Socialism’s great. Just ask Oliver Stone.
Oliver Stone has composed not one but two biopics glorifying the socialism of Hugo Chavez. Wonder if it’ll become a trilogy with the finale showing images of Venezuelans eating their pets and burning their currency for warmth?
Doubt it. Remorse and honest regret are not found in any great quantity in Hollywood.
How did Oliver Stone, Michael Moore, and Sean Penn get it so wrong when observing the Venezuelan “miracle”?
Venezuela was so rich with oil that it took some time for socialism to completely destroy its once-vibrant economy. Even to this day Venezuela still has the largest oil reserves in the world, even greater than Saudi Arabia’s. They just can’t get it out of the ground because socialism has destroyed the pricing system, and endless government spending and debt caused hyperinflation that has destroyed its currency.
Some blame Chavez for this disaster. Some blame Maduro. But really, could any one man take a country with more oil reserves than Saudi Arabia and screw it up so badly that hundreds of thousands of citizens would flee the country? Could one man take the richest country in South America and turn it into a hellhole where citizens literally starve in the streets?
Chavez and Maduro alone didn’t lay waste to Venezuela. Rather, it was the terrible constellation of ideas called socialism that reached its pinnacle under Chavez and Maduro that devastated Venezuela.
Some like to point to the Castro-loving Hugo Chavez as the beginning of socialism in Venezuela, but the roots of its government owning the means of production started decades before Chavez. State control over Venezuela’s oil industry dates back to the 1970s.
According to José Niño, “in the 1950s, . . . Venezuela was at its peak, with a fourth-place ranking in terms of per capita GDP worldwide.”1 In the 1950s, when the Perez Jimenez government ruled, there were no extensive price controls. At that time, Venezuela was neither democratic nor a completely free market economy but rather a military regime with aspects of crony capitalism. For the most part, prices were not controlled and a limited marketplace allowed supply and demand to intersect and work their magic.
As Niño describes it: “A combination of a relatively free economy, an immigration system that attracted and assimilated laborers from Italy, Portugal, and Spain and a system of strong property rights, allowed Venezuela to experience unprecedented levels of economic development from the 1940s up until the 1970s.”2
Daniel Lahoud is a professor at the Universidad Católica Andrés Bello, a Catholic university, and at the Universidad Central de Venezuela (UCV). Lahoud describes Venezuela’s long path to socialism:
“Before 1973 our government did not own any companies and Venezuela grew 6.5 percent year-on-year. In contrast, between 1974 and 1998 we experimented with democratic socialism and brought GDP growth to 1.9 percent year-on-year. Since 1999 we are experimenting with scientific socialism and the rhythm is 0.0 percent or negative.”3 (Today, Venezuela’s GDP is contracting at 10 percent.)
In contrast, consider another South American country, Chile, which abandoned its flirtation with socialism back in 1973. At that time, Chilean income was about 36 percent of Venezuela’s. Operating under free markets and capitalism, Chilean incomes have increased by 228 percent, while Venezuelan incomes have declined by 21 percent. Capitalism has left Chileans 51 percent richer than their Venezuelan counterparts, who now starve despite the vast resources of their country.4
Lahoud thinks it is very important that people understand not only the enormity of Venezuela’s disaster but the root cause:
“I have known the reality of the failure of socialism in my own flesh. And as I live in Venezuela, I want to show that this is an absolute failure always and everywhere. Socialism, whatever form it may take, only brings economic destruction and worsening of the conditions of human life.”
Lahoud admits that “Venezuela was never a country of economic freedoms. But when we had less public spending, we grew more. . . .”5
In the late 1950s, military rule was replaced with “democracy.” Romulo Betancourt (1959–64), an ex-communist, assumed the reins of power and made a significant turn away from a market economy. Niño describes Betancourt as adopting a “more gradualist approach of establishing socialism,” as he was “part of a generation of intellectuals and student activists that aimed to fully nationalize Venezuela’s petroleum sector and use petroleum rents to establish a welfare state. . . .” So, socialism in Venezuela was not a new program created by Chavez, but rather Chavez simply took socialism to another level.
Niño tells us that Betancourt’s government tripled income taxes and generated massive fiscal deficits that “would become a fixture in Venezuelan public finance during the pre-Chávez era.”6
Betancourt was succeeded by Carlos Andres Perez, who nationalized the entire petroleum sector in 1975.
As Niño puts it:
The nationalization of Venezuela’s oil industry fundamentally altered the nature of the Venezuelan state. Venezuela morphed into a petrostate, in which the concept of the consent of the governed was effectively turned on its head.
Instead of Venezuelans paying taxes to the government in exchange for the protection of property and similar freedoms, the Venezuelan state would play a patrimonial role by bribing its citizens with all sorts of handouts to maintain its dominion over them.7
If socialism means that the state owns the means of production, then 1975 was a significant milestone in Venezuela’s descent into socialism. With enormous oil reserves and a steady flow of cash, it would take a decade or two for socialist policies in the form of price controls and currency controls to completely ravage the economy.
Chavez didn’t just arrive unannounced on the scene. He first came to prominence in a failed coup in 1992 against the Andres Perez regime. Chavez was imprisoned for two years. Upon his release, he decided this time to take power through the political process. He founded the Fifth Republic Movement and was ultimately elected president of Venezuela in 1998.
Leftists in America heralded Chavez’s election. Bernie Sanders, Noam Chomsky, and others pointed with glee to data showing a decline in poverty. When socialism finally strangled the economy and Chavez resorted to violent means to quell protests, many on the left went radio silent on Venezuela.
