Chavez Legacy

BACK in the 1990s Latin America seemed to have turned the page on military rule and embraced democracy and free-market economics, with the sole, beleaguered exception of communist Cuba. And then along came Hugo Chávez, a bumptious Venezuelan former lieutenant-colonel who, having staged a failed military coup against a democratic government, got himself elected as president in 1998.

Mr Chávez proceeded to dominate his country for more than 14 years until his death this week from cancer. His secret was to invent a hybrid regime. He preserved the outward forms of democracy, but behind them he concentrated power in his own hands and manipulated the law to further his own ends. He bullied opponents, and encouraged the middle class to emigrate. He hollowed out the economy by mixing state socialism and populist redistribution with a residue of capitalism. And he glued it all together with the crude but potent rhetoric of Latin American nationalism. Mr Chávez claimed to be leading a “Bolivarian revolution” against the “empire” (ie, the United States). It did not seem to matter that Simón Bolívar, the Venezuelan hero who liberated much of South America from Spanish colonial rule, was an Anglophile conservative.

Theatre, cunning and oil

Two things lay at the heart of Mr Chávez’s success. The first was his own political talent. Born in provincial obscurity, he proved to be a natural performer and communicator, with an unmatched ability to empathise with ordinary Venezuelans, combined with plenty of cunning. If Nicolás Maduro, his appointed vice-president and anointed successor, possesses any of these skills, he has yet to reveal them.

The second and bigger factor was that Mr Chávez had the immense good fortune to come to power just as an unprecedented commodity boom was about to get under way. As the oil price soared the dollars rolled in, without the Bolivarian revolution having to work for them. Mr Chávez used this windfall to buy himself popular support, with social programmes and handouts. The oil-fuelled bounty seemed to vindicate his claim that before his advent, Venezuelans had been impoverished by “neo-liberalism”.

But the writing on the wall for Venezuela is no longer just Bolivarian slogans. Although commodity prices may not be about to fall, they are no longer rising as they did in the 2000s. After ramping up spending ahead of October’s election, the government posted a fiscal deficit of 8.5% of GDP last year, financed in part by mortgaging some of its future oil output to China. Last month it devalued the currency by 32%.

As acting president since December, Mr Maduro has continued in his boss’s vein, issuing threats against the opposition and private business and expelling a couple of American diplomats. No doubt Mr Chávez’s death will prompt a sympathy vote that will help Mr Maduro win the election that the constitution now demands. Latin Americans have a necrophiliac streak, and the opposition, though stronger than in the past, is reeling from defeat in presidential and regional elections last year. But Mr Maduro lacks Mr Chávez’s authority. Assuming he wins, he will have to stabilise the economy while imposing his will on his faction-ridden party. The place may unravel.

Behind the propaganda, Venezuela’s ugly reality is that of a corrupt, cynical and incompetent regime (see article). It is regrettable that Mr Chávez will not be around to reap the whirlwind he has sown: perversely, the worse things now get in Venezuela, the more this will flatter his memory. So despite its malign effect on Venezuela, chavismo will survive its creator’s demise, much as Peronism has outlived Colonel Juan Perón in Argentina.

The venom behind the bear hugs

Elsewhere in Latin America, Mr Chávez’s influence has waned in recent years. Ecuador’s Rafael Correa is best placed to inherit his mantle: in power since 2007, he romped to another four-year term at an election in February—and he has oil. But Ecuador, like Bolivia, where Evo Morales, a fellow socialist, remains unchallenged, lacks Venezuela’s size, wealth and clout. Argentina’s Cristina Fernández, a semi-detached ally, has mounting problems of her own. As for Cuba, which gets around $6 billion a year from Venezuela, the Castros have manoeuvred to put Mr Maduro, their closest Venezuelan ally, in power. Cuban communism and the Bolivarian revolution have swum together; if Mr Maduro falters, they may sink together.

Mr Chávez’s fans claim that, thanks to him, Latin America freed itself from subjection to the United States. The continent certainly grew in confidence while he was in power, but that happened because of better economic management and rising trade with China, not because of anything Mr Chávez did. His scarlet beret may look good on bourgeois T-shirts in Greenwich Village and Islington, but Latin America’s real working-class hero has been Brazil’s Lula. And despite all the bear hugs at Latin American summits, Mr Chávez did not further the continent’s cause. Although Latin America’s leaders—including Lula—have been reluctant to denounce Mr Chávez, they know that he prevented it from fulfilling its potential and uniting behind democracy and open markets.

With luck, chavismo will now have lost much of its sting. His death could help break the deadlock that has stalled Latin American integration. The Chávez formula—exploiting inequality and social grievances to demonise the opposition—will remain a powerful one. But now that the man has gone Latin America’s democrats have an easier task.


