Updated 5 months, 3 weeks ago

On Donald Trump, Hugo Chavez and their respective elites

As the "Rocky Horror Show" (AKA American Presidential Election according to a British nobleman) draws to a close, one too many are trying to understand how could this ordeal happened.

Indeed, far beyond the character resemblance between Donald Trump and Venezuela's Hugo Chavez, key to the triumphant emergence of his leadership is elite behavior in the U.S. Like their Venezuelan peers, elites in the US treated Trump as an isolated event bearing no roots to domestic political sentiment and henceforth temporary. They regarded Trump a ripple in the ocean of political content with democracy that would not even leave the most minuscule blemish in the face of history.

But like Venezuela, U.S. democracy had been under untenable stress for over a decade. Economic restructuring which is key to continued middle class growth and ancillary aggregate demand growth had to be postponed under the false pretense that the end history had arrived and the U.S. would reign as a solitary power forever.

Add to the mix the sense of unsubstantiated optimism in the transformational properties of technology and you get a complacent elite unable to take brave decisions or to offer any sacrifice to the altar of progress. And while in Venezuela the roots of complacency where based on a pervasive rent-based culture tied to oil riches, the results in terms of democratic erosion were similar.

From 1958 through 1998 Venezuela was deemed to be a beacon of progress and prosperity, being a fast-growing economy from the 1920s till the late 1970s and one of the few democratic nations in the Americas.

But then along came the first oil bonanza and hence the first major economic mismanagement, which caused a decade of serial recessions, output collapses, devaluations and massive impoverishment throughout the 80s.

The political institutions nesting Venezuela's democracy could not provide the necessary treatment to this economic malaise. The corporatists model created by the Spaniards was not dissembled by Betancourt, the father of the democratic period.

On the contrary, corporatism was deepened as interest aggregation and dispute resolution were left to the elite commanding heights. Elites would decide who, when, and how oil rent was to be extracted and distributed.

The system was thus ineffective to enact economic adjustment and political reform. As oil rent proved to be too small to feed the growing needs of a thriving democracy -- notably economic diversification and political empowerment of emerging groups -- a disgruntled citizenry began to reject and grow emetic of the status quo.

This somehow mirrors -- albeit not exactly -- the situation in the U.S.

To be sure, the end of the 20th century was marked by the rising sea of technology's first wave.

Information and digitalization began to transform economic activity as well as everyday life. Political organizations, education systems and training facilities have failed to run at the same speed of the technology rise.

We thus have less people unemployed; much more people tending to multiple small jobs; schooling that fails to prepare for the workplace and overall economic stagnation. These are the perfect ingredients to brew a successful populist regime. Preventing such an outcome takes elite quality.
In Venezuela elites chose to seize the emergence of an outsider to continue rent extraction. Without an ensuing plan to set the foundations of a diversified economy, oil rent -- once again -- proved to be too small to cover the needs of 34 million people who aspired to live by U.S. middle class standards.

Catastrophe was written on the wall as the Bolivarian regime continued the rent extraction model increasing public expenditures to the point of bankrupting the country thereby setting the foundations for the current humanitarian crises.

In the U.S., economic prosperity and the First Technology Wave created a "cognitive elite", who are twenty times richer than the national average, educated together at IVY League universities, marry each other, work together and live together in exclusive gated communities in cities like Belair, Malibu, Santa Monica, Silicon Valley, Manhattan and Boston. They are Ùber satisfied with democracy and believe the rest of the population should feel accordingly.

On the opposite side of the population spectrum lies the majority of white America.

They have no college degree; have been unemployed for over a decade; are victims of drug abuse; send children to foster care and eat junk food when they can. They are enraged with the system and appalled by the Washington gridlock. They will show up in droves to vote for Trump.

But in contrast with elites' demeanor in Venezuela with Hugo Chavez, salient GOP leaders, scholars, business leaders, former military generals among others have condemn and rejected Mr. Trump's bigotry, misogynist and populist stance, fearing that his presidency might debase America's democracy.

In February of 1992, Hugo the savior made his insertion in Venezuela's politics with his famous words that he and his coup colleagues had failed "por ahora!" (for now) TV remark, after his failed coup-attempt against Carlos Andres Perez.

Instead of reproaching the lieutenant colonel's transgression against the Rule of Law and the Institutional framework that prevailed in Venezuela since 1958, salient members of the nation's elite saw in Chavez and opportunity to get at the top of rent extraction and sack the value creating economic rules that were being imposed by the Perez Administration.

Implicitly or explicitly, the elite in general supported Hugo Chavez and his assailing of the status quo and established institutions.

Without the support from diverse factions of the Venezuelan elite Chavez could have not installed the rabidly destructive strain of populism that has destroyed the economy and all freedoms in Venezuela.

Should Mr. Trump win on November the 8th, America may feel some ignominy and its days may turn darker instead of brighter over the next four years, but they won't become as gloomy as those of current Venezuela, mainly because Venezuela lacks the freedom creating platform that the U.S. has built since the arrival of the Pilgrims to Plymouth Rock.

This explains why populism in America which thrived at the turn of the 19th century did reduce trade, restricted emigration and raised high the nationalism flag, but failed to create new governments or overthrow the U.S. constitution. Because in the U.S., the law of the land and not rent extraction is still the flame of citizenship.