2 February 2018

The vicious cycle that props up dictatorships


Human progress, as I have pointed out before for CapX, is neither linear nor guaranteed. And while the world is getting better across a multitude of indicators of human well-being, individual countries can and do regress – sometimes dramatically. Perhaps no two countries exemplify that fact as well as Venezuela and Zimbabwe. Both nations took a decidedly wrong turn at the end of the last millennium and descended into poverty and dictatorship. What explains the long-term survival of their reprehensible regimes? Simply put, both regimes appear to prioritise their hold on power at almost cost to the population. Indeed, by immiserating their people, they have in many ways strengthened their positions.

As difficult as it is to imagine today, Venezuela was, for much of the 20th century, the richest country in Latin America. In 1998, however, Venezuela elected Lieutenant-Colonel Hugo Chavez as its leader. The Comandante proceeded to build 21st century socialism in the Latin American country by progressively eroding property rights, the rule of law and voluntary exchange. Zimbabwe, in contrast, was never the richest country in Africa – that has always been South Africa. But Zimbabwe had a sophisticated economy and was generally considered to be one of the continent’s most promising countries. In 1999, however, President Robert Mugabe decided to violently dispossess his country’s commercial farmers as a punishment for their support of Mugabe’s political opponents.

Both economies took a nosedive. Venezuela’s average income has fallen by 21 per cent since Chavez came to power. Zimbabwe’s shrunk by a staggering 55 per cent between 1998 and the nadir in 2008. According to the International Monetary Fund, hyperinflation in the former will reach 13,000 per cent this year, while hyperinflation in the latter peaked at 500 billion per cent in 2008. Unemployment rates soared and hunger spread.

As living standards declined, government repression – including political imprisonment, torture and extrajudicial killings – revved up. Over two million Venezuelans emigrated abroad, while at least three million Zimbabweans left for South Africa alone. The emigres from both countries included some of the most educated and entrepreneurial citizens, for their skills were more easily transferable abroad.

Resurgence of socialist policies in the two countries is all the more unfortunate considering that both Latin America and Africa are home to some of the most inspiring free market success stories in the world. When Chile embarked on its economic reforms in 1973, the country’s average income was 38 per cent that of Venezuela. In 2017, Chile’s average income was 79 per cent higher than Venezuela’s. Since becoming independent in 1966, Botswana has followed market-friendly economic policies. In 1966, the average income in Botswana was 54 per cent that of Zimbabwe. In 2016, Zimbabweans earned 12 percent of what the people of Botswana earned.

(Note that I am using two different measures of income. That’s because Conference Board’s purchasing power adjusted figures do not contain data for Botswana, while the World Bank’s inflation-adjusted figures do not contain recent data for Venezuela.)

Unfortunately, Chavez ignored the Chilean example and opted to follow the Cuban model instead. Likewise, Mugabe ignored Botswana’s success and modelled his regime on the Soviet Union. He also developed strong links with North Korea. The latter trained Zimbabwean troops that Mugabe and his successor, Emerson Mnangagwa, used to suppress domestic dissent in the 1980s. The Cuban and North Korean connections are significant.

Contrary to the usual narrative, which holds that impoverishing and tyrannical regimes should buckle under the weight of their own failures, the Cuban and North Korean regimes show that it is possible to survive for surprisingly long periods of time. Put plainly, the pauperisation of the population may be a desirable development from the regime’s point of view.

Economic collapse turns peoples’ attention away from social change and toward survival. Hyperinflation deprives people of resources and ability to effectively oppose the government or even to engage in transactions that are basic to the conduct of daily life. Remaining resources – including food and medicines – can be distributed among regime’s supporters. Potential troublemakers, including the country’s intellectual and business elites, flee abroad.

The regimes in Venezuela and Zimbabwe have defied the odds – including repeated predictions of their demise made by the present author. But they have also shed any pretence of caring about the well-being of their people. Instead of reducing poverty and inequality, the rulers of Venezuela and Zimbabwe made them worse. All that remains of Venezuela’s 21st century socialism and Zimbabwe’s liberation struggle is the rulers’ determination to stay in power.

Marian L. Tupy is Editor of humanprogress.org.