"Why not? The answer is that Chávez turned the state-owned oil company from being professionally run to being barely run. People who knew what they were doing were replaced with people who were loyal to the regime, and profits came out but new investment didn't go in."
This is a classic "that never works" maneuver. The USA did the same thing to some extent when it "de-Baath-ified" Iraq, which shows that this is a thing that doesn't work regardless of whether you are "left wing" or "right wing" and it doesn't even work when the USA does it. It also sometimes fails in the corporate world, such as when an "activist investor" replaces everyone who knows what they're doing in a company or a lot of people are fired in an acquisition.
Funny how this argument starts to fall apart when you look at all the failing oil & fracking companies in the US, which were run by people who knew what they were doing and had no socialist petro regime to be loyal to and no activist investors.
It seems to show that their boom/bust is caused by oil, not politics. Fortunately the US doesn't have a majority of its income dependent on a single state-owned company, so "creative destruction" can happen safely as long as there's a proper social safety net.
The frackers have stopped drilling new wells, but the way fracking works actually lends itself to this. They are not long term wells like you typically see, but more of a burst and drill again. When the prices go up, they will put the equipment back in the field.
Now would be a good time to schedule some of those infrastructure projects that need truckers, welders, and such.
Yes, that's my counter-point. Depending fully on oil has many negative repercussions for any country. Unlike private entities in the USA, you can't just downsize a country to maintain profits.
They're only failing because it costs them $35 to produce a barrel of oil, and the price of oil is currently well below that. If it recovers, they'll recover.
An economy that can fail because of a lower price of oil is itself a failure.
It's like saying, "yeah, our high traffic e-commerce site is only failing because an intern tripped over a server power cord". No, failure is when tripping over a power cord is enough to make you fail.
The better analogy in computer services would be if your e-commerce site made $100 per hour and took 1 kilowatt to run, but then the price of electricity rose to $101 per kilowatt-hour. As soon as the price fell back below $100, you'd be back in business -- the same is true of the fracking companies as soon as the price of oil rises.
$101/kWh is a black swan event that would take down your competitors and customers just the same, "falling to the lower end of historical norms for oil prices" is not.
Even so, if your business depends on some resource staying at a certain price, and you do not wish to couple your profitability to that price, you should buy options or forward contracts, as that's the benefit of modern financial instruments. Oil-intense businesses (like airlines) tend to hedge against big fluctuations like this.
First, those are companies, not countries. Second, those companies are failing economically, but they aren't failing in their ability to pump oil out of the ground. Whereas Venezuela got rid of the people who actually knew how to pump oil out of the ground, so they got less oil at the same time as falling oil prices.
Where's the evidence of that? Why do you think venezuela should be able to solve all their problems by pumping more oil but don't expect failing companies to do the same?
You seem to be confused. api's claim was that getting rid of people who know what they're doing, and expecting success, never works. You seem to be arguing that other things can fail to work. That's true; nobody claimed otherwise. Your replies therefore seem to be aimed at strawmen; nobody here has expressed the position you are arguing against.
You're right, I was taking issue with the article quote that api embedded, and the notion that getting rid of people who knew what they were doing, assuming it's true, was the cause of VZ's current catastrophe. I think they could have had the most well-oiled oil-pumping machine and they would still be in financial ruin, as has happened to countless corporate oil companies in the US.
True. If you set your expenses to match your expected income, and your income is from oil, and the price of oil falls spectacularly, you're in deep trouble. It doesn't matter whether your expenses are social programs (Venezuela) or loan payments (frackers), you're just about doomed either way.
"Now, there's nothing wrong with that — in fact, it's a good idea in general"
When you are spending more money than the money coming into the system, which happens with almost all socialist systems (because commerce is severely restricted), it collapses.
Anyway, I checked out the first country (South Korea) in your source. 2014-12-31 estimate of outstanding debt is $424.5 Billion with a credit stock of ~$2.4 trillion.
If you want to only analyze receipts over a short period of time, then I'd guess you can find a positive period for most countries.
Every company that starts on credit is spending more money than the money coming into the system. It is rational in a stable society to borrow against future earnings in order to invest in the ventures that will generate those earnings.
The United States can spend according to their projections for the value of US Treasury Bills. US Treasury Bills, in turn, are an investment in the future US economy as a whole. The connection between them is fuzzy and distant but at least in theory the government is run on tax-receipts even though T-Bills are doing so well they are self-sustaining.
Venezuela was borrowing against their own future and their economy was tied up in energy. They are in a different situation.
Should probably include the context of the quote, which I think already says that:
>>The first step was when Hugo Chávez's socialist government started spending more money on the poor, with everything from two-cent gasoline to free housing. Now, there's nothing wrong with that — in fact, it's a good idea in general — but only as long as you actually, well, have the money to spend.
I think even the article doesn't go far enough though: it's not just about whether you "have enough money", but whether you can reliably expect to keep getting that money, and you won't see increases in your spending obligations.
On that note: There's a dangerously common mentality out there that doesn't understand the concept of "good times don't last forever":
Your country has a lot of oil money coming in? Save some for when it isn't. Revenues are high because of a tech boom? Set it aside for later. Your pension fund investments returned 30% this year? No, don't pay out 23% to the managers "since they hit their 7% target"; that 30% has to cancel out down years.
And in personal lives: Your current job seems like an absurdly good deal? Save and cross-train for when it becomes obsolete or oversupplied.
"And in personal lives: Your current job seems like an absurdly good deal? Save and cross-train for when it becomes obsolete or oversupplied."
Too true. I've talked to many successful small business owners that managed to make it through multiple recessions. This is usually the key to surviving.
Alexander Hamilton's goal was to assume the debt from the independent states to bring power to the federal government. He wasn't a lover of debt. He was a lover of federal power.
As a side note, how this figured into the creation of Washington DC is pretty interesting.
The Cubans did not run to Americans out of love, they saw the writing on the wall that their patron/sponsor in Venezuela was a sinking ship. This was long time coming but things will not really settle down or improve in VZ until 2019, when PDSV will be vacated out of power, but one can hope that can happen early.
The Oil bust and Venezuela creating a welfare state around $100/barrel (along with the corruption) led to this crisis. This is the cost of Leftist Populism. Some ones got to pay, and usually it is the populace. Caracas is probably most violent City in Americas, today.
People in US clamoring for leftist populism should take deep look at Venezuela.
For it to actually be post hoc, I think you'd have to show ideological bias, when at least the WaPo story looks pretty straight up. Price of oil is the prime mover here, and Venezuela has big problems because of it. The Resource Curse is a real thing...
Oil represents 95%[1] of Venezuela's export earnings. When 95% comes from a single source and that source loses 1/3rd of it's value in a short amount of time then its straightforward to understand why Venezuela is in this situation.
>>People in US clamoring for leftist populism should take deep look at Venezuela.
I don't see a reason to bring your political leanings into a discussion of straightforward economic cause and effects.
>>I don't see a reason to bring your political leanings into a discussion of straightforward economic cause and effects.
That means, when they were going well, they shouldn't be boasting the "Leftist" government and so, right?
But what did we see? they and their leftist supporters kept on chanting "Chavez, Chavez" and "Left, Left". Did they ever consider the so "straightforward" economics then??
I think it's you who are oversimplifying here. Venezuela has two big problems: the first is that collapsing oil prices knocked the support out from under their economy, and the second is that the government is trying to pretend that hasn't happened by enacting capital controls and printing huge amounts of money, based on a (let's be clear) distinctively populist/leftist economic theory that there is no such thing as inflation, but rather only predatory pricing.
I think it's easier to metabolize the political dimension to the story when you think of "populist/leftism" as something outside of simple "populism" or "leftism". There are plenty of left-leaning thinkers who do not believe you can print money to solve any economic crisis.
"based on a (let's be clear) distinctively populist/leftist economic theory that there is no such thing as inflation, but rather only predatory pricing."
Can you source any of this without linking to an "Objectivism"-associated organization?
The poster you replied to originally made it quite clear that it was a distinctive branch of populism/leftism, not a part of any mainstream ideology.
Besides, if you twist policies and ideologies enough, you can get anything to justify anything. You can find justifications for guaranteed income from socialist and libertarian perspectives, for example.
Exactly, and that's why I asked for a source about the claim not believing in inflation was in any way a tenet of left-wing populism, or leftist ideologies in general. I shouldn't have mentioned Objectivism unless someone had cited a reason.com/cato/etc article. I'm not sure why you think I misunderstood the poster, because I don't disagree with you.
Well, I'll give an opinion. Venezuela doesn't really believe that there is no such thing as inflation as a fundamental position. It fundamentally believes that all assets that aren't going to help the poor should be confiscated and used to help the poor, or something like that. When that delivers disaster instead of utopia, the disaster must be the fault of evil people, because the fundamental position can't be wrong. So they wind up at the position that there's predatory pricing rather than inflation, because it must be the fault of greedy people rather than the fault of a bad theoretical foundation.
I'd classify that as "rooted in ideology", but I'll also agree to a large side dish of "mismanagement".
Bingo. A lot of the 'leftist' things enacted were not things that have been successful elsewhere.
Look at Norway for instance - they've stashed a lot of their oil money in a fund for the future, rather than piss it away.
Venezuela was a terribly run place, whatever sort of economic theories the leadership espoused. Lots of stuff went on that would not have been acceptable in a country with a stronger democracy and a high regard for the rule of law.
If population ratios are the standard to go by, they are better examples (by that standard) of what outcomes Venezuela could expect than Venezuela is for the US, so offering them as counterexamples in a thread where Venezuela is being held out as a cautionary tale for the US is not inappropriate.
Qatar and UAE are a good example too (overall) at managing resources. Libya is not. All of them have small populations. And they belong to the same Arabic world.
