In previous columns, I have raised concerns about the economic damage imposed by progressive politics on the once widely respected United States economy. This column clearly identifies the predictable end-point of such progressive politics in the nightmare form of the failed economy and brutal liberal fascism of Venezuela under the presidency of Hugo Chavez.
Hugo Chavez was elected President of Venezuela in 1998 with a successful campaign that promised to help the country’s impoverished majority. He was re-elected in 2000, and again in 2006. In February 2009, he won a referendum to eliminate term limits on the presidency. Although a controversial figure – identified by the administration of George W. Bush, for example, as a threat to democracy in Latin America – Chavez is highly regarded within the international progressive movement. In 2005 and 2006, he was named one of the left-leaning Time magazine’s 100 most influential people. As a man of limited education, he has been awarded honorary doctorates by universities in South Korea, the Dominican Republic, Brazil, Russia, and China. In a list compiled by the left-leaning magazine New Statesman Chavez was voted eleventh in the list of “Heroes of our Time”.
So let us scrutinize the manner in which Chavez has earned his high standing within the progressive movement, the nature of the economy that he has transformed during a decade of populist arbitrary rule. The recently published Index of Economic Freedom for 2010 provides information directly relevant to this inquiry.
In 2010, Venezuela is ranked 174th out of 179 nations in terms of the index of economic freedom. With an overall score of 37.1 on a scale of 100 (maximum economic freedom) to 0 (minimum economic freedom) Venezuela is categorized as a repressed state. Venezuela is ranked 28th out of 29 countries in the South and Central America/Caribbean region. Its economic freedom score has deteriorated throughout Chavez’s rule, declining by 2.8 points during 2009. Despite its oil wealth, Venezuela has a per capita income of only $12,804.
The authors of the Index characterize Venezuela as follows:
“Heading a government that has abandoned all but the trimmings of democracy, President Hugo Chavez has positioned himself as the leader of Latin America’s anti-free market forces and sought allies in China and Russia, as well as Iran and other rogue states. He has hobbled opponents, undermined speech and property rights, pursued a military buildup, and imposed foreign exchange controls….Venezuela has Latin America’s highest inflation rate.”
Most startling of all the specific freedom indices for Venezuela is the zero awarded to property rights protection. The authors note that the judiciary is completely controlled by the executive, that politically inconvenient contracts are abrogated, and that the legal system discriminates against or in favor of investors from certain foreign countries. A close second in the dismal rankings is the index of 5 allocated to investment freedom. The authors note that investment laws and bureaucracy are non-transparent and burdensome, that the legal system is corrupt, and that government expropriation of key assets – in the cement, dairy, steel, and banking industries – is increasing.
Other very low valuations are the scores of 19 for freedom from corruption, with Venezuela ranking 158th out of 179 countries in Transparency International‘s Corruption Perceptions Index, and of 20 for financial freedom, with Venezuela’s financial system subject to growing government control and nationalization. Capital markets are small and subject to pervasive government interventions.
The Index of Economic Freedom does not focus attention on the erosion of civil liberties under the Chavez presidency. Private radio and television outlets have been shut down and replaced with state networks. Political opposition has been brutally suppressed, with protesters beaten by National Guard soldiers wielding metal chains. Rumors abound that the Venezuelan military is being placed under the control of Cuban officers as the reign of terror advances. The recent resignation of the Venezuelan Defense Minister and Vice President, Ramon Carrizales is associated with this Cuban takeover.
Ironically, the immediate cause of fermenting protest in Venezuela is a sequence of rolling power blackouts instituted by the government in January 2010 in response to an electricity shortage. Underlining this collapse is the fact that Hugo Chavez is running out of foreign exchange because oil production is falling. In 1998, the privately-owned oil companies pumped 3.3 million barrels a day. In 2010, the nationalized oil industry pumps only 2.4 million barrels a day – and that is an optimistic government estimate. Venezuela is not running short of crude. Having expelled or seized the assets of foreign companies capable of maintaining rhe country’s fields, and firing thousands of skilled employees of the state oil company PdVSA because he did not like their politics, Chavez is now reaping the economic rewards of liberal fascism.
Be aware, my fellow Americans of the future that awaits the United States, if progressive populism really takes hold and destroys the cherished economic freedoms that we currently still enjoy.