WASHINGTON, March 4, 2014 — Venezuela is at odds with itself. Everybody is blaming everybody else in Venezuela for the economic problems the country is facing.
Venezuela is currently facing protests against President Nicolas Maduro, successor to Hugo Chavez, who the opposition blames for the current economic and security problems. Maduro, being a good politician, blames the opposition for creating the exact same problems.
Maduro, like his mentor Chavez, is heavily tilted towards the government directly controlling and owning the means of production in Venezuela. The opposition, on the other hand, tends to support the private sector. In purely economic terms, Venezuela could be warring between fascists and communists. As economic commentator Louis Woodhill once wrote, “Inflation is to deflation as fascism is to communism. The two are not opposites; they are both bad. The opposite of both inflation and deflation is stable money.” One could add that the opposite of both fascism and communism is liberty.
It is true there are huge socio economic problems in Venezuela, but they started long before Maduro took power. In fact, they started even before Chavez took power. Those economic problems are what allowed Chavez and his allies to take power in Venezuela.
In 1997, the inflation rate in Venezuela ran at nearly 120%. When Chavez took powr in 1999, inflation was at 40%. To his credit, he brought it down to 12% during his 14 years in power. When Chavez died, inflation was at 30%. Under Maduro, it has shot back to above 50%.
High inflation in Venezuela is a long running problem that both fascists and communists have not been able to solve because both options are inherently bad systems.
Protesters who want to replace Maduro seem unaware that its replacement could be yet another government that spits at liberty. The demonstrators have vowed to fight until Maduro falls. According to the BBC, one protestor, Carlos Eduardo Vega, said “nobody is tired here and we will fight until the government falls.”
As both sides in Venezuela are clearly bad at managing the economy and both want a large government that favors certain segments of society over others, the solution should be obvious: less government and more liberty.
There should now be serious discussions by both sides for a constitution that guarantees individual liberty, equality before the law, strict and clearly defined property rights, and if truly determined to check the size of government a flat tax rate so that government knows it only has so much money coming in and will not get more.
Sound money is very important for a stable society, Venezuela will have to agree to a more conservative outlook on money. The facts are that inflation is always caused by too much money. In days gone by, leaders employed warlocks, soothsayers, and witches to advise them. They where then replaced by priests. Today, they have monetary economists telling them printing money is a solution rather than creating actual goods and services, and hocus pocus, it is a way to justify their pay checks. The economy is really about human action.
Human beings thrive more sustainably without the use of coercion but under an environment of liberty.
There is however always hope, the opposition of today is not the same as the opposition of 1999, no matter how Maduro portrays them. Henrique Capriles Radonski a key opposition leader and governor of the second most populous state in Venezuela, Miranda, and seems to understand the world. Capriles recently called on his supporters asking them not engage in violence with the police.
Capriles Radonski and the rest of the opposition could find themselves in a better light if they could utter a real vision. His statements about “case by case” examination for privatization leaves many wondering what that means. The ideal blue print would recognize that State Assets belong to the people; every single citizen of age should be allowed to partake in the process, even if it means, depending on demand, that people can only purchase a few shares, at least 50% of shares to ordinary individual citizens. Expense is not an excuse for not doing the right thing. If multinationals remain interested, they can purchase shares on the stock exchange at a market value set by the people not bureaucrats.
Selling entire State corporations to a multinational or single investor will just cause oligarchies to rise.
Capriles Radonski is appeasing those scared of reform by promising continued free education and health care, but he must remember an education is worth nothing if a person is barred from using it or competing for cultural and legal reasons.
One can only hope that the facts and reality are not completely ignored in the Venezuelan political scene. Venezuela needs a constitution that limits human emotions in government, as with emotions, a leader will always favor his close associates give them contracts, print money for them, generally create laws for his fraternity and associates to have an unfair advantage whilst saying it is for the good of society.