Thursday, May 20, 2010

Chávez about to fall, for the millionth time

The Economist has a story on Venezuela, with a solid recap of recent events.  After years and years, though, I am tired of the "Chávez is really hurting now, and soon his government will fall" meme.  Way back in 2001, Kurt Weyland asked if Chávez was "losing his luster," using essentially the same argument as The Economist nine years later.  It is similar to the decades of predictions about the imminent collapse of the Castro government in Cuba.  Or the imminent death of Fidel Castro, though at least that one will eventually come true.

So, feel free to continue predicting.  At the very least, though, these predictions should explain what has changed significantly enough to make it happen in 2010 when it hasn't happened before (not counting the coup, anyway).

22 comments:

leftside 12:38 PM  

I agree with your analysis that we've heard this a million times before. But something significant has changed in the last year. Economic growth is no longer keeping up with inflation for average people. For the first time unemployment is ticking upwards rather than the long positive direction it had for some time (still below the US rate). So he has lost the remarkable economic momentum that he had sustained since 2003 (where GDP nearly doubled and poverty was cut by 2/3rds).

I still think he has a lot of gas in his tank, but the legislative elections are critical to see if he can retain his governing majority.

kelby,  5:03 PM  

The Economist is right of course, because, clearly, these Latin American countries just dont understand economics like we do! /sarcasm off

It is the same with Argentina during the Kirchner era, first under Nestor and now Mrs....we heard how Argentina was going to collapse year after year if they continued statist policies.

Now, neither of these economies are perfect, but who's is?

Anonymous,  10:37 PM  

A lot of things have changed. Crime has risen (Caracas is one of the most dangerous cities in the region), inflation is out of control (the highest by far in the Americas) and, more generally, over time people get tired of whoever is in power. Of course, if Venezuela were a normal democracy no one would wonder why , after 12 years, there could be a discussion of a change in government. But Venezuela is not a real democracy, which is The Economist's point.

Robert Funk 9:46 AM  

And don't forget the end of the Concertación

Justin Delacour 7:41 PM  

Chavez has much more political capital than most foreign observers understand. Venezuela's economy did poorly from 1999 to 2003 too, but Chavez's presidency withstood the economic downturn. The reason is that Chavez has a very solid base that never dips below 40% of the population. No matter how bad things get, Chavez's large base will always turn out for him.

That's not to say that Chavismo isn't politically vulnerable. It's simply to say that Chavismo has a much more solid political foundation than many care to admit.

Boli-Nica 6:00 PM  
This comment has been removed by the author.
Boli-Nica 6:08 PM  

Chavez, even more than Putin's Russia, is over-dependent on oil prices. Reduced production and a large and poorly run State apparatus. Not to mention terrible fiscal and monetary policy.
A public sector run stupidly, a battered private sector, record inflation.

Bottom line: if your economy is shrinking after you have torn through 600 billion bucks in oil revenues, and your neighbors are growing, any politician will pay the price at some point.

Boli-Nica 10:07 PM  

The Economist is right of course, because, clearly, these Latin American countries just dont understand economics like we do! /sarcasm off


ummmmm.. what part of:

"while the rest of Latin America is recovering strongly from the world recession, Venezuela is slumped in stagflation"; and "shrinking economy", "contraction of" "GDP of 2.6%"; inflation, etc., etc.,

Don't you Get????

The basic economics of Chavez' Venezuela, is wrong by any measure - meaning the Economist is pretty much right.

Anyone believing the "Caracas Consensus" (i.e. Chavez' statist policies) is a viable alternative is deluded, blind or just plain stupid. Venezuela just spent 3/4 of a trillion dollars, and has an economy that is shrinking.


Brazil, Colombia, Peru, and Chile are growing.

These countries for the past 20 years followed policies that roughly followed the same parameters. They increased the role of the market in their economies, brought fiscal discipline to their public sectors, followed sound monetary policies, encouraged foreign investments. The so-called alternative is as bankrupt today as it was in 1988.

leftside 1:53 PM  

Boli-Nica, I am sure it is convenient to harp on this particular moment in time when Venezuela is lagging. But any real analysis would have to look at a slightly longer historical record of Chavez. Doing so shows that in almost every other year since 2003, Venezeula has grown faster than everyone else.

