Death of a dictator: Venezuela’s opportunity

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Death of a dictator: Venezuela’s opportunity

The death of Venezuelan President Hugo Chavez presents the country with an opportunity to reverse the economic and social policies its leader pursued incessantly. If last year’s surprisingly close presidential challenge by Henrique Radonski is any indication, Venezuela may be ready to try Adam Smith’s prescription of “peace, easy taxes, and a tolerable administration of justice.” If the people do, Venezuela stands to become the free market comeback-kid of the century.

When Chavez nationalized Venezuela’s oil industry and implemented a central planning system, the administration chose to pursue a single economic plan. This came at the expense of an unknown number of possibilities the competitive economy would have brought about, and had immediate and unforeseen consequences.

Chavez’s supporters argue that Venezuela’s rapid urbanization and subsequent municipal mismanagement were caused by market failures inherent to capitalism.

They are either ignorant of history or ignoring it: Venezuela’s oil boom was the only factor that enabled its metropolitan development, creating the very power grids that struggle today to support the energy needs of millions in the 21st century. Governmental energy preference goes to the state-owned refineries, making blackouts a reality of life under Chavez’s “socialist revolution.”

Capitalism didn’t disenfranchise Venezuela; it helped build it, and it did a better creating infrastructure than communism could do maintaining it. By claiming capitalist successes for his radical communist agenda, the average citizen’s ability to vote with his feet was all but eliminated.

Incentive structures for entrepreneurs faced a double-pronged challenge from Chavez, who likened profits to pirated spoils while literally threatening to seize any successful enterprise in the name of populism. In so doing, he echoed the broadly felt yet ill-understood feeling of exploited labor that is the cornerstone of Marxism.

Marx and Chavez both rejected that value is subjectively determined by the benefits both producers and consumers gain in trade. Such an approach had the effect of pulling his people back toward a tribal view of society, with Chavez acting as tribal leader and exercising complete control over his tribe’s direction.

Chavez’s application of Marxist theory worked against the grain of human development, sharing nothing with what words like “progressive” actually mean. Nevertheless, “progress” became a populist battle cry for the agenda of social justice he forced.

This is perhaps how Chavez was most damaging, and where Venezuela stands to gain the greatest. His understanding of social justice appeals to college students with red stars on their bags, but not to any serious entrepreneur or firm with the wealth and willingness to build a factory. Targeting wealth equality instead of opportunity equality has hampered Venezuela’s competitiveness in a world that measures utility by what it gains from the trade, not what a select subset of Venezuelans think labor and resources are worth. Dismantling individuals’ economic and social rights hurts everyone in a country crying out for opportunities only an administration of justice can provide.

It is my hope that with the passing of such an iconic and influential figure as Chavez, Venezuela’s people will see how their leader’s well-to-do intentions rendered the nation uncompetitive on a global scale. So long as Venezuela treats its greatest asset as a fixed resource to be allocated equally, it forgoes its share of what the free, peaceful and just nations bring to the market.