Chavez and the Power of the State

by on May 7, 2009 at 7:20 am in Current Affairs, Data Source, Economics, Law, Political Science | Permalink

Between 2002 and 2004 millions of Venezuelans signed petitions calling for a vote to remove Hugo Chavez from office.  Signatories were not anonymous and during the petition campaign Chavez supporters hinted darkly that there would be retaliation.  Chavez was in fact forced into a recall election, but unfortunately he won (not one of democracy's better moments).  After the election, the list of signatories was distributed to government agencies in an easy-to-use database.  The database included the names and addresses of all registered voters and whether they had signed an anti-Chavez petition.  Technology thus provided Chavez supporters the information they needed to retaliate.

Technology cuts both ways, however, and in a truly remarkable paper, Hsieh, Miguel, Ortega and Rodriguez match information in the petition database to another database on wages, employment and income.  What the authors find is shocking, albeit not surprising.  Before the recall election, petition signatories and non-signatories look alike.  After the election, the employment and wages of signatories drop considerably, about a 10% drop in wages relative to non-signatories.  Survey evidence conducted by the authors is consistent with retaliation by Chavez supporters especially in the form of job losses in the public sector.  The authors estimate that the retaliation was so widespread, many workers were pushed into informal employment, that the Venezuelan economy was significantly damaged.

This is original, important and actionable research.  Bravo to the authors, especially to Ortega who–as of this posting–has a job in Venezuela.

1 Zamfir May 7, 2009 at 8:39 am

From what I hear from Venezuelans, popular support for Chavez is very real, even if actions like this make it far from democratic. Basically, people see, not without reason, his competitors as just as likely to have corrupt and undemocratic tendencies and all other flaws of Chavez, except they would give less petrodollars to the people. It is not a given that stricter controlled democracy in Venezuela would automatically remove Chavez.

2 Andrew May 7, 2009 at 8:48 am

It should be SOP for the President to issue a statement thanking the dictator in question for his recent support for the CIA operations within their country.

3 Max May 7, 2009 at 8:54 am

Well, I always say, led the idiots be ruled by a scammer, I am only sorry for the citizens who hate Chavez, didn’t vote for him and now have to suffer, because they are too poor to leave the country. Those are the people that deserve pity =)

4 assman May 7, 2009 at 10:05 am

“Besides, is democracy only “unfortunate” when the people choose someone Alex Tabarrok don’t like?”

No democracy is always right…Always!

5 Chris May 7, 2009 at 10:24 am

Your use of “unfortunate” to describe an election result you disagree with is, um, *unfortunately* reminiscent of the Reagan Administration’s decision to illegally support a terrorist group attempting to violently overthrow the Ortega administration in Nicaragua because Reagan disagreed with his policies.

6 John Locke May 7, 2009 at 10:29 am

All campaign contributions in U.S. elections should be anonymous for the reasons implied in this post, but you won’t even find very many libertarians advocating such a policy, even those who oppose gun registration. The U.S. is far on the path to becoming as poor as Venezuela, and will fall apart in less than 30 years.

7 Rich Berger May 7, 2009 at 11:28 am

You do attract the loonies, don’t you? Isn’t it pretty clear that Chavez is a thug, impoverishing his own people and trying to hold onto power by any means necessary?

8 josh May 7, 2009 at 11:54 am

“even if actions like this make it far from democratic”

What definition of democratic excludes rewarding supporters and punishing rivals? Why would you expect democracy to produce something other than this tendency?

9 JeffJ May 7, 2009 at 1:43 pm

I’m curious how “original, important and actionable research” that criticizes a populist leader receives attention, yet the reams of original, important and actionable research criticizing the world’s plutocrats is ignored.

It’s almost like our poster has a bone to pick.

10 Larry May 7, 2009 at 1:46 pm

It’s interesting that even here on a libertarian econ blog most commenters attack anyone who dares to criticize such a widespread, apparently government sanctioned, retaliation campaign against people whose only offense was to sign petitions. You lefties love your thuggery.

