Oil Wars

A long time follower of Chavez, and blogger himself, has recently made some interesting observations on my posts and pointed out areas where he disagrees with my analysis. Further, he has sought to "elevate the level" of the discussion here.

Given that his comments are in themselves worthwhile and that they do succeed in elevating the discussion I thought they should be responded to in a post rather than being left in the comments section. What follows are Justin's comments with my response.

Justin's main assertion is this:

I feel the "standards" to which OW tries to hold Venezuela are "utopian" in the sense that they leave little consideration for all the structural, cultural and institutional obstacles to his desired ends.

Governments aren't made up of supermen who can simply brush aside existing cultural mores, political institutions, and economic structures and make the world from scratch. Governments invariably operate within certain constraints. Thus, governments should be judged in light of the constraints under which they operate.

Often OW does not take into consideration that the "standards" to which he tries to hold Venezuela are historically unprecedented. On the one hand, he sets the capitalist mercantilism of countries like South Korea, Taiwan, and China as the "standard" by which Venezuela's economic performance should be judged. On the other hand, he tries to hold the Chavez government to a strict set of democratic "standards," somehow forgetting that the periods of rapid industrial expansion in Taiwan and South Korea did not take place under the political conditions that he demands of Venezuela. On the one hand, he wants Venezuela to have the kinds of "insulated technocrats" characteristic of the Chinese and South Korean models, and he wants these technocrats to take Venezuela to the economic promiseland. On the other hand, he demands the kind of open, democratic politics in which "insulated technocrats" cannot maintain their insulation from political pressures. In sum, OW wants the "best" of both worlds, but what he fails to recognize is that there are inevitable trade-offs between one set of goals and the other. In a democracy, governments face the kinds of political constraints on their economic plans that the South Koreans or the Taiwanese did not encounter in their most rapid stages of industrial development (because these countries had out-and-out dictatorships that didn't have to concern themselves with elections). In democracies (and particularly petro-democracies), politicians often have little choice but to put their short-term political survival ahead of long-term economic plans. So my point is that OW hasn't really paid that much attention to the constraints under which the Chavez government has operated.

That's not to mention the fact that the basic model that OW advocates is not environmentally sustainable. The model of the future cannot be exponential growth because the planet cannot sustain that.

Justin starts off by making the observation that all countries have different cultures and political and social structures. Certainly that is true - almost by definition.

But it is also true that it is largely irrelevant unless something can be shown that is unique to Venezuela's society and culture and which somehow impairs its ability to develop. I don't rule out that such a thing could exist - but it isn't enough to assert it, you have to say specifically what it is.

But Justin does then get to the heart of his point which is that I appear to advocate things for Venezuela that are contradictory. On the one hand I want them to follow a high investment high growth economic model similar to that used by South Korea, Taiwan, and China. On the other hand I want them to be an politically open democracy. Both of those things are true.

Yet as Justin observes South Korea, Taiwan, and China all were/are dictatorships during their economically formative years. Moreover, it is highly unlikely they could have grown anywheres near as fast had they been democracies - they wouldn't have been able to keep investment as high and consumption as low if they had to face periodic elections.


Therefore, advocating an East Asian development model and democracy can be a contradiction.

And if we were talking about Brazil, or Colombia, or Honduras, or Peru, or Argentina Justin would be completely right - it would be a contradiction. The only way those countries could invest enough to grow rapidly would be by asking the population for significant sacrifices. Almost certainly, those sacrifices could only be imposed by a government that didn't have to worry about being voted out of office - ie a dictatorship.

Therefore, in the case of most countries I would have a major contradiction - a country can follow the east Asian development model of rapid growth or it can be a democracy, but it can't do both.

However, having to choose between rapid growth or democracy is one that Venezuela doesn't face. The reason is simple - oil. Venezuela has more money, per capita, than any other country in Latin America. And the government, in particular, has far more money per capita at its disposal than any other government in Latin America - it owns all the oil. And as the statistics that have been gone over before show Venezuela has far, far more money at its disposal than South Korea, Taiwan, or China ever did.

Those huge resources mean that Venezuela can spend heavily on social programs that satisfy important and keep the support of most of the population AND at the same time have tens of billions of dollars to spend on development projects.

In fact, it is very easy to see that they could afford both things: for the past number of years they have spent heavily on social programs AND wasted billions of dollars by giving away absurdly cheap dollars to the Venezuelan upper class (now, even Chavez admits they were doing this though he doesn't say why).