Cheap labor from South and South East Asia have a lot more to do with Qatar and UAE. Also lot of India-Pakistan trade (because of hostilities) happens via. UAE and Qatar(to a lesser extent).
So, there are elements, like demographics, stability and geographical and geo-political issues casting bigger shadow than we think.
Dubai is 70% non-citizens, and majority from India.
Can you provide examples on why Venezuela is a "weak" democracy or has poor rule of law, and specially compared to which other countries for example? Thanks.
Look at how Chavez took over the oil company, and generally treated businesses.
Sweden, for instance, may have high taxation, but it is applied fairly, and businesses are not considered 'the enemy'. Property rights exist and are taken seriously.
I'm actually a somewhat left-leaning person, but never found Venezuela to be a very compelling example, to be honest.
It wasn't any particularly leftist policies that killed them, it was just trying to artificially boost the value of their currency.
That policy has been tried across he political spectrum and it's pretty much always ended in tears.
>Look at Norway for instance
Norway wasn't suffering from a massive level of poverty. When Chavez took over, Venezuela was and he cut it significantly. That's what he "pissed" the money away on.
Everybody has to queue for toilet paper! The economy has ground to a halt! Unless you use the (entirely unregulated, utterly laissez-faire) black market, nobody can buy anything. Not toilet paper, not food.
I'm on your side of this one, but I think crdoconnor has a bit of a point.
I saw somewhere (the original article or a comment, I forget which) that people are limited to buying one chicken a week. That's not good... unless you couldn't buy any before, in which case it's a massive step up. Would getting that much protein in your diet (that you never could get before) be worth being unable to get toilet paper (that you also probably couldn't afford before)?
But I'm on your side of this one, because it turned out that chauvismo didn't deliver enough gain to enough people. It promised utopia, but delivered much less, even to the poor, at the price of destroying the economy. But don't minimize the value of what it delivered to the poorest of the poor.
That's a colorable argument, but my response would be that the likely ultimate outcome of capital and price controls along with a disbelief in the concept of hyperinflation is zero chickens for the poor, because in the absence of a stable economy all commerce will go to the black market, and the black market could give two fucks about the poor.
Agreed, though that assumes facts that are not yet in evidence. My argument was based on current circumstances; yours is based on the current trajectory.
Are we reading the same article? Chavez didn't simply subsidize the poor. He also (a) nationalized the oil industry and (b) handed control and management of that industry over to political allies who mismanaged it badly. He did the same with the central bank.
There are much more significant criticisms of Chavez than that, but these are the ones germane to the immediate article.
Whatever you might think about his overt political objectives, it didn't work: there are long lines for toilet paper, and even the lines are now rationed.
>Chavez didn't simply subsidize the poor. He also (a) nationalized the oil industry and (b) handed control and management of that industry over to political allies
Yeah, he nationalized the oil industry and redirected that stream of revenues to poverty reduction programs.
The US establishment was vehemently pissed at this audacity which is why they supported the coup to oust a (whisper it) democratically elected president and also wrote lots of angry articles about him, some of which you apparently read...
>handed control and management of that industry over to political allies who mismanaged it badly
The US oil companies who were carting the vast majority of Venezuela's national wealth out of the country prior to nationalization probably did have a more efficient set up, yes.
>Whatever you might think about his overt political objectives, it didn't work
What part of cutting poverty in half - his overt political objective - was such an abject failure?
https://news.ycombinator.com/item?id=11029049 --- a reply to another of your comments. That comment, of course, says the same thing that the comment you replied to; it's like you stopped reading at "it didn't work".
What's especially insidious about this logic is the fact that poor people in Venezuela have no international voice; if you're hearing complaints, they must be from the relatively well-off. That much is probably true, but look how that logic works to support the ineffective government of Venezuela: the well-off aren't complaining that it's too hard to buy BMW sedans. They're complaining that they can't fucking buy toilet paper. You think that means the poor people can? Or, what, food and toilet paper are bourgeois concerns?
>it's like you stopped reading at "it didn't work".
Are you disputing that poverty rates were cut in half or are you claiming that this is irrelevant because there are queues for toilet paper and TVs?
>What's especially insidious about this logic is the fact that poor people in Venezuela have no international voice; if you're hearing complaints, they must be from the relatively well-off.
I've been to Venezuela and I have met the rich, the middle class and the poor. I'm pretty clear about aware of what each group complains about and why.
It's not any real secret that the (often very violent) protests in Caracas are usually confined to the wealthy white neighborhoods, nor is it any secret that the very poor formed the bulk of Chavez's base (they adored him).
>That much is probably true, but look how that logic works to support the ineffective government of Venezuela: the well-off aren't complaining that it's too hard to buy BMW sedans. They're complaining that they can't fucking buy toilet paper. You think that means the poor people can?
I think that if you think queuing for toilet paper is the apex of poverty then you have no clue what true poverty really is.
>Or, what, food and toilet paper are bourgeois concerns?
Food and medical care is easier to come by these days for the very poor (what on earth did you think I meant by cut poverty in half?).
That's assuredly not a "bourgeois concern" although the obsession with removing price controls in order to eliminate queues most certainly is.
But, see, chavismo got soundly thumped in the latest elections precisely because it didn't deliver. It delivered some relief of poverty for a time. But it didn't deliver nearly as much as people expected, as measured by the latest election response.
Don't forget the price controls he instituted. The Chavez government mandated a price for televisions that was below the wholesale cost of them. When this went into effect, the stores were cleared of TVs in days (obviously this measure was super popular with the people), and then the shops remained empty, as the store owners didn't have the money to restock. And weren't inclined to do so, as selling below the wholesale price is a fast way to going out of business.
"I don't see a reason to bring your political leanings into a discussion of straightforward economic cause and effects."
Really? Can't you really step out a little and try to think why oil represents 95% of Venezuela's export earnings? Are you really sure that pointing the cause of Venezuela's collapse on leftist policies is just a fruit of "policial leanings"? Is there anything you would you consider as reasonable argument against "leftist populism"?
> Can't you really step out a little and try to think why oil represents 95% of Venezuela's export earnings?
Yes, and it has nothing to do with leftist populism (just as the dominance of oil among Saudi Arabia's exports has nothing to do with leftist populism, and the dominance of copper among Chile's exports -- which is true now, and was under both the Allende and Pinochet regimes in the past -- has nothing to do with leftist populism.)
There have been whole shelves of books written on how the dominant international trade regime locks countries whose existing comparative advantage is in extractive industries to those sources of income in international trade and makes it difficult for most of them to successfully diversify; this problem is independent of whether the local government is left- or right-leaning, and whether it is populist or not.
> Are you really sure that pointing the cause of Venezuela's collapse on leftist policies is just a fruit of "policial leanings"?
Pointing with significant evidence to specific effects of specific policies might not be, blaming it generically on leftism or leftist populism is, OTOH, a different story.
What's going to run this whole conversation off the rails is that "leftist", "populist", "socialist", etc. are emotionally loaded strawmen. Politics and economics have many more interesting dimensions to discuss than just "left vs. right".
So asking for an argument against "leftist populism" is a waste of everyone's time because nobody will agree on what those words mean, they'll all talk past each other, and it's missing 99% of the interesting things to discuss about Venezuela as compared to other countries.
OPEC without SA is irrelevant, it's like NAFTA without the USA. Saudi wage the price war on emergent players (frackling and shale extractors), disregarding the wishes of lesser market players like Venezuela.
It's not a price war if you're reverting to a competitive market after many years of running a cartel. Unless you dislike a competitive market?
The Saudis realise that setting a high price allows for artifically high shale investment which would eventually disenfranchise the Saudis. They rather take some pain now than sponsor their own demise.
My point was Saudi are not some victims of cartel policies. They run it (or ruin it) at their own discretion as the largest member by far. Cartel quotes were never binding them in any practical way.
From the article it sounded like they were already well on their way to disaster even with high oil prices. For instance, not even maintaining their oil infrastructure, and installing incompetent loyalists to run it.
> When 95% comes from a single source and that source loses 1/3rd of it's value in a short amount of time then its straightforward to understand why Venezuela is in this situation.
There is more than that. In 90's when the Venezuelan crude was as low as $11 per barrel, the business was still profitable. Now with a price $20 per barrel it is dangerously close to the price of production (when you include refinement which is not an option for Venezuelan oil), so it is not just because the market bump, but also for being inefficient in the business.
>I don't see a reason to bring your political leanings into a discussion of straightforward economic cause and effects.
Because it is relevant, it is not only because economic causes but also because the government policies made this situation particularly terrible. Should Venezuela had better economical policies this would has been just a mere crisis and not a bankrupt scenario.
Its a bit worse than that as the oil produced in Venezuela (Heavy crude oil) needs more processing than say oil out of North Dakota or Texas (West Texas Intermediate). They actually had to import oil to blend to bring up the quality. Since they haven't invested in their industry, they really don't have ability to produce oil as cheaply as other countries and need a much higher price.
In recent history, Venezuela defaulted in 1982, 1990, had a banking collapse in 1994, 100% inflation in 1996, defaulted again in 1998 and 2004...all bad luck of course.
What ridiculous propaganda. This is the cost of depending an entire country's budget not only on one single commodity export, but on highly optimistic predictions of that commodity's future price. Commodities go through major boom and bust cycles and all countries depending on oil are feeling the bust right now, regardless of political leanings.
I remember reading an article several years back, before it was obvious the hell that was coming to Venezuela. The reporter was quite impressed with Chavez's ability to speak and act for the people. He noted that one day Chavez was walking in the city and saw a nice building. He said something to the effect of "The people need this building much more than the rich companies using it" and boom, those folks lost their building.
Yet it was somehow a mystery to both the reporter and many folks in the states that somehow this was a problem. There were tons of supporters of what was going on in Venezuela, all over the world, thankful that somebody was finally truly looking out for the common man.
