Meddle Not!

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“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights. . . . that to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed.”

That’s the theory of the Declaration of Independence.  This is my deduction: If a government has no just power to exist, anyone is morally free to go to work and try to shut it down. We should not assume, however, that everyone should start trying that stunt, right here and right now. It’s possible that foreigners, for example, should mind their own business. Here’s a principle that used to be honored in America: our government shouldn’t meddle with the affairs of other countries, unless it has a self-defensive reason for doing so.

That principle has been interpreted to mean that all governments are created equal, and that their so-called rights should always be respected. In other words, “We have the Bomb, but, to be fair, why shouldn’t North Korea have the Bomb as well?” I can tell you why North Korea shouldn’t have the Bomb, but you know it already.

Now to my subject. Venezuela is ruled by a socialist dictatorship that is as mean and oppressive and just plain stupid as you would expect a socialist dictatorship to be. Very well. What follows from that?

Does it follow that our government should try to remove the government of Venezuela? That it should plot with the Venezuelan military to remove the country’s dictator? That it should, in effect, wage war against Venezuela as currently constituted?

This, it appears, is what our government is doing.

It’s not as if Venezuela had the Bomb. It’s not even as if Venezuela constituted an economic threat to us, now that we have enough of our own oil not to need any more of Venezuela’s. Besides, the socialists have wrecked the country’s oil industry. If crass self-interest were our guide, we would be happy to lose a competitor, in the political as well as the economic realm. The best advertisement for capitalism and limited government is the hideous failure of Venezuelan socialism.

It is reported that the vast majority of Venezuelans think it’s impossible for them to remove their own government, and that they want some foreign power to do it (guess which). I admit that if I were a Venezuelan, I’d probably be praying for an American invasion. In the current crisis, I probably wouldn’t have enough presence of mind to remember how badly the interference of “international Boy Scouts,” as Isabel Paterson called them, has turned out for some of the intended beneficiaries. But the truth, the truth on which self-interest and moral principle agree, is that the Venezuelans got themselves into this mess, and they need to get themselves out of it.




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Caracas Dispatches

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Mercedes Flanagan — I’ll call her that — a Venezuelan lawyer, television executive, and jurist, and most important, this author’s first cousin, arrived in Miami on December 15, 2017.

Flanagan. A good Latin American name, like O’Higgins or De Valera.

Mercedes was able to get here after acquiring a six-month US visa (months in the making and a miracle) and flying a convoluted route that included Trinidad and Panama City. Direct flights — or flights of any sort — have become increasingly difficult to book because of Venezuela’s paucity of convertible currency. Five days after her arrival we met at her sister’s house in Boca Raton to celebrate the holidays together. Two of her granddaughters were there, having left Venezuela three months before. They too were seeking political asylum. Mercedes had lost a lot of weight but looked good, a result she attributed to the “Maduro diet,” as Venezuela’s food shortage is nicknamed, after Nicolás Maduro, the current president. She dreads returning.

Please forgive me for that absurd phrase: “mismanaged socialist economy,” as if a well-managed socialist economy could be a reality.

“Behind the scenes,” she said, “Cubans run everything.” A surprising revelation for what was once one of South America’s richest, most sophisticated, and modern countries — and a dark irony. During the 1960s, Cuban military and guerrilla leaders funded and aided leftist insurgents. Though thoroughly defeated, they’ve made a latter-day comeback.

I asked Mercedes about the state of her finances. She answered that she was still receiving her government pension but that one-third of it had been converted into nonconvertible “economic war bonds,” useless savings certificates.

In 2017, the mismanagement of Venezuela’s socialist economy — please forgive me for that absurd phrase: “mismanaged socialist economy,” as if a well-managed socialist economy could be a reality (a socialist economy is, by definition, a mismanaged economy; to actually mismanage a socialist economy would be to insert market mechanisms into it) — drove the inflation rate of the Bolivar (Venezuela’s currency) to somewhere above 4,000%. Mercedes reported a black-market exchange rate of 102,000 Bolivares to the dollar, circa December 1. CNN now (mid-January) reports 191,000 Bolivares to the dollar.

