Versión Español
EspañolA few days ago, the Venezuelan government announced the creation of a new government agency, the Viceministerio para la Suprema Felicidad del Pueblo (Ministry for the Supreme Happiness of People). Of course, the jokes have continued since the announcement, due to the extravagance of the title, which raises shortsighted populism to new heights with Chávez’s successors.
One wonders how a government agency that will only increase bureaucracy and spending could “provide happiness.” Keep in mind, Venezuela suffers from immense inflation — exceeding 40 percent per year — and has implemented draconian restrictions against access to dollars, which are necessary for imports and travel. Predictably, severe and increasing shortages abound.
While the new ministry may seem funny — at least to observers — the truth is that Venezuelans live a daily tragedy. The citizens have seen how gradually the socialist government has destroyed the country’s infrastructure and economy. In addition, the brutal socialist experiment started by Chávez threatens the enviable social life so many have known in Venezuela.
Thus, I am not willing to engage in funny jokes about the new agency. Instead, I would like to analyze briefly the motives and outcomes for what is at face value an incoherent policy.
Nicolás Maduro’s decision is not a thoughtless act. Behind the creation of this agency, there is a conception of social policy which is not exclusive to Venezuela’s socialist governments. In fact, it is shared by governments many assume to be more serious and responsible. The basic idea is that poverty and unhappiness can be “fought” through the subsidies that governments give to poor people. They suppose that by giving money or food to those living in poverty they will help them to escape their unfortunate condition.
United Nations and IMF officials, governments and diplomats from developed countries, and even private entrepreneurs and financiers spread this simplistic logic as if it were noble wisdom. They believe that the solution to poverty is to have the state take money from a few individuals through taxation, and then give it to others through various forms of subsidies.
We can say that the idea is simplistic, but that is generous, since it is totally false.
The first key reason is that wealth creation is the cure for poverty. A poor person or family needs to be able to generate an income of some level to leave poverty. To give them wealth created by others, and taken by taxation, will not help. They are still not producing by themselves, and mere appearances do not change that.
The state does not create wealth, it only redistributes it, and it needs to take a lot of resources from productive activities in order to change someone else’s life. Unfortunately, this redistribution process also seriously affects and impedes the broader process of wealth creation.
You cannot feed a growing number of individuals in sustainable fashion, but still, political pressure to increase subsidies sees no end. So governments decide to take on debt, beyond what they can afford. This has happened in recent times in the United States and most European countries: governments generate crises and recessions; with crises come more unemployment, inflation, and a larger population dependent on state subsidies or direct payments; eventually, higher taxes appear, along with their economic burdens.
Although the politicians involved never acknowledge so — and perhaps they are too obstinate to even realize — governments reach the opposite result of their stated objective. In other words, rather than cure poverty, they end up generating more poverty!
In addition to the economic burdens of transfers, the subsidies process generates other negative and even worse outcomes. They enable the corruption of public officials, since larger and larger sums of money pass through their hands. Further, subsidies create a sense of dependency and undermine the pride of the beneficiaries. They get used to the idea and assume that people have the moral claim to receive such subsidies, while not necessarily taking responsibility for and making any effort to improve their own situation.
Then, these policies generate a vicious cycle, from which it is increasingly difficult to escape and that ends up impoverishing the whole society. Venezuela is just an extreme example — a ridiculous and, at the same time, tragic case — of a folly which we should all recognize at this time.
Translated by Sofía Ramírez Fionda.
