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How to mess up an economy

Here is a long and good article about the destruction of the economy of Venezuela by Hugo Chavez, the president who recently attempted – unsuccessfuly, thank goodness – to get himself voted president for life. I know I am preaching to the coverted around here by pointing out the sheer folly of what this thug is attempting, but sometimes you have to keep pointing to such examples lest people in other parts of the world forget just what a disaster state central planning is.

It never fails to strike me how such a resource-rich nation like Venezuela can be ruined by a political operator like Chavez, and contrast that with how a small colony, with hardly any resources at all apart from sheer entrepreneurial spirit, like Hong Kong, can rise to be one of the richest places on the planet.

For a great guide to some of the key drivers of wealth in countries down the ages, this classic by David Landes is greatly recommended.

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11 comments to How to mess up an economy

  • guy herbert

    “…how such a resource-rich nation like Venezuela can be ruined…”

    Isn’t resource-richness the heart of the problem, creating an essentially political competition for control of state rents?

  • I’m not sure in this case; I suspect that Chavez genuinely believes that all this talk of markets is a ruse to enrich America at the expense of Venezuela. If so, it’s almost more tragic than if he was just destroying the place for his personal benefit.

  • I’m not going to deny that Chavez’s government may be causing a whole lot of problems, but don’t delude yourself that Venezuela was some kind of free market paradise before he showed up, or that US influence in the region has been a force for good.

  • Chavez is destroying Venezuela because he is a tit.
    Like all of the most evil of people he believes what he is doing is right and for the greater good.

  • permanentexpat

    …….how a small colony, with hardly any resources at all apart from sheer entrepreneurial spirit, like Hong Kong, can rise to be one of the richest places on the planet.

    Doubtless some of you will be able to tell me why Britain, the benign ruler of that colony, was & is unable to emulate its success.
    I would guess:
    1/ The sensible absence (mostly) of ‘gahmen’ interference in allowing entrepreneurs to make money to the common good & benefit.
    2/ See 1/
    3/ See 1/

    HK, even today, is a shining example of free private enterprise and a glaring , embarrassing monument to British political & economic stupidity.

  • nick g.

    In a way, I can imagine a conspiracy which has some plausibility- the C.I.A. is backing Chavez! It does the rest of us some good, now that Russia is not a Communist Model, to be reminded of what full-blown Socialism can be like! North Korea is in an obscure corner of the world, but Venezuela is next door to the USA! (I wonder if Bush will prod Chavez into doing something idiotic, thus making right-wingers look good!?)

  • Gregory

    Command economies do, you know, work under ideal conditions…

    … conditions that include perfect knowledge and essential omniscience and omnipotence from the Commander of the economy, perfect acquiscience from the plebeians, and non-disruption from external forces.

    In other words, you’d need God to run your economy. Hmm. I don’t think Chavez quite qualifies.

    It really is remarkable how the free market, capitalistic economies manage to blunder along decade after century after millennia, considering that it really is quite chaotic. That’s the way it should be.

  • Paul Marks

    I wrote a comment dealing with some of the points made in comments above – history of Venezula, American interventions (good and bad) in Latin Ameican (mostly about the mistaken policy of supporting “reformist” centre left governments), and how Chevez does not have beliefs that are wildly different to the academic mainstream.

    I also nodded at Guy Herbert’s good point that it is natural resources that allow socialist rulers to be a problem.

    Certainly North Korea (and so on) can be a problem without such natural resources – but people in Asia do not regard North Korea a great place (well apart from some brainwashed South Korean students who think that the principles they are taught by collectivist teachers are something to do with reality).

    Many people in Latin America (and other places) do regard the socialism of Venezula as something to be copyied – and the oil money pays for the propaganda to help them think that (as it does for domestic propaganda stunts and so on). Although many people (such as people who took what they were taught at school and university seriously – people including some big business people) would tend to believe Chevez anyway.

    Indeed if France or Germany had fallen to the Marxists in 1917 it might have been less of a long term nightmare than Russia “the treasure house of nations” falling to them – and less of a problem round the world.

    But (of course) I got “internet explorer can not display the webpage” (as I do so often).

    And I am not going to type the thing out again.

  • DS

    Who could have seen that coming? Over the past 90 years there is no precedent for this sort of thing, Chavez is pioneering something brand new that has never been tried before. The fact that it turned into a complete disaster can’t be blamed on him. That damn free market that screws everythig up just keeps seeping in through the cracks messing everything up. It must be the fault of the US somehow.

    (Sarcasm intended)

  • “In other words, you’d need God to run your economy.”

    We have got him,doesn’t seem to get the knack of “Render unto Ceasar”

  • Gregory

    Umm, I don’t think Gordon Brown qualifies either.

    You know who I’d like to see run the economy? Really, really like?

    Alfred E Neumann.

    Sure, it’ll be a mess. But boy oh boy, what a glorious mess it would be.