Read a book once which compared many different cultures over the centuries. Lately it's fairly common to wave your hands around and say something like "There are no better or worse cultures. Each has its own values" but this author did not do that. He made the case, and I agreed, that whatever your values, it's better living to 75 than it is dying of disease at age 8. What was one of the primary things he felt made a difference in cultures? Respect of private property.
I'm not sure where you're going with that, but after reading a book on the Spanish Civil War, when "respecting private property" means "a few people having a lot of it and most folks having next to nothing" and the former fighting to maintain this advantageous statu quo, it's pretty clear to me that the long-term stability of the country is in large part predicated on some measure of equality and social justice before "the respect for private property".
Do you not see respect for private property as part of social justice? If not, consider: You're poor. You finally get enough money to save a bit. Is it not part of social justice that nobody can take it from you?
Not really. They didn't propose the end of private property and total economic planning by the government, did they? They just wanted to "do more for the poor", better education, better hospitals, correct?
You don't have a single leftist politic in the US.
Come on, you've got one of the most fucked up healthcare systems in the developed world, precisely because of your right-wing policies to privatize everything - and not a single politician is planning to fix that.
> Off-Topic: Most stories about politics, or crime, or sports, unless they're evidence of some interesting new phenomenon. Videos of pratfalls or disasters, or cute animal pictures. If they'd cover it on TV news, it's probably off-topic.
No, less wrong is just so neoliberal, socially conservative, and outright fascist in the extreme that the ones that are "only" neocons think they're social democrats, in part because they aren't as extreme as the extremists and in part because they think they're all socially liberal because their Glorious Leader is polygamous.
> You don't have a single leftist politic in the US.
We've got a few, but they rarely get much attention.
> Come on, you've got one of the most fucked up healthcare systems in the developed world, precisely because of your right-wing policies to privatize everything - and not a single politician is planning to fix that.
First, "one of" is superfluous.
Second, though, the "not a single politician is planning to fix that" part is false; single-payer has a number of politicians who advocate for it, most notably, currently, Sen. Sanders, one of the two significant contenders for (though not the frontrunner) the Democratic Party nomination for the Presidency.
Is your last sentence for real? The government in Venezuela is better described as fascist or at the very least, statist.
And anyway even it were a true stanchion of leftist populism, it does not mean that because one leftist populist country built on oil export revenues went bankrupt, that others will as well.
How does Venezuela offer any lessons for American leftists? I'm not super familiar with the situation in Venezuela, but it seems like they have almost no relation.
The Venezuelan government looks like the old Soviet version of leftism, where dissent is suppressed, everything in sight is nationalized, money is tightly restricted, foreign companies are kicked out, etc.
American leftism is basically, let's raise taxes a bit and subsidize health care more. The two don't look even vaguely alike.
Usually are ideas more tied to the Marxism-Leninism way of thinking.
I don't think there are many public figures supporting it, but something is going on in the population when you see a guy like Donald Trump in front of polls for that long. When you compare speeches, you can observe that D. Trump is pretty much Chavez from the other side of the street.
They may be similar in their approaches to international commerce, but Trump and Chavez seem like opposites in terms of their approach to the domestic economy.
> Trump and Chavez seem like opposites in terms of their approach to the domestic economy
They are closer that you might think. For instance, they both have used the nationalism as a wild card (Trump when said that would force Apple to use USA based manufactures and Chavez when he "freed" companies from foreign capitals).
> They may be similar in their approaches to international commerce, but Trump and Chavez seem like opposites in terms of their approach to the domestic economy.
Well, sure, a right-wing nationalist populist is in some respects opposed (though in others aligned) with what a left-wing nationalist populist would pursue.
Precisely - but for some very odd reason, some people seem compelled to defend Venezuela, because it's part of "team lefty" or something. I suppose it's similar to how people have defended (and sent money to) some pretty horrible right wing regimes because they were fighting for "team righty".
Which people, exactly? I don't think I've ever seen any American leftist defend the Chavez regime. Is this some fringe movement being blown out of proportion?
I don't think I've seen it on HN, and it hardly seems worth bringing up unless you're bringing it up among such people.
Edit: well, there's one, just above a little bit. I guess they are out there! But still, it hardly seems worth calling them out considering they seem to have zero (probably less than zero) influence.
I don't see how any of this is related to No True Scotsman.
I'm not surprised they exist, but they seem quite rare and thus not worth addressing. Most of your links appear to be random authors, unless they're influential and I'm just not familiar with them. The one about the Congressman is interesting but could just be a matter of finding something good to say about the recently deceased.
In any case, Chavez-defense hardly seems like a popular movement that needs to be spontaneously called out and debunked like this, any more than news of a satellite launch needs an "Ah hah, so there, Flat Earthers!"
> Precisely - but for some very odd reason, some people seem compelled to defend Venezuela, because it's part of "team lefty" or something
What people? I've occasionally seem Americans on the left praise particular acts of the Venezuelan government, often while at the same time criticizing others -- and I've seen Americans on the left criticize US acts against the Venezuelan government, like overtly backing a coup.
But I haven't seen any substantial defense by notable American leftists of the Venezuelan government on a general level (and certainly nothing to compare with the closeness between, say, the Saudi royal family and notable figures on the right.)
Pretty much right, but IMO most of the defense is because Bush II meddled in Venezuela politics and (from the Lefty perspective) anything Bush did is automatically wrong, so Chavez must be okay.
Just like most of the climate denialists (or other far-right bad ideas) are from people who first heard about global warming from all the Liberal professors and hippies making noise about it. And anything they want must be automatically wrong.
The lesson is that everything is just fine until you run out of other people's money. Oh, they never talk about raising taxes a bit, if they do they know they are just throwing lies about because it never covers the cost of everything they want to give away; for your vote.
The typical egotistical reply is that "if they just did" or "we will do it right" when people point out the follies that you have it all if we do it right. Simple how they sold the ACA, after all the we are the US we can do it better than Europe.
So it is with most forms of governance which are based on exploiting jealously instead of good government spending. It is far easier to convince people that others have an unfair advantage that to admit the over regulation, lack of respect for property rights, political favoritism, and inefficient government programs are the cause.
I thought the lesson of Venezuela was that seizing control of the entire economy is a good way to wreck it. Venezuela had serious problems long before oil prices crashed, and "running out of other people's money" is just exposing the problems of their disastrous policies, it's not the cause of those problems.
To me, all 'soft' leftism converge to more radical socialism in time, if economy can withstand it of course. In social democracy once you start, you never stop. More publicization, more taxation, more government regulations, price caps, wage controls, social spending, more public workers.. Whether you prefer it that way or not, government and state just gets larger and larger. Usually before being `socialist` economy goes bust and people selects a more conservative government. After a while, left comes again with the same populist ideas and cycle continues.
I havent heard anyone in the US clamoring for the government to take control of the means of production as in Venezuela.
I havent heard anyone in the US clamoring to increase expropriation of real estate and property (in fact, i commonly see articles negative about asset forfeiture laws and eminent domain)
I havent heard anyone in the US clamoring for a chairman of the Fed who 'doesn't believe in such a thing as inflation'
I havent heard anyone in the US clamoring for policies dependent on static revenues from any specific exports.
Could you be more specific in the leftist populism policies that you think a) created this crisis in Venezuela and b) represents an equal threat to the United States?
> People in US clamoring for leftist populism should take deep look at Venezuela.
All things in balance. Capitalism is not inherently good, nor is socialism inherently bad. You've got to balance the two: there are certain markets (namely anything around health care or essential needs) where profit creates a perverse incentive.
The US is also starting from a much better place than Venezuela did: our economy is far more diverse, so market changes don't affect us as strongly. The US could do with being a bit more socialist in some ways, but we can also afford it.
Every time some flavour of socialism fails, out of the woodwork they come: See? Socialism doesn't work, Capitalism is perfect.
Every time some flavour of socialism succeds: Hmm... Yea those Scandinavians are a ticking bomb, any day now they are going to fail. (40 years later)... Any day now...
> Hmm... Yea those Scandinavians are a ticking bomb,
Most Scandinavians countries are kingdoms ( I think only Finland is actually a republic) and when people talk about socialism they usually have Marxism-Leninism in mind. The Nordic model [1] relies on the free market to have a welfare state, which contrast with Marx's ideas of state and social classes.
Not in America. In America, people think anything involving public spending is socialism. We also don't know what social democracy is and we define "liberalism" in a different way from everyone else on the planet.
> when people talk about socialism they usually have Marxism-Leninism in mind.
Er, what? Socialism is much more than just Marxism even in the broad sense, and Leninist vanguardism ("Marxism-Leninism") is not particularly significant in modern socialism. About the only thing from even Marxism in the broad sense that is fairly broadly common throughout all of what people talk about under the umbrella "socialism" is the broad outline of the critique of concerns/problems with capitalism, but the actual alternatives vary considerably.
I get it, you don't like it, but the problem here is not exactly socialism, but a disfunctional economy. They have based the economy only on one thing, oil, and now that has 1/3 of the price they need. That doesn't have anything to do with socialism.
The shortages are extremely serious at this moment. We're having a humanitarian crisis because medicines can't be found, people use social media to ask for medicines.
The government limited the days where you can go to the super market to the last digit of the "Social Security Number". So if yours end in 0 or 1 then you must buy on Monday. And nothing guarantees that you will find what you're looking for.
Lines outside supermarkets take 2 hours or more and they only sell you a limited amount of items. 1 Chicken per week.
The government also installed finger print scanners to make sure that you don't buy more than you're allowed.
All this measures are failing and will fail, because the problem is that they destroyed the private industry making us heavily relay on imports. Now that the price of the oil is down there is not enough money to import, so there's simply not enough food, medicines, etc.
