Thursday, March 7, 2013

Hugo Chavez Was No Outlier

David Conklin writes at the Harvard Business Review of the nationalistic tendencies in Latin America and how far the people are from understanding the beauty of free markets:

With the passing of Hugo Chavez, it is important to understand the place of Chavez in the political history of Venezuela and of all Latin America. We should not think that socialist movements in Latin America will die simply because Chavez has died. He often pointed to Simon Bolivar, Venezuela's early visionary and leader (1783-1830), as the model for his political philosophy: Latin America must achieve a united independence from foreign powers. For Chavez, this meant not only political independence but also economic independence. It meant nationalization of foreign-owned corporations and distancing Venezuela from the USA, which in the past had often been involved in the internal politics of Latin American nations. It also meant assisting other Latin American nations financially with the wealth from Venezuela's oil exports. Dramatically, it meant reaching out to nations around the world and establishing new economic relationships, especially with socialist leaders in Cuba and China.

Chavez was not advocating a new and original political agenda. Nationalistic sentiment was strongly rooted in Latin America's past. In the 1940's and 1950's, the economic doctrine of "dependency theory," promulgated by the economist Raul Prebisch, supported autarky or economic independence, placing restrictions on imports and foreign ownership. If economic forces were left to themselves, economic forces would victimize the peripheral nations, while the developed nations at the "center" would gain all the benefits of trade and development. Latin America should be for Latin Americans. This protectionist position allowed the growth of domestic monopolies that became increasingly non-competitive. This position also meant that governments were continually intervening in markets with price-setting and regulations, as well as with government ownership. For example, in 1975, a socialist president of Venezuela, Carlos Perez nationalized the oil industry, and used oil revenues to create more government-owned industries, here again causing inefficiencies.[...]

For all these reasons, change towards free markets and private property and open dissent will not come quickly or easily in Venezuela. We may expect ongoing conflicts

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