May 30th, 2016

Colombia vs. Venezuela

Here’s an excellent “compare and contrast” article by Michael Totten on Colombia and Venezuela.

Remember what a mess Colombia used to be? I certainly do. But although I had some vague notion it was doing at least a little better these days, I had no idea how very much better it’s doing. That’s encouraging.

Whereas, Venezuela—which used to be one of the brighter spots in Latin America—well, you all know what’s going on there.

[Hat tip: commenter “Brian Swisher.”]

3 Responses to “Colombia vs. Venezuela”

  1. Geoffrey Britain Says:

    Totten has written another insightful article but one that fails to get to the heart of the issue. Why did Venezuela turn to Chavez? Why will Columbia, sooner or later, start to see a rise in calls for socialism?

    Capitalism is amoral. Life’s essential unequal “sharing of blessings” will inevitably result in 80% of the wealth gravitating into the hands of the upper 20%.

    Education, the fulcrum upon which upward mobility based in merit is leveraged, creates ‘turnover’ in that 20%.

    A society that fails to reward merit in favor of oligarchic status, that then makes law, the rule of men, rather than the rule of law and that fails to inculcate the embrace of education for all (necessary for upward mobility) will falter and perpetuate a system of injustice, opening the door to socialism’s seductive promise.

    Judeo/Christian values, place the obligation upon those ‘blessed by providence’, to act to the benefit of those less fortunate.

    When a society’s elite reject that obligation, instead assuming their blessings to be their oligarchic due, upward mobility is stillborn.

    The historical result is the cyclic embrace of capitalism and socialism. A cycle of socialism’s destruction followed by capitalism’s rebuilding, followed by a society embracing socialism’s promise of a ‘corrective’ mechanism for the abuses of an arrogant elite.

  2. Gringo Says:

    The historical result is the cyclic embrace of capitalism and socialism. A cycle of socialism’s destruction followed by capitalism’s rebuilding, followed by a society embracing socialism’s promise of a ‘corrective’ mechanism for the abuses of an arrogant elite.

    The US, never having experienced the destructive habits of socialism, has many of its young crying for Socialism. They were not alive when we could point to Really Existing Socialism as practiced behind the Iron Curtain. Chile, having undergone the Allende “experiment,” has been loath to return to Allende’s economic policies, even when a center-left coalition has governed Chile for 20 out of the last 26 years. Similarly, Colombia has experienced the F.A.R.C. for the last 50 years. The F.A.R.C. has more fanboys in Venezuela than in Colombia. Later than sooner, I say.

    Following are some stats that compare Venezuela’s performance under 17 years of Chavista governance versus Colombia. As Chavez was elected in 1998, stats for 1998 will show what he inherited. The comparison does not favor Chavismo.

    GDP per capita, PPP (constant 2011 international $) 1998-2013 increase
    Colombia 15.1%
    Venezuela 43.8%

    GDP per capita, PPP (constant 2011 international $) 1998-2014 increase
    Colombia 49.0%
    Venezuela 9.0%

    In 2013, when the price of oil was still around $100/BBL, Chavista Venezuela’s economic growth from 1998 was anemic compared to Colombia:15.% vs. 44%. With the fall of oil in 2014, the comparison became even worse for Chavista Venezuela+ 9% versus 49%. Today, Venezuela’s per capita income is probably below what it was in 1998, compared to an increase of nearly 50% for Colombia for the same time.

    Poverty headcount ratio at national poverty lines (% of population), Venezuela
    1998 50.4%
    2013 32.4%

    Poverty headcount ratio at $3.10 a day (2011 PPP) (% of population),Colombia
    1996 27.34%
    1999 32.87%
    2013 13.79%

    From 1998 to 2013, both countries have reported similar declines in poverty, albeit with different indicators: 18% for Venezuela, and 19% for Colombia from the late 1990s to 2013. Which poverty reduction is more believable, the country which increased per capita income 15% or the country which increased per capita income 44%? It seems to me that in order to distribute more income, you need more income to distribute- which makes Colombia’s poverty reduction claim more credible. Today, poverty in Venezuela is greater than it was in 1998.

    UNODC Murder Rates, 1998
    Colombia 55.6
    Venezuela 19

    UNODC Murder Rates, Most Recent year [2012 or 2013]
    Colombia 31.8
    Venezuela 53.6

    Colombia’s murder rate has declined 43% since 1998, while Venezuela’s murder rate has increased 182% since 1998.
    Since 1998, Colombia’s Life Expectancy has increased 3.6 years, compared to an increase of 2.4 years for Venezuela.

    In looking at economic growth, at murder rate, at poverty reduction, and at increase in Life Expectancy, Colombia, once Venezuela’s poor cousin, has outperformed Venezuela since 1998.

    What many people don’t realize is that courtesy of some PDVSA employees who came to Colombia after being fired for having participated in the strike, Colombia has increased its petroleum production from ~500,000 BBBL/Day to ~1 million BBL/Day. This also means that Colombia, like Venezuela a petroleum exporter, is suffering from the lower oil prices. But as its economy is much more diversified, Colombia is doing better than Venezuela.

    https://en.wikipedia.org/wiki/List_of_countries_by_intentional_homicide_rate
    https://en.wikipedia.org/wiki/List_of_countries_by_intentional_homicide_rate_by_decade#1990s
    http://data.worldbank.org/data-catalog/world-development-indicators

  3. Gringo Says:

    Correction:
    GDP per capita, PPP (constant 2011 international $) 1998-2013 increase
    Colombia 43.8%
    Venezuela 15.1%

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