Small business are on their knees. They are just surviving and living paycheck by paycheck. They sell whatever they get access too. Their profits are worth nothing in dollars (if they manage to have profits). An inflation projected to be 700% this year makes it extremely hard to survive, you need to adjust your prices every hour.
Nobody is doing well in Venezuela, except the corrupt people in the government who keep stealing money.
You should spin this off into a separate thread. I think it would be very interesting.
But if you don't, I'd like to know what it was like before 2006, when oil profits were high and subsidies followed. Did you get a sense the poor were significantly improving in their standard of living at that time? What about the middle class? If not, what do you think held them back?
Not at all. It's too unsafe, and the tourism industry is not good either. If you still want to go, do so with a local. That way you'll reduce risk quite significantly.
Answering this question has been harder than I thought. I hate to say "Don't go to my country right now". But I've to be honest, I don't think it's worth the risk visiting right now due to crime, robbery, murders, kidnaps and more.. Even though a dollar will go a long way, your life is worth a lot more.. Hopefully things will get better soon you will be able to see the Angel Falls and Los Roques with your own eyes!
It's 2013. Let's say you were economically literate, had a significant pot of money to protect, and were concerned about the direction the country was taking.
What would have been the best way to protect that pot of money, and how hard would it have been to do it?
The best way to protect the money would have been to buy US dollars on the black market.
Another way would have been to buy a car, motorcycle, alcohol, etc. Anything that preserves it's value over time. The worst thing would be to have it on the bank.
Oye, chamo. :) My wife wants to visit Caracas with our son in the summer, to see family. Last time we were there was 2008, when the "fuerte" was 8:1 and we witnessed two carjackings. I think it's a terrible idea to go back, even for a week or two. What do you think?
It's definitely not safe. But it's very hard to stop visiting family. Just avoid public places, don't go out during the night and stay with your family.
I'm currently living in Montreal. I love Canada and all the opportunities it offers. People are very friendly and it's extremely multicultural! But my heart will always be in Venezuela.
>> The first step was when Hugo Chávez's socialist government started spending more money on the poor, with everything from two-cent gasoline to free housing.
That sounds exactly like the kind of thing we (HN crowd) have been dreaming about. Hopefully we don't end up reading a similar comment down the road about the US!
I think it's pretty clear that any US policies will be more sophisticated than "create insane price subsidies on a product produced by a dying state-owned company".
What really matters is not "money on the poor", but economic diversity and sustainability. Let's not latch on to political catchphrases designed to short circuit critical discussion. When people suggest things like basic income on HN, there is always discussion of how to fund it sustainably.
I think there's a marked difference between conversations about basic income and "two-cent gasoline".
In this case, direct market manipulation of specific goods paid for by a budget entirely reliant on the price of oil being at historical highs doesn't seem like good policy, even to those who'd vote for Bernie Sanders!
I really wish to hear from people who support leftist causes what they think of this and if there's anything, any hypothetical event, that they would accept, if happened, as a proof that leftist policies are bad.
What do you mean by leftist? It's obviously a continuum -- many successful European countries self-describe their governments as socialist and it's working well for them.
If you only think of the corrupt and incompetent governments as the leftist ones, it's a truism that their policies are failing.
I'm not sure if I qualify as leftist, but I can answer your questions. Is there anything that makes me accept that leftists plicies are bad? Yes. Evidence, like Venezuela's example, prove that some leftists policies are bad. The current government and the policies it have taken are the only responsible for the current inflation and product scarcety. But that doesn't mean that every leftist policy is bad.
For example, the Venezuela government started programs to eliminate analphabetism, increased the number of doctors and free hospitals (in a program with the help of Cuba), reduced the infant death rate, increased the education budget, the access to potable water and other things like that. Granted, none of these measures are leftist per se, but also, these are not the things a right wing government cares about (at least not our right wing governments).
I think the reason so many people in Latin America is leftist is not ideology. It's simply that the other option is not liberalism, free markets and laisse faire. The alternative is chronism, medieval institutions (feudalism is alive in a lot of places), privatization of earnings and nationalization of loses.
Thank you for being the only one to answer my question.
But let me make another one. We will not agree on an answer, you don't even have to reply if you don't want, but I want to ask anyway: you don't see any relationship between the reasoning behind free hospitals and the Venezuela economic collapse?
Relationship between some improvement in health services and economic collapse? No. I think the economic trouble is due to a bigger, wider mismanagement. Health and education are just a drop of water that could (and should) remain untouched even after the prices of oil went down.
When I talked about an increase in health and education expenditures, I was talking about increase in the percentage of the budget, so they were done at expense of other things, and it began before the increase in oil prices. The years previous to Chavez, the health budget was 3.5-4.5% and it went up to 6.0%, and remained above 5.0 up to 2010. As you can see, these are not exorbitant expenses, and they are below other countries' expenditures like Uruguay, Tanzania or Uganda [1].
The economical crisis is not because the government increasing expenditures in some basic human needs, but because there hasn't been a cut down anything at all. There are a lot of valid criticisms that can be done to Venezuela's government, but expending a little bit more in its people is not one, in my opinion.
You'd need to define "leftist causes" a little more specifically.
For example, I support socialized medicine, but don't support nationalizing the economy or strict capital controls. Do I qualify or not? Assuming I do, am I allowed to point out that Venezuela's problems are more likely due to stuff like the last two?
Its not exactly hard to come up with a counter-point on right-wing policy here using the same, broad logic. Putin's Russia is having similar issues with an unbalanced budget due to a low oil price - would you say that his mistake is leftist causes?
At the heart of both countries current circumstances are _populist_ causes, and it seems to be the combination of populism and oil dependency that's at the heart of Venezuela's current problems.
In short, relying on the price of a commodity being at or above an historically high level to balance your budget is going to lead to large blow-outs in your budget if the price falls drastically. The comparison to Norway is a good one simply because they created a buffer-fund for handling prices swings. Left or right, that seems like sound economic policy.
I really wish to hear from people who support rightist causes what they think of this and if there's anything, any hypothetical event, that they would accept, if happened, as a proof that rightist policies are bad.
If you actually read the article they are quite reticent to blame socialism as the root cause but rather economic mismanagement and cronyism. This is a feature of many Latin American states regardless of left or right politics. In contrast socialism seems to be working just fine in Canada and Northern Europe.
In any case the current surge of left-leaning politics in the US is a symptom of massive economic inequality. If rightist politics had an answer for that, anything other than "just work harder," then people wouldn't be so quick to look to the left.
Nationalizing industries is not inherently a leftist thing. There have been despotic regimes who were not leftist and seized control of means of production. And there are plenty of leftist governments that don't nationalize industries.
It's fun to use these situations as proof of one political belief or another, but I suggest looking deeper than "socialism" or "leftism". Chavez tapped a popular anger that was the direct result of mismanagement by the previous 30 years of government that was decidedly not leftist. The mood was so bad that Chavez was forgiven for a coup attempt and allowed to run for president. Think about that for a second. The AD-COPEI regime in power from the 60s to the 90s was so discredited that a literal traitor was elected to replace them.
Venezuela's problem is not political flavor, it's the oil curse itself. I have family there, and it is quite bad. The economy is stuck in several sorts of cleft stick: Saudi Arabia's game of chicken with the rest of OPEC, the mismanagement called out in the article, the hangover of Chavez policies (which were necessary for popular support), and of course the military-narco complex always in the wings.
the oil curse? come on. natural resources are neither a blessing or curse. norway is a small country with lots of oil and isn't a disaster. i don't know what the problem is but don't blame it on oil.
Imagine having the ability to see and hear the thoughts of everyone around you.
You'd either be a superhero, the best politician, running a sane, stable, healthy 'democracy' where people who were upset had things fixed just the right way - or you'd be a crumbled mess, an incoherent madman.
There's no middle ground. With a singularly outsized ability like that, you simply could not function in a 'normal life.'
Perhaps huge oil revenues are like that - without a stable cultural and political setup to use the resources wisely and for the benefit of the whole community (norway) - perhaps the only other course is a totally connected political mafia that extracts the value of the primary resource for itself and its supporters.
A history of colonialism would set the country up for the second track.
It's a term of art in development economics. Norway is an interesting case because it had a developed economy before petroleum exploitation, but even so a lot of Norwegian policies depend on having a large fiscal buffer based on resource extraction. Developing states without strong social structures generally follow maladaptive development paths when exposed to lots of resource revenues, which is a tragedy in its own right.
Also looks like the Chavist party is busing running around, fingers in the ears and singing la-la-la in a futile effort to deny the actual situation (no, guys, price controls didn't work in the past and they still don't work now). When your politicians try to unsee reality, you're in trouble.
Oh yes, they are thoroughly fucked. But so are the people in general. The "curse" of oil is that it takes relatively few people to run the industry. Perhaps 100,000. The rest of the population is surplus to requirements. In theory you only need to pay off the oil folks, plus protection, to remain in power. In practice...
That's because Venezuela is a de-facto narco state at this point. The politicians are denying reality because they make a lot of money by facilitating the global drug trade.
Venezuela is the key link in the global narcotics supply chain: heroin comes in from central Asia and is then smuggled by Mexican cartels into the US, and cocaine comes in from Colombia and Peru to be shipped overseas and ultimately land in Europe.
The Chavist politicians have an active interest in unseeing reality. Reality is that they are screwing over the population in order to stay in power at any cost so they can continue to line their pockets with drug money. That's not the narrative they want to tell, so they change it.
Yes; typically they go after traffickers like this with RICO cases. Their organizations break US law every day, and by being part of the conspiracy to commit those crimes, they are guilty under RICO. All the government has to do is prove that laws were broken, there was a conspiracy of many people to break those laws RICO laws were designed specifically to take down large, loosely connected criminal organizations like this.