In order to conserve cash, banks are sticklers at enforcing check cashing procedures and creating on-the-spot, arbitrary rules to deny a check.

Let’s take a closer look at this money thing. Each day, Venezuelan banks are given a fixed budget dictating how much cash they’re allowed to disburse to clients. Electronic transactions are allowed, but forget ATMs, they’re all out of cash. Outside the banks, the lines of customers waiting to cash checks in order to acquire cash are already long by opening time — translating to about an hour’s wait. In order to conserve cash, banks are sticklers at enforcing check cashing procedures and creating on-the-spot, arbitrary rules to deny a check. But here’s the kicker: the daily per client check-cashing allotment set by the government is the equivalent of between 6 and 18 US cents — often not even enough to buy a “tit’s” worth of groceries.

Yes, a “tit” or teta, as it is called, because it resembles a droopy breast. Officially, they are CLAP bags. They hold a month’s worth of groceries and toiletries that cost the equivalent of 18 US cents. The government makes them available to the poorest Venezuelans at heavily subsidized prices. But, as CNN reports, “Recently, CLAP bags have gotten smaller or been delayed as more Venezuelans slip into poverty and as the government runs out of money to import essential goods.” How ironic: a shortage of worthless cash.

Salaries are unpredictable, even for government employees. So garbage is collected perhaps once a month, according to Mercedes. One enterprising “Chávista collective” in Caracas representing about 4,000 families has issued its own, parallel currency, the panal, and its own bank, El Banco Panalero, to ease the shortage of cash. The pudgy face of the demagogue former President Hugo Chávez graces one side.

Speaking of iconic faces, renditions of Simón Bolívar’s face have been subtly altered to make him look more creole than European white by pugging his nose and darkening his skin — in other words, to have him resemble Chávez and Maduro.

Salaries are unpredictable, even for government employees. So garbage is collected perhaps once a month.

On the plus side, gasoline runs at about 60 cents a gallon — up from 4 cents a gallon not very long ago — a price that has allowed a lucrative smuggling market to thrive at the Colombian border. And Venezuelan day workers — mostly prostitutes — are now allowed into Colombia to earn some real money.

N.B.: Mercedes requested that her true identity not be revealed, writing: “The situation in Venezuela is now much worse with the cold-blooded assassination of the soldier officer for ‘desertion’ for disagreeing with the dictatorship of ‘twenty-first century socialism’ along with three civilians, one of them a pregnant woman . . . and they're not allowing family to see, identify the cadavers, or bury them. We're awaiting Maduro's announcement of the suspension of all civil rights. . . There the raids by armed ‘collectives’ controlled by the government continue with orders to spread panic so that the real, suffering population won't continue to demand their rights to food, medicine, security and free elections."




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How Much Ruin, Exactly?

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“There is a great deal of ruin in a nation.” It’s a remark Adam Smith made to a young colleague, John Sinclair, who worried that the cost of quelling the American rebels might lead to the downfall of Great Britain. It’s also a remark Liberty’s founder, Bill Bradford, quoted back to me on several occasions, whenever I was doom-and-glooming about how some country or another was on the road to ruin.

It’s a remark that comes to mind often still, whenever I’m agitated about governmental stupidity or malfeasance. Foolish wars in the Middle East have not ruined the US, and neither have decades of profligacy, proliferations of acronymic agencies, or a succession of villains in our highest offices. Communism did not ruin Russia, and has not ruined China; even Nazism could not permanently ruin Germany, though it did succeed in splitting it for a while.

It’s a familiar feedback loop: the more that’s seized, the worse the economy gets; the worse the economy gets, the more can be seized.

Nonetheless on occasion I read of some insane diktat in one or another corner of the globe and wonder just how far that corner’s leaders are prepared to stretch the maxim. Sovereign debt will likely not ruin Spain, or Portugal, or even Greece, though the EU seems intent on testing that out a while longer yet. Debt (again) and a shrinking population will probably not ruin Japan, but its prime minister Shinzo Abe, with his “Abenomics”—a reheated and desperate Keynesianism—is trying his hardest to make things worse. Unemployment and labor unrest will certainly not ruin France, but French president François Hollande, meanwhile, has yet to pass up a chance to kill off jobs and push companies abroad.

