Free Markets, Free People
How To Build A Dictatorship
Venezuelan voters approved a referendum to end term limits on Sunday, paving the way for Hugo Chavez to perfect his dictatorship:
President Hugo Chavez says a referendum victory that removed limits on his re-election is a mandate to intensify his socialist agenda for decades to come. Opponents warn of an impending dictatorship.
Both sides had called the outcome of Sunday’s vote key to the future of this South American country, split down the middle between those who worship the president for redistributing Venezuela’s oil riches and those who see him as a power-hungry autocrat.
“Those who voted “yes” today voted for socialism, for revolution,” Chavez thundered to thousands of ecstatic supporters jamming the streets around the presidential palace. Fireworks lit up the Caracas skyline, and one man walked though the crowd carrying a painting of Chavez that read: “Forever.”
The constitutional overhaul allows all public officials to run for re-election as many times as they want, removing barriers to a Chavez candidacy in the next presidential elections in 2012 and beyond.
“In 2012 there will be presidential elections, and unless God decides otherwise, unless the people decide otherwise, this soldier is already a candidate,” Chavez said to applause. First elected in 1998, he has said he might stay in power until 2049, when he’ll be 95.
Hmmm. Maybe those “critics” are onto something, eh?
At their campaign headquarters, Chavez opponents hugged one another, and some cried. They said the results were skewed by Chavez’s broad use of state resources to get out the vote, through a battery of state-run news media, pressure on 2 million public employees and frequent presidential speeches which all television stations were required to air.
With the courts, the legislature and the election council all under his influence, and now with no limits on his re-election, officials say Chavez is virtually unstoppable.
“Effectively this will become a dictatorship,” opposition leader Omar Barboza told The Associated Press. “It’s control of all the powers, lack of separation of powers, unscrupulous use of state resources, persecution of adversaries.”
As the article notes, however, everything is not peaches and cream for Chavez. Venezuela’s economy, which is so heavily dependent on oil revenues, lies in shambles, beset by low oil prices, rampant inflation, and little prospect for relief. According to Michael Shifter of the Inter-American Dialogue in Washington:
… the global financial crisis and the plunging price of oil, which accounts for 94 percent of Venezuela’s exports and nearly half its federal budget, will limit Chavez’s ability to maintain the level of public spending that has fueled his popularity.
Without oil revenues to prop up the socialist spending regime, Chavez will have to resort to other means of stabilizing the economy. Because producers of wealth are so politically disfavored in Venezuela, and there are myriad obstacles to successfully operating any businesses, Chavez’s options for economic recovery are limited:
“Venezuela faces serious problems no matter what today’s results were. Later this year, economic problems are going to be felt more acutely.”
Venezuela, the fourth-largest supplier of crude oil to the U.S., depends on oil for 93 percent of export revenue and half the government’s budget. Prices for crude have plunged 74 percent since touching a record in July.
“Now we’re going to see what’s beyond this campaign and what he does when he takes the economy into account,” [Enrique] Alvarez, [head of Latin America fixed-income research at IDEAglobal in New York] said.
The adjustments to economic policy will probably include raising taxes and devaluing the currency to cover a public deficit now that his marathon political campaign is out of the way, said Alberto Ramos, Latin America economist at Goldman Sachs Group Inc. in New York.
Raising taxes is de rigueur in such circumstances, but not likely to generate much revenue. After all, the government has taken over the most lucrative part of the Venezuelan economy, and people and businesses who don’t earn much don’t have much to pay to the government. Taxes are not going to solve any problems.
Without any real economic engine to fund socialist programs, therefore, Chavez won’t be able to buy votes anymore. Instead he will have to find another way to garner (or manufacture) public support if he wants to remain in power. And there isn’t any doubt that he wants to remain in power.
The most obvious way for Chavez to accomplish this feat to convince the country that his leadership is indispensable to the country’s fortunes. That line of argument is already a staple in his rhetoric — i.e. that success of the Bolivarian Revolution depends on Chavez exercising ever increasing power — so the foundation has been laid. However, it was much easier to sell that idea when the oil revenues were pouring in. With a looming fiscal crisis at hand, and the prospects of economic improvement looking dim, a call for new leadership will likely grow louder.
