Leftist Media Icons Overlook the Economic Disaster of Venezuela

P. Gardner Goldsmith | May 23, 2016

Dinosaur collectivists in pop media seem averse to noting the stark realities of leftist economics. The current example is the basket case of Venezuela, which the editors of the Washington Post and a gaggle of Hollywood celebrities appear to be afraid of acknowledging.

On May 4, the Post published an article that makes one suspect its editors might be stuck in 2000. Entitled “Venezuela Should Be Rich. Instead, Its Becoming a Failed State,” the piece, promoting the belief that the nation-state is “on its way” to failing, seems a tad late in the offing.

The Venezuelan economy failed a long time ago.

And it failed thanks to the collectivist policies of former President Hugo Chavez and current President Nicolás Maduro. Anyone with functioning eyes could see it.

Beginning in 1999, the year he was elected to office, Hugo Chavez enacted a series of central plans that “nationalized” (i.e., confiscated, i.e., stole) many private industries from their owners and destroyed the incentives for people to work or invest in business.

In America, many of Hollywood’s most famous leftists applauded this approach.

Upon Chavez’s death in 2013, the multi-mansion populist Michael Moore Tweeted of Hugo’s great heroism:

“Hugo Chávez declared the oil belonged 2 the ppl. He used the oil $ 2 eliminate 75% of extreme poverty, provide free health & education 4 all.”

Unfortunately, Mr. Moore’s claims lacked specifics, definitions, a sense of cause and effect...and a respect for the truth.

For example, what Mr. Moore did not explicitly spell out was that Venezuela already had a state-run oil company called Petróleos de Venezuela (PDVSA), and that, under Chavez, it had been run into the ground and 20,000 of its striking workers (you know, the “people” Mr. Moore supposedly loves) were fired by El Presidente in 2002. In 2003, Rafael Ramírez, the head of the company (also Chavez’s Minister of Energy), stopped PDVSA from publishing annual reports. Not a good sign.

Thirsty for cash to sustain its growing social “welfare” state, in 2007, Chavez’s administration took over the majority of four oil projects worth $30 billion that had been owned by Exxon and Conoco. The lawsuits brought by both companies against the government are ongoing, and they have fled, taking their business with them.

But, wait, there's more:

  • In 2008, Chavez instituted a windfall profits tax of 50% on oil companies selling barrels of oil for over $70, and a 60% tax on barrels sold for over $100.
  • In 2009, Chavez and his cronies seized a gas pipeline.
  • In 2010, they took over eleven oil rigs owned by a small energy company based in the US. The result? The “people” did not get ever-dwindling money from oil and gas sales.

The government of Venezuela got the profits and ran the energy interests like most government projects -- badly. The seizures frightened investors and prospective energy businesses from coming to Venezuela, and over the course of less than a decade, even as oil prices rebounded from a drop in 2015, overall oil production has dropped 25% in the nation since 1999. For a socialist state that relies on oil revenues for 45% of its government cash, and for which oil represents 95% of its exports, that’s unsustainable mojo.

As a result of this decrease in government revenue, Chavez came up with a Baldrick-like “cunning plan.” He took over more private businesses.

In 2007, Chavez’s government took over the largest power company in the nation. In 2008, Chavez took over the concrete industry. In 2011, Chavez moved to take over the gold mining industry. That process is ongoing and one Russian company is locked in a lawsuit against Venezuela as this post appears. In 2011, Chavez announced his plan to take over private homes in a pretty area called Los Roques, to use them as state-run tourism, and his administration took over a ferryboat business.

And for fans of free speech, which we just know Mr. Moore must be, Chavez created his own government-run TV channel in 2003, then shut down the television station called Globovision and its reporters after they offered stories and opinions critical of his administration.

In the halls of U.S. academia, leftists such as Naomi Schiller, an Assistant Professor of Anthropology at Brooklyn College, have praised Chavez’s suppression of speech, saying at a conference at John Jay College that he and current President Maduro took “various measures to neutralize their (Globovision’s) power and limit the ability of these outlets to disregard media regulations.”

That’s putting it quaintly.

But let’s get back to the celebrities for a moment, and offer more of their wisdom before we ask why they seem to be so fearful of recognizing what Chavez’s, and now Maduro’s, collectivist, anti-competitive policies have wrought.

In a statement issued upon Chavez’s death, talented director/producer/writer Oliver Stone issued a statement that read, in part:

“I mourn a great hero to the majority of his people and those who struggle throughout the world for a place…”

Mr. Stone has been a strong voice against U.S. militarism around the world, and made a name for shedding new light on the murder of John F. Kennedy. But since many people in Venezuela are reportedly hunting dogs, cats and pigeons now to eat, one wonders about the empirical basis of his claim.

Likewise, Sean Penn, who has shown courage protesting what he saw as U.S. government meddling in Venezuelan affairs, nonetheless misses the point about collectivism in action. When Chavez passed away, Mr. Penn noted:

“Venezuela and its revolution will endure under the proven leadership of vice president Maduro.”

A nation the population of which is starving does not long endure.

Some critics of this free market analysis of Venezuela might argue that the nation is in dire straits because of U.S. government opposition to Chavez and Maduros. But, regardless of the accusations of espionage, the Venezuelan economy exhibits all the traits of a failed collectivist state. As it has needed more cash to support its welfare state, it has seized more industries, reaching the point where the Maduro government took over farms, toilet paper manufacturers, and even the biggest brewery in the nation.

Without market incentives, workers have had no reason to produce. If they tried to organize against the state, they lost their jobs. If they tried to complain, their news outlets were closed. This is not freedom. This is not “helping the poor”. This is statism; and price controls, food rationing, starvation, money-printing, and hyper-inflation always come as the last phases.

Venezuela has reached that point, and no amount of makeup the U.S. leftists put on this can hide the ugly face of desperation that collectivism has wrought.

Perhaps, Michael Moore will see this someday. Perhaps, he will open his house to some of the Venezuelan poor he says he champions.

Both are highly unlikely.