to believe that Argentina once had one of the highest living standards in the world.

    During the first three decades of the 20th century, Argentina outgrew Canada and Australia in population, total income, and per capita income.[3] By 1913, Argentina was the world’s 10th wealthiest nation per capita

  17. Fisky

    I really do think it is time for the Right to start promoting it’s own 18C of the RDA preventing incitement to class/anti-business hatred. We’ve seen how devastating the effects of this form of vilification are on democracy, economics and human rights in Latin America and other continents, and given that the results of economic vilification are always the same (hyper-inflation, economic collapse, hunger, rioting, murder), it’s not obvious why it should be legal.

  18. Tracey

    I was aware that Argentina once had a booming economy, but I confess I didn’t realise Venezuela did too.
    Why is the right of politics not in our faces, on the airwaves, pointing out such examples of the effects of socialism to people who vote based on their hip pocket?

  19. The Pugilist

    Hard to believe that Argentina once had one of the highest living standards in the world.

    During the first three decades of the 20th century, Argentina outgrew Canada and Australia in population, total income, and per capita income.[3] By 1913, Argentina was the world’s 10th wealthiest nation per capita

    What’s harder to believe is that they’ve pretty much been enamoured with socialism ever since. As has most of South America. Yet they wonder why they are almost all basket cases. Of course, it’s all a conspiracy by the west to keep them poor.

  20. Ed

    Of course, it’s all a conspiracy by the west to keep them poor.

    Capitalism is to blame.

  21. Mk50 of Brisbane, Henchman to the VRWC

    Fisky: There’s one of your “right-wing” unionists that you might read about in the media. Yeah, real right-winger that one – seconding solidarity motions with Huggy Rotting Chavez.

    FTFY!

    This is a truly remarkable achievement. Venezuela is actually one of the wealthiest nations on the planet on a per capita basis. To destroy this in a mere 16 years is truly an astonishing achievement, and one which gives the lie to the view that ‘the USA is so strong that even 8 years of Obama is no problem’.

    When a true believing socialist unleashed the forces of ruin in a society, the damage taken each year is truly colossal.

    The socialist cretins (BIRM) have even destroyed Petróleos de Venezuela, S.A. (PDVSA Petroleum of Venezuela) by taking every cent they generate (including 100% of th mainteannce budget!) and squandering it on ‘social programs’ – read free money for their supporters. And PDVSA owns the oil in the ground – it should be an endless cornucopia of wealth.

    butt he personal greed of socialist thieves knows no bounds or reason, does it? As the spectacular collapse of Venezuela shows yet again.

  22. Notafan

    Will the bus driver admit that he is wrong, or does there have to be a revolution? Chavez stole from the productive and encouraged sloth. No toilet paper is inconvenient, food shortages will be something else.

  23. Gab

    How many times does it have to be rubbed in peoples faces that Socialism DOES NOT WORK?

    Think of a never-ending game of Whack-A-Mole. That’s how many times.

  24. Bruce of Newcastle

    The socialist cretins (BIRM) have even destroyed Petróleos de Venezuela, S.A. (PDVSA Petroleum of Venezuela) by taking every cent they generate

    Worse than that. Chavez stocked the place with clueless party members. Which maybe why the refinery exploded. Can you imagine a pack of loyal lefty bus drivers running an oil refinery? Accident waiting to happen.

    The sector’s decline began in 2003, following a strike by the employees and managers of Petróleos de Venezuela (PDVSA), the state oil company, in protest against Mr Chávez’s leftist policies. When the conflict ended, the president had almost 20,000 workers sacked. Since then, PDVSA’s chairman, Rafael Ramírez, has steadily replaced them with loyal chavistas: he has made it an explicit company policy to employ only supporters of the president.

  25. Walter Plinge

    Andrew: Yep. Unbelievably, I’m STILL encountering scumbags who believe the $30bn flushed to date on giving 70,000 people slightly better cable than they could have got from Foxtel for the last 20 years was a GOOD thing because the grubiment was “investing.”

    The NBN is clearly outdated technology. Today I got a message from a friend in Austin, Tx, bragging about his internet upgrade, with a pic from a speed test site: 320 Mbps download and 222.5 upload. That’s 1 second to download a 35 MB video clip and 1 second to upload an 8 MB photogallery. Shortly the service will go to 1 Gbps for no extra charge. It’s fibre to the outside of the house then Cat6 internally.

    And yet this service is not provided by the US government! Surely a private company, AT&T in this case, can’t be more competent than the government.

  26. Jannie

    I suppose one of the reasons the developing world gets conned into ‘the socialist path’ is the apparant socialist policies of some of the ‘rich’ countries, especially in Europe. Wonder how France will look in a few years.

  27. srr


    Twitter says images blocked in Venezuela

    AAP
    February 15, 2014 11:14PM

    Social networking site Twitter says Venezuela has blocked images on its service. Source: AAP

    VENEZUELA has blocked images on Twitter, the company says, offering a workaround for users who want to get tweets via text message on their mobile phones.

    Company spokesman Nu Wexler said on Friday via email that “Twitter images are currently blocked in Venezuela”.

