Oil stocks rallied this week upon news that Hugo Chavez, Venezuela’s latest leftist leader with dictatorial latency, weathered a recall election storm. For now, Venezuela’s three million barrels a day of crude oil will continue to flow into gas tanks around the western hemisphere.
Those following the Venezuelan story will know that opposition to Chavez has amplified largely in response to Chavez’ ongoing efforts to consolidate his own power. Now, we’re not just talking about a few political appointees here, we’re talking about increasing the Supreme Court justice count from 20 to thirty-something (kind of like what old FDR once attempted, but failed). Another big concern is suppression and censure of the media and secret police tactics aimed against the other power center in Venezuela, which is the middle/business class; or more rightly, the propertied class. Latin America has had a history with these kinds of guys, and so they are understandably intolerant of moves that seem to suggest that the Mr. Chavez may be envious of the Dear Leader. As classical liberal we understand the essential role that property rights play in freedom, so it is no wonder that Chavez, who is a neo-Marxist, is aiming his guns against them. Not only has he made owning property increasingly burdensome, he simultaneously robs from those with success and wealth, and then turns around to destroy their very existence, biting the hand that feeds him. It’s not unlike the plot of an Ayn Rand novel.
Now, I’m all for free trade. I’m also all for keeping the oil flowing. Oil not only lubes the world economy, it fires it. But I would prefer that the nations that were pumping that oil weren’t working on a Marxist-like political and economic plan. For example, in order to win his recall, Chavez further extended benefits into the barrios, which of course will have to be paid for somehow, which means bad for the property owners who are being taxed enormously to pay for it. As oil reserves in that country plateau, and as the oil dependence of major consumers like the US decreases over time, Venezuela will find it increasingly difficult to remain afloat. Perhaps more importantly, they will find if increasingly tough to pump enough oil even to feed themselves.
The Venezuelan state, and the Chavez government, survives only by siphoning off oil money (not unlike another recently deposed dictator we know). While the oil serves our short-term economic interest, the economic and political unrest that this situation stands to generate seem likely to undermine our long-term interests in the region over the long term. Which brings me to wonder…how then should be we handing out foreign policy with this guy? And if we chose to focus on the long-term situation, how do we do that short of sending in the marines? I’m not entirely certain that I know the answer those questions. I do know is that Chavez, and tyrants like him, only serves to undermine the principles that we as classical liberals hold dear. What is less clear to me is what classical liberals should do about it.