Power & Market

Venezuela Needs Both a Political and an Ideological Change

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.

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