11 JeffJ May 7, 2009 at 2:28 pm

Well, sure, power corrupts. Even among union leaders. Guess which way the populous votes when given the choice (which they are usually not) between a corrupt populist leader and a corrupt plutocrat (one of “our SOBs”)?

I love the “thug” comments. Most Venezuelans recognize that Chavez is standing up to thuggery. Of course his actions will look like thuggery in a few select circles.

Despite the selection bias toward the wealthy in the comment section of an American libertarian economics blog, there is still a healthy dose of reality from the proles. Talk is cheap and that’s a great thing for real democracy.

12 Pete May 7, 2009 at 2:48 pm

The real unfortunate thing is a discussion that goes on and on, mostly trying to justify and/or sympathize with Hugo Chavez and his reelection(s). Why unfortunate? Beacuse mostly they were either overtly or covertly fraudulent. Lets see:
If tapping the totality of the state’s coffers and putting it at the service of the leftist candidate is ok,
If sending armed bands to terrorize the hapless opposition is ok
If having “grabbed’ control of the supreme court by padding it with extra judges (using the term very loosely) is ok
If not having a single opposition member of congress and rubber stamping laws to strip the power of opposition elected officials is ok

then I guess Hugo Chavez is the man who should be where he is and all discussion of his legitimacy is null and void. Yet, none of those things are ok anywhere where the rule of law holds sway.

Draw your own conclusions.

13 John Pertz May 7, 2009 at 3:15 pm


So basically your argument is that because Batista may have been a crony capitalist, therefore a leader like Castro or “gulp” a democratically elected leader like Chavez has free reign. After all the preceding leader was very bad and did very bad things, therefore the newly elected official is justified in his actions because he was selected by the beaten down masses.

This is poor logic and probably subterfuge. You evaluate dictators or elected officials objectively, not comparatively. You dont say oh well Chavez is bad but the poor people elected him and they weren’t treated well by the previous guy.

A much better and humane and logical left wing argument would be that Chavez should of embarked on an economic platform similar to Norway’s. Norway is similar to Venezuela in the sense that they make money off of oil. However, the difference between Norway and Venezuela is that Norway is run by mostly intelligent, calm, well mannered social democrats who didnt embark on a campaign of destroying property rights. Norway doesnt waste its time getting caught up in symbolic political moments.

No, Norway has done quite the opposite. Norway has made use of their extreme oil wealth to deliver a highly functional welfare state, they have maintained property rights, they have respected the liberty of their individual citizens to some degree and they have a very nice diversified economy. Simply put, Norway isnt going to hell if the price of oil tanks.

Chavez on the other hand has ruined property rights, scared away any private capital that may have found the environment attractive, and has officially tied the fate of Venezuela to the price of oil. Even worse, Chavez has created expectations for the people of Venezuela. They are getting medical and schooling services funded through the state’s sale of oil. He has harassed and largely scared away any private business that may have been interested in industrial production. So now what happens to Venezuela as the private economy erodes further and further, the country’s fate becomes more and more tied to the sale of oil.

Again I feel very bad for the people of South America. Their leaders could of employed much better models that could of worked for all people. Instead Chavez and many of the others are calling plays out of a very old school left wing playbook. A playbook that should of been chucked years ago. Unsurprisingly, the more functional and quietly efficient Nordic-left wing models get ignored here. And unsurprisingly the left wing fools rush in to support Chavez or any other left wing dictator at every given turn. VERY SAD!

14 John Pertz May 7, 2009 at 3:59 pm

I couldnt agree more with Rex Rhino. It is one thing for left wing people to worry about the plight of the working poor, health care costs, and social liberalism. However, it is quite another to support a borderline quasi fascist just because he makes odes to the poor and is in rhetorical opposition to right wing politicians.