Suspend Your Cynicism. For A Moment


There are lots of behaviours that lots of people exhibit: bravery, altruism, charity etc. But there is one behaviour that you can guarantee that all people will display: self interest. Protecting their families; ensuring that their interests (pay, home etc) & reputation are served first. So whilst there are many with a deep sense of morality who will go out of their way to help others, there are plenty who will walk past someone in distress & only do something to make money or improve their image.

Which is why there seems to have been a great deal of cynicism over celebrities & politicians (or president’s wives in particular) holding up notices with #bringbackourgirls. You know, I get it: Kanye West is better known for marrying a vacuous woman & thinking he is God rather than caring about girls in Africa; Barack Obama sends drones to bomb other nations, so when Michelle appeals for morality, there is going to be some cynicism.

However, and it’s a big however, social media pressure DOES work. Social media can make and break careers, and one thing you can guarantee is that a great deal of world leaders don’t want their precious image or ego taking a bashing by people around the world making them look stupid (see Cameron on the phone to Obama for example). You can take leaders like Putin and Assad out of that mix, but Goodluck Jonathan seems no different. Yes the regime is by all accounts corrupt, but this is a leader who doesn’t want the West to think he’s an incompetent fool who has let 200 of his citizens disappear without taking any action (regardless of the fact that this is exactly what has happened).

So, will a large number of (sometimes hypocritical) celebrities & politicians holding up a piece of paper make a difference? My opinion is resoundingly yes. If these were your children, what would YOU do?  Everything. And you’d get the media on your side. If these were kids in the US, France or the UK, the governments would be all over this and the parents would not rest until their children were safely returned. The same should apply to these children in Africa. The reality is that these girls may not be returned safely, that this will all go horribly wrong, but with the world watching and with attention back on this event (and remember, that attention did disappear), everything should be done (bar Western military invasion) to resolve this.

So suspend your cynicism for a moment. Celebrities are often vain, vacuous & self serving. And maybe that’s why they are standing there with a sign on social media saying #bringbackourgirls. But in this case their vanity (or maybe their altruism?) is being used for a cause that is worthwhile.



Expenditure Must Equal Tax Take


OK, so first off, what is the tax take of a country?

  • My definition is – the exact amount of money that a country receives in tax revenue in any given year
  • NOT what it hopes to receive but what it actually receives
  • Any tax collection authority has an idea of what their tax take will be any given year and they will take account of leakage (tax evasion which is illegal) and an idea of what won’t be paid via avoidance (they set the rules, so they expect people to exploit the holes)

So now we’ve got that straight, the tax take is what you should expect to get and you should plan to get. Whatever your view on tax (hate it or think people should be taxed more) assuming you will get more is silly – it’s like saying people won’t commit crime. Criminals will avoid paying tax and most people (call them immoral if you want, morality is not one size fits all) will ONLY pay the tax they have to.  I have my own personal view of tax and it’s that there should be a flat tax BUT that’s not for discussion now – my only point today is that the tax take must equal the expenditure any government makes.

According to this article the UK will pay £1billion a day in interest supporting our debt. You can beat me up on the difference between deficit & debt but one thing is clear: you cannot pay off the debt until you are spending less than you taking in in tax receipts. Why is this so important to me and why should it be important to you (as let’s face it, prudent economic ain’t sexy)? Well I pay a lot of a tax and I’m not alone in that. If you’re a single person earning £50,000 you will pay out £15,000 in tax. That’s a lot of money, you have no kids, don’t use much public services & still the government cannot balance the books. I’d be pissed with that. I give you £15,000 every year & you still overspend? And you want MORE?? Exactly.

So, considering most people don’t want to pay more tax and let’s face it, it’s the lowest tax brackets that generate the most tax, the expenditure clearly has to come down. The left wing will say armed forces, trident etc will have to come down & the vulnerable cannot be impacted; the right wing will say the benefit system is too generous, the NHS is a behemoth and the armed forced must be protected.  I see both views but I don’t want to start that debate here, but let’s get one thing straight – we have our tax take, we have our current expenditure & it’s frankly too high. Choose your current UK expenditure you hate and tell your MP you want it gone. But we cannot keep going on like this, we cannot keep servicing a debt that costs so much, having someone earning £12,000 a year paying for a Tory MPs stables to be heated or the Royal Family’s Range Rover.

As Vince Vaughn in Starsky & Hutch said:

“Coke it costs money, planes they cost money. This yacht, this perm, my kid’s braces, it all costs money”

It all costs money kids & when we the taxpayer funds that bill, we MUST force our MP’s to ensure that the current tax take (no more than it is now) equals what is spent.