Caracas Chronicles

Photo: El Estímulo

Among the many reactions to the deranged economic announcements made by Nicolás Maduro, there’s a line of thought I find deeply disturbing: the “progressive” wing of the opposition accuses Maduro of being a neoliberal, comparing him to former president Carlos Andrés Pérez and his 1989 reforms. You’d expect this from Rafael Ramírez and other disgruntled chavistas, not from people who have suffered the disastrous consequences of 20 years of chavismo.

I don’t know if this is just political opportunism or plain ignorance, but the fact that political leaders in 2018 Venezuela are still using this rhetoric of necessary economy as something evil against the people speaks volumes about why chavismo came into power. The idea that resources are finite or the concept of opportunity costs are just lost on complete factions of the opposition.

The idea that resources are finite or the concept of opportunity costs are just lost on complete factions of the opposition.

In 1989, Venezuela faced a looming balance payment crisis, international reserves were $300 million only and there were less than a month of imports. Carlos Andrés Pérez received a country on the verge a bankruptcy, saddled by suicidal foreign exchange controls, money-losing state-owned companies, price controls and regressive subsidies. The only way to solve this, the only moral answer to years of fiscal irresponsibility (in many ways started by Pérez himself during his first term, and perfected under Jaime Lusinchi) were painful economic reforms.

Pérez appointed a young cabinet of highly-educated non-politicians. Although criticized at the time, it was necessary to end the perverse currency controls and privatize money-losing racetracks and state-owned airlines that only made international flights. At the time, many intellectuals and political actors from the left denounced the reforms as “neoliberal,” a term derived from the Washington Consensus.

The Washington Consensus is a set of orthodox economic policies—such as avoiding large fiscal deficits, setting a competitive exchange rate, privatization of State enterprises and keeping competitive interest rates—laid out in 1989, by English economist John Williamson, which shouldn’t be controversial to anyone who has endured 20 years of chavismo. Many interest groups boycotted the reforms and Venezuela was never able to modernize its economic model.

At the time, many intellectuals and political actors from the left denounced the reforms as “neoliberal,” a term derived from  the Washington Consensus.

Looking back, it’s fair to criticize the disastrous communication strategy and the lack of political savvy by the new ministers. But questioning the morals of the reforms—or their necessity—is just chicanery at this point. Precisely the fact that Venezuela was never able to carry the reforms to achieve macroeconomic stability is one of the culprits of chavismo.

If only we were experiencing a sensible economic “neoliberal” reform carried out by our brightest technocrats, Maduro’s paquetazo could work. What we have is a murderous dictatorship composed of ill-prepared criminals trying to enact incoherent reforms that include a staggering increase in money supply not supported by any cut in public spending, while setting price controls for essential foods and arresting managers for not complying with them.

This is not an attempt to finally enact fiscal sanity or liberal policies; it’s a desperate attempt by criminal doofuses to solve a problem they’ll never understand, with vulnerable Venezuelans again paying the consequences of the economic illiteracy and opportunism of its elites.