This must have been what it was like in the late Roman Empire, when successive emperors tried to stave off decline by decreeing how the economy would work.
In the US, Truman placed the railroad under US military control in 1950, and I recall at least threats of having military take over coal mines both in the US and UK, because of worker strikes.
>Many countries have "tried to stave off decline by decreeing how the economy would work." Including the US...In the US, Truman placed the railroad under US military control in 1950
You're using this as an example of fending off economic decline?
> GDP Growth Rate in the United States...[reached] an all time high of 16.90 percent in the first quarter of 1950...
No. The link I gave lists examples of countries which tried to impose nation-wide economic controls, including revolutionary France, Nixon's price controls in the 1970s, and Zimbabwe's price freeze in 2007.
The referenced article concerns oil mining placed under military control, so I thought it was relevant to point out that the US has also placed privately owned critical infrastructure under military control.
If there's any meaning to my comment, it's the suggestion to look to more recent history for compelling analogies, rather than ancient Rome.
You explicitly quoted the part about economic decline, and indeed this was critical to the sort of scenario Montrose was referring to. His comment isn't suggesting that Rome be taken as the best historical case study for understanding Venezuela today, but rather that Venezuala might give us a sense of the on-the-ground human element during the decline of Rome.
We can look to the troubles of almost any country to look for something which "might give us a sense of the on-the-ground human element during the decline of Rome."
Where is there notable about Venezuela which makes this comparison insightful? Wouldn't it be more insightful to compare it to, say, the decline of the British Empire?
Has Venezuela, like Rome, had a long series of costly wars (including civil wars) which took money out of the government coffers?
Has Venezuela, like Rome, lost a revenue source by no longer being able to expand into new territory?
Does Venezuela have anything like the Vandal pirates which disrupted Roman trade?
Has it undergone a partition like that of the Eastern and Western Roman Empires, where the money diverted into strengthening Constantinople meant that Rome was less defended against invasion?
Is the Venezuelan military increasingly peopled by foreign soldiers of fortune who have little loyalty to the country and might instead attack it?
Because all I get from the comparison is that there's hyperinflation going on caused by poor government and a loss of income. Which has been true of a lot of countries.
The thing that is notable about the decline of Venezuela is that it's happening now, when we can make direct observations rather than reconstructing things from the historical records.
If I am betrayed by a friend and say "this is what Caesar must have felt like", I am not saying that my friend's betrayal is the most like that of Caesar's, nor that Caesar's betrayal is the most similar historical betrayal to my mine. It just means "oh, now I know more about what that feels like".
I lost a glove. What I felt must be like what Luke Skywalker felt when he lost his hand.
I set a PR of 7:15 on running a mile. That must be like what Bannister felt when he broke the 4 minute mile.
But montrose made more than a simple comparison. The implication is that high-level government attempts to control economic policy is what lead to the similarity.
I disagree that assessment, and pointed to other attempts at high-level government control of economic policy, with a variety of results, to show that there isn't a strongly causal connection.
Plus, there are other factors which are involved. Why should we think that the views of Romans in the late Western Roman Empire were similar to what's going on in Venezuela now?
What Venezuela has in common with the late Empire is that economic controls are pervasive, without the sort of punitive completeness you'd find in the USSR, or China under Mao. While few controls works, and being a police state sort of works (if there are free-market economies whose products you can copy), this middle strategy doesn't work well at all.
>and being a police state sort of works (if there are free-market economies whose products you can copy)
That's an ideological statement. One can be a "police state" and has advanced technology and products -- free market not required.
In fact most of the technical and product developments in 18th and 19th century took place in markets quite far from "free", and of course Nazi Germany (the de fact "police state") was quite competent technologically.
> Many countries have "tried to stave off decline by decreeing how the economy would work." Including the US.
> Truman placed the railroad under US military control in 1950
These seem like non-sequiturs to me. The economy in the 50s was booming. Truman took control of the trains to mitigate the effects of a worker strike during wartime, when it was important that the trains be running efficiently.
I found the original comment to be a non-sequitur. I gave examples of other historical cases which fit that description to suggest that there wasn't enough detail for it to be useful or insightful.
While the Ottomans were far from perfect (and I learned a lot about the bad things they did back in school in Romania), you might want to crack open a history book.
