National Security & Defense

The Facts about Venezuela

Coping with a mandated power cut in San Cristobal, Venezuela. (George Castellanos/AFP/Getty)
No, it is not a victim of its own economic success.

Some of you will be familiar with the Twitter feed of the DPRK News Service, an often hilarious online parody of the output of socialist North Korea’s official pronouncements on world affairs: “Kim Il-Sung University professors announce individually packaged celerys, bringing joy to celery lovers throughout our land.” “International shouting tycoon Donald Trump criticizes U.S. politicians for their swinish and uncouth table manners.” But we live in times beyond satire, and even the imaginary Norks behind Juche Beyoncé (“Noble dissident folksinger Beyoncé hit by disgusting, pornographic, and racist slanders by English illiterate smut-peddler Piers Morgan”) couldn’t produce what’s being published under Wired’s venerable flag right now.

Venezuela’s Economic Success Fueled Its Electricity Crisis.”

This isn’t parody.

In an article produced in association with CityLab and Climate Desk, Wired argues with a straight face that Venezuela, where the use of hairdryers has become a matter of urgent national policy, is in this pickle because Hugo Chávez’s economic policies were just so damned successful. Chávezism — which is roughly the economic philosophy of Bernie Sanders and Donald Trump — brought so many Venezuelans out of poverty that the resultant increase in demand on the electrical infrastructure simply could not be met.

This is, as the economists say, horsepucky.

If you consider the most meaningful measure of a country’s economic output — GDP per capita over time — you’ll see that the fat years under Chávez did not actually happen. In fact, if you chart that real (inflation-adjusted) GDP per capita by year, you’ll see that Venezuela is significantly poorer today than it was in the 1960s, 1970s, or 1980s. In fact, Venezuela’s per capita GDP reached its all-time low in 2003, under Chávez. This is no surprise: Making well-off countries poor and poor countries starving is what socialists do.

Venezuela’s per capita GDP reached its all-time low in 2003, under Chávez. This is no surprise.

Chávez’s predecessors during the last gasps of the old Republic of Venezuela (Chávezism came with a new constitution and a new name, the Bolivarian Republic of Venezuela) weren’t winning any prizes for growth or stability in the years leading up to the catastrophe that was Chávez, but the idea that there was some kind of general economic renaissance in Venezuela under Chávezism isn’t supported by the data. What we see is an economy that threw off a lot of money when oil prices were high (Venezuela is something close to a single-commodity economy) during which time Chávez seized everything he could get his hands on in order to enrich himself and his cronys, and to purchase political support at home and abroad. The obscene spectacle of U.S. congressmen such as Chaka Fattah of Philadelphia and other Democrats groveling before the murderous autocrat in exchange for a few measly barrels of subsidized heating oil sticks in the memory.

Oil prices went back down, and down went Venezuela.

Somehow, at the end of that roller-coaster ride, Chávez’s daughter acquired a net worth of $4.2 billion. But Bernie Sanders isn’t doing too poorly, either.

#share#Under Chávez and his successor, Nicolás Maduro, Venezuela kinda-sorta invested billions and billions of dollars in electrical capacity and infrastructure. It just never quite materialized. For example, a $40 billion project “created” more than 5,000 MW of new capacity, but only 3,300 MW became available for consumption. How? The answer to that riddle, and not das Kapital, is the real socialist master-text: mismanagement, incompetence, and corruption. The cost of those projects ran on average two-and-a-half times over estimates — while producing less power than they were supposed to. The socialist government gave billions of dollars in electricity contracts to firms with no background in the business. Of course that money walked away, ending up in banks in, among other places, Lebanon.

RELATED: There Is (Still) No Alternative: In Venezuela, the Same Lessons as Cuba, North Korea, USSR…

If you truly believe that Venezuela is suffering from electricity shortages because its economy is so successful, you should ask yourself why it is suffering from a toilet-paper shortage, too. And a shortage of rice, milk, cooking oil, and other basic foods. And water.

“Forward-looking Venezuelan comrades put entire country on hardcore paleo diet!” the DPRK News might say. People who aren’t in the comedy business detect something more serious.

The authors of the dopey Wired article cite the reduction — purported reduction — in Venezuela’s poverty rate under Chavez as their main evidence. The World Bank figures (based, inevitably, on questionable Venezuelan data) suggest that the Venezuelan poverty rate was cut from 50 percent to 30 percent over 15 years. The same figures have the poverty rate around 80 percent today. If you follow along with that bouncing ball and still can’t figure out what song is being sung, maybe a different line of work is in order.

Maybe the fact that the Venezuelan economy is today contracting at about 7 percent per year while inflation is running at about 720 percent per year has something to do with it, too.

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