Some leftists, however, stuck with Chavez and put an interesting spin on their defense of state violence against the people. George Ciccariello-Maher is a writer and activist who supported Venezuela’s Bolivarian Revolution led by Chavez. He taught political science at Drexel University until being consumed by a Twitter storm over his tweet: “All I want for Christmas is White Genocide.” When prompted to clarify his comments, he tweeted: “when the whites were massacred during the Haitian revolution, that was a good thing.”8
Commenting on Chavez’s crackdown on protesters, Ciccariello-Maher wrote: “If we are against unnecessary brutality, there is nevertheless a radically democratic form of brutality that we cannot disavow entirely. This is the same brutality that ‘dragged the Bourbons off the throne’ [ . . . ] This was not brutality for brutality’s sake [ . . . ] It is instead a strange paradox: egalitarian brutality, the radically democratic dictatorship of the wretched of the earth. Those smeared today [ . . . ] are in fact the most direct and organic expression of the wretched of the Venezuelan earth.”9
Oh my . . . “egalitarian brutality” . . . “democratic brutality”—so much for democratic elections restraining the excesses of socialism.
When Maduro took over from Chavez, some questioned whether the ensuing disaster should be blamed on Maduro. On the one hand, the country was already in a tailspin when Chavez died. Maduro, in many ways, was simply a continuation of the Chavez rule. Maduro was seen as Chavez without the charisma, and there was not enough distinction between the two to lay more blame on one than the other.
By the time Maduro came to power, Chavez had created a massive socialist welfare state to transfer wealth with the goal of eliminating income inequality, all financed by the enormous cash flow from oil.
As Al Jazeera described it, “As Chavez strived to transform the nation with what he called 21st century socialism, his populist policies began to take a more radical turn. He nationalized industries and bloated state bureaucracy at great national expense, all funded by high oil prices and unchecked borrowing. Venezuela became saddled with record-high levels of debt.”10
Yet, for several years Venezuela continued to plug along.
As CNN reported: “Hugo Chavez, the man who built his powerful persona on a populist platform of sharing Venezuela’s vast oil wealth with the poor and disenfranchised, leaves his nation with a greater distribution of cash to the poor.”11
Chavez’s Hollywood supporters continued to crow about how income inequality was melting away in Venezuela. CNN reported that income inequality “dropped to among the lowest in the Americas during his tenure” and cited the World Bank reporting that “those living below the poverty line fell to 36.3% in 2006 from 50.4% in 1998 and infant mortality fell from 20.3 per thousand births when Chavez took over to 12.9 in 2011.”12
And yet the dream of socialist paradise was always ephemeral. As Maduro came to power in 2013, the mirage of Venezuelan socialism vanished, only to reveal a disaster of immense proportion. The result was an economic catastrophe that included hyperinflation and mountains of debt and food shortages never before seen in modern Venezuela.
Margarita Lopez Maya, a professor at Central University of Venezuela, said, “Venezuelans today cannot eat. You see people eating from the garbage.”13
When Chavez died in March 2013, Venezuela was already poised to fail. As Al Jazeera reported, “Chavez handed over both the reins of power to his handpicked successor, Nicolas Maduro, as well as the poisoned chalice of an economy about to implode.”14 Within months of his death, Venezuela was forced to devalue the bolivar by 30 percent against the dollar. Despite having the world’s largest oil reserves, oil production began to decline.
Venezuela’s dependence on oil became its Achilles’ heel. When oil prices hit the skids, the fragility of Venezuela’s economy became apparent.
Ricardo Hausmann, a former Venezuelan government official, describes the economic collapse as “the largest recession in Western Hemisphere history—significantly larger, almost twice as large as the Great Depression of the US.”15
How severe was the collapse? GDP contracted by more than 10 percent as inflation soared to 26,000 percent.16
Food became scarce as grocery store shelves emptied. The British newspaper Independent reported that “the economic crisis in Venezuela is so severe that 75 percent of the country’s population has lost an average of 19 pounds in weight. . . .”17
Peter Wilson at USA Today interviewed Roberto Sanchez, an unemployed construction worker in La Victoria, Venezuela, “as he waited in a line with 300 people outside a grocery store.”
Sanchez: “We have no food. They are cutting power four hours a day. Crime is soaring. And Maduro blames everyone but himself. . . .”
Wilson quotes the mayor of Chacao: “People are hunting dogs and cats in the street, and pigeons in the plaza to eat.” Hyperinflation and currency controls limit the importation of food and medicine. Over the years, Venezuela, rather than grow its own food, purchased more than 70 percent from abroad, paying for it from oil sales.
Medicine shortages also plague Venezuela. You can hear the anguish in Luis Avila’s voice: “My four year old daughter is dying of cancer, and there’s no medicine here to treat her.”18
Three Venezuelan universities conducted a “National Survey of Living Conditions.”
About a third of Venezuelans were found to only have enough food for two meals or less each day. Whereas Sean Penn and others had lauded Chavez for eliminating 80 percent of poverty, this survey found that 87 percent of Venezuelan households had descended into poverty.19
The survey found that poverty had nearly doubled from 48 percent in 2014 to 87 percent in 2017. So much for socialism curing poverty. As poverty exploded under Maduro’s socialism, more than a half-million people fled Venezuela into Colombia and Brazil.20
Socialism destroyed the economy of a country with vast natural resources. Despite the promises of leftist politicians and celebrities, the truth won’t be denied: socialism poisons everything it touches.