Every country decrees how their economy should work. That's what central banks, laws, regulatory bodies and fiscal spending are all about.
Venezuela's economy is tanking because it was so heavily dependent upon oil revenue and because oil prices collapsed. That really is it. This isn't about socialism or capitalism or central planning or markets. This is all about oil, dutch disease caused by oil and political and economic instability caused by the fight over those resources.
The same thing happened in the 90s when Venezuela could hardly be called socialist and the resulting economic and political turmoil propelled Chavez in to power. Back then it was all "capitalism's fault".
Of the countries 'blessed' with massive natural resources - relative to the size of the economy, I can think of precisely one that hasn't been fucked up by it.
Edit: -2 points and 0 counter-arguments. Apparently the idea that Venezuela (along with African and Middle Eastern countries), with vast natural resources get screwed up politically and economically by them is not a popular one, but nobody really wants to say why they think that...
>Of the countries 'blessed' with massive natural resources - relative to the size of the economy, I can think of precisely one that hasn't been fucked up by it.
Whilst "Dutch disease" is a well established if not uncontentious theory, Venezuela has suffered notably worse effects in response to oil price downturns to every other oil-dependent country, and it's difficult not to see a link between that and the government's extreme antagonism to non-oil businesses and longstanding currency mismanagement (as well as the less-unusual corrupt control of the oil itself by regime-linked kleptocrats)
>Venezuela has suffered notably worse effects in response to oil price downturns to every other oil-dependent country
Largely because there are few countries that are quite that oil dependent. Russia's a screw up but even they aren't as oil dominated as Venezuela, for instance.
I suppose there's Iraq...
>the government's extreme antagonism to non-oil businesses
This antagonism dates back to the 2001 coup in which the leaders of those non-oil businesses banded together in an attempt to unseat Chavez and replace the democratically elected government with tanks.
Generally this kind of behavior is strongly frowned upon, when it's done against a government that is friendly to the US. But, when it is done against a government that nationalized US oil interests, the propaganda wheel spins the other way: as you said, "it's not them that were hostile to him, it's him that is too hostile to them".
Anyways, can point fingers all you like in that conflict (and all sides do), but the fact remains that the conflict simply would not have happened without the spoils of the oil resources to fight over.
Corruption was similarly driven by the vast natural resources, just as happens in Africa, in the Middle East, in Russia... in every country in the world with vast economy-dominating natural resources except that sole unafflicted country - Norway.
There's plenty of countries which derive as much or more income per capita from oil as Venezuela, and few of them are known for having other sources of income (though with the possible exception of wartorn Libya they've certainly done more to encourage them and less to discourage them than the Venezuelan government). For the most part they are (like their non-oil rich neighbours) not exactly bywords for good governance or equitable wealth distribution, but large segments of their population are not on the brink of starvation as a result of oil prices being below early 2014 levels whilst still high by historic standards.
It stretches credulity even further to believe that Venezuela's disastrous economic policies were the necessary and unavoidable consequence of a oil company strikes and short-lived military coup 16 years ago which was as unsuccessful as Castro's own attempts to overthrow an elected government with tanks a decade earlier. Especially not with periodic coup attempts and more regular mass strikes being an occupational hazard of being a Latam president regardless of oil wealth or lack thereof.
>tried to stave off decline by decreeing how the economy would work.
So, a tried and tested way (from the ancient Greek loan relief [1], to laws to suppress the Great Depression, to all kinds of monetary policies used worldwide), except in periods of cultural and political decline.
I didn't mean complaining is bad, on the contrary, these people just can't complain. I was thinking that if less dramatic circumstances can ruin your productivity, this dramatic situation must be hell.
It will get darker and darker, it may/will (unfortunately) cost more lives, but I hope that once clean elections take place (and a couple of government terms down the road) normality and calm will be established, and all that will be a thing of the past. Judging from Argentina's problems - I know, not the same source of problems - things are now better off than 10-15 years ago. Still in recovery mode, but the darkest days are a thing of the past.
Edit: adding the below (apologies) timeline
-Big Oil corporations tried to do business in Venezuela.
-Having a massive public sector, I bet there was A LOT of bribery involved.
-Big corporations then played the greed-game.
-Someone decided to have a revolution and bit the hand that was feeding him (bribes/public sector).
