More trouble looming for Venezuela

It is hopefully only a matter of time before Juan Guaido inherits the ruins of Venezuela. But Ben Powell and Rafael Acevido warn that the road to recovery will be long and hard under the socialist policies that Guaido will pursue.

Unfortunately, Guaido and the allied political parties belonging to the Democratic Unity Roundtable — known as Mesa de la Unidad Democratica (MUD), or “Frente Amplio” (Broad Front) — were more united in their opposition to Maduro’s leadership than to the failed socialist policies. In fact, Guaido’s political party is a member of the Socialist International and he and his allies would like to return to the type of “light socialism” Venezuela practiced before Chavez came to power in 1998.

Those policies took Venezuela on a downward trend from 1957 when Venezuela’s real GDP per capita was half of that in the United States to the situation in the 1990s with the average income only 15 percent of the US level.

Venezuela needs true market reforms: privatizing state-owned companies and assets, including the state-owned oil company (PDVSA); eliminating such corrupted institutions as the Bolivarian National Guard; reducing government personnel; giving administrative and budgetary autonomy to counties; replacing steeply progressive taxation with simple flat tax; eliminating international trade barriers, and opening the road to monetary freedom by dollarizing.

They point to the Republic of Georgia following the 2004 Rose Revolution. With the suite of reforms favoured by Powell and Acevido Georgia is now ranked the seventh most economically free country in the world with income per capita up 40 percent, infant mortality down 30 percent and employment up 10 percent. They could have suggested Estonia as an inspiration as well.

If Venezuela is going to get off “the road to serfdom” and back on a path towards prosperity, Guaido will need to give voice to Venezuela’s market-oriented opposition groups—such as Rumbo Libertad and Movimiento Libertad Venezuela—and embrace real reform.

Read the whole article (not long).

This entry was posted in Economics on the left, International, Rafe. Bookmark the permalink.

15 Responses to More trouble looming for Venezuela

  1. Dr Fred Lenin

    Bit like the alp union gang taking over from the gangrene communists ,what improvement would that be then. Or the turnbull liberals just as bad ,tweedledumb and tweedle dumber.

  2. stackja

    Germany and Japan were devastated. But rebuilt.

  3. Nob

    The Venezuelan military establishment benefit heavily from crony capitalism. Far more than you might imagine.

    They will resist any meaningful reform.

    By “resist”, I mean violence.

    For a hint of what’s in store, try this link.
    https://www.thetimes.co.uk/article/how-trump-can-save-venezuela-from-putin-zbbqbqzmw?shareToken=d9c0bb6e49df3ccdaff5ccb9ed83cf02

    if too paywalled or you, here’s an extract:

    The army is not a monolith. Senior officers run a television channel, a bank, a construction group, and are entangled with the state oil company.

    If Maduro falls, they go broke. There are dedicated chavistas in military intelligence who liaise with Cuban officers. They’re not letting go either. Some officers play the booming black market and the smuggling networks. Others are professionals who appreciate high salaries and the modern kit that has been coming from China and Russia.

    The army is flanked by paramilitary thugs such as the colectivos, often hardened criminals on motorbikes whose job is to spread terror.

  4. Stackja:
    Erhardt removed all wage and price controls.
    Ended rationing.
    Only way to rebuild – everything government touches is twice as expensive and takes twice as long.
    Germany is proof of it.

  5. Chris M

    This could happen here, thanks in significant part to John Howard.

  6. Robbo

    The situation in Venezuela is pretty much the same as it is in numerous countries in Africa. Some loony, murderous, corrupt dictator grabs power and over a period of time sends the country into a ruinous shitheap. The comes the revolution and the mad bastard in charge is replaced by another mad bastard who starts lining his pockets and stuffing his Swiss bank accounts with billions. The changeover in rulers is backed by the dills in the West who think that the replacement will be (a) better and nicer than his predecessor and (b) he will be friendly to the West rather than being a pal to Russia and/or China. They get that wrong as well. I predict right now that Guaido will be as bad as the bloke he replaces.

  7. Roger

    How many times do they have to try Socialism before realising it doesn’t work?

    It’s humanity’s recurring nightmare.

  8. Nato

    Yep. I can think of one, and only one, situation when the mob overpowering the established authorities wanted to be done with it and go back to their farms. Guaido is just another one in a long line of other ones who wants the king out of the palace so he can have the palace. I am sceptical that he wants the power to help the people, but rather to help himself to the prerequisites of the palace.

  9. Robbo:

    I predict right now that Guaido will be as bad as the bloke he replaces.

    The Chinese will be in like Flynn with bribe money and reconstruction with Chinese labour.
    A 3000m airport at Maracaibo with the Panama Canal within reach of a J-15 with single YJ-83j anti shipping missile.
    That would freeze the US ability to reinforce their Pacific/Atlantic fleets.
    I would presume that Trump may have to consider Chinese interference as a casus belli.

  10. Nob

    Regional security concerns aside, handing over your infrastructure to the Chinese is probably the least-worst outcome for failed states today. As you can see in Africa.

    I suppose Australia’s getting in early with our own.

  11. Overburdened

    It’s a bit tedious that the complexity of managing a society and aspiring to worthy ambitions by leadership of any stripe is as ever reduced to the simplistic or echo chamber shouting.
    Australia is not Venezuela or anywhere else. It has a unique national history as do other Countries.
    If you want to see a social welfare state experiment that has matured in an economically capitalist system, look no further than home.
    The persistent blind spot that l see across this and other sites of all persuasions is that the people commenting all seem to be doing ok relative to their local conditions, looking at the peripheral lifestyle comments that are posted.
    The good news is that this sort of exercise of free speech is generally harmless to the Nation, however l would admire a more nuanced commentary re a plan for dealing with reality and how to make the best of dealing with the facts.
    In the end it is necessary to enough revenue to keep the wheels turning.
    The question is how this is achieved, or whether the next plan will work.

  12. Nob

    In the end it is necessary to enough revenue to keep the wheels turning.

    That is the crystallised message that we need to get through to every wannabe socialist.

    You need productive enterprise to feed the whole shitshow.
    How best to achieve that?
    Stand back and look: The dead hand of government stifles it in every case but there are tolerable levels of stifling. (of course, this leads people to assume that it’s all good and more government must lead to better outcomes …)

    the people commenting all seem to be doing ok relative to their local conditions

    True, but in my case, with no academic qualifications, I’ve managed by moving around to where the opportunities are. Others by starting businesses and creating opportunities.

    Most people are stuck in situ so it’s important that they learn the role of productive enterprise in feeding their dreams even if it’s just “more free stuff from government”.

  13. Rafe Champion

    Dear Overburdened
    You forgot to indicate ‘Sarc’.

  14. Dr Fred Lenin

    Who is going to sing “Dont cry for me Venezuela” . Socialism always causes crying bucketss of blood .

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