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Venezuela’s Economic Calamity Caused No Surprise At Cafe Hayek

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Rita Varela does not like my criticism of Joseph Stiglitz’s generally happy assessment, in the Fall of 2007, of Hugo Chavez’s economic policies imposed on Venezuelans [2].  Ms. Varela scolds, by e-mail:

You [Boudreaux] find it simple to look out your rear view window to see what happened. It was not so simple to see nine years [ago] that the oil price would fall so far.

Ms. Varela:

No sensible economist could have looked at Venezuela in 2007 – or in whatever year the price of oil recently peaked – and predicted anything but the general state of economic calamity that reigns there today.  Stiglitz’s 2007 assessment of Chavez’s policies wasn’t wrong because Stiglitz failed to account for falling oil prices.  His assessment was wrong because every good economist understands that making property rights more insecure, centralizing more and more economic decisions in a government bureaucracy, and preventing market prices from rising and falling as the forces of supply and demand would push those prices unavoidably cause economic damage – and that the greater these interventions the greater the extent and depth of the resulting damage.

But lest you or anyone else suppose that good economists have only after the fact concluded that Chavez’s (and Maduro’s) economic policies spell doom for the Venezuelan economy – and greater tyranny for Venezuelan society – here are a few Cafe Hayek blog posts from years ago: February 7, 2007 [3];  February 8, 2007 [4];  also February 8, 2007 [5];  December 26, 2009 [6];   September 26, 2010 [7];  and  April 22, 2012 [8].