Venezuela Evolving

For John, BLUF:  The sad story is that Venezuela was doing well, but to do better the leadership, under President Hugo Chávez, tried socialism, which caused collapse and thus many, almost all, are doing less well.  Nothing to see here; just move along.

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Bloomberg:  Venezuela Turns to Privatization After Being Bankrupted by Socialism

Here is the sub-headline:

After much pain and suffering, Venezuelan socialist leaders have conceded they cannot effectively run an economy.

From The Foundztion for Economic Education, by Managing Editor Jon Miltimore, 16 February 2021.

Here is the lede plus five:

Early in 2007, after winning a second six-year term as president, Hugo Chávez announced his plan to nationalize Venezuela’s largest telecommunications company, CANTV, hinting at wider nationalization plans to come.

“All that was privatized, let it be nationalized,” announced Chávez, who had run under the banner of democratic socialism.

Nearly a decade and a half later, on the brink of mass famine and a growing energy crisis, Venezuela is now moving in the opposite direction.

According to Bloomberg News, Venezuelan president Nicolás Maduro has quietly begun transferring state assets back into the hands of private owners in an effort to reverse the country's economic collapse.

“Saddled with hundreds of failed state companies in an economy barreling over a cliff, the Venezuelan government is abandoning socialist doctrine by offloading key enterprises to private investors, offering profit in exchange for a share of revenue or products,” write Caracas-based journalists Fabiola Zerpa and Nicolle Yapur.

The transfer, which was not announced publicly but was confirmed by “nine people with knowledge of the matter,” reportedly includes dozens of coffee processors, grain silos, and hotels that were confiscated as part of Venezuela's widespread nationalization that began under Chavez.

It is all happening sub rosa.  But it is happening.  Venezuela is moving away from Socialism, but not necessarily toward Capitalism.

Here is how the article ends:

The Maduro government is still using everything from price controls on food to minimum wage hikes to currency manipulation to manage its economy, not to mention selecting which businesses get to participate in its privatization efforts (and who gets to invest).  In terms of overall economic freedom, Venezuela ranked 179 out of 180 countries in 2020—one place ahead of North Korea and one behind Cuba.

At best, Venezuela’s current economic system is a form of fascism, which Sheldon Richman once described as “socialism with a capitalist veneer.”

Yes, the difference betaween Fascism and Socialism is how the profits are distribued.  In both cases the concept of individual freedom is very limited.  For example, see this testimony by a North Korean woman who is now in the UK.

The key take away is that Democratic Socialism is still socialism and is a perversion of how economics works.  The outcome of any form of socialism is the destruction of the economic signaling system that makes for successful economic exchange and advancement.

Regards  —  Cliff