Dorothy Kronick wrote an excellent article for The New Republic, which you can read in its entirety by registering free here. Entitled “The Kingdom of Darkness”, it could have as subtitle a saying Venezuelans use frequently “We have seen this movie before” as it outlines how Chavez is making the same economic mistakes made by some of his predecessors. Yes, we have seen this movie before and we know the ending and it is not very pretty. Some highlights from the article, but you should go read it all, worth your time and the perspective:
“In fact, the long economic catastrophe that led to Chavez’s
election in 1998 was created not by market reforms but rather by
policies just like those that define Chavez’s Bolivarian project. While
neoliberal adjustments in Venezuela were problematic, a Chavez-style
development model holds primary responsibility for the country’s
abysmal poverty and inequality.”
“To be sure, there are significant differences between Chavez’s
economic policy and Perez’s: Chavez devotes a larger portion of the
federal budget to social spending; tax collection has increased under
Chavez, while it suffered in the ’70s; and, perhaps most importantly,
Chavez has kept the national debt profile under control (total debt is
about 30 percent of GDP). The government still has nearly $25 billion
in international reserves, though this represents a sharp decline from
$36 billion at the close of last year.
But these differences are unlikely to save Venezuela from
1980s-style troubles when the price of oil falls–and perhaps before
then. While debt accumulation has not yet reached dangerous levels, it
has been increasing since January; analysts predict that the government
will finish 2007 with a sizable fiscal deficit. Unless the economy
generates value outside the oil sector, it is only a matter of time
before the government must borrow or cut expenditures (and it is
unlikely to do the latter).”
The Devil's Excrement 
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