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Venezuela: The Triumph of Failure

By Michael Rowan | El Universal

17.08.05 | Political folly has triumphed over economic common sense in Venezuela since 1976, not just since 1998. For Venezuela, the period from World War Two to 1976 was a robust success -almost the best in the world. And the thirty years since was a downright disaster -one of the worst in the Americas. In the first period, there was consistent economic growth, wealth creation, a rising standard of living, and free enterprise. In the second there was massive inflation, poverty, unemployment, corruption, and politics 24 hours a day.

What turned success into failure in 1976 was a combination of the nationalization of oil, a crippling state command economy, and the debilitating politics of rents and work avoidance that comes from institutionalized corruption. As Venezuela recognized its failure in the 1980s, the political class denied it. When economic reforms were applied in 1990, the political class turned against them and cheered two attempted coups d'etat. In 1996, PDVSA opened oil to successful strategic alliances, which the government is closing down today with a vengeance.

Since 1976, every successive president promised success and delivered failure. No one is better at triumphant failure than Chavez, so the alternative to him is not another failure but a leader who understands how and why Venezuela succeeded from World War Two to 1976. And who offers that change in clear terms to the poor.

Venezuela's return to individual freedom, private enterprise, education, work, and wealth creation can be achieved by providing people the tools they need for productive work. This can be done by transferring state wealth and power to the nation's families. With half the value of Venezuela's resources, each of the eight million families in Venezuela can be provided a trust account of $100,000 in value that they cannot spend but must invest. The annual dividends will be $10,000 and cut poverty in half in one year. Economic growth will soar as people - not oil - pay taxes to support government.

State employment and military spending need to be cut in half, and state enterprises eliminated, while education becomes its primary concern. An alternative to failure exists, and it is not another version of Chavez or Caldera. It is someone who understands why Venezuela succeeded before 1976, and can explain it convincingly to the poor.

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