    Venezuela’s main telecommunications company, CANTV, is government-run and handles the overwhelming majority of internet traffic.

    Users said the blockage had ended by Friday and was most intense on Thursday, a day after two students were killed by gunfire during protests.

    Video and still images that circulated via Twitter after the killings purported to show police and pro-government activists shooting at protesters.

    The images’ authenticity could not be confirmed.

    Media coverage of the protests was limited, as Venezuela’s government dominates the country’s airwaves.

  28. Paulgf

    Steve’s comments about the stock side of the productive economy has a lot of relevance too as regards to construction in Australia that I hope is addressed in this royal commission. The construction sector in Australia is by world terms out of control. This is a function of absurd labour practices and a number of the larger builders with market power allowing the unions to run rife. Grace collier has written on this in past weeks in the Australian. Having worked in th construction sector and seen first hand how the bidding on large resource projects works and the anti competitive practices imposed on subcontractors to pay obscene Labour rates and allowances to win work, it is hardly surprising the resource boom is contracting fast. The problem comes when as a nation our tax payers dollars can hardly build anything anymore such as roads or schools without an obscene amount of money being required and waste and inefficiency feeding everybody who is cohorts in this sector at the expense of taxpayers. The whole micro economics of the construction sector needs literally tearing down and rebuilding with proper competitive pactices for the nations good. Even more so when the infrastructure of a widespread nation such as Australia’s is vital in driving productivity.

  29. Blogstrop

    We’ve just endured six years during which this country was on a course downwards. Silly promises, wasteful schemes, budgets blown, debt accumulating. While not as obvious as Chavez, we have had (and could again) leadership entirely undeserving of the role.
    What will allow it to happen again is the residual useful idiocy in the media.

  30. john constantine

    gillard treated australias military the same as chavez treated the oil sector.

    australias left stripped the military of all infrastructure and maintainance upgrades.the lefties worked to make the military an occupied leftie branch of social engineering instead of a war machine,just as chavez made the oil sector a featherbed for lefties.

    now how to fix?–and remember the way that gillard couldn’t get off a plane without ‘giving’ a few hundred million to whatever part of the host country hated the west the most?.like chavez propped up lefties everywhere. remember the western leftie media in joy about chavez giving financial aid to detroit lefties?. turns out that the left couldn’t affford that money any more than gillard could,without exploding debt.

  31. Mk50 of Brisbane, Henchman to the VRWC

    I missed that one, Bruce, thanks for the link. There’s a lot of ex-PDVSA employees in Alberta, and working the Bakken shale, and even a few in this country. So the socialists have driven out the expertise to restore PDVSA. Apparently once they learned of the leakage, they started to confiscate their savings and private family assets – like the houses their families lived in – to ‘punish the class-traitors’. What they forgot is that Venezuela has land borders…. and much of the industry lies in the west, around Maracaibo.

    So they got their families out via Columbia, and the Canadians (and others) have quietly been granting them entry as bona-fide political refugees. The result is that even if they want to, the Venezuelan ‘government’ no longer has the national skill base to restore the industry. So they confiscated the corn crop, stole and ate the farmer’s oxen, ate his seed corn, shot the farmer for complaining, burned down his house and stables and shot his family, scattered salt on the fertile flats and now wonder why there’s no food!

    Eat Marxism, then, boys.

  32. Antipodean

    It’s even funnier than that Mk. The socialist thugs appropriated international oil company assets by forcing operatorship of PDVSA on foreign controlled projects in Venezuela. That is the state stole private assets. Problem for the marxist bully boys is that international oil companies do have some recourse available to them. Now where did all those Venezuelan foreign capital assets go to…

  33. Mk50 of Brisbane, Henchman to the VRWC

    Antipodean

    Thanks, I had not seen that one and it’s a hoot, and good on Conoco for nailing them for loss of cash flow as well. Obviously, they will make this judgement in 2007 dollars and then add interest.

    How are things over your way?

  34. Antipodean

    Yeah good, just back home in Perth after spending not an inconsiderable amount of time in Singapore and Texas.

  35. Mk50 of Brisbane, Henchman to the VRWC

    You rotten swine!

    Unless it was for work, in which case it’s ‘you poor sod’.

  36. HK_Brother

    I have a friend from Venezuela. He experienced regular shortages of eggs and milk. At one point, it got so bad, the country literally ran out of toilet paper! (The Govt was forced to make a special order to fill the demand!)

    This is what happens when the goal is “equality for all” and the Socialist Govt tinkers and tampers the various key markets of a country. Everyone suffers.

    It makes my friend passionately furious that some Westerners are promoting this horse manure ideology. He learned to hate Lefties from life experience. (He tells us how good we have it and we don’t appreciate it.)

    The collapse of a nation is done by gradual erosion over time, of its key components…Then it reaches a tipping point. Most people don’t see the gradual part. They only see the critical point where it collapses.

  37. DrBeauGan

    I predicted this six years ago. It was a very easy prediction of course. But why can’t the totalitarians see it? Bloody toats are blind.

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