-Then then got caught in a Oil-price-power-game that hurt Russia and some other satellite countries.
-Been unable to cope with the lack of 'free-oil-money' they got caught unprepared to go through the financial challenges - no savings, no FX.
-As a country, Venezuela was living on the respective 'salary-loans', they went bust on the first hiccup.
-And it all went downhill after that. It took Venezuela a decade to get where it is now, it will take another 20 years to fix things.
Root Cause Analysis: oh so many things.. huge public sector service, very little privatization, plenty of bureaucracy, centralization of decisions (central government)
Because outlawing a political movement supported by millions of citizens has always worked so well?
My country, the UK, has been ruled by socialists for two fifths of my lifetime and we're doing fine. OK, so the 70s were pretty bad, but it's not like Chavez is the ideal socialist leader, any more than Batista and Pinochet are the ideal republicans.
Yeah its like there is never any real socialism, even though something like 20 different countries with different cultural backgrounds have been at it. And following pretty much to the letter what Marx intended. Yet some folks refuse to see facts for what they are.
Its about time for people to realize that it’s a broken complex system which relies on unhealthy controls over economy and actually empowers corruption and opression it claims to oppose. And I suspect that is the case since most discussions nowadays are based at the moral level rather than economics.
>And I suspect that is the case since most discussions nowadays are based at the moral level rather than economics.
It's pretty obvious why. Communism/Socialism has failed big time in economics, in an unmistakable way, so the only ground left to fight is on philosophy/morals. But even then there's ample evidence this leads to bad outcomes, no matter how good intentions one starts with.
Marx founded communism not socialism which already existed, they are not the same thing. Many western European countries have had real socialist governments for much of the post-war period, including the UK.
The USSR was not a communist country either if you want to argue semantics, as they called themselves socialists. Socialism is just the kind of regime that leads to a communist utopia, in the future.
Russia is not a superpower, they just think they are.
They'll probably be put back together by Colombia, who's in pretty good shape these days.
The US will probably see another batch of very conservative Hispanics like we saw with Cuba. The Venezuelans I've met lately don't exactly love socialism.
Q. Who are the major holders of Venezuela and PDVSA bonds?
A. These securities are popular among funds that invest in emerging market bonds. Their high yields - which are close to 10 times higher than those of neighboring Colombia - help increase the overall profitability of the portfolios.
Institutional investors with big holdings include T Rowe Price Associates Inc (TROW.O), Ashmore Investment Management Ltd (AGOL.L), and BlackRock Investment Management Ltd (BLK.N).
Q. What would be the consequences for Venezuela of default?
A. Creditors could seek to seize assets Venezuela owns in other countries, including refineries such as those operated by PDVSA’s U.S. refining and marketing subsidiary Citgo.
Article also discusses role of chinese and russian financing
Which is why socialists around the world mourned Chavez' election at the time, right? /s
Venezuela, like Cuba, North Korea, China and the USSR were feted by socialists the world over, right up until their failings (often in the form of millions of people starving to death) became visible to the world.
It’s the other way around: the vast majority of socialists never “feted” Chavez, but your strawman argument depends on the premise that those people are not real socialists.
It's seems like a permanent feature of any socialism-building effort: first, it "gives hope", then breaks economy, and inevitable proclamation "not real socialism" ends the cycle.
Much like the child that cried wolf, calls that Venezuela is doomed any day now, have lost all potency. If the media hadn't discredited themselves in the 00's with the coverage of how terrible the place was we could actually believe them today. Unfortunately going from "it's hell on Earth" in 2004 to "it's hell on earth for reals this time" doesn't inspire confidence in the message.
Eight years ago I was on a commuter train from DC to Baltimore and a strange woman sat next to me and started asking all sorts of questions about the train and Baltimore. By strange, I meant that she was talking: no one talks on a commuter train, we're all zombies. Turns out she was from Venezuela and was visiting her young niece being treated at Johns Hopkins after being severely injured by a family pet down there.
Let that sink in for a moment. Child was injured in Venezuela, and Kaiser flew her all the way up to JH in Baltimore for treatment back in 2010. The Venezuelan family, obviously on the affluent side back in those days, had purchased a health insurance policy made available from Panama because they felt the socialized health care system run by Venezuela was grossly inadequate, and as they discovered, it was.
