Vacation In Venezuela

We provide transportation to four-year-old kindergarten for one of the grand-deGloves. The letter of the week was V and one of the teachers said today’s subject would be Vacation In Venezuela.  In fact, they liked Vacation In Venezuela so much that they extended it to two days.

Of course, our immediate thought was why are you glorifying that hell-hole? Yet we refrained from comment despite the facts.  On the Heritage ranking of economic freedom it is 179 of 180.  Six countries are not ranked.  To put it kindly, it is a violent place without a reliable government.  About a year ago the LA Times said:

Venezuela’s violent crime epidemic appears to be escalating into a full-blown humanitarian crisis. The precise dimensions are hard to know, however, because along with the collapse of the economy and widespread hunger has come a near blackout of reliable government crime statistics.

Nothing we have seen suggests the situation has improved since then.  We are convinced that it was appropriate to leave this as a politics free zone.  There are not many countries that start with V: Vanuatu, Viet Nam, Venezuela.  The kids are just four.  The discussion is not about governments but geography and letters.  We are happy with our choice.  The question is when should we speak up?

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Hands Off Venezuela

The Weekly Standard recently had and editorial and support piece by Barton Swaim on getting Maduro and his cronies out of Venezuela.  We don’t think such an aggressive stance is warranted.  The support piece quotes the editorial:

The reality is that the Chavistas must be deprived of their oil. Otherwise Maduro stays, and Venezuela’s nightmare continues. If the Trump administration wants to rid the Americas of their most odious regime, it will have to embargo Venezuelan oil. Announce the decision six months in advance: Maduro and his cronies step down peacefully or the U.S. deprives them of their only real source of money. In the meantime, strengthen the opposition with clandestine funding and overt encouragement.

Barton goes on to suggest that an alternative is to have a Venezuela airlift like the one in Berlin.  Except it wouldn’t be anything like it.  The most important difference would be that the allies controlled West Berlin according to treaty.  Then Barton goes on to conclude:

It [the airlift] might be a wild idea. Perhaps the saner move would be the more immediately consequential one of embargoing the country’s oil. But either is better than watching another generation of Venezuelans starve.

There are two problems with US intervention leading to regime change in Venezuela:  First, the set of variables are large and the possibility of disastrous outcomes is too large.  The Knowledge Problem will make us ineffective.

The results would not be limited to Venezuela.  US actions in Central and South America reverberates through all of Latin America.  As NRODT tells us, Argentina has made remarkable progress in the last few years.  Still, including the Caribbean, according  Heritage, it is home to six of the 23 repressed economies in the world.  Why do we take aggressive steps to fix the other five?

The empathy of Barton and the others at the Weekly Standard speaks well for them.  Unfortunately, it is not something that we can fix.  To create a working economy the Venezuelans (Zimbabwean etc.) need to fix it for themselves.  We hope that they renounce socialism immediately but it is up to them.

Don’t Forget Venezuela

Venezuela continues to circle the drain.  Remember it has the largest oil reserves in the world.  In the last three months the price of oil (yes there are lots of prices but they move in tandem) has gone from $54.53 to $65.41.  Unfortunately, it is trying to apply socialism.  Scott B. MacDonald reports on the impact:

Venezuela is a mess. It clings on the edge of total debt default only thanks to the timely recent assistance of Russian money. At the same time, the economy has imploded—oil production and exports are struggling, inflation has zipped well above 2,000 percent (into the realm of hyperinflation), unemployment is in excess of 20 percent, and there are growing numbers of outbreaks of looting in the face of widespread shortages of food and basic goods. By one estimate, Venezuela’s economy has contracted by 40 percent in per capita terms from 2013 to 2017, while the country has one of the world’s highest homicide rates.

There is limited ability for the The Donald to have an impact here.  We can safely say that he will avoid his immediate predecessor’s “Mi amigo” moment.

Sidebar:  Reporting of Obama’s mi amigo doesn’t come up on Google’s first page.  There are two negative comments on it, one being the link, but there is no reporting of it.  Interesting.  End Sidebar.

Scott says it is up to Venezuela’s military because, like the Congo, Zimbabwe, and eastern Europe, the solution, or lack of a solution, is up to the folks in the country.  Scott says:

For change to occur it will have to come from within the ranks of the armed forces. While the top leadership has benefited from its close relationship with the Maduro gang, much of the rank and file is not immune to the ravages of socialist policymaking and mismanagement.

We hope for the best but much will have to go right to get from the current situation to a functioning country,  Good luck to the reformers and good luck to outsiders in identifying reformers.

 

Good Luck Zimbabwe

It appears that Zimbabwe has ousted the tyrant Robert Mugabe and his first lady Grace who has ruled and ruined the country over the last 37 years.  Right now Zimbabwe ranks 175 out of 180 countries on Heritage’s Index of Economic Freedom.  Here is a quote from Heritage:

Zimbabwe’s economy is characterized by instability and volatility, both of which are hallmarks of excessive government interference and mismanagement. Massive corruption and disastrous economic policies have plunged Zimbabwe into poverty. The government’s near bankruptcy has triggered large protests over unpaid civil service wages and a continuing economic crisis.