This is just the tip of the iceberg. Vice has a ton of stuff on the global drug problem, and Venezuela is the epicenter of trafficking right now because Caracas is the safest port in the world for traffickers. There's actually a good 30 minute video on Vice that explains the whole supply chain and its links to Boko Haram, ISIS and Islamist extremists in North Africa.
Indeed, the problem has not been "socialism" or "populism." The problem has been and continues to be complete and utter idiocy. Finally, after Chavez died, Venezuelans began to see this for themselves, and as mentioned in the article, voted massively for the opposition in the latest parliamentary elections. Unfortunately, the president remains in place and apparently maintains the power to continue the idiocy a bit longer. It is very sad to me to see, especially after the people so emphatically rejected him and his party's policies in the 2015 parliamentary elections.
"Communist" or "people's" speakers in Latin America have had an incredibly powerful voice since the US supported dictatorships of the 60s to 80s. It didn't matter what crimes they perpetrate, they could always count on the population forgiving them.
Now that those people have been in power for a while all over the place, people are waking-up to the fact that they aren't special, and there's no deep truth on their discourse.
A .vn minister said recently that toothpaste was difficult to find in stores because people were brushing their teeth 3x a day, which is "obviously too much, 1x at night is enough". It is incredible how stupid things a person allows him/herself to say when paid to do it.
Well, the media mischaracterized what she said in order for it to sound more shocking. What she actually said was that people use more medication than they need, in general. Still preposterous, but I'm saddened that the media makes these outlandish claims that only hurt its credibility in the long run.
Not only because of Venezuela. As usual the simple yet effective "Qui bono" ("Who benefits") question can clear things up:
The US and allies:
- US and the EU are really not affected by low oil prices, you can even argue it is good for them since they're net importers. Also they have strong industrialized diversified economies, so they're hardly vulnerable on one single spot.
- Saudi Arabia: can stand short-to-medium term low oil prices as already shown on the 70s crisis.
About US "enemies":
- Russia: badly hit, a big oil exporter, but unlikely to be weakened much since it can rely on other exports.
- Venezuela: the most badly hit since more than 80% of its income is from oil, and having lost a charismatic leader replaced by a relatively unknown one, it's the right time to tighten the rope.
- Iran: you don't want to give them a huge influx of petro-dollars just after lifting the sanctions.
- China: since the beginning of the oil price plunging, it has shown difficulties to keep up and lately its stocks are free-falling.
So clearly a net geopolitical gain for US and its allies. Also the political instability of Middle East and Libya chaotic situation brings more cheaper oil, so all this looks like was part of this same plan: get rid of annoying governments (Chavez/Maduro, Gaddafi and Al-Assad) and weaken others (Iran and its allies: Yemen, shiite Irak government) while getting cheaper oil which in turn weakens other enemies like Venezuela and China and helps ailing allies like the EU. Not a bad plan at all I think. And people that think politics and economics are not related are either naive or didn't read much History. It's called "economic policy" for a reason.
So, your claim is that the global price of oil is being manipulated lower solely to punish Venezuela for having a Chavista-style government?
Allow me to indulge in some counter-prognostication. Shale technology will cap the oil price at $50-$60 per barrel in perpetuity. Since the Chavistas rely on a price far higher than this to fund their theft and largesse, their system will be revealed to be no more economically sustainable than the dozens of other socialist revolutions that have been tried.
I'm not defending reliance on high oil price as a good long-term strategy. In any case the money was used to improve the living standard of a lot of people, and that's something I cannot disagree with. Still I would have used that money to diversify the economy reliance on oil and make sure we had funds for the future, but that doesn't make the same political impact.
And the dozens of other socialist revolutions that have been tried all failed because they have been all boycotted by capitalist nations, with war, arms race, space races, illegal embargoes, and whatnot, not because the socialist system is not sustainable. Socialism cannot compete with capitalism in term of generating huge amount of capital and growth because it is not the goal of the socialist system.
Still, examples like Cuba with a 50-year embargo from the world superpower manages to have the best health of all latinamerica, and even a lower children mortality than the USA. I totally disagree that this is a failure. The USSR also went from a absolute monarchy slavery behind-time empire to a world economic and military superpower with one of the best health and education systems in ~30 years, which is an unparalleled impressive feat.
Um, what? Are you saying the members of OPEC are more concerned about regime change in Venezuela than their own economic survival? You'll have to explain how that one works.
OPEC never was a tight group. They hardly agree on anything or consult each other for production strategies. Also OPEC has not that much weight on world oil production any more. And also most OPEC countries are more interested in better relation with the USA than any OPEC strategies.
Venezula is a really interesting example in my mind. Here is a country which has all of the fundamental things it needs to be a vibrant, robust, and generally great country and yet it isn't one.
It has natural resources which are in demand, and for which the tools and techniques to convert them into exchangable goods is well understood. It has few serious military threats from its neighbors and so militarily its primarily responsible for civil and criminal activities, and it has nominally "easy" access to nearby markets for trade goods (importing things it doesn't have domestically).
But it also has people in "charge" to have no idea how running a country even works much less the forces that act on it. And as many anti-libertarians will point out, the lack of a competent government does not result in a paradise emerging from the work of motivated individual actors within.
And understanding that, go back to the founding of the US and its fits and starts trying to go from being a colony to being a country, and most importantly the constraints on their own actions that everyone had to agree to in order to get the Constitution done. Try to understand why that worked is an interesting (and perhaps vital) exercise. Was it the people? Their values? Their education? Their understanding? Was it coincidence or luck?
I find myself desperate to know why one institution works and another fails. Both large like nation-states, and small like companies. How is it "no big deal" for some companies to get a new CEO and catastrophic for others?
How is it "no big deal" for some companies to get a new CEO and catastrophic for others?
It probably doesn't satisfy, but isn't one answer to this question: "Because there are countless convoluted variables"? This would depend on the outgoing CEO, the incoming CEO, every key employee, the state of the company, the company's sector, the state of the economy, etc.
I guess you're looking for consistent rules of thumb, but is it possible that there are too many factors for their to be any good rules of thumb?
Having joined IBM which has a process for everything (including evolving management, and making changes at the top) which was very very different than Sun which was evolution by attrition (for example once Ed Zander figured out that Scott McNealy wasn't going to give him a shot at being CEO he went to Motorola) which was different than NetApp where some positional changes (CEO) seemed managed while others (CTO and VP Eng) did not.
And then there are processes like military command or the US Constitution which have their own components. For example you can't run for the office "Speaker of the house" in the US Congress you have to be voted into it by a set of peers who are all nominally eligible for the job. Similarly with Pope, anyone in the College of Cardinals can be elected as I understand it. Not so much for Dali Lama though.
Organizations are only as strong as the people who make them up, but creating tools to manage that set of people for the greater good of the organization, that is an interesting question. How do you quell damaging voices while amplifying the voice of people making forward progress? Countries are the same way, monarchies can fail suddenly with the coronation of a bad monarch, but democracies tend to survive such games. Rome had been around for centuries but as more and more power congealed into a single individual it became more and more unstable. It is like you have to walk into a room where anyone else can get you removed, and still get stuff done.
How to design robust organizations at scale. And how to quantify the stability and robustness of a given organization. I agree, it's an interesting topic. At the nation-state scale, it could be that we don't have enough data points.
And to take the question to its extreme, it's hard to answer what kind of life-forms/civilizations might be likely to become space faring (or even intelligent) with N=1.
> And as many anti-libertarians will point out, the lack of a competent government does not result in a paradise emerging from the work of motivated individual actors within.
There's a big difference between an incompetent government and a libertarian free-market paradise. The two aren't even comparable. A corrupt government bureaucracy with central economic planning based on nepotism and cronyism (presumably, Venezuela) is pretty much the polar opposite of what any sane libertarian or anarcho-capitalist would be advocating for.
I agree they would not advocate it but I'm wondering how they would prevent it. It is easy for people who don't understand the consequences of their actions to over power those who do, because they are willing to take action that favors short term gain over long term survival. So your 'sane libertarian' or 'anarcho-capitalist' who was not also willing to destroy the economy to further consolidate their influence, would be swept aside by thugs who were willing to do that.
> It has few serious military threats from its neighbors
The U.S. military is 'full spectrum dominance', including coup attempts, as in the 2002 coup attempt. Team Bush has not been gone long in the bigger scheme of things, and Team Bush 2 (Obama) seems to have sanctions on Venezuela. Sanctions is tantamount to a blockade or a siege, seen by some as an act of war even if no guns get fired.
Venezuela's problem is that it wants to be a proper country rather than some Goldman Sachs managed vassal state.
The Venezuela wikipedia page makes it sounds as if the Bolivarian Revolution is a repeat of history:
The election of Carlos Andrés Pérez in 1973 coincided
with the 1973 oil crisis, in which Venezuela's income
exploded as oil prices soared; oil industries were
nationalized in 1976. This led to massive increases in
public spending, but also increases in external debts,
which continued into the 1980s when the collapse of oil
prices during the 1980s crippled the Venezuelan economy.
As the government started to devalue the currency in
February 1983 to face its financial obligations,
Venezuelans' real standards of living fell dramatically.
A number of failed economic policies and increasing
corruption in government led to rising poverty and crime,
worsening social indicators, and increased political
instability.
228 comments
[ 3.1 ms ] story [ 258 ms ] threadThis is a classic "that never works" maneuver. The USA did the same thing to some extent when it "de-Baath-ified" Iraq, which shows that this is a thing that doesn't work regardless of whether you are "left wing" or "right wing" and it doesn't even work when the USA does it. It also sometimes fails in the corporate world, such as when an "activist investor" replaces everyone who knows what they're doing in a company or a lot of people are fired in an acquisition.
Funny how this argument starts to fall apart when you look at all the failing oil & fracking companies in the US, which were run by people who knew what they were doing and had no socialist petro regime to be loyal to and no activist investors.
