Who's to Blame for Chavez?
Kevin Grier, guest blogging on Marginal Revolution, makes an argument calculated to offend:
In 1957, Venezuela’s GDP per capita was 51% of the US, in 2003 it stood at 18.5% of the US. Existing institutions had no credibility with a very large portion of the population and simply could not continue to exist as they had.
I am just saying that Venezuela was run into the ground by its ruling class and Chavez is the (I hope only temporary) result of their short sighted, poor governance.
Of course, I’m not offended, but I do have a question: What would have happened if Venezuelan elites had tried to pursue a pro-growth agenda during the post-war pre-Chavez era?
I suspect, though I’m open to correction by experts in the region, that leaders who tried to pursue significantly better policies would have fallen from power one way or another.
If I’m right, Venezuelan policy was bad in the past for the same reason it’s really bad now: In Venezuela, bad policy is good politics because it’s popular. So perhaps Grier should think twice before telling Venezuelan elites “you have only yourselves to blame” – and think about offering them sanctuary in the U.S. instead.
Cuban exiles have put Castro’s Cuba to shame; let’s give Venezuelans the same opportunity.
May 24 2007 at 4:11pm
But would letting Venezuelan elites emigrate and thrive in the USA help the poor in Venezuela?
May 24 2007 at 4:20pm
His statistics only go back to 1950. But most Latin American countries had GDP per capita even higher relative to the US in the immediate pre- and post-WWI periods. Many of them went towards socialism, populism, protectionism, and caudilloism during that period, and suffered.
So it’s all come around before. There’s no evidence nor sense of advancement to me, no indication that this time things will be different.
May 24 2007 at 9:13pm
So, let’s let more of these irrational Latin American voters into our country to vote!
May 24 2007 at 11:27pm
Lately there have been reports Latin American countries will band together to form a bank to act as a suplement to the World Bank, and the IMF. Venezuela wants to use this to sever all ties with these international institutions, ultimately leading to default. How will default help the Venezuelan economy? Forget about increasing standard of living. Could they maintain current standards without the capacity to borrow? While oil prices are high Chavez can ignore the world. However, Venezuelan oil trades at a discount because of high suffer content, resulting in a ten dollar per barrel differential to the market. What will happen when Venezuelans decide that they are tired of the road Chavez is leading them down, especially when they see the success that Lula has in Brazil with his reforms? Will Chavez just go away? Or will Venezuela turn into Nigeria?
May 25 2007 at 7:25am
Chavez is driving away the type of people you want as your fellow citizens, educated conservatives. I knew several Venezuelans in Florida and they all had or were in the process of obtaining advanced degrees. They also seemed to lean towards the paleoconservative side of politics. What is bad for Venezuela’s elite is good for America’s Republicans.
May 25 2007 at 1:16pm
you touch on an important notion that you have discussed in the past on irrationality and economics:
“bad policy is good politics because it’s popular”
That’s not just in Venezuela but everywhere. Economically ignorant emotion is the number one enemy of economic progress. The culprit of economic problems that drive ill-conceived, yet popular, solutions is often (well almost always) not easy to spot. This failure to orient oneself in a proper position to judge why we got here and where to go is the result of economic illiteracy and the driver of destructive populism that sneers at economic principle.
May 26 2007 at 8:05am
Bryan: Why in the world would you say my post was “calculated to offend”? In all honesty I find that labeling offensive.
As to your counter-factual, as I pointed out in my post, Brazil was poorer than Venezuela in the 1950s and now is richer and so far no Chavez. Mexico also.
I’d like to ask you exactly what countries with strong economic growth in the postwar period have had populist revolutions and put in constituent assemblies to re-write the constitution?
Its a pretty common finding in the empirical literature that regime length and stability is related to economic performance.
None of this says that bad policy isn’t often popular all around the world, but there is a big difference between that and the claim you seem to be making, that economic growth doesn’t help incumbent regimes’ popularity or stability.
May 26 2007 at 2:25pm
You should consider South Africa as a very similar example. Make of that what you will. South Africa’s growth, after being substantial in the 60’s, has been flat for the last 35 years. (And makes an interesting contrast to the sustained growth of Botswana during that same period.)
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