Venezuela: Bozo as Al Capone, or is it Vice-Versa? [[UPDATE]]

One of the world's biggest clowns-cum-thugs/thugs-cum-clowns is Venezuela's President Nicolás Maduro. He has filled that high office since he took over for the dead Hugo Chavez in March 2013, and "won" election on his "own merits" (Cough!) the following month.

In a world full of political clowns and thugs, Maduro belongs to a select club that admits only those adept at both professions. Other recent members of the club, in no particular order, have been Noriega of Panama, Ceausescu of Romania, the Kim family of despots of the DPRK, Burnham of Guyana, Amin of Uganda, Mugabe of Zimbabwe, Mobutu of Zaire, Zelaya of Honduras, Gairy of Grenada, Bokassa of the Central African Republic/Empire, and perhaps a tiny handful of others. Maduro has that je ne sais quoi quality that ensures his entry into the ranks of the clown-thugs. Bozo with a truncheon. Capone with big floppy shoes. You get the idea.

I met Maduro twice: once in Washington DC, and once in Lima, Peru. Both times at events of the OAS (Organization of American States). He was then Venezuela's Foreign Minister. I found the former bus driver to be a big  (6'3" - 6' 4") charmless, rude, crude, loud-mouthed slob, who resorted to insults and yelling to try to make his silly points. The Ralph Kramden of the diplomat set. I doubted then, and do so today, that he ever read a book, at least not one that did not require the accompaniment of a crayon. His "E-ticket" to the stratosphere of Venezuelan politics was a slavish and very public slobbering devotion to Hugo Chavez. He is Frank Nitti in a bad suit. Even after the death of his mentor Chavez, he must constantly refer to the late comandante and try to hitch himself ever more closely to the dead man's coat-tails--often in some truly bizarre ways.

Venezuela, one of the world's biggest oil producers and exporters, is in an economically and socially disastrous state. Margaret Thatcher once famously said that socialists eventually run out of other people's money. Venezuela has not yet run out of money, but due to horrid mismanagement, corruption of the highest order, and constant political interference in the workings of the marketplace it might as well have run out. The money, still pouring in although not at the same rate as in the past (we will discuss this below), should prove more than enough to ensure a good future for Venezuela and its people. Instead, it is used to crush liberty and democracy, buy or, better said, rent influence overseas, enrich an inner cabal, and run short-term cons to keep the restive underclass expecting more and more hand-outs. Lots of "free" stuff for regime supporters. Confiscations, jail, exile, and public abuse for opponents.

In an excellent article, Steve Hanke from CATO tells us, that since Chavez's death, Venezuela's currency, the bolivar, "has lost 62.36% of its value on the black market." Venezuela's official inflation rate now exceeds 54% while, "The implied annual inflation rate in Venezuela is actually now in the triple digits, coming in at a whopping 283%." That puts Venezuela in some very bad historical company as the country nears a hyperinflationary rate. Maduro and his backers have decided to make the situation even worse by continuing and even "doubling down" on the policies that got the country into this mess.

Some (pre-fracking) estimates have put Venezuelan oil reserves as the world's largest. Due, however, to corruption, nepotism, and mismanagement, all of which have stifled investment and driven out high quality technicians, Venezuela's nationalized oil production has gone into a slump. The Venezuelan regime, naturally, has resorted to what leftist governments do all over the world when the economic data does not correspond to their fantasy world. Reminiscent of the fake jobs data put out by the Obama misadministration just prior to the 2012 elections, the Venezuelan government lies, overstating oil production by over 420,000 barrels/day. The money from oil sales goes into unaccountable funds, and gets used for a variety of things many of which have nothing to do with reinvestment, and, as noted above, have everything to do with enriching the inner cabal and promoting lunatic economic schemes to keep that cabal in power.

