Venezuela is in the throes of a deep political and economic crisis. The country’s democratic system has produced two successive tyrannical dictators, Hugo Chavez and Nicolas Maduro. There are extreme shortages of food and other essential items. Prices are rising at a rate of around 700 percent. There are massive anti-government protests involving hundreds of thousands of people, with the government killing some of the protestors.
What is the solution to Venezuela’s woes?
The answer depends on whether you’re talking to an American liberal (i.e., leftist or progressive), conservative, or libertarian.
The liberal says: Venezuela just needs to raise the minimum wage, tax the rich and give the money to the poor, and increase government welfare spending and debt.
After all, isn’t that what liberals say is the key to ending poverty? Well, poverty is one big problem in Venezuela today. In fact, people are on the verge of starvation there.
So, in the mind of the liberal, that’s what needs to be done to combat poverty in Venezuela — just raise the minimum wage, tax the rich and give the money to the poor, and increase government welfare spending.
There is one big problem, however: Chavez and Maduro have already done all those things. And guess what happened: the economic crisis got worse. In fact, the more that Maduro take these steps, the worse things get. Today there are few rich people to tax because governmental policies have made most everyone poor. In fact, Venezuela today (along with Cuba and North Korea) actually constitutes the ideal leftist society: almost total economic equality — i.e., no big disparities in wealth — because most everyone is equally poor.
What Venezuela is confirming is that it is precisely leftist solutions to ending poverty that are the cause of poverty. That should serve as a valuable lesson for Americans, given that leftists here (and conservatives) are heading America in the same direction as Venezuela, with massive welfare spending, massive warfare spending, and ever-increasing debt.
The conservative says: Impose economic sanctions that will increase the suffering of the Venezuelan people, in the hopes that they will support a military coup, or send in the Marines or the CIA to oust Maduro from office and replace him with a pro-U.S. and “pro-capitalist” military dictatorship, much like the U.S. government did in Chile in the early 1970s, when the CIA engineered a coup that brought Chilean military strongman Gen. Augusto Pinochet into power.
There is a big problem, however, with the conservative solution: the military dictatorship will inevitably begin doing what Pinochet did: clean up the country by rounding up socialists, leftists, and communists and incarcerating, torturing, raping, executing, and disappearing them — all because of their leftist beliefs.
Of course, some conservatives will say that that’s no big deal because the victims are bad people, given that they are socialists, communists, and leftists. They’ll also say that all these “human rights abuses” will be worth it because the military dictatorship will bring “free markets” to Venezuela, much like, conservatives say, the “Chicago Boys” did for Chile.
For libertarians, the morality of killing, raping, or torturing people because of their political or economic beliefs is problematic, as is the willingness to trade innocent lives for economic prosperity.
Moreover, the truth is that the Chicago Boys never brought “free markets” to Chile. Instead, enthusiastically assuming bureaucratic positions within one of the most tyrannical regimes in the world, they became better central planners than their leftist predecessors had been. That is, while the Chicago Boys used their bureaucratic positions within Pinochet’s dictatorial regime to reduce regulations and to privatize some enterprises (which, naturally, did increase economic prosperity, as it has in communist China), they never actually abolished the departments, agencies, and laws that infringed on economic liberty. The Chicago Boys simply managed the levers of the state better than their socialist predecessors.
Why, the Chicago Boys in Chile didn’t even abolish the minimum wage, much less Chile’s Federal Reserve System.
They also didn’t abolish income taxation, state involvement in education, or welfare programs.
They certainly didn’t dismantle the nation’s national-security establishment that they enthusiastically went to work for after it took over the government.
While the Chicago Boys claim to have brought a “free market” Social Security plan to Chile, the truth is that it was nothing but a plan based on the principles of economic fascism, which shouldn’t surprise anyone given Pinochet’s fascist proclivities.
Finally, the Chicago Boys certainly didn’t protest, at least publicly, the millions of dollars in U.S. foreign aid that were flooding into the regime (and which were helping to shore up the Pinochet regime and its concentration camps, torture and rape chambers, kidnappings, assassinations, and disappearances).
Libertarians advocate a genuine free-market economy for Venezuela, one where economic activity is genuinely free from governmental interference. That’s what the adjective “free” in “free market” means — not less governmental interference but rather free from governmental interference. That’s what makes the idea of “free markets” so revolutionary.
To achieve a society of economic prosperity and rising standards of living, Venezuela should repeal, not reduce or reform, the minimum wage, price controls, and economic regulations. It should abolish all income taxation. It should dismantle all welfare departments, agencies, and programs. It should end its Fed and establish a free-market monetary system. And it should dismantle its national-security establishment and convert the government into a limited-government republic.
For that matter, that’s also what the United States should do.