Good Riddance To Hugo Chavez

Let’s see – rumor has it that Hugo Chavez and his family amassed a fortune of $2 billion during his 14 year reign in Venezuela, which would amount to an average salary of about $142.8 million per year. Not bad work if you can get it – Chavez made Wall Street executives look like pikers. And what exactly did Chavez accomplish to earn his lofty salary, you might ask? Well, nothing less than leaving his country in shambles.

Chavez left Venezuela with one of the world’s highest rates of inflation, largest deficits, and fastest growing debts. Not to mention the power outages, rolling blackouts, and Venezuela’s murder rate – more people are killed in Caracas on an average weekend than in Baghdad and Kabul combined. And if you’re still not impressed, consider the political repression and the shortages of milk, flour, and sugar. Maybe Venezuelans should ask for a refund of that salary.

Hugo lovers praise Chavez for reducing the poverty rate in Venezuela from 50% to 32%. But that fact by itself is meaningless – we need to put it in perspective by comparing Venezuela’s poverty rate with other Latin American countries over the last 14 years. As the Daily Beast points out, Venezuela falls short in this regard – its poverty rate is higher than the average in Latin America and countries like Brazil and Peru improved more than Venezuela. This suggests that Venezuela would have done just as well with any other leader.

And then there is Venezuela’s oil industry, with oil and gas reserves that rank among the largest in the world. Oil production has dropped by one-third since Chavez took office, and the state oil company apparently is ready to start paying suppliers with IOUs instead of cash. Slate’s Raul Gallegos characterizes the industry’s problems as a lesson in “oil wealth mismanagement,” but it can also be viewed as a lesson in mob rule.

Chavez was an authoritarian, but he still needed to win elections. Chavez may have relied on general thuggery and other heavy-handed measures to help win his elections, but he also needed the support of the mob, which he bought by stripping Venezuela’s oil indus-try. The resulting decline of the industry is almost a classic example of how authoritarian governments fronting the mob will kill the golden goose.

During the U.S. presidential election last year, the Obama team ran a campaign ad aimed at college students. In the ad, Obama promised to throw money at students for college and surprisingly enough, the ad even identified the source of the money:  the wealthy and – wait for it – the oil companies. The U.S. is far from being Venezuela, but it’s troubling that Obama seemed to be pulling a “Chavez” in promising oil company wealth to win votes.

Hopefully, politicians will think long and hard before moving toward our own version of mob rule. America’s founders worried most about mob rule and attempted to construct a form of government that would avoid it. Chavez and the Venezuelan example should serve as a reminder of where such a path ends.

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