The dictatorship, the absolute economic collapse and the consequent humanitarian crisis in Venezuela is motivating all kinds of debates, and that’s fine, despite the fact that subjecting a people to hunger, misery, torture in the name of an idea -a very bad one, by the way- like socialism, it would not have to be, at all, a reason for even discussion; It is wrong and must be condemned to its fullest extent. However, there have been those who, from the conventional economic analysis, intend to relativize the Venezuelan disaster of what is theoretically wanted from socialism.
This is the case of Noah Smith, a regular columnist for Bloomberg, who on February 22nd published a very unfortunate note titled Bolivia’s Problem Is Macroeconomics, Not Socialism. Unfortunate because, upon noticing the macroeconomic problems of Bolivia, which are already impossible to hide, everyone has rushed to applaud him without first having noticed his tricky arguments. To make it short, what Smith is saying in general terms, in fact, is that socialism is good, that it would have been even more successful in Bolivia if the prices of commodities that it exports would had not fallen in 2014; and in specific terms that, if today it fixes its macroeconomy, Bolivia could finally call itself ‘the most successful socialist country in the world’.
The main problem in Smith’s analytical approach is that he assumes economic crises simply happen as a becoming of nature, and that an eventual economic crisis in Bolivia would make of Evo Morales and the socialism he has been implementing for the past 13 years, a victim of bad economic policy decisions. However, every crisis is the effect of a specific cause, it has a name and surname, and Bolivian economic policy, typically socialist (no Rule of Law, confiscations, monetary nationalization, taxes, big spending, fiscal and trade deficit, protectionism and debt) has been ruinous as each and every one of the times and places where it has been tried to implement it, and the sluggish macroeconomics (whose figures have been shown to be manipulated) is just one of several manifestations of this problem.
In the same way, Smith assumes that the cause of macroeconomic problems have a fundamental cause in the oil downturn, when in fact this fall, although very important, is only an aggravating factor. Bolivia’s economic slowdown begins before the oil downturn, and not only because of its macroeconomic policy, but also because of the structural model implemented before and after, for instance, the State Constitution of 2009, which, among other aspects, establishes and determines the life priorities of its citizens in a typically top-down and perverse manner. And nothing in this way has not changed at least since 2006.
Bolivia is not an exception, but part of the norm of the socialist failure. The economic problems of Bolivia are exactly the same as those of Argentina, Brazil, Ecuador and even Venezuela at a certain moment, only at a different stage. For Bolivia to fall into a comparable crisis is only a matter of time. Let’s just hope that by then Noah Smith appeals to his sanity and intellectual honesty to remember his note and acknowledge his mistakes.
In any case, to propose an objective debate on the results of recent socialism in Latin America and the world, my recommendation is to begin with a note written by Tyler Cowen, also on Bloomberg, on February 20, entitled Venezuela Is not Just a Failed State. It’s a Failure of the Left.