
How Venezuela went from a rich democracy to a collapsing dictatorship - superpatosainz
https://www.vox.com/platform/amp/world/2017/9/19/16189742/venezuela-maduro-dictator-chavez-collapse
======
padobson
I thought this paragraph was the most enlightening:

 _Chávez was an innovator in how he spent money, but he did little to improve
how Venezuela actually makes money. He paid no attention to diversifying the
economy or investing in domestic production outside of the oil sector. The
country relies on imports for many of its most basic goods and services,
include food and medicine._

You could probably put the greatest economic minds in the world in charge of a
big country like Venezuela and they would still fail to diversify the economy.

Markets are necessary for successful diversification - avoiding shortages and
economic collapses when key industries suffer downturns.

I'd say social democracies in Europe have shown pretty conclusively that the
way to fund broad social programs to help the poor and middle class is via
taxation of market economies. Let a healthy private sector self-organize the
production of the economy, and let taxes pay for social programs.

~~~
guelo
And America is showing that if you don't tax wealth enough the inequality
causes instability.

~~~
wmccullough
Not disagreeing, just curious. How much taxation is appropriate for the
wealthy? When explicitly does the label of wealthy apply?

~~~
guelo
Who knows. I'm sure there are many economics papers addressing the question.
But it's somewhere before you get to the historic inequality levels of today
[https://fred.stlouisfed.org/series/GINIALLRF](https://fred.stlouisfed.org/series/GINIALLRF)

~~~
thephyber
To be fair, inequality levels were comparable in 1929, which falls outsize of
the scope of that chart. Still historic by US standards, but not
unprecedented.

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legulere
Venezuela is simply suffering one of the worst cases of Dutch Disease in the
world. The oil prices don't keep up with the spending. With a destroyed
economy there is more opportunity for a dramatic system change.

This happened before in Venezuela in the 80s/90s and eventually led to Chavéz
getting into power.

~~~
0x27081990
If their economy wasn’t centrally planned and controlled by the government, it
would be more resilient

~~~
danharaj
This same thing happened under a more liberal capitalist government before.
That's literally how Chavez got into power. The biggest difference between
then and now is the severity of the oil price drop. An exacerbating factor is
that the same forces that tried to coup Chavez in 2002 are of course still
politically active and, rationally given their interests, using their economic
connections to exacerbate the economic collapse through various means. The
United States recently freezed some Venezuelan government finances which is
obviously intended to further destabilize the government.

Venezuela is a shitshow, to put it bluntly. But the shallow analyses which
focus purely on ideology instead of the physical reality on the ground is
asinine, bordering on propaganda (Vox tends to swing randomly between center-
left progressivism and center-right neoliberalism). Is the government of
Venezuela incompetent? Probably as incompetent as most. Are they dealing with
an unprecedented economic collapse caused by structural factors? Yes. On the
other hand, most people don't actually know how the Venezuelan economy is
structured. They just know "socialism bad" and "capitalism good". It's
tiresome because the same structural deficiencies at play in their economy
_today_ was there decades ago, when they weren't "socialist".

It should be noted what happens to countries whose economies collapse because
their place in the world economy no longer exists and then seek to renormalize
via the accepted capitalist channels (like the IMF and the like). The entire
country gets sold off to foreign interests and they spend the rest of their
decades financing a debt they can never pay off.

As for the repressiveness of the Venezuelan state, it's not surprising. The
violence of a state is directly proportional to how threatened it feels. When
a state is failing, it is going to be violent. Cf. Spain and Catalonia at the
moment.

~~~
sremani
A quick refresher for my liberal friends,

Oil Prices in 2012:
[https://www.eia.gov/todayinenergy/detail.php?id=9530](https://www.eia.gov/todayinenergy/detail.php?id=9530)

Food Shortages in Venezuela in 2012 Source from NYT:

[http://www.nytimes.com/2012/04/21/world/americas/venezuela-f...](http://www.nytimes.com/2012/04/21/world/americas/venezuela-
faces-shortages-in-grocery-staples.html?mcubz=3)

~~~
0x27081990
They closed import/export for the private sector. Only federal government
handles it. Which led to export just oil (inefficiently if I may add), so when
priced collapsed they had to decide if pay debt and face hunger, or fight
hunger and face a financial default. Guess which one they decided?

------
dingo_bat
Venezuela failed because of the lack of a free market. Almost all economic
activity was by the government, there were price controls on everything. It
turns out the market is much more efficient in managing resources than any one
organisation.

IOW, in case it's not clear, Venezuela failed because of socialism. It's
hilarious to see all these long winded explanations that refuse to name the
well known philosophy that has repeatedly led countries to the same place.
There is no analysis needed. It has been analysed a hundred times already in
history.

Suppose I fell off from a hundred story building and died. Now imagine
newspaper articles going into gravitational theory and saying that the cause
of death was a high speed impact with the ground, which was worsened because
it was concrete. That would be stupid. The well known fact is that I died
because I fell from a high place. You don't need an analysis for that. It's
obvious. Once a phenomenon has been explained and analysed well enough, it can
just be named and you need not go into a lot of details and develop your own
theory. You can just reuse the name and everybody understands.

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eighthnate
Declining oil prices and US sanctions.

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timb07
I hope Trump doesn't read this article as a how-to guide.

~~~
dingo_bat
I think that Trump is the last person to look at socialism as a manual. That
man maybe one of the most capitalistic person in the world.

------
everyone
Taking the long view, the US and its interventionism is to blame for a lot.

[https://venezuelanalysis.com/analysis/10112](https://venezuelanalysis.com/analysis/10112)

ps. Here is decent doc by John Pilger synopsising the US's history of
interventionism. (Starts at about 38 mins, before that is some stuff from
Venezeula from 2007)

[https://vimeo.com/16724719](https://vimeo.com/16724719)