Venezuela faces critical shortages of even basic consumer goods, such as toilet paper. Its retail sector is adopting the look I saw long ago in Guyana as a result of similar economic policies: stores look like they sell shelves. For political reasons, the government insists on maintaining an artificially low bolviar-dollar exchange rate of about 6.2 bolivars to the US dollar. The black market rate, in other words, the real exchange rate, is easily ten times that. The government strictly controls who can buy dollars at the cheap rate, forcing most businesses onto the black market. Combine that with government price controls, out of control government spending, and the fact that Venezuela depends on imported consumer and other manufactured goods, and, well, you don't need a PhD in economics to see what will result: shortages and inflation. Even big multinationals have had to suspend operations in Venezuela because they cannot get dollars to buy critical components.

The response of Maduro to the mess he inherited from Chavez and to the declining economic fortunes of Venezuela? More of the same but on steroids. Municipal elections next month pose a problem for the regime. Although elections in Venezuela are far from free and open, they still do have some ability to show dissatisfaction. The uncharismatic Maduro, himself, almost certainly lost the April elections, but managed to jigger the results just enough to eke out a win. Maduro simply does not have the pull that his predecessor had, and does not inspire the same sort of fanatical loyalty. He needs to show the Chavez base that he can deliver the goods--literally. He, therefore, has taken Chavez's war against free enterprise, liberty and democracy to another level. As you can read here, he has begun ordering troops into popular electronic stores and forcing the owners, often opponents of the regime, to sell their imported goods at cut-rate prices, in other words, at the prices the goods would have if the merchants could buy dollars at the official rate. Maduro has gotten the Chavista dominated legislature to give him economic dictatorial powers. He will govern for the next year by decree,

Maduro, 50, who is staking his rule on preserving Chavez's leftist legacy, says he has already planned the first two laws he will decree - maybe as soon as Wednesday. 

One is intended to limit businesses' profit margins to 15 percent to 30 percent as part of an "economic offensive" against price-gouging. Another would create a new state body to oversee dollar sales by Venezuela's currency control board. 

Diosdado Cabello, the head of the National Assembly and a staunch supporter of the president, said lawmakers had fulfilled an order by the late Chavez when they backed the legislation. 

"He told us to pass all the laws necessary to wring the necks of the speculators and money launderers," Cabello said.

Maduro will decide what can be sold, by whom, and at what price. Again, no PhD or Nobel prize is needed to see how this will end. Businesses will close, shortages will increase, prices will go up, and the people's dependency on the government will grow.

In short, Chavez ran Venezuela with the "long-con." Maduro does not have the skills for that, and came to power as the long-con was coming to an end. He has to go for the "Winner! Winner! Chicken dinner!" short-con approach. Constantly pulling rabbits out of his hat. Accuse the capitalists! Accuse the gringos! Accuse the political opposition! The end result, of course, is the destruction of liberty and the growing chaos, lawlessness, and violence we see in Venezuela.

The left has its way.

UPDATE: I got the text below from a friend who is an expert on and long-time observer of Venezuela. Thought you all might find it interesting to see his reaction to my piece and his perspective.

You are quite right that Maduro doesn't have Chavez's charisma -- and for the Venezuelan poor Chavez really did have charisma. My own observation of Maduro has led me to conclude that -- as with Chavez - the over-the-top posturing is to some extent theatrical and directed mostly at his domestic audience. 

But I think the Bolivarian antipathy toward the U.S. is real --as well as rhetorical. I also think there is an element of real desperation in Maduro's recent speeches. He may not be as gifted a leader but he is smart enough to see that the economy is spinning out of control. On some level I think he and the Chavista holdovers in his cabinet know they are not going to be able to evade responsibility for eviscerating the productive sector forever unless/unless they can somehow plausibly attach blame to sinister forces of the "right" (both foreign and domestic). 

The economy is a mess and a mess to an extent most folks can't quite grasp. The Maduro government, however, as you suggest, seems intent on doubling down on the same policies they have followed over the last few years. If oil dips, things could deteriorate further quickly. If it doesn't, of course, they could play this out for a long time.