Ironically, the path to permanent power for Chavez was described by socialist activist Naomi Klein in her book “Shock Doctrine: the Rise of Disaster Capitalism.” In what has become the bible for the anti-capitalist/ant-globalization movement, Klein
… explodes the myth that the global free market triumphed democratically. Exposing the thinking, the money trail and the puppet strings behind the world-changing crises and wars of the last four decades, The Shock Doctrine is the gripping story of how America’s “free market” policies have come to dominate the world– through the exploitation of disaster-shocked people and countries.
Her theory rests on the premise that democratic obstacles to corporate domination are swept aside in times of severe crisis (e.g. Iraq war, Katrina, tsunami in Sri Lanka), allowing global moneyed interests to swoop in and take control of the economy. She often cites Milton Friedman and the “Chicago Boys” dealings with Pinochet as an example of how capitalist forces purposely, and sometimes violently, undermine the will of the people when they are at their weakest in order to introduce reforms that actually serve the interests of the elite rather than the people. In spite of her historically challenged maunderings (Friedman only met Pinochet once for an hour, and wrote him a letter), Klein does hit on an important point: crises are routinely used to further the power of the elites. Klein just identifies the wrong parties. It is typically the government elites who profit from these crises.
Take, for example, how our own government has seized upon the current fiscal crises to shove a giant social spending bill down our throats, plunging future generations into massive debt, and centralizing control over the lives of individual Americans:
Last year the US economy was hit with one shock after another: the Bear Stearns bail-out, the Indymac collapse, the implosion of Fannie Mae and Freddie Mac, the AIG nationalisation, the biggest stock market drop ever, the $700bn Wall Street bail-out and more – all accompanied by a steady drumbeat of apocalyptic language from political leaders.
And what happened? Did the Republican administration summon up the spirit of Milton Friedman and cut government spending? Did it deregulate and privatise?
It did what governments actually do in a crisis – it seized new powers over the economy. It dramatically expanded the regulatory powers of the Federal Reserve and injected a trillion dollars of inflationary credit into the banking system. It partially nationalised the biggest banks. It appropriated $700bn with which to intervene in the economy. It made General Motors and Chrysler wards of the federal government. It wrote a bail-out bill giving the secretary of the treasury extraordinary powers that could not be reviewed by courts or other government agencies.
Now the Obama administration is continuing this drive toward centralisation and government domination of the economy. And its key players are explicitly referring to heir own version of the shock doctrine. Rahm Emanuel, the White House chief of staff, said the economic crisis facing the country is “an opportunity for us”. After all, he said: “You never want a serious crisis to go to waste. And this crisis provides the opportunity for us to do things that you could not do before” such as taking control of the financial, energy, information and healthcare industries.
That’s just the sort of thing Naomi Klein would have us believe that free-marketers like Milton Friedman think.
Of course, that isn’t how supporters of free markets behave at all. It is, however, exactly how someone like Hugo Chavez operates.
With the Venezuelan economy shrinking, and real suffering occurring on a growing scale, the opportunity is ripe for Chavez to further “reform” the country, and complete the Bolivarian Revolution as he has promised. That won’t save the nation from economic ruin, and indeed will probably hasten such an outcome, but it will provide the impetus for perpetual Chavista rule.
The economy is doing poorly? That’s because the revolution has not advanced far enough. Economy doing well? The revolution is working its wonders! Rinse and repeat.
Thus the keys to Chavez’s Bolivarian kingdom lie in the propagandistic message that only centralized and powerful leadership can provide adequately for all. Principles such as “fairness” and “equality” are used as bludgeons against any who dare step out of line. Individual achievement is sneered at as “selfish” and “against the common good.” The redistribution of any wealth created outside the government system (as all wealth created inside is confined to the governmental leaders) is touted as the only means of ensuring a safe and productive future for all. Capitalism is deemed the language of the oppressor, and blamed for any and all ills that befall the nation. Yet, despite all this rhetoric, things will never seem to get any better.
Poor, poor Venezuela. Thank goodness we won’t such stifling of economic welfare and individual freedom here.