How Populism Helped Wreck Venezuela
The story of how the country went from cheap fridges to no food is about more than socialism and corruption.
What’s the problem with populism? Why, in some circles, has the term acquired such a negative connotation? After all, you could argue that populism is simply the promotion of popular ideas with which elites disagree. You could think of it as a movement to uproot a political establishment that has become unresponsive to the public. But populism can also be described as a political logic by which politicians claim to exclusively represent the righteous people in a struggle against the corrupt elite. And the hazards of adhering to that logic are on display right now in Venezuela.
Hugo Chavez, the late leader of Venezuela’s socialist revolution, once provided his people with subsidized refrigerators from China, appearing on television in a mock kitchen to personally cross out the “capitalist” price tag on a fridge and write in a “Chavez discount.” Now his successor’s people have little to refrigerate. Three-fourths of Venezuelans reported involuntarily losing an average of 19 pounds in 2016 because of rampant food shortages and runaway inflation, which is making basic goods unaffordable. A third of Venezuelans reported eating two or fewer meals a day last year—triple the number recorded a year earlier. Child malnutrition has reached crisis levels.
From a spiraling health emergency to creeping political anarchy, Venezuela is in the throes of “the kind of implosion that hardly ever occurs in a middle-income country like it outside of war,” as Moises Naim and Francisco Toro wrote in The Atlantic. While this implosion was accelerated by the 2013 death of Chavez and the 2014 drop in the price of oil, which accounts for nearly all Venezuela’s export revenue, it can be traced in part to the Venezuelan government’s failed socialist policies—price and currency controls, farm and factory nationalizations, government control of food distribution, and the like. It is also the product of government corruption, cronyism, and plain incompetence; by one measure, corruption is more widespread in Venezuela than in any other country in the Americas.
But Chavez and his shadow of a successor, Nicolas Maduro, are also textbook populists. “We are confronting the devil himself”—the American imperialists and their Venezuelan lackeys—“at the ballot box,” Chavez declared ahead of the country’s 2006 election. “You are not going to reelect Chavez really, you are going to reelect yourselves. The people will reelect the people. Chavez is nothing but an instrument of the people.”
And this populism has compounded the Venezuelan crisis in subtle ways that illustrate the downsides of one of the most potent political forces in the world today. Venezuela isn’t collapsing because of populism. But when populism turns sour, the result can look a lot like what’s happening in Venezuela.
Populism is “just one of the possible factors that could influence which way a country heads economically or politically. I think Venezuela shows pretty well that it’s not the only thing,” said Kirk Hawkins, an expert on Latin American populism at Brigham Young University.
“If we had a right[-wing] populist—if this were [former Peruvian President] Alberto Fujimori or even a … Donald Trump or a Marine Le Pen, the [Venezuelan] economy wouldn’t look like it does right now,” Hawkins told me. “Populism interacts with other features of the political environment to give you certain kinds of tendencies.” And in Venezuela, where most people are not property owners, many people work in the informal sector, and economic inequality has historically been high, populists are apt to gravitate toward socialism rather than, say, right-wing nationalism.
Chavez’s brand of populism has contributed to the collapse of Venezuela in at least three ways.
In an oft-cited 1991 study with Rudiger Dornbusch, the economist Sebastian Edwards noted a pattern: In several Latin American countries—Argentina, Brazil, Chile, Peru, Mexico, and Nicaragua—economic populists had come to power amid profound dissatisfaction with the performance of the economy and therefore widespread receptiveness to populists’ anti-elite messages. As a result, the populists had pursued transformative economic change with abandon, focusing on swiftly stimulating growth, generating employment, and redistributing income rather than curbing inflation or balancing government budgets. They tended to succeed in the short term but fail in the long term, when these risky fiscal and monetary policies caught up with them. Many eventually lost power amid rising inflation and economic crisis.
All politicians want to be popular. All want to preside over economic growth. All are biased toward policies that will win them praise in the present rather than the future. But populists are particularly attracted to measures that produce “short-term gain and long-term pain,” Edwards argued. Since populists present themselves as political outsiders whose legitimacy comes from the people, “they need to establish themselves and maintain their popularity. And in order to do that, they need to generate [economic] highs very quickly.”
Chavez, for example, became president in 1998 by running as an anti-establishment figure who would revive a moribund economy (he had recently been imprisoned for staging a failed military coup). And over the next 14 years, as he continued to cast himself as an outsider despite leading the government, he funneled Venezuela’s flourishing oil revenues into popular social programs rather than stockpiling the proceeds for use in an economic downturn.
Despite his rhetoric, Chavez’s policies weren’t entirely socialist “in the old sense that [socialists] want to expropriate everything and advocate the dictatorship of the proletariat,” Edwards said. But they were consistently shortsighted, he argued: “The number-one rule for proper economic management in a natural resources-based country is to save during the boom years in order to be prepared to survive the lean years.” This is what Norway has done in investing oil money in a sovereign-wealth fund. But it is not what Chavez did.
