Power & Market
The Venezuelan central bank has released new data showing just how far the nation's economy has disintegrated in recent years.
MercoPress reports this week (in text that is rather loosely translated from Spanish):
After several years, the Central Bank of Venezuela (BCV) published results of gross domestic product (GDP) until the third quarter of 2018, with which officially confirms the recession that is experienced in the oil country. With the data it is known then that between the third quarter of 2013 to September of last year the economy lost 52.3%. President Nicolás Maduro is on power since 2014.
The BCV report draws a demolished economy. According to the institution, the construction sector fell by 95% between the third quarter of 2013 and the third quarter of 2018, the manufacturing sector by 76%, trade by 79% and financial institutions by 79%. According to the data released on Tuesday, towards the end of 2018 the collapse accelerated.
The official figures of the BCV also confirm the magnitude of the Venezuelan economic recession that has been recorded since the arrival of Nicolás Maduro to the presidency of the country. According to the data, after a slight growth of 1.3% in 2013, as of 2014, the deterioration of the economy begins with a decrease of 3.9%; as well as a fall of 6.2% in 2015.
Among the most striking of the statistics offered by the central bank was 2018's inflation rate of 130,060.2%.
The data release was mandated by the International Monetary Fund which threatened to sanction Venezuela with limitations on its Special Drawing Rights if it did not report updated macroeconomic data.
Given the acceleration of economic decline, it looks like the IMF may need to revise its most recent estimates of Venezuela's economic growth which can be seen in per capita GDP numbers. Here are the IMF's country-by-country estimates of GDP per capita, published using extrapolations from older Venezuelan data:
Note the downward trend in Venezuelan GDP (the bottom dark blue line.) It now appears likely Venezuela's growth will need to be adjusted downward.
While the magnitude of the economic decline is remarkable, Venezuela's decline in relation to other South American nations is, by now, a well established trend.
While much of the continent has been undergoing significant growth over the past twenty years — especially in Peru, Uruguay, and Colombia — Venezuela has been moving in the opposite direction. Indeed, according to the estimates published before the release of the Venezuelan central bank's new data, the nation's per capita GDP declined 25 percent from 2008 to 2018.
The relative change has been less dramatic in more recent time frames. Brazil's growth dropped to zero between 2013 and 2018, and Argentina's growth turned negative. Both nations are notable for embracing highs-pending, high-inflation policies over the past decade. It remains to be seen if Brazil's and Argentina's more recent turns toward allegedly pro-market regimes can repair the damage.
Meanwhile, Venezuela has been notable for adopting an especially virulent type of socialism, even when compared to other leftist regimes, such as Bolivia and Ecuador. While Morales in Bolivia and Correa in Ecuador tended to be more pragmatic in their professed "socialism," The Chavista regime in Venezuela has doubled down on enforced "equality" through widespread expropriations and persecution of the productive middle classes.
The results have been disastrous indeed.
As with everything in Venezuela, this week’s attempt at removing the Maduro regime was a mess. It seems to have had no coordination or logical planning. It consisted largely of opposition leader Juan Guaidó calling out civilians to support this attempt to take the control of the Venezuelan state, but with little effect. Some newspapers reported that Guaidó and ally Leopoldo López started to act before the plan was ready. Other sources say that high-ranking officers had negotiated with the U.S to keep Maduro in power. But one thing is sure: the current regime is still in place. Even more troubling is the fact some armored vehicles hit civilians that were on the streets protesting in favor of Guaidó. At the end of the day López with his family sought refuse in the Spanish embassy, and some military officers that were supporting Guaidó requested political asylum in Brazil’s Embassy. El Pais reports at least five people were killed in today’s chaos
Replacing the Current Regime with More of the Same?
Where to go from here? Venezuelans have suffered many disappointments, and there is a lot of skepticism in the population about the likelihood of replacing the current regime with something truly better. Here’s the problem: Venezuelans need to get rid of Maduro and his comrades, but we also need open the road to radical free-market reforms if they want to have a future with a long-run prosperity and liberty. In early March, Ben Powell and I wrote about this conundrum.
Unfortunately, the ideological fuel that would feed the engine of a new regime is not so different from the same that fed Chavez’s project. The “Plan País” supported by those seeking to topple Maduro is just another Keynesian recipe that will apply all the usual failed policies that have been used historically in Venezuela. In my country, this has only ever created a fake short-run “prosperity” which then creates cronyism, corruption, and an enormous states which owns of the commanding heights of the economy. In terms of human rights, a badly managed economy under some other group of hardline Keynesians might still be preferable to the current regime.
Nevertheless, at this time, it looks like an easy victory for replacing the Maduro regime with the opposition is not right around the corner. It looks increasingly like the best way to facilitate improvement would be for Guaidó and López to negotiate with Maduro for new elections, and more importantly to open the country to foreign capital yet again. With that in place there could be hope for an economic rebound. Of course, the government planners would still claim their intervention was the cause of the “economic miracle” that would come with stability, but we could at least hope for a gradual turn toward saner economic policy over time.
Vox is whooping up the wacky notion that “sex was better under socialism.” Tell that to Romanian women forced to undergo monthly gyno exams to outlaw abortions because the government proclaimed in 1985 that “the fetus is the socialist property of the whole society… Those who refuse to have children are deserters.” Women’s reproductive lives were part of centralized economic planning, especially “policies to make better use of the population as a factor of production” by “stimulating an increase in birth rates.”
This policy was endorsed and subsidized by the World Bank, which is currently touting itself as the friend of women.
