American Consequences - August 2020

MERITOCRACY AT RISK

his country into a socialist dictatorship that would ultimately destroy his country’s economy... a path encouraged by his mentor, Fidel Castro, that focused on providing people with just enough to keep them dependent. Citizens could receive a nominal living, subsidized housing, monthly food rations... but only so long as they supported him and his regime. Gangs known as “colectivos” were imported from Cuba to spy on and intimidate Venezuelans to ensure that no one stepped out of line in their support for Hugo Chavez. Those who did faced violent consequences. Citizens could receive a nominal living, subsidized housing, monthly food rations... but only so long as they supported him and his regime. TOO GOOD A DEAL? These memories came flooding back to me at that moment inside the hot, sweltering church... An hour into Chavez’s speech, we were all the way back to 1830, the year his homeland became independent. “Finally!” I thought. Then came the U-turn... Or as I like to call it, the point of no return. “Una vez, en Venezuela, en 1680,” he bellowed dramatically, waving his hands and

“Venezuela is being born again,” Chavez, 44, declared as soon as the election results were reported. As his supporters blared car horns and set off fireworks in the streets of this capital, he made an appeal for calm and vowed to pursue prudent economic policies. Prudent. Economic. Policies. To sovereign debt traders like us, those words were encouraging. I was too junior to be included in the team that went to Caracas, but I was super exited that my colleagues might meet the new president. Once there... they heard the now-familiar refrain from Miraflores. “Tomorrow,” they were told. Then, “tomorrow” again. At that point, the words “prudent economic policy” had less meaning... Effectively, we’d been forewarned. This was a politician who talked a good game about prudent economic policies – but they were prudent only to him, his friends, and his family... all of whom benefited financially. At the time, Venezuela was riding high... enjoying the highest per-capita income in all of Latin America. It was a wealthy nation with massive resources. The Orinoco region, located in the northern part of the country, is now considered the largest source of proven oil reserves in the world, rivaling Saudi Arabia. And back then, there was much excitement over its potential. But Hugo Chavez was on a crusade, leading

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