Now would be a good time to schedule some of those infrastructure projects that need truckers, welders, and such.
It's like saying, "yeah, our high traffic e-commerce site is only failing because an intern tripped over a server power cord". No, failure is when tripping over a power cord is enough to make you fail.
The better analogy in computer services would be if your e-commerce site made $100 per hour and took 1 kilowatt to run, but then the price of electricity rose to $101 per kilowatt-hour. As soon as the price fell back below $100, you'd be back in business -- the same is true of the fracking companies as soon as the price of oil rises.
Even so, if your business depends on some resource staying at a certain price, and you do not wish to couple your profitability to that price, you should buy options or forward contracts, as that's the benefit of modern financial instruments. Oil-intense businesses (like airlines) tend to hedge against big fluctuations like this.
When you are spending more money than the money coming into the system, which happens with almost all socialist systems (because commerce is severely restricted), it collapses.
I don't think it is possible under current monetary regimes.
Net debt equals net savings, so the vast majority of developed economies run deficits because somebody has to soak up the surplus they create.
But Venezuela was a petro state. See my other post for the real reason for their collapse.
[1] https://www.cia.gov/library/publications/the-world-factbook/...
Anyway, I checked out the first country (South Korea) in your source. 2014-12-31 estimate of outstanding debt is $424.5 Billion with a credit stock of ~$2.4 trillion.
If you want to only analyze receipts over a short period of time, then I'd guess you can find a positive period for most countries.
You mean, like the USA?
The United States can spend according to their projections for the value of US Treasury Bills. US Treasury Bills, in turn, are an investment in the future US economy as a whole. The connection between them is fuzzy and distant but at least in theory the government is run on tax-receipts even though T-Bills are doing so well they are self-sustaining.
Venezuela was borrowing against their own future and their economy was tied up in energy. They are in a different situation.
If only the debt/GDB ratio wasn't growing over the years...
>>The first step was when Hugo Chávez's socialist government started spending more money on the poor, with everything from two-cent gasoline to free housing. Now, there's nothing wrong with that — in fact, it's a good idea in general — but only as long as you actually, well, have the money to spend.
I think even the article doesn't go far enough though: it's not just about whether you "have enough money", but whether you can reliably expect to keep getting that money, and you won't see increases in your spending obligations.
On that note: There's a dangerously common mentality out there that doesn't understand the concept of "good times don't last forever":
Your country has a lot of oil money coming in? Save some for when it isn't. Revenues are high because of a tech boom? Set it aside for later. Your pension fund investments returned 30% this year? No, don't pay out 23% to the managers "since they hit their 7% target"; that 30% has to cancel out down years.
And in personal lives: Your current job seems like an absurdly good deal? Save and cross-train for when it becomes obsolete or oversupplied.
Too true. I've talked to many successful small business owners that managed to make it through multiple recessions. This is usually the key to surviving.
"Alexander Hamilton believed that a domestic debt, supported by federal taxes collected from all the states, would unify the country", a quote from
"Why the Founding Fathers Loved the National Debt"
http://www.bloombergview.com/articles/2013-01-25/why-the-fou...
How many times has the US collapsed?
"Alexander Hamilton believed that a domestic debt, supported by federal taxes collected from all the states, would unify the country", a quote from
"Why the Founding Fathers Loved the National Debt"
http://www.bloombergview.com/articles/2013-01-25/why-the-fou...
As a side note, how this figured into the creation of Washington DC is pretty interesting.
The Oil bust and Venezuela creating a welfare state around $100/barrel (along with the corruption) led to this crisis. This is the cost of Leftist Populism. Some ones got to pay, and usually it is the populace. Caracas is probably most violent City in Americas, today.
People in US clamoring for leftist populism should take deep look at Venezuela.
>>People in US clamoring for leftist populism should take deep look at Venezuela.
I don't see a reason to bring your political leanings into a discussion of straightforward economic cause and effects.
[1] http://www.opec.org/opec_web/en/about_us/171.htm
That means, when they were going well, they shouldn't be boasting the "Leftist" government and so, right?
But what did we see? they and their leftist supporters kept on chanting "Chavez, Chavez" and "Left, Left". Did they ever consider the so "straightforward" economics then??
I think it's easier to metabolize the political dimension to the story when you think of "populist/leftism" as something outside of simple "populism" or "leftism". There are plenty of left-leaning thinkers who do not believe you can print money to solve any economic crisis.
Can you source any of this without linking to an "Objectivism"-associated organization?
Besides, if you twist policies and ideologies enough, you can get anything to justify anything. You can find justifications for guaranteed income from socialist and libertarian perspectives, for example.
I'd classify that as "rooted in ideology", but I'll also agree to a large side dish of "mismanagement".
Look at Norway for instance - they've stashed a lot of their oil money in a fund for the future, rather than piss it away.
Venezuela was a terribly run place, whatever sort of economic theories the leadership espoused. Lots of stuff went on that would not have been acceptable in a country with a stronger democracy and a high regard for the rule of law.
It's about management not money or resources.
So, there are elements, like demographics, stability and geographical and geo-political issues casting bigger shadow than we think.
Dubai is 70% non-citizens, and majority from India.
Look at how Chavez took over the oil company, and generally treated businesses.
Sweden, for instance, may have high taxation, but it is applied fairly, and businesses are not considered 'the enemy'. Property rights exist and are taken seriously.
I'm actually a somewhat left-leaning person, but never found Venezuela to be a very compelling example, to be honest.
They are also rigged in my country, but it is a bit more obvious there.
The funny thing is that Norway's system was designed by an Iraqi immigrant engineer.
That policy has been tried across he political spectrum and it's pretty much always ended in tears.
>Look at Norway for instance
Norway wasn't suffering from a massive level of poverty. When Chavez took over, Venezuela was and he cut it significantly. That's what he "pissed" the money away on.
http://reason.com/blog/2015/01/20/venezuelan-fuel-subsidies-... (first link I found, but you can find other less ideological sources as well. I'm not in the reason.com camp, myself).
I'm sure they've done a few good things too, but I think the bad has mostly outweighed the good.
Cheap gasoline is the least of their problems. That is one thing they do have enough of to go around.
>I'm sure they've done a few good things too, but I think the bad has mostly outweighed the good.
Yeah like cutting the poverty rate in half. Something that apparently stops being laudable once the middle classes have to queue for toilet paper.
I saw somewhere (the original article or a comment, I forget which) that people are limited to buying one chicken a week. That's not good... unless you couldn't buy any before, in which case it's a massive step up. Would getting that much protein in your diet (that you never could get before) be worth being unable to get toilet paper (that you also probably couldn't afford before)?
But I'm on your side of this one, because it turned out that chauvismo didn't deliver enough gain to enough people. It promised utopia, but delivered much less, even to the poor, at the price of destroying the economy. But don't minimize the value of what it delivered to the poorest of the poor.
There are much more significant criticisms of Chavez than that, but these are the ones germane to the immediate article.
Whatever you might think about his overt political objectives, it didn't work: there are long lines for toilet paper, and even the lines are now rationed.
Yeah, he nationalized the oil industry and redirected that stream of revenues to poverty reduction programs.
The US establishment was vehemently pissed at this audacity which is why they supported the coup to oust a (whisper it) democratically elected president and also wrote lots of angry articles about him, some of which you apparently read...
>handed control and management of that industry over to political allies who mismanaged it badly
The US oil companies who were carting the vast majority of Venezuela's national wealth out of the country prior to nationalization probably did have a more efficient set up, yes.
>Whatever you might think about his overt political objectives, it didn't work
What part of cutting poverty in half - his overt political objective - was such an abject failure?
What's especially insidious about this logic is the fact that poor people in Venezuela have no international voice; if you're hearing complaints, they must be from the relatively well-off. That much is probably true, but look how that logic works to support the ineffective government of Venezuela: the well-off aren't complaining that it's too hard to buy BMW sedans. They're complaining that they can't fucking buy toilet paper. You think that means the poor people can? Or, what, food and toilet paper are bourgeois concerns?
Are you disputing that poverty rates were cut in half or are you claiming that this is irrelevant because there are queues for toilet paper and TVs?
>What's especially insidious about this logic is the fact that poor people in Venezuela have no international voice; if you're hearing complaints, they must be from the relatively well-off.
I've been to Venezuela and I have met the rich, the middle class and the poor. I'm pretty clear about aware of what each group complains about and why.
It's not any real secret that the (often very violent) protests in Caracas are usually confined to the wealthy white neighborhoods, nor is it any secret that the very poor formed the bulk of Chavez's base (they adored him).
>That much is probably true, but look how that logic works to support the ineffective government of Venezuela: the well-off aren't complaining that it's too hard to buy BMW sedans. They're complaining that they can't fucking buy toilet paper. You think that means the poor people can?
I think that if you think queuing for toilet paper is the apex of poverty then you have no clue what true poverty really is.
>Or, what, food and toilet paper are bourgeois concerns?
Food and medical care is easier to come by these days for the very poor (what on earth did you think I meant by cut poverty in half?).
That's assuredly not a "bourgeois concern" although the obsession with removing price controls in order to eliminate queues most certainly is.
Really? Can't you really step out a little and try to think why oil represents 95% of Venezuela's export earnings? Are you really sure that pointing the cause of Venezuela's collapse on leftist policies is just a fruit of "policial leanings"? Is there anything you would you consider as reasonable argument against "leftist populism"?
Yes, and it has nothing to do with leftist populism (just as the dominance of oil among Saudi Arabia's exports has nothing to do with leftist populism, and the dominance of copper among Chile's exports -- which is true now, and was under both the Allende and Pinochet regimes in the past -- has nothing to do with leftist populism.)
There have been whole shelves of books written on how the dominant international trade regime locks countries whose existing comparative advantage is in extractive industries to those sources of income in international trade and makes it difficult for most of them to successfully diversify; this problem is independent of whether the local government is left- or right-leaning, and whether it is populist or not.