Fast forward to today and you have two major government-run systems collapsing beyond recovery. First one is oil- state income is beyond a systemic collapse: oil workers simply don't have enough calories to work the actual jobs. There had been a longstanding incentive to work in the oil field because there were oil cafeterias feeding the workers and they've now run out of supplies to sustain that. Now, oil workers are fleeing in unrecoverable numbers. Latest news here is that the military has taken over policing this function out of desperation. The second system is healthcare.
These are old articles (hospital one is two years old) but very germane to the discussion. Beyond a soft paywall, so open in incognito windows. Also steel yourself before looking at the photo gallery, as outdated as it is.
So what's happening now? Venezuela stopped paying its debts and is in default. Foreign embassies are closing and leaving the country due to instability. Official currency has cratered to a point of you needing a dump truck of cash to pay for a loaf of bread, if you can find it, so black market currencies are being used for transactions instead. Elites running the country are messaging that everything is fine and pitching some make-believe cryptocurrency tied to a physical oil barrel (which they won't be able to produce with the oil industry labor drain) as a way to save the country. Venezuelan citizens have fled in vast numbers (Colombia by way of Miami Herald alone estimates 600-800k, wiki entry has it at 4 million), and though that effect slowed the food crisis from worsening in mere places, overall effect is unstoppable because neighboring countries are tightening the borders. I didn't even get to mention rising violence and neighbors fighting over contents of garbage cans.
I just don't see how you can call this an exaggeration. Venezuelan government cronies couldn't squander the money fast enough fifteen years ago, and here's the end-result of their mismanagement.
68 comments
[ 2.8 ms ] story [ 129 ms ] threadEg, https://en.wikipedia.org/wiki/Incomes_policy .
In the US, Truman placed the railroad under US military control in 1950, and I recall at least threats of having military take over coal mines both in the US and UK, because of worker strikes.
You're using this as an example of fending off economic decline?
> GDP Growth Rate in the United States...[reached] an all time high of 16.90 percent in the first quarter of 1950...
https://tradingeconomics.com/united-states/gdp-growth
The referenced article concerns oil mining placed under military control, so I thought it was relevant to point out that the US has also placed privately owned critical infrastructure under military control.
If there's any meaning to my comment, it's the suggestion to look to more recent history for compelling analogies, rather than ancient Rome.
Where is there notable about Venezuela which makes this comparison insightful? Wouldn't it be more insightful to compare it to, say, the decline of the British Empire?
Has Venezuela, like Rome, had a long series of costly wars (including civil wars) which took money out of the government coffers?
Has Venezuela, like Rome, lost a revenue source by no longer being able to expand into new territory?
Does Venezuela have anything like the Vandal pirates which disrupted Roman trade?
Has it undergone a partition like that of the Eastern and Western Roman Empires, where the money diverted into strengthening Constantinople meant that Rome was less defended against invasion?
Is the Venezuelan military increasingly peopled by foreign soldiers of fortune who have little loyalty to the country and might instead attack it?
Because all I get from the comparison is that there's hyperinflation going on caused by poor government and a loss of income. Which has been true of a lot of countries.
If I am betrayed by a friend and say "this is what Caesar must have felt like", I am not saying that my friend's betrayal is the most like that of Caesar's, nor that Caesar's betrayal is the most similar historical betrayal to my mine. It just means "oh, now I know more about what that feels like".
I lost a glove. What I felt must be like what Luke Skywalker felt when he lost his hand.
I set a PR of 7:15 on running a mile. That must be like what Bannister felt when he broke the 4 minute mile.
But montrose made more than a simple comparison. The implication is that high-level government attempts to control economic policy is what lead to the similarity.
I disagree that assessment, and pointed to other attempts at high-level government control of economic policy, with a variety of results, to show that there isn't a strongly causal connection.
Plus, there are other factors which are involved. Why should we think that the views of Romans in the late Western Roman Empire were similar to what's going on in Venezuela now?
I will translate your suggestion like this:
-Either be a full-on dictatorship OR
-Be a modern democratic state
China that infinite8s mentions in his comment could also be considered as such.
Heck, Franco's Spain lasted for 30+ years...
