The Thing that Ate Venezuela

With its recent mass of fresh expropriations, the Venezuelan government has reverted to its old, troubling ways. Now that the Parliamentary elections are behind us, it is unburdened by having to pretend it believes in private property. Like a monster from a 1950s B-movie, Hugo Chávez has gobbled up major food distributors, a glass factory, milk distribution companies, newly-built shopping malls, and entire rows of apartment buildings.

But while this has been dramatic, it has also been strangely targeted. Apparently, Hugo Chávez has opted to install a socialist-style economy by, roughly, taking over a company  a day. Companies, such as Ireland’s Smurfit-Kappa, are even starting to expect that their day of reckoning will soon come.

Call it trickle-down communism.

Is this strange strategy the product of cold calculation? Or is Chávez really like one of those monsters and simply binges without strategy? Does he take because he must, or does he take because he can?

For all we discuss Hugo Chávez, there are two things about him we know for sure: he values holding on to power above everything else, and he really, seriously prefers Cuban-style communism over a capitalist – or even a mixed – economy. In light of these facts, what is the ultimate goal of deepening his attacks on private property?

The country envisioned by chavistas is not necessarily a North Korea-style autocracy, where all forms of private property are banned. Let’s remember that there are private hotels and grocery stores for tourists in Cuba, and the government on the island is taking tiny-little baby steps to expand private property.  So regardless of the outcome, Chávez will always allow some space for private property in Venezuela, even if our worst fears come to pass.

And yet the Venezuelan public, by and large, rejects expropriations and cherishes private property. Chávez must be thinking that if he takes over just enough, slowly but surely, he will get to his nirvana without the public noticing. If that holds true, pretty soon the only private things in Venezuela will be … what? Banks? Newspapers? A few stores here and there?

The problem for Chávez is that he doesn’t have enough time to take over all he needs to in order to make us into another Cuba.  Trickle all he wants, there are way too many companies, sectors and housing complexes in Venezuela for him to gain complete control at this rate.

The change to another Cuba will require significant waves of nationalizations in which large sectors of the economy are brought under direct government control.  A company each day won’t get him there.

So how does this all play into his thirst for power? For one, it probably scares the bejeezus out of those willing to finance the opposition.

I have no way of knowing, but it wouldn’t surprise me if there was some link between the owners of Agoisleña or Owens-Illinois and the opposition.  The direct threats to Polar, our country’s largest private company, is not going to make Lorenzo Mendoza feel all that comfortable writing a check for Maria Corina Machado’s 2012 campaign.

This is just a theory, of course, but it holds up well when one considers that one of the largest companies recently nationalized, Sidetur, was owned by Machado’s family.

But if this is what he’s thinking, I doubt it would work. The opposition has a number of ways of getting financing, and the Venezuelan authorities are simply too incompetent to prevent it.  Even after the massive nationalization waves of the past few years and the panic he has engendered, even with strict currency exchange controls, there are little signs the opposition’s parliamentary campaign was under-funded. Even if it was, it didn’t prevent the government from losing the popular vote.

Regardless of the ultimate goal, government-by-gluttony is a high-risk strategy for Chávez. It increases scarcity, delays the country’s emergence from the recession, and the workers of the affected companies simply don’t want it.

This all plays into the opposition’s hands and enforces their message. Chávez’s gamble seems to be that this won’t matter in the end, either because the opposition will not have the funding needed to campaign effectively in two years, or because targeted nationalizations will not make people think private property has ceased to exist.

There is another, simpler theory to explain why they are doing this: thuggery. It could well be that there is no strategy at play, and that they are taking companies and property left and right simply because they want to and they can, damn the torpedoes.

We used to call him The Fat Man in the Palace. But the combination of his rapacious appetite for everything that does not belong to him and his lack of political capital in succesfully pulling it off, Hugo Chávez has become somewhat of a a contradiction: a monster to be feared but one that is still easy to caricature.

He’s become The Thing that Ate Venezuela.