Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

August 16, 2007

Venezuela — Corrupt As Hell, Income Inequality Rising

by Brad Warbiany

Chavez is known for his defenders. I’ve noticed quite often that the ones that comment here seem to think we’re all a bunch of “gringos” who want to exploit the poor and ruin Chavez’ socialist revolution. And I understand, of course… After all, I’m just a blogger. What credibility do I have on Venezuela, other than my study of the history of socialist nations?

But today, I’ve got good news. No longer do I have to rely on my own reading of the facts to call Chavez a corrupt dictator who is running his nation into the ground and offering little more than lip service to the nation’s poor. I’ve got the World Bank and The Economist to do it for me! From The Economist (subscription may be required):

Mr Chávez proclaims that “being rich is bad”. He frequently lashes out at what he calls “the oligarchy”. Strange, then, that the streets of Caracas are clogged with big new 4x4s (Hummers are especially favoured), it is hard to get a table at the best restaurants, and art dealers and whisky importers have never had it so good. A new oligarchy seems to be rising in Venezuela on the back of the “Bolivarian Revolution”, named for the country’s independence hero.

Their prosperity owes much to an oil windfall: the price of Venezuela’s main export has increased almost eightfold since 1999 and the economy has been growing at 10% a year. But government policies, too, have favoured the bankers and other intermediaries: inflation is close to 20% and the official value of the currency is twice its black-market exchange rate. So the savvy investor looks for access to cheap dollars, import opportunities and government contracts, all of which are largely conditional on political obedience. By contrast, manufacturers and farmers face price controls and risk sporadic official harassment. The result has been the rise of what is known, in obeisance to Bolívar, as the “Boli-bourgeoisie”.

This is typical socialism. When a private company makes a decision to award a contract (paying for it with their own money), they make the decision based on who they think is most likely to provide the best service at the most competitive price. When the government makes the decisions of who gets key contracts, spending taxpayer dollars with no accountability, those decisions are made based on who has the most political pull.

And are the poor being served? Only if they’re politically connected. If they’re regular hardworking non-political people, they may just starve:

Mr Chávez claims to be pursuing economic nationalism and “endogenous development”. But farmers and manufacturers struggle against cheap imports. Though local dairy products are often missing from the supermarket shelves, Gouda and Emmenthal cheeses nestle beside Irish butter. The frozen chickens at Mercal, a government chain of subsidised grocery shops, are Brazilian. The importers who supply Mercal have grown rich. But Venezuela’s ranchers are becoming extinct, threatened by expropriations, land invasions and price controls, as well as by extortion and kidnappings by criminal gangs.

After all, Chavez’ rule is that “being rich is bad”, and that businessmen are evil. But there’s a corollary to that rule. If the businessmen support Chavez, they should be rich and they’re no longer evil.

And through all of this, his socialist rule isn’t even promoting “income equality”, one of the cardinal tenets of socialism:

Thanks to economic growth and social programmes, the government claims that only 30% of Venezuelan families now live in poverty, down from 55% at the peak in 2003. But according to a new report by the central bank, income inequality has widened slightly under Mr Chávez: the Gini coefficient—a statistical measure of inequality—has gone from 0.44 in 2000 to 0.48 in 2005.

Officials stress that two-thirds of the poor have benefited directly from government social policies. As well as Mercal, these include the “missions”, which offer education and health care. Up to 2m people get a small cash stipend. But despite hefty increases in the minimum wage and price controls on basic goods, inflation is eating away at the gains.

Whether you believe that the Venezuelan govenrment’s numbers on poverty are true (and I don’t), the fact that income inequality is rising is contrary to Chavez’ goals. In fact, income inequality is even higher than here in the USA!* In Hugo Chavez’ Venezuela, the rich get richer, and the poor can’t buy groceries.

Hugo Chavez may have put the snow job on Barbara Walters, but I don’t think he can fool the World Bank:

For those with connections, however, the rewards are great. The World Bank recently ranked Venezuela as the second-worst country in the Americas for the control of corruption, above only Haiti. Others confirm this perception. “We usually ask for 10%,” a foreign diplomat reports one government official admitting. “But some get greedy and want 15-20%.”