It's been a while, but I think Venezuela was one of Ian Bremmer's prime examples.
https://www.amazon.com/gp/aw/d/0743274725/
That's an ideological statement. One can be a "police state" and has advanced technology and products -- free market not required.
In fact most of the technical and product developments in 18th and 19th century took place in markets quite far from "free", and of course Nazi Germany (the de fact "police state") was quite competent technologically.
> Truman placed the railroad under US military control in 1950
These seem like non-sequiturs to me. The economy in the 50s was booming. Truman took control of the trains to mitigate the effects of a worker strike during wartime, when it was important that the trains be running efficiently.
Here, let me get you started: https://en.wikipedia.org/wiki/Mehmed_the_Conqueror#Administr...
Every country decrees how their economy should work. That's what central banks, laws, regulatory bodies and fiscal spending are all about.
Venezuela's economy is tanking because it was so heavily dependent upon oil revenue and because oil prices collapsed. That really is it. This isn't about socialism or capitalism or central planning or markets. This is all about oil, dutch disease caused by oil and political and economic instability caused by the fight over those resources.
The same thing happened in the 90s when Venezuela could hardly be called socialist and the resulting economic and political turmoil propelled Chavez in to power. Back then it was all "capitalism's fault".
Of the countries 'blessed' with massive natural resources - relative to the size of the economy, I can think of precisely one that hasn't been fucked up by it.
Edit: -2 points and 0 counter-arguments. Apparently the idea that Venezuela (along with African and Middle Eastern countries), with vast natural resources get screwed up politically and economically by them is not a popular one, but nobody really wants to say why they think that...
Norway ?
Nonetheless, it doesn't appear to be having a positive effect on your politics. Imagine if people like Gina Rinehart started to dominate.
Largely because there are few countries that are quite that oil dependent. Russia's a screw up but even they aren't as oil dominated as Venezuela, for instance.
I suppose there's Iraq...
>the government's extreme antagonism to non-oil businesses
This antagonism dates back to the 2001 coup in which the leaders of those non-oil businesses banded together in an attempt to unseat Chavez and replace the democratically elected government with tanks.
Generally this kind of behavior is strongly frowned upon, when it's done against a government that is friendly to the US. But, when it is done against a government that nationalized US oil interests, the propaganda wheel spins the other way: as you said, "it's not them that were hostile to him, it's him that is too hostile to them".
Anyways, can point fingers all you like in that conflict (and all sides do), but the fact remains that the conflict simply would not have happened without the spoils of the oil resources to fight over.
Corruption was similarly driven by the vast natural resources, just as happens in Africa, in the Middle East, in Russia... in every country in the world with vast economy-dominating natural resources except that sole unafflicted country - Norway.
It stretches credulity even further to believe that Venezuela's disastrous economic policies were the necessary and unavoidable consequence of a oil company strikes and short-lived military coup 16 years ago which was as unsuccessful as Castro's own attempts to overthrow an elected government with tanks a decade earlier. Especially not with periodic coup attempts and more regular mass strikes being an occupational hazard of being a Latam president regardless of oil wealth or lack thereof.
So, a tried and tested way (from the ancient Greek loan relief [1], to laws to suppress the Great Depression, to all kinds of monetary policies used worldwide), except in periods of cultural and political decline.
https://en.wikipedia.org/wiki/Seisachtheia
"You're posting too fast, please slow down"... for an hour. OK, let's make it a year.
With Venezuela, what can we actually do that's going to change anything?
Edit: adding the below (apologies) timeline
-Big Oil corporations tried to do business in Venezuela.
-Having a massive public sector, I bet there was A LOT of bribery involved.
-Big corporations then played the greed-game.
-Someone decided to have a revolution and bit the hand that was feeding him (bribes/public sector).
-Then then got caught in a Oil-price-power-game that hurt Russia and some other satellite countries.
-Been unable to cope with the lack of 'free-oil-money' they got caught unprepared to go through the financial challenges - no savings, no FX.
-As a country, Venezuela was living on the respective 'salary-loans', they went bust on the first hiccup.
-And it all went downhill after that. It took Venezuela a decade to get where it is now, it will take another 20 years to fix things.
