Chávez, Stiglitz and other Populists
By Gustavo Coronel
October 3, 2006
Latin America has been long on populist political leaders and short on statesmen. Peron, Eva, Menem in Argentina; Vargas and Color de Mello in Brazil; Velasco Ibarra and Bucaram in Ecuador; Velasco Alvarado, Fujimori and Alan Garcia in Peru, Carlos Andrés Pérez and Hugo Chávez in Venezuela are some of the many examples of populism in Latin American politics. Betancourt in Venezuela, Lleras Camargo in Colombia, Cardoso in Brazil are some of the few examples of statesmanship. During the last 100 years of Latin American history we can see how politics have prevailed over policies. The reason is that politics is short-term oriented while policy formulation and execution are long-term. Populist leaders live in the present and immediate future while statesmen prefer the long-term view. Populists are sprinters while statesmen are marathoners. Most populists have no patience or stamina to run beyond the "400 meters." This explains their preference for promises. Populists will always talk about the things they will do, while statesmen prefer to talk about the things they have done. While populists share a perverse vision of personal and absolute power, statesmen share the power of a vision that has much more to do with the improvement of their societies than with attempts to consolidate personal power. In the terminology of emotional intelligence populists are essentially dissonant leaders. They do not govern, they rule. As such their political legacy tends to be one of hate, resentment and fear.
A theoretical model by Dornbusch and Edwards (The Macroeconomics of Populism in Latin America, Univ. of Chicago Press, 1990), is useful to understand the way populist leaders work. Populists, the model stipulates, are disdainful of economic constraints. They are free spenders. Their main theme is often wealth redistribution and they rarely know how to create new wealth. This is why they restrict themselves to taking money from those who have it, many of whom have earned it through hard work, in order to give handouts to those who do not have it. In this manner everybody becomes equally poor.
Modern populists connect directly to the masses, commonly bypassing organized political parties and labor unions. They promise the masses that they will be getting the money the rich have taken away from them. In talking to the masses they often use the ways of folklore. Bucaram danced salsa, Chávez sings off-key and recites tacky poetry, Fujimori wore native headwear. The populist leader chooses an enemy, often the members of the rural and industrial elites and systematically browbeats them, sowing social and racial hate among the population. Populists decide on wage increases by executive decree and combine them with price and exchange controls, in order to give the masses a temporary illusion of prosperity.
For populist leaders like Chávez "to be rich is evil," the "poor are good, the rich are bad." I recently heard a populist leader speaking in Washington, Vice President Garcia Liniera of Bolivia. He talked to the audience about building a strong Bolivian State, which could use its economic surplus to inject it into the communities, so that they could build what he called a new "Andean Capitalism," a combination of big industry with small, family size enterprises. It made for an entertaining talk but he failed to tell us how could Bolivia generate economic surplus by ostracizing the private sector. The latest news from Bolivia indicates that Garcia Liniera's dreams are in for a rude awakening. The nationalization of the hydrocarbons industry is encountering many financial, political and technical problems and workers are back to road blocking. The problem with populism is that it only works in the very short-term and eventually fails to conform to social realities.
The impact of Hugo Chávez in Venezuela and abroad
Hugo Chávez is a textbook example of neopopulism. He has made a direct connection with the masses through television. He has become a very authoritarian leader and what he calls "Participatory Democracy" only means participarle al pueblo, telling the masses after the fact what he has decided to do. Although he is driven by megalomania, just as the other populist leaders of the region, there are two factors that separate Chávez from other populist Latin American leaders: one, he has a pocket full of money and, two, he is obsessed with destroying "the empire," as he calls the United States. These two factors have driven him beyond Venezuelan borders, something that not even Juan Peron tried to do. In doing this Chávez has committed all the financial resources of Venezuela to structure a global anti-U.S. alliance. This is forcing him to neglect the domestic scene. He now spends most of his time and Venezuelan money abroad, buying loyalties from small countries by giving them handouts (Bolivia, the Caribbean States) or from big countries by promising them Venezuelan oil (China) or buying from them billions of dollars in arms and weapons systems (Belarus, Russia and Spain). His megalomania has gone global and he is now clearly aligned with the most dictatorial regimes of the World: Zimbabwe, Iran, North Korea, Syria, Libya, Belarus, Cuba and with narcoterrorist and/or militant terrorist organizations such as FARC in Colombia and Hezbollah in Lebanon.
In spite of this dismal performance some international observers tend to give Hugo Chávez credit he does not deserve by over estimating the effectiveness of his ill-planned and corrupt social programs. For example, when Chávez came to power in 1998 Venezuela already had a 94% literacy rate. But he claims to have eliminated illiteracy from the country, teaching "1.5 million Venezuelans to read and write in 18 months." This comes out to about two Venezuelans per minute, day in and day out. Understandably the United Nations has refused to validate this claim. The Barrio Adentro mission, designed to give medical services to the poor in the barrios is a valid concept (though poorly executed) that cannot be used to replace a structural, long-term health policy. While the Cuban medical and paramedical staff prescribe aspirin in the barrios, the Venezuelan hospitals lack the most essential equipment and facilities, a situation that has caused many deaths. I disagree with those observers who say that Chávez's "missions" have come to solve problems that the traditional Venezuelan political parties cared very little about. Statistics reveal that many of the previous democratic Venezuelan governments in the period 1958 to 1980 paid more attention to structural health policies than to programs designed for political effect. Chávez's missions give poor Venezuelans an illusion of being tended to, but the structural solutions to health and education are lacking. This is the very essence of populism.