And then there’s Venezuela.

Venezuela, of course, was one of the great experiments: Hugo Chávez’s “Bolivarian Revolution” was supposed to prove the superiority of socialism (economic, of course; its moral superiority was assumed long ago), provided only that said socialism is backed up by seemingly inexhaustible national resources. Chávez, wasting no time after his election in 1998, set about “redistributing income” through land grabs and price fixes, threatening hesitant businesses with expropriation and then often following through on that threat. Under “Chavismo,” Venezuela assumed ownership of much of the nation’s construction, telecommunications, utilities, and food production industries, insisting at each step of the way that the takeovers were necessary to combat the predation of profiteering capitalists.

This sets up a feedback loop familiar to anyone who’s given even the slightest attention to modern government, where every gain (however temporary) is attributed to the extraordinary wisdom and foresight of the government agents, while every loss (all too often permanent) is attributed to the greed of speculators and other enemies of the people. Naturally, the more that’s seized, the worse the economy gets, but on the other hand, the worse the economy gets, the more can be seized. It’s brilliant, really—at least until the shortages of basic goods become too great for anyone but an ideologue to ignore.

Say this in Chávez’s favor: his policies—and those of his successor, Nicolás Maduro—have encouraged innovation in the Venezuelan people; for instance, consider the smartphone app created to help them find toilet paper, in perpetually short supply thanks to price controls. But, as with the more traditional example of broken windows, this innovation isn’t going toward the sorts of things that would convince anyone of Chavismo’s superiority. And as other nations, especially the United States, Canada, and Brazil, have become more energy-independent, Venezuela and President Maduro are finding fewer buyers for their one undoubted asset, while the state-owned oil industry has become ever more wasteful and unprofitable.

With revenues plummeting and prices held artificially low, inflation has, inevitably, kicked in. And here’s where the “ruin” starts coming in: Maduro’s response (other than continuing to threaten or outright seize businesses) was to devalue the currency, and impose controls on currency exchange. As account holders desperately tried to get their money out of the country ahead of impending hyperinflation, Maduro doubled down by devaluing further, attempting to cut off foreign travel. Finally, he enacted a “Law on Fair Prices,” prohibiting profit margins of over 30%—which is to say, no profit, for anyone running an import business—while at the same time enacting long jail terms to punish “hoarders,” or, less insanely, anyone refusing to sell at a loss.

The socialist policies have certainly encouraged innovation in the Venezuelan people—take for instance the smartphone app that helps them find toilet paper.

Now, I’m no expert on Venezuela. I’ve never been there, I don’t know anyone from there, and I can’t get more than the barest sense of any articles written in Latin American Spanish. But I can’t imagine any experience of the place that would convince me that those Venezuelans who protest Chavismo are just, in the words of professional useful idiot Oliver Stone, “sore losers”—though they certainly aren’t winners, either, not while they’re getting gunned down for demonstrating against the ongoing depredation and repression. And so long as the government is willing to arrest the opposition leader, or expel consular officials for so much as meeting with protesting students, things don’t seem likely to improve.

It’s impossible to know where it will all end, or whether it could be enough to ruin Venezuela. I suspect not: prior to Chávez, Venezuela was no more or less stable than any other Latin American nation since the time of Bolívar himself. Oddly enough, in this era of globalization, the idea of a nation may be more susceptible to ruin than individual nations themselves. Those that are nearest ruin are those that were highly unstable and unwanted to begin with: Somalia, Iraq, Yugoslavia—lines drawn on a map as a convenience to colonial invaders or international do-gooders (if you can tell those apart). Yet even those fictions hold up longer than one might expect—just look at Zimbabwe.

So yes, there is likely a great deal of ruin still in Venezuela. But it is a shame, and likely will be a tragedy, to see the depths its rulers are willing to plumb before they hit bottom.



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