Does anyone else find it strange that the same people who criticize BushCo for their ties to Halliburton and “Big Oil” champion a corrupt dictator like Chavez, doling out wealth and riches to those with the most political pull? ¿Quién es el diablo, ahora?

* Note that I don’t place a lot of faith in the Gini coefficient. In fact, I don’t see it as the government’s business to fix this “problem”. I just find it funny that Chavez’ socialist revolution can’t even get the number lower than what we have in the USA.

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  • UCrawford

    I feel somewhat bad for the people of Venezuela. A lot of them were simply too stupid and uneducated to realize what socialism really means for the poor. Now they go from a system in which they’re merely poor to one in which they’re poor and starving.

    On the other hand, I take something of a bitter pleasure in knowing that I saw this coming all along. Socialists are such morons.

  • TanGeng

    Amen to that UCrawford. State socialism, especially dictatorial state socialism requires the creation of two separate classes, the privileged ruling class and the unprivileged but very very equal class that consists of everybody else. The imposition of minimum wages means that all those not capable enough to justify or not politically connected enough to be given the minimum wage decreed by law, suffer. Oh and that cruel mechanism called inflation will eat away at the state imposed minimum wage.

    This is arrangement is akin to the that of the king and the his nobles. Who would have thought that a dictator might try to create that arrangement?

  • http://venezuela-usa.blogspot.com/ KA

    Most Venezuelans don’t want “XXI socialism” , this all comes down to money. Right now Venezuela is flooded with money, yes even the poor are benefiting. However, sooner or later the oil party is going to end and everyone is going to sober up. It happened in the 1980’s and it will happen again.

  • tarran

    Not all socialists are morons: take the Hutterites, who do quite well despite decades of official discrimination in Canada and the Northern U.S.

    Of course, they practice voluntary socialism. People who don’t like the rules are welcome to leave the group without fear of assault and murder.

  • Pingback:   Venezuela — Corrupt As Hell, Income Inequality Rising by Bharat Obama

  • http://jscottbarnard.com j.scott barnard

    You’re all a bunch of gringos who want to exploit the poor and ruin Chavez’ socialist revolution!

    Seriously, though. Chavez can pretty much do whatever he wants as long as oil prices stay where they are. –s

  • Palomudo

    Wow…. you are indeed a bunch of ignorant mtherfkers. Your zionist ruled government has done a great job keeping you ignorant and misinformed. You think Chavez is corrupt and has destroyed Venezuelas economy (gowing steady for the last 3 years). I guess you also think that there is no crisis in the US economy. You will soon find out how fckedup your country is.

    Be carefull not to curse Venezuela too much, you might need a place to land.

  • UCrawford

    Palomudo,

    Calling someone ignorant in a letter riddled with typos, grammatical errors and anti-Semitic slurs is the height of comedy. Thanks for a good laugh…and I’m sure everyone who reads it will be “carefull” to keep the analytical skills and attention to detail of you Chavez supporters in mind as we watch Venezuela’s economy continue to “gow”.

  • http://unrepentantindividual.com/ Brad Warbiany

    Palomudo,

    Notice that my sources were The Economist magazine (published in London), who quoted the World Bank on the rating of corruption. These aren’t American government sources. And if you’ve read much of what I’ve written, I’ve stated several times that America is headed towards some serious economic problems, based largely on a government that is spending too much and hiding the levels of inflation we have to dupe the masses into thinking it’s sustainable. Which sounds exactly like what Chavez is doing, only he’s doing it a lot more quickly.

  • Palomudo

    UCrawford, profanity mispelled on purpose makes it a typo. Zionists are those who ruled the US government, many of the happen to be fake jews, this of course is an automatic antisemitic label on anyone who dares to say anything about jews. Zionists call themselves jews when in reality they are no jews, they worship money and power. They own the media, the world bank and evrything else. You wonder why Americans are dying in Iraq? wjo are they fighting? Al qaida? Do you believe thay? wow you are so naive! wahat about 911, Osama did it? from a cave in the middle of nowhere? do you beleive it? wow… you are so naive. What about zionist larry sylverstein tower 7 collapsing without reason, do you believe it? Take a look at this site http://www.jewsagainstzionism.com/antisemitism/holocaust/index.cfm
    find out what the zionist did to the real jews.

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