> Are you really sure that pointing the cause of Venezuela's collapse on leftist policies is just a fruit of "policial leanings"?
Pointing with significant evidence to specific effects of specific policies might not be, blaming it generically on leftism or leftist populism is, OTOH, a different story.
So asking for an argument against "leftist populism" is a waste of everyone's time because nobody will agree on what those words mean, they'll all talk past each other, and it's missing 99% of the interesting things to discuss about Venezuela as compared to other countries.
Similarly, Ecuador is pretty leftist. It just has a substantially better run economy.
The Saudis realise that setting a high price allows for artifically high shale investment which would eventually disenfranchise the Saudis. They rather take some pain now than sponsor their own demise.
Because political leanings are leading to economic policy decisions.
There is more than that. In 90's when the Venezuelan crude was as low as $11 per barrel, the business was still profitable. Now with a price $20 per barrel it is dangerously close to the price of production (when you include refinement which is not an option for Venezuelan oil), so it is not just because the market bump, but also for being inefficient in the business.
>I don't see a reason to bring your political leanings into a discussion of straightforward economic cause and effects.
Because it is relevant, it is not only because economic causes but also because the government policies made this situation particularly terrible. Should Venezuela had better economical policies this would has been just a mere crisis and not a bankrupt scenario.
https://en.wikipedia.org/wiki/Shortages_in_Venezuela
Yet it was somehow a mystery to both the reporter and many folks in the states that somehow this was a problem. There were tons of supporters of what was going on in Venezuela, all over the world, thankful that somebody was finally truly looking out for the common man.
Read a book once which compared many different cultures over the centuries. Lately it's fairly common to wave your hands around and say something like "There are no better or worse cultures. Each has its own values" but this author did not do that. He made the case, and I agreed, that whatever your values, it's better living to 75 than it is dying of disease at age 8. What was one of the primary things he felt made a difference in cultures? Respect of private property.
Come on, you've got one of the most fucked up healthcare systems in the developed world, precisely because of your right-wing policies to privatize everything - and not a single politician is planning to fix that.
You must not pay attention to the news much.
Anyway, this whole discussion is politics, so... I have flagged the article.
https://news.ycombinator.com/newsguidelines.html
It's somewhat loosely enforced, but the guideline is there.
We've got a few, but they rarely get much attention.
> Come on, you've got one of the most fucked up healthcare systems in the developed world, precisely because of your right-wing policies to privatize everything - and not a single politician is planning to fix that.
First, "one of" is superfluous.
Second, though, the "not a single politician is planning to fix that" part is false; single-payer has a number of politicians who advocate for it, most notably, currently, Sen. Sanders, one of the two significant contenders for (though not the frontrunner) the Democratic Party nomination for the Presidency.
Typical political season scaremongering...
Single-payer healthcare and free college education will bring the US to the brink of collapse!
And anyway even it were a true stanchion of leftist populism, it does not mean that because one leftist populist country built on oil export revenues went bankrupt, that others will as well.
The Venezuelan government looks like the old Soviet version of leftism, where dissent is suppressed, everything in sight is nationalized, money is tightly restricted, foreign companies are kicked out, etc.
American leftism is basically, let's raise taxes a bit and subsidize health care more. The two don't look even vaguely alike.
This sounds more like American liberalism rather than leftism
I don't think there are many public figures supporting it, but something is going on in the population when you see a guy like Donald Trump in front of polls for that long. When you compare speeches, you can observe that D. Trump is pretty much Chavez from the other side of the street.
https://en.wikipedia.org/wiki/American_Left
They are closer that you might think. For instance, they both have used the nationalism as a wild card (Trump when said that would force Apple to use USA based manufactures and Chavez when he "freed" companies from foreign capitals).
Well, sure, a right-wing nationalist populist is in some respects opposed (though in others aligned) with what a left-wing nationalist populist would pursue.
Precisely - but for some very odd reason, some people seem compelled to defend Venezuela, because it's part of "team lefty" or something. I suppose it's similar to how people have defended (and sent money to) some pretty horrible right wing regimes because they were fighting for "team righty".
I think it's a terrible mentality.
Edit: well, there's one, just above a little bit. I guess they are out there! But still, it hardly seems worth calling them out considering they seem to have zero (probably less than zero) influence.
http://progressive.org/news/2013/03/181214/hugo-chavez%E2%80...
http://www.counterpunch.org/2015/03/02/the-legacy-of-hugo-ch...
http://abcnews.go.com/blogs/politics/2013/03/rep-jose-serran...
http://www.thenation.com/article/legacy-hugo-chavez/
Edit: Not American: http://www.theguardian.com/world/2013/mar/06/hugo-chavez-and...
I'm not surprised they exist, but they seem quite rare and thus not worth addressing. Most of your links appear to be random authors, unless they're influential and I'm just not familiar with them. The one about the Congressman is interesting but could just be a matter of finding something good to say about the recently deceased.
In any case, Chavez-defense hardly seems like a popular movement that needs to be spontaneously called out and debunked like this, any more than news of a satellite launch needs an "Ah hah, so there, Flat Earthers!"
What people? I've occasionally seem Americans on the left praise particular acts of the Venezuelan government, often while at the same time criticizing others -- and I've seen Americans on the left criticize US acts against the Venezuelan government, like overtly backing a coup.
But I haven't seen any substantial defense by notable American leftists of the Venezuelan government on a general level (and certainly nothing to compare with the closeness between, say, the Saudi royal family and notable figures on the right.)
Because, in spite of his many flaws, Chavez cut the extreme poverty rate by 70%.
I bet you've never wondered why this fact wasn't filtered down to you through the US media have you?
>I think it's a terrible mentality.
Indeed.
Just like most of the climate denialists (or other far-right bad ideas) are from people who first heard about global warming from all the Liberal professors and hippies making noise about it. And anything they want must be automatically wrong.
The typical egotistical reply is that "if they just did" or "we will do it right" when people point out the follies that you have it all if we do it right. Simple how they sold the ACA, after all the we are the US we can do it better than Europe.
So it is with most forms of governance which are based on exploiting jealously instead of good government spending. It is far easier to convince people that others have an unfair advantage that to admit the over regulation, lack of respect for property rights, political favoritism, and inefficient government programs are the cause.
I havent heard anyone in the US clamoring to increase expropriation of real estate and property (in fact, i commonly see articles negative about asset forfeiture laws and eminent domain)
I havent heard anyone in the US clamoring for a chairman of the Fed who 'doesn't believe in such a thing as inflation'
I havent heard anyone in the US clamoring for policies dependent on static revenues from any specific exports.
Could you be more specific in the leftist populism policies that you think a) created this crisis in Venezuela and b) represents an equal threat to the United States?
All things in balance. Capitalism is not inherently good, nor is socialism inherently bad. You've got to balance the two: there are certain markets (namely anything around health care or essential needs) where profit creates a perverse incentive.
The US is also starting from a much better place than Venezuela did: our economy is far more diverse, so market changes don't affect us as strongly. The US could do with being a bit more socialist in some ways, but we can also afford it.
Every time some flavour of socialism succeds: Hmm... Yea those Scandinavians are a ticking bomb, any day now they are going to fail. (40 years later)... Any day now...
Most Scandinavians countries are kingdoms ( I think only Finland is actually a republic) and when people talk about socialism they usually have Marxism-Leninism in mind. The Nordic model [1] relies on the free market to have a welfare state, which contrast with Marx's ideas of state and social classes.
[1] https://en.wikipedia.org/wiki/Nordic_model
Er, what? Socialism is much more than just Marxism even in the broad sense, and Leninist vanguardism ("Marxism-Leninism") is not particularly significant in modern socialism. About the only thing from even Marxism in the broad sense that is fairly broadly common throughout all of what people talk about under the umbrella "socialism" is the broad outline of the critique of concerns/problems with capitalism, but the actual alternatives vary considerably.
http://www.newgeography.com/content/002287-sweden-a-role-mod...
But you repeat yourself!
It's now Spain's turn, apparently.
You can look at base points for Venezuela credit default swaps in 2014.
http://money.cnn.com/2014/12/12/investing/venezuela-russia-d...
http://i2.cdn.turner.com/money/dam/assets/141212155648-venez...
Wall Street has been betting against Venezuela for two years.
Do small shops survive in Venezuela? How?
The government limited the days where you can go to the super market to the last digit of the "Social Security Number". So if yours end in 0 or 1 then you must buy on Monday. And nothing guarantees that you will find what you're looking for.
Lines outside supermarkets take 2 hours or more and they only sell you a limited amount of items. 1 Chicken per week.
The government also installed finger print scanners to make sure that you don't buy more than you're allowed.
All this measures are failing and will fail, because the problem is that they destroyed the private industry making us heavily relay on imports. Now that the price of the oil is down there is not enough money to import, so there's simply not enough food, medicines, etc.
Nobody is doing well in Venezuela, except the corrupt people in the government who keep stealing money.
But if you don't, I'd like to know what it was like before 2006, when oil profits were high and subsidies followed. Did you get a sense the poor were significantly improving in their standard of living at that time? What about the middle class? If not, what do you think held them back?
What would have been the best way to protect that pot of money, and how hard would it have been to do it?
Another way would have been to buy a car, motorcycle, alcohol, etc. Anything that preserves it's value over time. The worst thing would be to have it on the bank.
That sounds exactly like the kind of thing we (HN crowd) have been dreaming about. Hopefully we don't end up reading a similar comment down the road about the US!
What really matters is not "money on the poor", but economic diversity and sustainability. Let's not latch on to political catchphrases designed to short circuit critical discussion. When people suggest things like basic income on HN, there is always discussion of how to fund it sustainably.