The same considerations apply to the use of Venezuelan oil as a political tool. By giving oil for free to Cuba and subsidizing oil supplies to Bolivia and the Caribbean countries Hugo Chávez is illegally disposing of US$2 to $3 billion per year in money that belongs to the Venezuelan people, without getting very much in return, except vague and temporary promises of political loyalty. His initiatives of Petroamerica, Petrosur and Petroandina with the possible exception of Petrocaribe, have not progressed beyond the conceptual stage. They represent empty promises, just as his idea of a US$25 billion gas pipeline from Venezuela to Argentina represents an irresponsible and typically populist maneuver that has already crumbled down.
Chávez's impact on Venezuelan or on the Latin American political scene could be short lived. I believe Chávez's regime represents an involution that will leave Venezuela in physical and spiritual ruin for two generations. His long-term hemispheric and global impact will probably be of similar magnitude to that of second category populist leaders and dictators such as Eva Peron or Robert Mugabe, never on the level of Fidel Castro. He reminds me, in his paradoxical combination of global messianic ambitions and small town, parochial manners, of the Mahdi who captured Khartoum and killed General "Chinese" Gordon in the late 19th century.
Hugo Chávez has conducted during the last eight years the most corrupt and one of the most inefficient governments in Venezuelan history. After receiving close to US$200 billion in oil income and doubling Venezuela's national debt, he has somehow managed to increase poverty and to deeply divide Venezuela's society, calling on racism and class struggle as strategic allies to promote hate and resentment. International reports such as Transparency International's Corruption Perceptions Index (CPI) and other reports, the United Nations Human Development Index, The Global Competitiveness Report 2006-2007 of the World Economic Forum, The Heritage Foundation's 2006 Index of Economic Freedom, and The Fraser Institute's Economic Freedom of The World: 2006 Annual Report place Chávez's Venezuela close to the bottom of the ladder, much closer to Africa than to Latin America in social and economic development. Chávez represents the classical Dissonant Leader, as defined by Daniel Goleman and collaborators in their book Primal Leadership: Learning to Lead with Emotional Intelligence (Harvard Business School Press, 2004). As such, he will leave behind a tragic trail of misery and ignorance.
Stiglitz and his distorted views on Populism
Populism in Latin America, including the example set by Chávez, has received an unexpected boost from Nobel Prize winner Joseph Stiglitz. This distinguished economist started to protest against the strategic errors of The World Bank and the International Monetary Fund (IMF) only after severing his working connection with The World Bank. He has become a main critic of the manner these organizations behave. Many of his arguments are well taken but he has also developed a fondness for Latin American populism, which he has defined as "not a bad thing." He has redefined populism as "...worrying about how the bottom two-thirds of the population fares." According to his definition, he claims Venezuela under Chávez is good because: "two-thirds of Venezuelans were living in poverty under the old system."
His opinions should be challenged. In the first place his redefinition of populism is incorrect. Populism, in its accepted definition, involves a pretense of caring about the poor in order to consolidate personal political power. It has to do with false promises, with throwing money around to make believe that the poor are being helped. A person like Stiglitz should know that Chávez has been playing such a game of deception. He should know that the Venezuelan population under Chávez is not better off but poorer, more ignorant, more dependent on the welfare state and more at the mercy of corrupt bureaucrats and common criminals. A first rate economist like Stiglitz cannot afford to be so easily duped as, say, Congressman Bill Delahunt. He adds another pearl of wisdom in the interview above mentioned: "If you look at Venezuela's example, it is that by bargaining tough and hard with the oil companies you can get a better deal." What Chávez has been doing with the foreign oil companies cannot be defined as tough and hard bargaining but as total disdain for the rights of others, whoever they might be. Gaining concessions through negotiations is one thing, imposing unilateral decisions is another. Chávez's example has been followed by Evo Morales in Bolivia, who has decided to treat foreign oil companies as criminals not to be trusted. The results of this unwise strategy are evident: Bolivia is having great political and economic problems at the moment. It seems evident that Sitglitz believes that if The World Bank and the IMF have left much to be desired in the manner they have behaved toward nations, this automatically means that irresponsible political leaders like Chávez are doing the right thing. This reasoning seems unworthy of a Nobel Prize winner.
Conclusion
Latin American democracy is very much alive. It has made significant progress in the hemisphere and remains a totally valid concept. In Brazil, Chile, Colombia, Panama, Central America, Uruguay, Peru, Mexico and, yes, even in Bolivia, democracy has so far prevailed. To those who despair about the uneven democratic development taking place in our region I say: Democracy is an ideal. The fact that most countries have not reached this ideal is no reason to invalidate the concept. It would be like eliminating marriage as a valid institution because of the marital records of the Hollywood crowd.
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