Read the full article at JimBovard.com
This week we witnessed the horrible spectacle of Nikki Haley, President Trump’s Ambassador to the United Nations, joining a protest outside the UN building and calling for the people of Venezuela to overthrow their government.
“We are going to fight for Venezuela,” she shouted through a megaphone, “we are going to continue doing it until Maduro is gone.”
This is the neocon mindset: that somehow the US has the authority to tell the rest of the world how to live and who may hold political power regardless of elections.
After more than a year of Washington being crippled by evidence-free claims that the Russians have influenced our elections, we have a senior US Administration official openly calling for the overturning of elections overseas.
Imagine if President Putin’s national security advisor had grabbed a megaphone in New York and called for the people of the United States to overthrow their government by force!
At the UN, Venezuela’s President Maduro accused the Western media of hyping up the crisis in his country to push the cause for another “humanitarian intervention.” Some may laugh at such a claim, but recent history shows that interventionists lie to push regime change, and the media goes right along with the lies.
Remember the lies about Gaddafi giving Viagra to his troops to help them rape their way through Libya? Remember the “babies thrown from incubators” and “mobile chemical labs” in Iraq? Judging from past practice, there is probably some truth in Maduro’s claims.
We know socialism does not work. It is an economic system based on the use of force rather than economic freedom of choice. But while many Americans seem to be in a panic over the failures of socialism in Venezuela, they don’t seem all that concerned that right here at home President Trump just signed a massive $1.3 trillion dollar spending bill that delivers socialism on a scale that Venezuelans couldn’t even imagine. In fact this one spending bill is three times Venezuela’s entire gross domestic product!
Did I miss all the Americans protesting this warfare-welfare state socialism?
Why all the neocon and humanitarian-interventionist “concern” for the people of Venezuela? One clue might be the fact that Venezuela happens to be sitting on the world’s largest oil reserves. More even than Saudi Arabia. There are plenty of countries pursuing dumb economic policies that result in plenty of suffering, but Nikki and the neocons are nowhere to be found when it comes to “concern” for these people. Might it be a bit about this oil?
Don’t believe this feigned interest in helping the Venezuelan people. If Washington really cared about Venezuelans they would not be plotting regime change for the country, considering that each such “liberation” elsewhere has ended with the people being worse off than before!
Gregoire Canlorbe, who interviews Mark Thornton here, has posted a new an interesting interview with former Czech President Václav Klaus.
Klaus describes himself as a defender of the "Nation-State," but in an interesting way.
For Klaus, the Nation-State acts as a bulwark against further centralization at the continental or the — god forbid — global level.
In other words, it's a decentralist view:
I would return the issue to the defense of the Nation-State. I truly believe in the Nation-State, therefore I am so critical of the continental ambitions of many European officials. I do not believe in the European Union or the European integration. This is for me the starting point.
For me, the Nation-State is the only possible way to have democracy. Democracy simply cannot exist at a higher level, as in continents, let alone global democracy in the world. So, my starting point is the Nation-State, the defense of the Nation-State, and the fighting continental integration.
Klaus's position reminds me of Jeff Deist's article "Brexit: Individualism > Nationalism > Globalism," which notes that real individual sovereignty is always preferable to false state "sovereignty." Nevertheless, in principle a local state is preferable to a remote global state:
Ludwig von Mises understood that self-determination is the fundamental goal of liberty, of real liberalism. It’s true that libertarians ought not to concern themselves with “national sovereignty” in the political sense, because governments are not sovereign kings and should never be treated as worthy of determining the course of our lives. But it is also true that the more attenuated the link between an individual and the body purporting to govern him, the less control — self-determination — that individual has.
To quote Mises, from his 1927 classic (in German) Liberalismus:
If it were in any way possible to grant this right of self-determination to every individual person, it would have to be done.
Ultimately, Brexit is not a referendum on trade, immigration, or the technical rules promulgated by the (awful) European Parliament. It is a referendum on nationhood, which is a step away from globalism and closer to individual self-determination. Libertarians should view the decentralization and devolution of state power as ever and always a good thing, regardless of the motivations behind such movements. Reducing the size and scope of any single (or multinational) state’s dominion is decidedly healthy for liberty.
Critics of this notion will no doubt say that "a state is a state." If this were true, however, then why not have just one giant state? The disaster that would be for human liberty is fairly obvious, which is why even the "state is a state" crowd don't often support the creation of mega-states.
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Moreover, it may very well be that Klaus is imagining a world of fairly small states — a situation that would allow for far greater choice for the citizens themselves.
After all, just how big one of these Nation-States needs to be to gain the benefits Klaus imagines remains unclear. Klaus comes from a Nation-State of 10.6 million people — 1/30th the size of the United States.
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Devolving each large nation state to something this size would certainly be a step in the right direction.
The Hill reports today that the Vermont Senate has voted to approve the legalization of recreation marijuana for users over 21 years of age.
With its passage in the Senate, the law proceeds to the governor's desk where he is expected to sign.
While eight states (Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, and Washington) have already legalized recreational marijuana, Vermont will be the first state to legalize via action of the state legislature. All other states that have legalized have done through statewide referenda or voter initiative.
Since 2012, when Colorado voters approved recreational marijuana, state-level voters have repeatedly shown indifference toward federal drug law — which, of course, is in violation of Article I of the Constitution, and the Tenth Amendment.
But now, for the first time, a state legislature and governor have joined the movement. This comes, we might note, mere weeks after US Attorney General Jeff Sessions announced he plans to ratchet up the Drug War against marijuana users.
Apparently, Vermont legislators are happy to disregard him.