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Late Venezuelan President Hugo Chavez AP Photo/Fernando Llano

Column Chávez was a charismatic leader - but his economic legacy should be a warning

We’ve lost a colourful world leader who genuinely seemed to have the best interests of his people at heart. But the facts don’t lie – Chávez’s economic legacy is a warning against statist socialism, writes Aaron McKenna.

THE UNTIMELY DEATH of Venezuelan President Hugo Chávez at age 58 has been a deep and scarring shock for his countrymen and followers of his “Bolivarian revolution” over the past 14 years. Cancer is a personal tragedy and Mr Chávez has departed us well before his time was up and his influence spent, having just won a third term as president late last year. It remains to be seen if the socialist revolution he has spearheaded nearly single-handedly will continue in the absence of his oversized personality, when all Venezuelans are left with are failed social programmes and deepening troubles like rampant 30 per cent inflation rates.

There has been a common theme following his death in an argument about whether or not Chávez was a dictator. He was no such thing, subjecting himself to elections that were free but, as the secretary general of the main opposition party Ramón Guillermo Aveledo put it before the last one, not fair. Chávez by this stage had come to control the media and would put on party political broadcasts lasting hours while his opponent Henrique Capriles Radonski got three minutes a day.

Authoritarian legacy

Chávez was about as democratic as you could hope from a Lieutenant Colonel who staged a bloody coup attempt in 1992 and ran around in his red paratrooper beret till his last days. The elections weren’t rigged, and voters did deliver a rebuke in one referendum that revolved around allowing him a third term as president. Admittedly he got his way in the end, but who are we to lecture others on what should happen when a government loses a referendum campaign?

Human Rights Watch has criticised Chávez for leaving an authoritarian legacy. He centralised power to an incredible degree, set up a parallel parliament after his election to usurp the one he didn’t have a majority in; ruled by decree much of the time and kept official Venezuela under thumb. He had María Lourdes Afiuni, a judge who released a man imprisoned without trial for three years, arrested and charged with supposed crimes against the state. She remains under house arrest after spending a year in prison awaiting trial.

There is no gulag archipelago in Venezuela, but like so many statist socialists Chávez found it necessary to centralise power and trample over human rights in order to see through his vision.

An attractive – but ultimately hollow – vision

Prior to the end of the Cold War socialists in Europe and elsewhere looked to the Eastern Bloc countries as the workers paradises to be idolised and mimicked at home. When that façade crumbled along with the walls used to cage their populations, socialists were cut adrift for most of the 1990s. Then came a series of socialist revivals in Latin America, most notably in Venezuela. Poverty has been a never-ending scourge of the continent and corrupt governments have kept wealth in the hands of the few for decades, so it is of little surprise that people look for a redistributive alternative.

Chávez offered such a vision, and people at home and abroad flocked to it. A close ally of Fidel Castro’s Cuba, Chávez used the oil wealth of Venezuela to kick off massive social programmes that have seen top line rates of poverty and deprivation fall in the country. Nevertheless his time in power has seen the creation of yet another hollow statist system, where industry is nationalised and withers; foreign investment flees; and grand social projects turn out to be massive white elephants. Underneath the façade there is a country with soaring inflation, crime rates and corruption.

In the wake of his referendum rebuke in 2007 , The Economist visited some of the collective projects underway and discovered one reason why Venezuelans might have seen fit to give their president a drubbing. A model collective farm failed and its workers forced to seek income elsewhere when the state-guided plan for what to plant went awry. Elsewhere a fishing processing plant stood idle because the planned wharf didn’t come to fruition (albeit, reminding me somewhat of the famous IKEA road in Ballymun. Governments the world over…).

Another failed experiment

The statist approach to control of everything brings to mind Milton Friedman’s life of a pencil, in which he described the massive complexity of putting together a seemingly simple and humble pencil; and essentially asking the rhetorical question, “Imagine if someone tried to organise that?” Venezuela has joined a long list of failed socialist states that have attempted to answer it.

One of the leaders of the collective farm, Jacobo Pacheco, told the paper that he had seen receipts to indicate that between them the officials and supplier involved pocketed 1 billion bolívares ($465,000) for the uncompleted work. Corruption is rife in the country, with party apparatchiks dong as they tend to do everywhere in the world – free reign is given over government spending and trousering as much as possible.

At home we’d do well to consider the lessons of Venezuela’s flirtation with a hard brand of socialism, as another failed experiment. Yet, we persist in having academics and politicians at home on the left look to these countries as a model for our own success.

Today With Pat Kenny had a discussion on the death of Chávez during the week with Barry Cannon, author of Hugo Chávez and the Bolivarian Revolution, who gave off a whiff of an apologist in the mould of today’s Labour Party leaders who idolised the gangsters running the places like the German Democratic Republic back in the day. When corruption was mentioned, he told listeners that Ireland suffers from it as well as Venezuela. When it was pointed out that Ireland ranks 25th on the world corruption index and Venezuela 165th he challenged the methodology of Transparency International’s survey; just like he challenged the statistics about Venezuela’s squandered oil wealth and the reality of failed social programmes as reported by another journalist who was in the country.

It’s always some sort of capitalist imperial conspiracy to either distort the numbers or, in the face of incontrovertible evidence, sabotage the revolution whenever failures of statist socialism are presented for discussion.

Brazil: combining a free market approach with social equality

Venezuelans and Irish socialists would do better to look to Brazil, where a free market approach is combined with a drive towards social equality. Let the free market do its bit to provide the wealth to pay for the social programmes. Previously a Chávez acolyte, Peruvian president Ollanta Humala has come full circle from hard-line statist to follower of Brazil’s model. That country is booming, while Venezuela took two years longer than its neighbours to emerge from the world recession despite its massive oil wealth, now mortgaged away to the Chinese in return for cash today.

We’ve lost a colourful world leader and Venezuelans a charismatic comandante who, for all his ideological faults, did seem to have their best interests at heart. Now would be a good time to take a sober look at his economic legacy and consider it a warning against the preaching of our own left wing brigades.

Aaron McKenna is a businessman and a columnist for He is also involved in activism in his local area. You can find out more about him at or follow him on Twitter @aaronmckenna. To read more columns by Aaron click here.

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