15 Chris May 7, 2009 at 4:31 pm

I don’t know whether Chavez is good, bad, or, like most people, some of both. My point is that that is the Venezuelan people’s decision to make, not yours and mine. And they made it. And the US has an unfortunate history of overthrowing elected Latin American politicians by violence, which we really truly should not repeat. And therefore, rhetoric about how some small country’s election result is “unfortunate” sounds like a threat.

I’m sure lots of Europeans were dismayed at the results of the 2000 and 2004 elections and all the uninvestigated irregularities that went along with them. But they didn’t invade us or sponsor terrorist organizations to overthrow Bush, and if they had, even people who voted against Bush would have been pissed off.

I don’t know, maybe Alex wasn’t suggesting anything like that and this whole thread is an overreaction. But it sure sounds like he’s implying that non-Venezuelans ought to consider overruling Venezuelan election results.

16 Alex Tabarrok May 7, 2009 at 4:59 pm

“…it sure sounds like [Alex] is implying that non-Venezuelans ought to consider overruling Venezuelan elections results.”

Whoah…not sure where that came from. It certainly was not in my head when I reported on this interesting and important paper.


17 fish on a bicycle May 7, 2009 at 8:59 pm

Interesting post Alex – wish you’d post more.

18 Eric H May 7, 2009 at 10:27 pm

I second Spike. Accurate, critical, and pithy.

19 Zamfir May 8, 2009 at 6:18 am

Using a signatory list to refuse jobs to your opponents is clearly undemocratic, and perhaps even illegal in Venezuela (I have no idea). It’s also, sadly, completely normal in many countries, and there is no reason to assume his opponents would refrain from it. They have, after all, already tried (and almost succeeded) to remove him by military force, hardly a democratic method in itself.

20 Cyrus May 8, 2009 at 8:39 am

The argument that any Latin American government is going to be a dictatorship, and therefore we shouldn’t hold dictatorship against this particular one, doesn’t hold. Brazil, Argentina, and Chile all have more or less functioning left-leaning democracies, and aren’t coming out of a substantially more democratic political history than Venezuela. Bastiat and Pinochet are not a moral baseline from whom you have to do better than to be minimally OK.

21 Zamfir May 8, 2009 at 11:07 am

Cyrus, sure, but I am really not fully convinced that Chavez is an undemocratic dictator. From time to time he seems to aspire to it, and he clearly is a borderline case, but most of the time he appears to have enough support to rely on democratic means to stay in power. What he will do if he loses, or is about to lose an election is not yet clear, and there are definitely good reasons to assume he will not accept, but that remains to be seen.

His interferences with the democratic process are another case of worry, but not giving jobs to your opponents is a long, long way from imprisoning them or throwing them from aircraft, and clearly not something that is below his opponents.

22 lucklucky May 8, 2009 at 2:55 pm

There is a cognitive dissonance by the people that mixes Democracy and Freedom. Historically Democracy have been in side of Freedom, it split the existing power and obviously in practice it give a say to everyone. But that possibility doesn’t prevent that Democracy can be employed as a tool of Tiranny based in a Populist message.
It is my contention that Democracies are being transformed into tirannies. When 60% of people vote to take the property of 40% by such a high numbers that many disagree of values we have a Democratic Tirany, this is just a sample of all personnel limitations that are being waged into us.
I fathom that except for lack of political freedom we will have many dictatorships with more freedom than Democracies.

23 Mr L May 18, 2009 at 4:37 am

So, wait, just because someone criticizes the actions of a democratically-elected leader, that makes them a colonialist? I suppose we should stop our criticism of Mugabe as well? Or Bush even?

Sadly, some in fact are intellectually consistent on this point. The line that Zimbabwe’s problems are really to blame on the West and that Mugabe is a democratically elected brave voice speaking against colonialist oppression and similar nonsense has been gaining among the left. Nobody defends Bush, of course.

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