On Real GDP growth, here are the facts since 2003 (according to the World Bank, via Google Public Data):

Venezuela has grown 276% ($83.5 B to $314B
Colombia has grown 166%
Peru has grown 110%
Brazil has grown 186
Mexico has grown 58%

So obviously a couple quarters of subpar growth is not going come close to ruining Chavez's impressive record on economic growth (and more importantly, reductions in poverty and unemployment)

Stephanie 8:11 PM  
This comment has been removed by the author.
Justin Delacour 8:13 PM  

Bottom line: if your economy is shrinking after you have torn through 600 billion bucks in oil revenues, and your neighbors are growing, any politician will pay the price at some point.

Setting aside the question of whether your portrayal is totally accurate, Chavez could very well pay a political price for some of the country's economic problems. However, one shouldn't fool him or herself into believing that Chavismo won't remain a major political force for decades to come. It will. Any time a left-populist figure takes up the mantle of traditionally excluded sectors and delivers very tangible benefits to millions of them, that figure will remain a political force to be reckoned with.

I can only hope that Boli-Nica doesn't buy into Fukuyama's "end of history" thesis. The notion that neoliberal capitalism could ever trimph for all time is a mirage. Neoliberal capitalism is the very source of the social contradictions that give rise to left-populism in the first place. If the Chavez-bashers are really so concerned about halting the rise of left-populism, they ought to try coming up with something more original than the same tired old neoliberal prescriptions that invariably elicit the kinds of populist backlashes that they so despise.

Bottom line: What the neoliberals fail to understand is that Chavez-style populism is the product of the very same social contradictions that the neoliberals themselves have helped to create.

Boli-Nica 11:08 PM  


On Real GDP growth, here are the facts since 2003 (according to the World Bank, via Google Public Data):

Venezuela has grown 276% ($83.5 B to $314B
Colombia has grown 166%
Peru has grown 110%
Brazil has grown 186
Mexico has grown 58%

So obviously a couple quarters of subpar growth is not going come close to ruining Chavez's impressive record on economic growth (and more importantly, reductions in poverty and unemployment)


Dude u r hilarious....
In the years you cited oil went from the teens per barrel to a hundred and fifty.
Explosive GDP growth like that would happen if there were trained chimpanzees in Miraflores.
Venezuela is one of the biggest oil producers in the world. It lives or dies by oii prices. Heck, Venezuela had GDP levels close to many Western European countries in the 50's - whed it was ruled by military dictators.

There is nothing impressive about a petro-kleptocracy like Chavez'. He is doing nothing that governments of all stripes have done before in the country.

Justin Delacour 2:42 AM  

Stephanie?

I originally posted from a public library today, so I inadvertently posted under the name of somebody who had been on that computer earlier.

Justin Delacour 2:56 AM  

There is nothing impressive about a petro-kleptocracy like Chavez'.

Ideologically-charged harangues are not going to elevate the discussion. The relevant political fact is not whether you (or I) think Chavismo has any worthwhile achievements but rather whether millions of Venezuelans believe as much.

leftside 2:45 PM  

Boli-Nica - if you can show me any other oil producing country in the world that achieved the GDP growth and reductions in poverty and unemployment that Chavez did from 03 to 08, then perhaps I'd buy your argument that "any chimpanzee" could have done it. The fact is, it was Venezuela's policy of taking greater control over the oil resources and redirecting how they spent the money that was a game changer. Of course, I am not discounting the price of crude. But if Venezuela had been playing by the old neo-liberal rules of the game, barely half that money would have ever reached the Venezuelan people.

Boli-Nica 6:22 PM  

Leftside, the top oil producers in the world are
* Saudi Arabia (8.73 million barrels per day)
* Russia (6.67)
* Norway (2.91)
* Iran (2.55)
* Venezuela (2.36)
* United Arab Emirates (2.33)
* Kuwait (2.20)
* Nigeria (2.19)
* Mexico (1.80)
* Algeria (1.68


It seems Venezuela has a lot in common with its fellow oil countries - like Iran its run by an authoritarian clown, it has Russian-levels of corruption, with the wasteful extravagance of Kuwait, all run with the efficiency and transparency typical of Nigeria.

That being said, with the population it has (several times smaller than Mexico, Russia, and roughly the same as Saudi Arabia) Venezuela should have a sizeable GDP, with the levels of production it has.