In this case, direct market manipulation of specific goods paid for by a budget entirely reliant on the price of oil being at historical highs doesn't seem like good policy, even to those who'd vote for Bernie Sanders!
Also, you are accusing the "just give them money, and stop babysitting adults" crowd of supporting cronist populist micromanaged social programs.
If you only think of the corrupt and incompetent governments as the leftist ones, it's a truism that their policies are failing.
For example, the Venezuela government started programs to eliminate analphabetism, increased the number of doctors and free hospitals (in a program with the help of Cuba), reduced the infant death rate, increased the education budget, the access to potable water and other things like that. Granted, none of these measures are leftist per se, but also, these are not the things a right wing government cares about (at least not our right wing governments).
I think the reason so many people in Latin America is leftist is not ideology. It's simply that the other option is not liberalism, free markets and laisse faire. The alternative is chronism, medieval institutions (feudalism is alive in a lot of places), privatization of earnings and nationalization of loses.
But let me make another one. We will not agree on an answer, you don't even have to reply if you don't want, but I want to ask anyway: you don't see any relationship between the reasoning behind free hospitals and the Venezuela economic collapse?
When I talked about an increase in health and education expenditures, I was talking about increase in the percentage of the budget, so they were done at expense of other things, and it began before the increase in oil prices. The years previous to Chavez, the health budget was 3.5-4.5% and it went up to 6.0%, and remained above 5.0 up to 2010. As you can see, these are not exorbitant expenses, and they are below other countries' expenditures like Uruguay, Tanzania or Uganda [1].
The economical crisis is not because the government increasing expenditures in some basic human needs, but because there hasn't been a cut down anything at all. There are a lot of valid criticisms that can be done to Venezuela's government, but expending a little bit more in its people is not one, in my opinion.
[1] http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS
For example, I support socialized medicine, but don't support nationalizing the economy or strict capital controls. Do I qualify or not? Assuming I do, am I allowed to point out that Venezuela's problems are more likely due to stuff like the last two?
At the heart of both countries current circumstances are _populist_ causes, and it seems to be the combination of populism and oil dependency that's at the heart of Venezuela's current problems.
In short, relying on the price of a commodity being at or above an historically high level to balance your budget is going to lead to large blow-outs in your budget if the price falls drastically. The comparison to Norway is a good one simply because they created a buffer-fund for handling prices swings. Left or right, that seems like sound economic policy.
I really wish to hear from people who support rightist causes what they think of this and if there's anything, any hypothetical event, that they would accept, if happened, as a proof that rightist policies are bad.
If you actually read the article they are quite reticent to blame socialism as the root cause but rather economic mismanagement and cronyism. This is a feature of many Latin American states regardless of left or right politics. In contrast socialism seems to be working just fine in Canada and Northern Europe.
In any case the current surge of left-leaning politics in the US is a symptom of massive economic inequality. If rightist politics had an answer for that, anything other than "just work harder," then people wouldn't be so quick to look to the left.
Nothing. It's a belief based on intentions, not on outcomes.
Venezuela's problem is not political flavor, it's the oil curse itself. I have family there, and it is quite bad. The economy is stuck in several sorts of cleft stick: Saudi Arabia's game of chicken with the rest of OPEC, the mismanagement called out in the article, the hangover of Chavez policies (which were necessary for popular support), and of course the military-narco complex always in the wings.
You'd either be a superhero, the best politician, running a sane, stable, healthy 'democracy' where people who were upset had things fixed just the right way - or you'd be a crumbled mess, an incoherent madman.
There's no middle ground. With a singularly outsized ability like that, you simply could not function in a 'normal life.'
Perhaps huge oil revenues are like that - without a stable cultural and political setup to use the resources wisely and for the benefit of the whole community (norway) - perhaps the only other course is a totally connected political mafia that extracts the value of the primary resource for itself and its supporters.
A history of colonialism would set the country up for the second track.
Venezuela is the key link in the global narcotics supply chain: heroin comes in from central Asia and is then smuggled by Mexican cartels into the US, and cocaine comes in from Colombia and Peru to be shipped overseas and ultimately land in Europe.
The Chavist politicians have an active interest in unseeing reality. Reality is that they are screwing over the population in order to stay in power at any cost so they can continue to line their pockets with drug money. That's not the narrative they want to tell, so they change it.
This is just the tip of the iceberg. Vice has a ton of stuff on the global drug problem, and Venezuela is the epicenter of trafficking right now because Caracas is the safest port in the world for traffickers. There's actually a good 30 minute video on Vice that explains the whole supply chain and its links to Boko Haram, ISIS and Islamist extremists in North Africa.
Now that those people have been in power for a while all over the place, people are waking-up to the fact that they aren't special, and there's no deep truth on their discourse.
The US and allies:
- US and the EU are really not affected by low oil prices, you can even argue it is good for them since they're net importers. Also they have strong industrialized diversified economies, so they're hardly vulnerable on one single spot.
- Saudi Arabia: can stand short-to-medium term low oil prices as already shown on the 70s crisis.
About US "enemies":
- Russia: badly hit, a big oil exporter, but unlikely to be weakened much since it can rely on other exports.
- Venezuela: the most badly hit since more than 80% of its income is from oil, and having lost a charismatic leader replaced by a relatively unknown one, it's the right time to tighten the rope.
- Iran: you don't want to give them a huge influx of petro-dollars just after lifting the sanctions.
- China: since the beginning of the oil price plunging, it has shown difficulties to keep up and lately its stocks are free-falling.
So clearly a net geopolitical gain for US and its allies. Also the political instability of Middle East and Libya chaotic situation brings more cheaper oil, so all this looks like was part of this same plan: get rid of annoying governments (Chavez/Maduro, Gaddafi and Al-Assad) and weaken others (Iran and its allies: Yemen, shiite Irak government) while getting cheaper oil which in turn weakens other enemies like Venezuela and China and helps ailing allies like the EU. Not a bad plan at all I think. And people that think politics and economics are not related are either naive or didn't read much History. It's called "economic policy" for a reason.
Allow me to indulge in some counter-prognostication. Shale technology will cap the oil price at $50-$60 per barrel in perpetuity. Since the Chavistas rely on a price far higher than this to fund their theft and largesse, their system will be revealed to be no more economically sustainable than the dozens of other socialist revolutions that have been tried.
And the dozens of other socialist revolutions that have been tried all failed because they have been all boycotted by capitalist nations, with war, arms race, space races, illegal embargoes, and whatnot, not because the socialist system is not sustainable. Socialism cannot compete with capitalism in term of generating huge amount of capital and growth because it is not the goal of the socialist system.
Still, examples like Cuba with a 50-year embargo from the world superpower manages to have the best health of all latinamerica, and even a lower children mortality than the USA. I totally disagree that this is a failure. The USSR also went from a absolute monarchy slavery behind-time empire to a world economic and military superpower with one of the best health and education systems in ~30 years, which is an unparalleled impressive feat.
A lot of damage was done in Argentina, Brazil, Bolivia and Venezuela.
It has natural resources which are in demand, and for which the tools and techniques to convert them into exchangable goods is well understood. It has few serious military threats from its neighbors and so militarily its primarily responsible for civil and criminal activities, and it has nominally "easy" access to nearby markets for trade goods (importing things it doesn't have domestically).
But it also has people in "charge" to have no idea how running a country even works much less the forces that act on it. And as many anti-libertarians will point out, the lack of a competent government does not result in a paradise emerging from the work of motivated individual actors within.
And understanding that, go back to the founding of the US and its fits and starts trying to go from being a colony to being a country, and most importantly the constraints on their own actions that everyone had to agree to in order to get the Constitution done. Try to understand why that worked is an interesting (and perhaps vital) exercise. Was it the people? Their values? Their education? Their understanding? Was it coincidence or luck?
I find myself desperate to know why one institution works and another fails. Both large like nation-states, and small like companies. How is it "no big deal" for some companies to get a new CEO and catastrophic for others?
It probably doesn't satisfy, but isn't one answer to this question: "Because there are countless convoluted variables"? This would depend on the outgoing CEO, the incoming CEO, every key employee, the state of the company, the company's sector, the state of the economy, etc.
I guess you're looking for consistent rules of thumb, but is it possible that there are too many factors for their to be any good rules of thumb?
And then there are processes like military command or the US Constitution which have their own components. For example you can't run for the office "Speaker of the house" in the US Congress you have to be voted into it by a set of peers who are all nominally eligible for the job. Similarly with Pope, anyone in the College of Cardinals can be elected as I understand it. Not so much for Dali Lama though.
Organizations are only as strong as the people who make them up, but creating tools to manage that set of people for the greater good of the organization, that is an interesting question. How do you quell damaging voices while amplifying the voice of people making forward progress? Countries are the same way, monarchies can fail suddenly with the coronation of a bad monarch, but democracies tend to survive such games. Rome had been around for centuries but as more and more power congealed into a single individual it became more and more unstable. It is like you have to walk into a room where anyone else can get you removed, and still get stuff done.
And to take the question to its extreme, it's hard to answer what kind of life-forms/civilizations might be likely to become space faring (or even intelligent) with N=1.
There's a big difference between an incompetent government and a libertarian free-market paradise. The two aren't even comparable. A corrupt government bureaucracy with central economic planning based on nepotism and cronyism (presumably, Venezuela) is pretty much the polar opposite of what any sane libertarian or anarcho-capitalist would be advocating for.
The U.S. military is 'full spectrum dominance', including coup attempts, as in the 2002 coup attempt. Team Bush has not been gone long in the bigger scheme of things, and Team Bush 2 (Obama) seems to have sanctions on Venezuela. Sanctions is tantamount to a blockade or a siege, seen by some as an act of war even if no guns get fired.
Venezuela's problem is that it wants to be a proper country rather than some Goldman Sachs managed vassal state.