John Oliver devoted most of his show this weekend to talking about the terrible situation in Venezuela, a situation that has been terrible to varying degrees for at least three years now. In the 20 minute segment, Oliver does a fairly good job of explaining what has happened to the country over the past decade and includes plenty of embarrassing clips of former socialist strongman Hugo Chavez and his successor, not-so-strongman Nicholas Maduro.
Oliver covers the country’s rampant hyperinflation and the subsequent “Maduro diet.” He describes Maduro’s quasi-legal political moves including stacking the Supreme Court with supporters, creating a new National Assembly, and sending opposition political figures to prison.
There’s just one glaring problem with Oliver’s report: He says socialism isn’t the problem. In fact, he opens the whole segment by mocking conservative media coverage of Venezuela. “If you follow conservative media at all, you will see it frequently painted as the inevitable, dire consequences of a socialist government,” he says. He then cuts to a clip of someone on InfoWars doing a fairly dumb woman-on-the-street interview. That’s the kind of cheap cop-out I would expect from John Oliver. It’s about as fair as criticizing John Oliver and then offering readers a clip of some left-wing campus imbecile in glasses. But I’m not going to do that. I’m just going to point out that John Oliver’s take on socialism not being the real problem in Venezuela is complete and utter garbage.
Oliver says, “This is not just a story about socialism. There are plenty of socialist countries that look nothing like Venezuela. It’s a story about epic mismanagement.” Well, yes and no. It’s certainly a story of mismanagement but that mismanagement has a specific character that Oliver doesn’t seem very interested in describing. Here’s how Forbes described Chavez’ management of PDVSA:
He fired about half of the workforce of the national oil company, PDVSA, during an oil strike in 2003, including the vast majority of top executives and technical staff. He forcefully renegotiated joint-ventures and operational contracts with foreign companies and partially nationalized them. ExxonMobil and ConocoPhillips withdrew from the country as a result. Thereafter, no relevant new oil projects have been completed. He also expropriated some service companies. In addition, Chavez drove PDVSA to run into significant debt, and transformed it, de facto, into a social and development ministry. Consequently, investment in oil development and production declined, even during the oil price boom.
So Chavez didn’t just fire people, he “expropriated” companies to put the government control of them. A bias for competence at producing oil was replaced with a political bias, i.e. people loyal to the socialist revolution were installed to manage things. Meanwhile, most of the money coming in was spent on heavily subsidized products for the poor. The government giveaway was the stuff Bernie Sanders’ dreams are made of. A large percentage of the money the oil company generated was spent discounting the cost of gasoline to make it the lowest price found anywhere in the world. A gallon of gas was just 9 cents in Venezuela in 2012.
All of this socialism seemed like a great idea for a while and was embraced by celebrities here in the U.S. as a model for other nations. And then the price of oil collapsed and the nation’s one valuable product suddenly couldn’t support everyone who had been told they deserved lots of steeply discounted gas and consumer goods.
Was this a case of mismanagement? Yes, absolutely. But what John Oliver never really delves into here is why the mismanagement happened and why, once things became unsustainable, the government couldn’t simply make some common sense market reforms to address it. The answer to all of those why questions is “socialism.”
Socialism is why Venezuela responded to the drop in oil prices with a fresh round of expropriations and price controls instead of cutting back on subsidies. It’s why the government maintained the absurd exchange rates on currency that no longer made any sense as black market exchange rates at the border began to skyrocket. It’s why Maduro refused to even admit there was a problem and instead claimed he was the victim of a U.S. led economic conspiracy to destroy the country. It’s why he lost the service of many international airlines because they refused to be paid at his absurd exchange rate.
Socialism is why a large portion of the population, who had become accustomed to getting a lot of free or heavily subsidized stuff, went along with all of this. They had been told for years that the freebies were the benefits of socialism. Neither Chavez nor Maduro wanted to explain to them that the free ride had come to an end (at least temporarily) because of international market forces that don’t follow the rules of the glorious revolution.
Socialism is at least indirectly responsible for the behavior of the autocratic regime. Because if they weren’t going to tell people the revolution was a failure, they didn’t want anyone else telling them either. That’s how you wind up with major opposition figures like Leopoldo López in a military prison on trumped-up charges. It’s how you wind up with major opposition figures told they can’t even run for office. It’s how you end up with people protesting the government in a secret prison.
The need to preserve the socialist revolution is also why you have roving gangs of socialist die-hards on motorcycles (the colectivos) who take the fight to preserve socialism into the streets and crack heads if necessary. In a word, socialism is the reason the country’s leaders doubled down on a situation that was clearly unsustainable in the long run and then backed up that double-down with force. For socialism to survive, the enemies of socialism have to be ignored or made to pay a price.
Venezuela isn’t a case of random mismanagement with no other significant characteristics. It’s a case of mismanagement driven by an impulse to preserve a socialist success story that has devolved into a miserable failure. Again, this John Oliver clip isn’t the worst thing I’ve seen or read on this topic. He does hit a lot of the highlights (and lowlights) but he’s avoiding the one thing that drove all of this mismanagement to such an extreme, probably because that would be awkward for a millionaire socialist to explain.