“Venezuela ran large budget deficits every year, even as oil prices skyrocketed between 2005 to 2014,” Toro, a Venezuelan journalist, has written. “That meant the country was piling on debt even as government revenue exploded—a senseless, pro-cyclical policy that left Venezuela up a creek without a paddle when commodity prices tanked.” (Populists aren’t always so nearsighted; Toro notes that Evo Morales, the populist-socialist leader of nearby Bolivia, which is also rich in natural resources, registered budget surpluses every year between 2006 and 2014.)
Today, Edwards said, Venezuelan leaders “have run out of any possibility of generating an economic high because they don’t have any international reserves, they don’t have any foreign exchange, there are no spare parts for factories, there are no spare parts for buses or trains or cars. There is no food. There is not even employment. And there is no way they can revive the economy. Then they cling to power by becoming more and more authoritarian. This is what I call the ‘post-populist dictatorial mode.’”
Hawkins is critical of Edwards’ thesis, arguing that it tends to lump together all unorthodox economic policies as “populist” and prone to disaster. But he agrees with Edwards that populism—whether of the left- or right-wing variety, whether in the Americas or Europe—can do serious damage to Western-style liberal democracy, which includes not just elections but civil rights and liberties, the rule of law, and checks and balances on political power.
Populists believe in popular sovereignty as expressed through elections and referenda. They often manage to increase voter turnout and public participation in politics. But they typically disdain and degrade the other institutions of liberal democracy. Since populists seek to delegitimize their opponents—characterizing them as enemies who are “consciously operating against the will of the people for [their] own selfish interests”—it isn’t much of a leap to deny those opponents certain freedoms, Hawkins explained. Since there is no such thing as a monolithic “will of the people,” populists are frequently charismatic leaders who can at least appear to unite people with different desires. And for the charismatic leader and his or her supporters, checks and balances on executive power are usually viewed as a bug, not a feature, of the political system. The supporters think, “‘We believe that the leader embodies our will, so we don’t need spaces in which this can be contested,’” Hawkins told me. “‘We should let the leader do the job.’”
In Venezuela, Hawkins continued, nearly two decades of populist governance has “resulted in the systematic rollback of civil liberties, beginning especially with media freedom.” (The independent press is routinely the first target of populists, who claim that news outlets are a tool of conniving elites.) Like many populists, who value elections for their capacity to affirm the people’s will rather than “resolve competing interests,” Chavez tampered with the fairness of the electoral process, restricting the opposition’s access to the media and deploying government resources to his party’s benefit. The country’s courts and Electoral Council are packed with Chavez/Maduro loyalists, and the Central Bank ceased to be independent long ago. Opposition leaders have been imprisoned and banned from politics. In recent months, the Supreme Court has tried to strip the opposition-controlled legislature of its powers and security forces have repeatedly used force to squash anti-government protests, resulting in dozens of deaths.
These measures have polarized and paralyzed Venezuelan politics, making it exceedingly difficult to remove from power those responsible for the country’s disastrous economic policies. “Maduro’s patronage and populism, combined with the opposition’s failure to reach out to the working classes and the poor, may prevent the creation of a broad all-Venezuelan protest coalition,” the political scientists Olga Onuch and Inaki Sagarzazu wrote recently. “That’s a problem if organizers hope to force change in Maduro’s government.”
The populist mindset may also help explain why the Chavistas have stubbornly stuck to their economic agenda even when the policies have failed so spectacularly. “Populism has a moral dimension that is ... dualistic,” Hawkins said. “You ascribe problems and wrongs and failures to a knowing, willing, evil opposition”—not to yourself.
Populism isn’t necessarily a toxin to the body politic, but some strains can prove corrosive. The drawbacks of instant economic highs and incremental concentrations of power materialize slowly. “Our research shows that time matters,” Hawkins told me. “Populists don’t do away with democracy the first day that they enter office.”
When Chavez rose to power in the late 1990s, the political scientist Cristobal Rovira Kaltwasser points out, he was responding to “a serious crisis of democratic representation” stemming from the corruption and lackluster economic policies of a self-satisfied elite. Only gradually did he become a radical populist-socialist, as he sought to bolster his support among the poor, recovered from a coup attempt against him in 2002, and clashed with George W. Bush in the United States.
“Populists do actually come [into office] believing very firmly in democracy,” Hawkins noted. “It probably takes a while—repeated conflicts with their opponents, reinforcing their beliefs about conspiracies against them—to justify stronger and stronger moves against those institutions. … But I also think there has to be a public that is willing to see their own cherished institutions be chiseled away at and not question it. That is something that is very hard to do all at once.”
Something similar could be said about the economic impact of populism. Consider those refrigerators that Chavez once hawked. The fridges weren’t merely socialist giveaways. They were a short-term solution: As part of an oil-for-loans deal with China, which left Venezuela dependent on Chinese imports, Chavez’s government advertised the fridges at rock-bottom prices ahead of a close election. They posed a challenge to democratic pluralism: The appliances were distributed to Chavez supporters. And only with time, once the man behind the plan died and the food disappeared from the shelves, has the folly of the approach been exposed.