21st Century Bolivarian Capitalism 2
We won’t be heading Down The Rabbit Hole for our next segment,”Blatant Disregard” until Monday but we have a lot to get to. First up let’s continue with yesterday’s topic, 21st Century Bolivarian Capitalism, a weird twist from the failed 21st Century Bolivarian Socialism.The only positive things that happen in regards to the economy in Venezuela occur when they shift away from disastrous socialist policies and big government control. After completely destroying the value of the local currency,the bolivar,(I guess you could consider lopping off 14 zeros from the currency under Chavismo completely destroying it) Maduro abandoned his currency controls regarding the use of US dollars and now 60% of transactions in Venezuela take place using dollars, although the dollar is not actually Venezuela’s official currency. It’s bizarre. The bolivar is still there,but is now worthless. Maduro’s failed cryptocurrency,”el Petro” is still there, although it was always worthless. Maduro always references the Euro and the Yuan when talking about currency values so he can continue his ideological bashing of the US but things are what they are. In Venezuela people don’t use the bolivar,the Petro,the yuan,or the Euro, they use dollars unless they don’t have access to them (remember,40% of families receive remittances from abroad in dollars). If he would finally and completely let go of the bolivar and the Petro and dollarize, as has been successful elsewhere, there would be much more currency stability.That won’t happen any time soon.
Then we have the partial relaxation of import restrictions but again the Chavistas can’t just “let go” so there are unintended consequences like imports being 40% cheaper than the exact same item produced domestically even as the Chavistas stress the need to recover lost domestic production (down 87% since Chavismo took the economic reins,although they say it’s not their fault).
At least there are finally a couple of positive thing to talk about economically in Venezuela so I have to give the Chavistas a little credit. They (Maduro) finally realized something their Chinese allies told them years ago. We’ve told you previously about how the Chavista Economic Minister tried to pander to his Chinese counterpart by saying that what was needed in Venezuela was more government control of business. He was corrected by his Chinese counterpart who told him that businesses in China succeed when the government supports them, not controls them. This is the fundamental flaw of Marxism, as the Chinese learned the hard way. Socialism/Marxism has never succeeded and never will because it is a mission economy (thanks Bill Bonner) and not a free economy. So what’s the difference, you may ask?
A free economy thrives because it is a series of win/win transactions. Each deal is evaluated on it’s own merits and both parties can enter into an agreement if there is something beneficial for each of them. It is either a win/win or there is no deal. A mission economy fails because it lacks that fundamental quality of win/win. In a mission economy ideology dictates who wins and who loses through big government control and central planning ie; Marxism. A small group of people, in an attempt to predict the future, evaluate how deals will work out based on their ideology. Since nobody ever has, or ever will be able to predict the future,under their system somebody has to win and somebody has to lose and when those nasty old unintended consequences happen as a result of their policies the losers always seem to lose in a big way. Socialism/Marxism cannot succeed on it’s own merits. The USSR never came to grips with this fundamental flaw and the USSR no longer exists. The Cuban communists never came to grips with this and communism has survived there only through being propped up first by the USSR and later Venezuela. During the 10 years in between the fall of the USSR (nobody to support their ideology) and the arrival of Chavismo (somebody to support their ideology) they experienced what is called their “Special Period” which is a kinder,gentler term for abject poverty.
The Chinese had a “Special Period” of their own back in the days when they were more “ideologically pure”. Chairman Mao’s Cultural Revolution and Great Leap Forward led to millions of deaths. Communist China only prospered when the allowed capitalism into their system. Now China is Communist in name only. They economically prosper through capitalism and the people are oppressed through authoritarian principles. It’s a successful combination if you take human rights out of the equation.
I loved the depiction of how Communist societies function in the HBO series “Chernobyl”. When a nuclear physicist tried to bring light to the massive damage and danger of the cover up she approached the government official that dealt with such matters and was told she was fear mongering. She asked him if she was correct in the knowledge that before he was in government service dealing with nuclear accidents he worked in a shoe factory and he replied “Yes,and now I’m in charge! Here’s to the workers of the world”. That’s what you get when party loyalty and ideological purity are placed ahead of common sense and the common good. That’s what you get with a mission economy and it’s why they always fail. Big government control just leads to more big government control.
So now we have at least a couple of instances where the Marxist hard liners in Venezuela, like Maduro, are softening their(his) stance and allowing a little prosperity to occur. They’re late to the party but it’s better than nothing. Tomorrow we’ll take a look at where Venezuela may,or may not, go from here. But first, a couple of quick blurbs from the news feed.
Splash 247 reports that Venezuela is preparing to restart the offshore Corocoro field. They say it will produce 2,000 bpd (barrels per day) initially and could reach up to 11,000 bpd by October. It is a lighter grade crude than most of the oil in Venezuela so that’s a good thing. My issue with this is that production of 2,000 to 11,000 bpd in the oil business is virtually nothing. Remember, at one point they were producing about 3 and 1/2 MILLION bpd.
And how about this from Morning Star (Russia)…”Maduro Welcomes Opposition Commitment To End Violence”. Uhhh…and who doesn’t? For the record I’m also in favor of air conditioning and puppies.
In more or less an “El Dorado” follow up we have Insight Crime reporting that in recent months tons of coltan, also known as “Blue Gold”, has been seized in Venezuela border areas with Brazil and Colombia from ex-FARC mafia and the ELN. The Italian government has linked some of the illegal coltan trade to Nicolas Maduro Guerra, the son of President (Dictator) Maduro. I guess the illegal trade in actual gold isn’t cutting it for the Chavistas.
See ya’ tomorrow!
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