Therefore, the only thing they would have to do differently is stop wasting money on the middle class consumer binge and spend that money on development projects - something this blogger advocated for the past three years. Given that the middle class doesn't vote for Chavez anyways and the poor and working class would still get the social programs they need, and hence would still support Chavez, he could in fact pursue a strong development policy while staying within the confines of a democratic government.

In other words, the apparent contradiction that Justin points out, while it may be valid for most countries, is washed away in the case of Venezuela by tens of billions of dollars in oil revenues.

Finally, Justin says rapid economic growth is not sustainable because of all the environmental degradation that comes with it. My response to that is twofold.

First, I have only spoken with regard to Venezuela and certainly one country of 28 million people developing to first world levels is not going to destroy the planet. Also, Venezuela is hardly a green country as it is, given the Chavez's government wasteful and highly polluting policy of giving away gasoline practically for free.

Second, even if we talk about the whole world developing it is not necessarily the case that the planet would be destroyed. Why isn't that automatically the case? Simple. Technology isn't static and new technology has the capability of having similar devices pollute much less, or similar size plots of land grow more food, or of generating ever greater amounts of energy from renewable resources. And technology isn't advancing anywheres near as fast now as it conceivably could because it is only about 20% of the worlds population that lives well enough to engage in scientific research. As more countries develop their populations will become more educated, they will have large numbers of scientists and the world will quite possibly see the pace of scientific and technological change advance much faster than it currently is. Hence, economic growth that lifts most of the worlds population out of poverty and into developed status could actually lesson environmental problems.

Therefore, I don't share Justin's Malthusian type concerns regarding economic development.

Finally, I want to turn to another comment posted by Justin that is very much worthy of discussion:

No doubt the party-liners exist (just as they do in all political movements), but I don't think you give a proper explanation as to why they are significant in number in Venezuela. This has more to do with the nature of Venezuela's political polarization than with the personality of Chavez. When a government is faced with both external threats and a disloyal opposition (that has never really renounced its legacy of political subversion and economic sabotage), the government's supporters will often be fearful of showing disunity in the face of these sorts of threats. So the dynamics at work are really much deeper than Chavez the man. That's the problem I see in your analysis.

I have a couple of disagreements with Justin's comments above.

First, how much of a "threat" has the Chavez government been facing for the past five years? I would say, very little. Chavez himself has won elections by wide margins, the opposition stupidly boycotted legislative elections so that Chavismo is totally dominant there, the media taken as a whole is probably more pro-Chavez and anti-Chavez at this point, the opposition eliminated itself from the military an oil industry via their stupid coup attempts and oil strikes, and the opposition can't even mobilize people in the streets any more.

So seriously, what threat? Do some students burning tires in the street threaten the governments stability? I think they clearly don't.

More to the point, the real threat to the government comes not from its opponents, as seditious and loony as they still may often be, but from the governments own failings. That is, the principal threat to the Chavez government comes from performing poorly, losing popular support and as a result loosing elections.

If the Chavez government continues to grow the economy, have more jobs created, maintains or even expands the social programs, deals effectively with every day problems such as crime and boost people's standard of living then it will be unbeatable at the polls.

But if it follows the wrong policies and the economy suffers as a result and if it is ineffective at dealing with other problems then it risks being voted out of office.

Hence, what would most benefit the government is open and thorough debate on what the priorities and best policies should be, then followed by action. The best and most effective way to run a political movement is to have a thorough discussion of issues followed by a democratic decision making processes. Then once that decision is made members need to be disciplined enough to follow that decision, even if it wasn't the one they advocated. Not only is that the politically correct way to do things, it is also the way that is most likely to result in correct policies.

But in Venezuela that sort of open decision making process is rarely seen. That is a huge problem.

And I don't buy the notion that it is the rank and file that insists on not having an open decision making process and wants the decisions to come from on high. Referring back to Chavez's speech - that wasn't the rank and file insisting on discipline and saying "I am the people". It was Chavez himself saying that.

It is clear that Chavez has lots of support. But it is a huge leap to go from saying that Chavez has a lot of support to saying that people don't want control over their leadership and a say in how things are done (or even more, to say that it is a good thing to have one person deciding almost all policies). For example, when I was speaking to people in Venezuela during the 2005 legislative elections I remember a lot of Chavez supporters being upset that the candidates were hand picked by Chavez rather than being chosen through internal elections.

And with new legislative elections only 9 months away how will candidate be chosen? I don't know, but the way they are chosen will be very telling.

Hopefully, this post serves to illustrate some of the differences in how people on the left view Chavez.
|