Davos to Caracas

From the icy peaks of Davos, the World Economic Forum this week announced that ‘reforming the very nature of capitalism will be needed to combat the growing appeal of populist political movements around the world’.  This is a recurring refrain at an event which combats populism by welcoming such economics luminaries as Bono, Shakira, Jamie Oliver and Matt Damon.

This year, Nobel prize-winning economist Joseph Stiglitz blamed corporations for rising inequality, stoking populism. Yet when Stiglitz visited Venezuela in 2007 praising the “positive policies” of populist President Hugo Chavez he was not alone.

Venezuela has been a darling of progressives such as UK Labour leader Jeremy Corbyn, who praised its “twenty-first century socialism” which was “seriously conquering poverty by emphatically rejecting the Neo Liberal policies of the world’s financial institutions.”

But far from conquering poverty, Venezuela’s policies of expropriation and price controls have impoverished a country which, before Hugo Chavez came to power in 1998, was the richest in South America with the largest reserves of oil in the world.  When the price of oil crashed, it exposed the damage socialism had done.  Venezuela has the world’s highest inflation rate (expected to reach 1660% this year) rolling blackouts, shortages of everything from medicine to milk and Caracas has the highest murder rate in the world.

Chavez’s successor Nicolas Maduro blames a US capitalist conspiracy and, says Amnesty International, is conducting a “witch-hunt against anyone who dares to voice an opinion contrary to his policies,” using “absurd conspiratorial arguments to justify irregular detentions.”

Milton Friedman once said if you put a government in charge of the Sahara Desert eventually there will be a shortage of sand … and sure enough, in Venezuela there are now fuel shortages.   Rather than blaming capitalism, Maduro and the WEF should take a closer look at the damage wreaked by governments.