Donald Trump Is No Hugo Chávez

in Economics/Politics by
   

The rise of Donald Trump’s candidacy has generated a strong degree of backlash among the chattering classes worldwide. No stranger to controversy himself, his campaign’s unconventional style has led various experts to draw parallels between Trump and the late Venezuelan President Hugo Chávez. While both Chávez and Trump never shied away from throwing verbal haymakers towards their opponents, the actions that these men have taken in their respective political careers could not be any further apart. The age-old axiom of “actions speak louder than words” is now more relevant than ever in this discussion.

These comparisons are not only specious, but they overlook important historical nuances that have separated the distinct political cultures of the United States and Venezuela over the years.

A Tale of Two Wars of  Independence

To understand the Chávez phenomenon, one must go back to Venezuela’s very foundation to get a comprehensive overview of its political underpinnings.

Starting from its war of independence, Venezuela has exhibited very anti-liberal tendencies. Taking advantage of the disarray brought about by the Napoleonic Wars in Europe, Latin American elites of Spanish descent (criollos) used the opportunity to consolidate their foothold in their respective regions.

An insurrectionist movement led by political elites who were more concerned with maintaining their colonial privileges, the Venezuelan War of independence resulted in the foundation of a new Venezuelan nation that kept its stratified colonial structure.

Despite attaining independence, Venezuela would experience significant political turmoil given the flimsy political structure it was founded on. For nearly a century, Venezuela remained a regional backwater ruled by petty tyrants and caudillos (strongmen).

It was not until the discovery of oil in the early 1920s that Venezuela would finally modernize and become one of the most prosperous countries in the region.

In sharp contrast, the U.S.’s independence experiment was one based on the ideas of limited government. More than just an anti-British rebellion, the American Revolution was a political expression of various rights–life, liberty, and property–that many American colonists believed were usurped by the British crown. These very principles have been ingrained in the political DNA of Americans for countless generations and have laid the basis for the U.S.’s success as a nation.

The genius of the American system lies in its system of checks and balances which established a clear separation of powers among the different branches of government. Combined with a system of market-preserving federalism, the U.S. could rely on an institutional framework that effectively decentralized political power at all levels, while also serving as a bulwark against potential transgressions by the federal government.

The system is by no means perfect, as witnessed by the unprecedented increase in the size of government since the advent of the New Deal. However, the American model has demonstrated its ability to withstand various attempts by presidents to overstep their constitutional boundaries–most notably when Franklin Delano Roosevelt tried nationalizing numerous industries under the National Recovery Administration and Harry Truman tried seizing steel mills–and establish a certain degree of separation of economy and state.

Venezuela’s Flawed Institutional Design

Why is a historical comparison of both country’s political institutions necessary?

New institutional economics and public choice theory have shed light on how institutional structures strongly shape and, at times, incentivize certain political outcomes. More than just individual actors, institutions are the underlying factor behind why certain countries fail and others succeed.

Venezuela’s history in the last 50 years is indicative of a system with a weak institutional framework. Venezuela reached its zenith in the 1950s where it held the 4th highest per capita GDP in the world. The economic prosperity that Venezuela enjoyed in this time period was largely due to the high degree of economic freedom that Venezuela experienced from the 1920s to the 1960s. However, its political and economic foundations were built on a house of cards once it returned to democracy in 1958.

The 25th Venezuelan Constitution, which ushered in Venezuela’s 4th Republic from 1961 to 1998, laid the groundwork for a social democratic model of governance that featured extensive government intervention in the economy. Although the 1961 constitution established a nominally federal system of governance, it lacked a genuine system of decentralization that would allow for fiscal competition among lower levels of government. The vast powers at the Venezuelan government’s disposal enabled it to maintain high degrees of government control over its economy’s commanding heights.

By the 1970s, Venezuela became a veritable petrostate once it nationalized its oil industry in 1976. Subsequent nationalizations of other sectors of its economy, enactment of economic controls, and a loose monetary policy created a prolonged economic malaise throughout the 1980s. With an increasingly impoverished Venezuelan populace, Venezuela started to experience social upheavals and discontent with its social democratic status quo.

Genuine attempts to liberalize Venezuela’s petrostate at the start of the 1990s came to naught once Venezuela descended into political chaos after it suffered two coup attempts led by Hugo Chávez. With a government delegitimized by the coups and internal party pressures, then President Carlos Andres Perez was impeached and jailed for corruption charges.

Despite being jailed for his actions, Hugo Chávez’s Revolutionary Bolivarian Movement-200 was able to pick up considerable steam given the widespread dissatisfaction with Venezuela’s two-party model. After President Rafael Caldera pardoned Hugo Chávez in 1996, the game completely changed. By the Venezuelan presidential elections of 1998, Chávez and his movement were a force to be reckoned with, as Chávez resoundingly won campaigning as an outsider.

No matter his outsider appeal, Chávez would repeat all of the errors committed during Venezuela’s 4th Republic but with unbridled authoritarianism. Expropriations, economic controls, and the destruction of Venezuelan political institutions were the highlights of Chávez’s regime. Record high oil prices masked the damage caused by Chávez’s destructive economic policies in the short-term, but the laws of economics reared their ugly head once oil prices fell. Chávez’s successor Nicolás Maduro has continued the march towards socialism, effectively turning Venezuela into a failed state that is now on the verge of famine.

Why a Potential Trump Presidency Will Not Be a Chavista Disaster

One can disagree with Trump’s economic policies – that being said, his policies do not necessarily entail a radical overhaul of the American system. It is no secret that Trump is in favor of protectionist economic measures that may likely have deleterious effects for consumers.  If Trump were to get in office and successfully pass this legislation, there would be clear negative effects, but nothing to suggest large-scale expropriations of industries big or small a la Chávez.

While high tariffs and other protectionist measures have characterized Venezuelan economic policy for the past 50 years, these were part of a package deal of statist policies that continued unabated for decades and contributed in undermining Venezuelan political institutions.

The U.S. has undoubtedly seen increases in the size of government in the past 70 years, but not to an extent where the government completely controls the commanding heights of the economy, nor where it corrupts political institutions.

The Marxist origins of Hugo Chávez’s political project cannot be overlooked when analyzing the rise of Chávez. Venezuelan political culture already had a social democratic ethos established by its bipartisan consensus from 1958 to 1998. Nevertheless, more radical variants of socialism crept into Venezuelan political circles throughout universities and other cultural venues.

Many of Chávez’s closest advisors were avowed Marxists and true believers in class warfare. Once Chávez’s movement became politically relevant, many of these individuals joined Chávez in the quest to turn Venezuela into the next Cuba.

While Donald Trump may have engaged in eminent domain activities of questionable merit, Chávez’s actions make Trump’s purported malfeasances look like child’s play in comparison. Chávez always had the long-game in mind and was ready to use institutionally destructive tactics to advance his political agenda

People can disagree with Trump’s agenda, but to compare his track record to that of Hugo Chávez’s political trajectory does not do justice to understanding Venezuela’s current political tragedy, nor does it provide an accurate analysis of Venezuela’s political history.

José Niño is a Venezuelan-American professional based in Fort Collins, Colorado. A citizen of the world, he has lived in Chile, Venezuela, and the United States.

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