By the way, the Norwegians and Saudi's also have national oil companies that are run much better than Venezuela's. Actually, the Russians do a better job than Venezuela, something you could not say in 1995

Boli-Nica 8:42 PM  

Boli-Nica - if you can show me any other oil producing country in the world that achieved the GDP growth and reductions in poverty and unemployment that Chavez did from 03 to 08, then perhaps I'd buy your argument that "any chimpanzee" could have done it. The fact is, it was Venezuela's policy of taking greater control over the oil resources and redirecting how they spent the money that was a game changer. Of course, I am not discounting the price of crude. But if Venezuela had been playing by the old neo-liberal rules of the game, barely half that money would have ever reached the Venezuelan people.

Ummm...first of all to look at the long-term trend you need to go before 03 to about 98 or 99 when oil was at 11 BUCKS A BARRELL!!.
A heavily oil-dependent country like Venezuela was in the dumps at that rate. When it rises to over 150 bucks a barrell that means a rise of over 1000 percent pricewise a short seven years later. THAT IS CALLED A BOOM. As a matter of responding to a BUST, of course there were big increases in key numbers. The base was low, the recovery quick.

Incomes in Venezuela and employment percentages have all risen whether it was in response to production increases under Perez Jimenez, or the Venezuela "Saudita" period after the 73 oil crisis.

During the "partidocracia" period, there were direct transfers to the poor, massive subsidies and price controls. Standards of living were equal to European countries at some points in time. People moved to Venezuela instead of fleeing, because it was so good.

However under Chavez it is arguably the most inefficient use of resources, and definitively the most corrupt administration in the past 40 years.

leftside 1:06 PM  

Boli, I take your answer as an admission that you were unable to find any country in the world that grew as fast as Venezuela during the oil boom years, or that reduced poverty and unemployment as fast. So it is not just blind luck and oil prices. It is how you take advantage of the boom and whether the people benefit. You ignore all this.

Your claims about authoritarianism, inefficiency, transparency, corruption, etc. are just that. Claims. But i think you'd find a majority of Venezuelans disagree and find that they are being listened do for the first time in decision making (opposite of authoritarianism). That cutting out middle men has increased efficiency (though there will be problems in any new arrangement of something so complicated). Corruption is being tackled quite heavily. Chavez has not been afraid to go after his own on this. Put simply, you have to provide proof, not just Heritage Foundation talking points.

leftside 1:13 PM  

And to cite the "partidocracia" (duopoly) that ended under Chavez as a great period in Venezuelan history would get you laughed out of the country.

info 5:24 PM  
This comment has been removed by the author.
Boli-Nica 5:29 PM  

And to cite the "partidocracia" (duopoly) that ended under Chavez as a great period in Venezuelan history would get you laughed out of the country.

Now? in 1989? 94? 98? or in 1976, 1974?, 1969?

Dude, for decades people in Venezuela and the region used to think that Venezuela politically and economically was the greatest thing since sliced bread.

Venezuela during the pacted period spent about the same percentage of GDP on healthcare, education, housing, and transfer payments as Chavez does now.

Unemployment rates during the boom periods were very low, and per capita income was high.
Venezuela WAS PLACE TO IMMIGRATE TO! Hundreds of thousands of Spaniards, Italians, and Latin Americans settled in the country. I have relatives from both Nicaragua and Bolivia who went there for the high wages and social benefits. IT WAS A RICH COUNTRY!!

The political parties had their rent rent-seeking constituencies that they funneled the oil resources to:

Lucrative contracts and so-called "industrialization" projects to oligarchs, government jobs and education to the middle class, and subsidized food, housing and health care for the poor, as well as direct handouts during election time.
Chavez own father , benefitted from his COPEI militance, improving the family's living conditions by the early 70's.

The system split, through two parties seemed to work, though there was a huge amount of waste and corruption -
What happened was that the expectations of middle class and poor Venezuelans were so high, and when oil prices started falling in the 80's, the government could not keep up subsidies, and was in debt. And the population had grown, and a new underclass, had also risen, watching how everyone else was getting paid.

When CAP was elected again in the eighties it was because he represented this very idea of an oil Santa Claus state of the 70's.

It was just another variation of the rentist economy that Venezuela exemplifies.
Then it was split between two parties, now its Chavismo

5:24 PM

  © Blogger templates The Professional Template by Ourblogtemplates.com 2008

Back to TOP