Venezuela’s President Hugo Chavez is widely praised for his efforts to uplift the poor. But his “successes” have come at a very high price, including the underperformance of the domestic economy,
After years of economic mismanagement, Venezuela is the only Latin American economy with negative growth. And crime & inflation, both of which harm the poor the most, are high & rising.
While things look bad, they are almost sure to get worse under Plan Socialista Simon Bolivar 2007-13 that calls for nationalizing 70% of private companies with the rest becoming joint ventures. As it is, the number of private firms is down by ½ to 7,000 & those surviving face negative economic growth last year (-3.3%) with a further decline (-5.8%) this year.
Once a net exporter of coffee, sugar & rice, Venezuela now imports many food staples in the wake of massive nationalization of agricultural land.
With the economy increasing dependent on oil revenues generated by a creaking state-run company, production of the state steel firm, Sidor, was down 25% in 2009 & 20% this year.
Venezuela’s experience with Chavez also reveals a problem with majoritarian democracy. Senor Chavez attained power just like Hitler did under the Weimar Republic and then used legal means to create a totalitarian state.
In both instances, charismatic leaders attracted strong electoral support of citizens.