We wish Zimbabwe well.  We recognize how difficult it will be to make headway after 37 years of misrule. If they are reading we want to remind them that capitalism works and socialism doesn’t.  As evidence, three of the five countries below them are Venezuela, Cuba, and North Korea.  Good luck.

A Reminder On Socialism

Yesterday is was Communism (no, we still don’t reference our stuff0.  Today it is socialism, the slightly less virulent method of restricting economic and personal freedom.   The WSJ Editorial Board tells us:

Venezuela is broke, which takes some doing. For much of the second half of the 20th century, a gusher of oil exports made dollars abundant in Venezuela and the country imported the finest of everything. There were rough patches in the 1980s and 1990s, but by 2001 Venezuela was the richest country in South America.

And now socialist Venezuela is broke.  Yes the country with the largest proven reserves in the world according to Wikipedia is broke.  The socialists are almost as unlucky as the Communists.  There are just too many “unexpected” events every time one of these methods is put in place.

Venezuela Clarity

Rich Lowery is on point in discussing Venezuela at NRO.  He has a great way of summarizing how bad things are there:

The result is a sharp, years-long recession, runaway inflation, and unsustainable debt. The suffering of ordinary people is staggering, while the thieves and killers who are Chávezista officials have made off with hundreds of billions of dollars. At this rate — The Economist calls the country’s economic decline “the steepest in modern Latin American history” — there will be nothing left to steal.

The situation leaves The Donald with limited options as Rich discusses.  Read his whole analysis.  What he doesn’t remind us of is the policy of The Donald’s predecessor.  To him Chavez was mi amigo.  As Patrick Cooper at USA Today had a quote from AP back in 2009:

“President Barack Obama has gone abroad and gored an ox — the deeply held belief that the United States does not make mistakes in dealings with either friends or foes. And in the process, he’s taking a huge gamble both at home and abroad, for a payoff that could be a long time coming, if ever.”

Read all of Patrick’s column to remind yourself how controversial the predecessors actions toward Venezuela were.  The Donald’s predecessor always seemed willing to gamble with our future.  If we were at the track we would say he wasn’t an astute improver of the breed.

Recently we cited David Horowitz at PowerLine on why the Middle East is a disaster.  The Middle East is not the only disaster left for The Donald to work out.  We wish him greater insight than his predecessor.  The problem is he has less degrees of freedom because of the actions that were taken.

Venezuela Confusion

Brandon Morse at The Blaze informs us that World of Warcraft currency is worth more than Venezuelan currency.  Brandon gives credit to others and then says:

According to sites that track the value of both currencies, KalebPrime’s math is outdated, and WoW gold is now worth even more than the bolivar.

According to the site dolartoday.com, which actively tracks the worth of the bolivar on the black market, the bolivar has dropped to 11,185.95 per dollar since KalebPrime posted .

Meanwhile, according to mmobux.com, which tracks the value of WoW’s in-game currency for sales outside of the game, the lowest sale of 10,000 gold in a real life exchange will get you $1.21 [or 8,264 per USD].

So when did this come about?  Brandon tells us:

This drop in the worth of the bolivar is stark compared to its worth just a few months ago. In May, 279 bolivars would net $1, according to CNN Money. In June, the worth dropped to 408 bolivars for every dollar.

What is the cause of it?  Brandon gives the party line:

The Venezuelan economy has suffered greatly under President Nicolas Maduro’s socialist regime. The drop in oil prices, combined with the Venezuelan government’s mismanagement of the economy has resulted in a shortage of everything from food to everyday items.

So the drop in oil prices is listed as the first cause.  What was the oil price at the beginning of May when things were less terrible?

Sidebar: We use the Brent price per barrel from Oil.Com.  There are several different benchmarks.  All will show that the price has jumped up and down but has been relatively stable in the last few months.  We use WTI for a longer view because that is the data we could find.  The benchmarks have different prices but they move together.  We are more nervous about Brandon’s measurements of the Bolivar.  It could be that CNN Money and dolartoday. com are not comparable because the Bolivar has an official rate and a real or black market rate.  End Sidebar

Brent crude was just above $52.  What was it at the beginning of June?  It was just below $52.  What is it today.  It must be like $1.43 to cause all this turmoil.  It is $52.72.  That’s right, the oil price has moved up slightly.  Now oil prices did plunge.  It plunged from about $100 a barrel to, roughly, the current price in the second half of 2014 as this chart shows (alert: it is a different benchmark (WTI) so the price today is a couple of dollars different).  Since the beginning of 2015 the price has jumped around on both sides of $50 but is is hard to discern a trend.  So oil prices dropped three years ago.  It is a problem for Venezuela but it is hard to connect what happened three years ago to its current woes.  The government needs to take at least 99 percent of the responsibility for the current problems.

Compare what is happening in Venezuela to the more capitalistic USA.  USA produces (2014 =8,764) over times as much oil as Venezuela (2014 = 2,500) but it is a smaller part of our economy.  The USA and its oil industry is recovering nicely in 2017 while Venezuela in chaos.  The different economic systems are why.

If that is how The Blaze presents Maduro’s problems then you know what to expect from the legacy media.  Venezuela is socialism.