Root Cause Analysis: oh so many things.. huge public sector service, very little privatization, plenty of bureaucracy, centralization of decisions (central government)
My country, the UK, has been ruled by socialists for two fifths of my lifetime and we're doing fine. OK, so the 70s were pretty bad, but it's not like Chavez is the ideal socialist leader, any more than Batista and Pinochet are the ideal republicans.
It's pretty obvious why. Communism/Socialism has failed big time in economics, in an unmistakable way, so the only ground left to fight is on philosophy/morals. But even then there's ample evidence this leads to bad outcomes, no matter how good intentions one starts with.
Two simple things if you are citizen of a stable country: get elected as the head of your country. Annex Venezuela.
Not saying it will be easy.
Who has the most influence here?
They'll probably be put back together by Colombia, who's in pretty good shape these days.
The US will probably see another batch of very conservative Hispanics like we saw with Cuba. The Venezuelans I've met lately don't exactly love socialism.
Q. Who are the major holders of Venezuela and PDVSA bonds?
A. These securities are popular among funds that invest in emerging market bonds. Their high yields - which are close to 10 times higher than those of neighboring Colombia - help increase the overall profitability of the portfolios.
Institutional investors with big holdings include T Rowe Price Associates Inc (TROW.O), Ashmore Investment Management Ltd (AGOL.L), and BlackRock Investment Management Ltd (BLK.N).
Q. What would be the consequences for Venezuela of default?
A. Creditors could seek to seize assets Venezuela owns in other countries, including refineries such as those operated by PDVSA’s U.S. refining and marketing subsidiary Citgo.
Article also discusses role of chinese and russian financing
https://uk.reuters.com/article/us-venezuela-bonds-q-a/implic...
Venezuela, like Cuba, North Korea, China and the USSR were feted by socialists the world over, right up until their failings (often in the form of millions of people starving to death) became visible to the world.
Then of course they ceased being real socialists.
http://www.socialistinternational.org/viewArticle.cfm?Articl...
Not all, of course. Socialism is a broad camp. But many.
Edit: and in fact they're still at it in Australia, where I live:
https://www.greenleft.org.au/content/venezuela-solidarity-gr...
Edit:... and how about Castro? Is he your idea of a real socialist? https://www.ndtv.com/world-news/hugo-chavez-and-fidel-castro...
Let that sink in for a moment. Child was injured in Venezuela, and Kaiser flew her all the way up to JH in Baltimore for treatment back in 2010. The Venezuelan family, obviously on the affluent side back in those days, had purchased a health insurance policy made available from Panama because they felt the socialized health care system run by Venezuela was grossly inadequate, and as they discovered, it was.
Fast forward to today and you have two major government-run systems collapsing beyond recovery. First one is oil- state income is beyond a systemic collapse: oil workers simply don't have enough calories to work the actual jobs. There had been a longstanding incentive to work in the oil field because there were oil cafeterias feeding the workers and they've now run out of supplies to sustain that. Now, oil workers are fleeing in unrecoverable numbers. Latest news here is that the military has taken over policing this function out of desperation. The second system is healthcare.
These are old articles (hospital one is two years old) but very germane to the discussion. Beyond a soft paywall, so open in incognito windows. Also steel yourself before looking at the photo gallery, as outdated as it is.
1: https://www.bloomberg.com/news/features/2018-02-22/hungry-ve...
2: https://www.nytimes.com/2016/05/16/world/americas/dying-infa...
So what's happening now? Venezuela stopped paying its debts and is in default. Foreign embassies are closing and leaving the country due to instability. Official currency has cratered to a point of you needing a dump truck of cash to pay for a loaf of bread, if you can find it, so black market currencies are being used for transactions instead. Elites running the country are messaging that everything is fine and pitching some make-believe cryptocurrency tied to a physical oil barrel (which they won't be able to produce with the oil industry labor drain) as a way to save the country. Venezuelan citizens have fled in vast numbers (Colombia by way of Miami Herald alone estimates 600-800k, wiki entry has it at 4 million), and though that effect slowed the food crisis from worsening in mere places, overall effect is unstoppable because neighboring countries are tightening the borders. I didn't even get to mention rising violence and neighbors fighting over contents of garbage cans.
I just don't see how you can call this an exaggeration. Venezuelan government cronies couldn't squander the money fast enough fifteen years ago, and here's the end-result of their mismanagement.