 This is Mises Weekends with your host, Jeff Deist. Well, ladies and gentlemen, welcome back once again to our weekend show. Mises Weekends, we're joined by two very special guests, both of whom were here this past week attending our Mises University week. Both are from Venezuela and these two gentlemen gave a presentation at Mises U about the current situation in Venezuela. We thought we'd dig a little deeper. I'd like to introduce we're joined by Professor Rafael Acevedo. From Venezuela and also Luis Soroco. I'm going to say from Venezuela, gentlemen, thanks for coming to Mises U. Thanks for your presentation. Thanks for joining us today. Well, thank you for giving us the opportunity to be here with you. Really, we in Venezuela don't have the opportunity like this because you know the libertarian thought is not supported in Latin American countries. So gentlemen, before we get into talking about Venezuela, I'd like to know how both of you came to be libertarians, to be Misesians, to come to Mises University. Okay. Well, each one of us on our own happened to meet very good people, you know, in our ways, friends and professors as well. Actually, Rafael met Professor Francisco Velandria in Venezuela and Jose Mora. Well, he was studying his Master of Science in Economics. Okay. And I met Professor Hugo Faria. He was my professor, economics professor while I was studying my Master of Science in Finance. And he is now a professor at the University of Miami. He migrated. He left Venezuela. And they were people that really loved free markets. They were defenders of free markets and were very influential for us. Very, you know, from that moment on, we started reading about, we actually, the word Hayek, the word, the name Mises or Rothbard, I've never heard those names before. I heard them when I started studying with Hugo Faria. And from that moment on, we, you know, started studying about them, about Hayek, Mises and all those guys and started supporting free markets. We really believe that that's the solution of our problems in Venezuela. And actually, I know about the Mises Institute because of Rafael. I didn't know about Mises Institute. Rafael told me, hey, there is an institution there in Alabama that, okay, let's try, let's apply. Okay. How about you? Well, I was looking for Google for reading. So about Hayek Mises and I found the Mises Institute and really was a very amazing experience to meet the website. I had the opportunity to read a lot of books. And, well, we say, hey, Luis, I think that there is a way, a real way to the freedom in Venezuela. Look at this website. Come apply for the Mises University, apply for the Mises University 2016. But we couldn't be here because of some problems, some troubles, financial troubles. But, well, we could be here right now. And yes, we think we had to work for these ideas in Venezuela because this is the only way that Venezuela will improve its economy and come overthrown this dictatorship. I don't know how to say this, but really we engage with these ideas. Okay? And we are working for that. So talk a little bit about the presentation you gave and some of the day-to-day current realities that Venezuelans face that people in the U.S. might not be aware of. Okay. Can I start from the past? Sure. Just to give you a picture of why we got to this point. We think in the 1920s, 1930s, 1940s, up to 1950s, we experienced very high levels of growth, economic growth. We had very high levels of economic freedom as citizens, as common citizens in Venezuela. But the outstanding feature of those years, of those decades, was that out of the five presidents we have, four were dictators. So it's kind of a, you know, we had very high levels of economic freedom, but we didn't have civil and political rights. They were very diminished by those dictators. And when we finally embraced democracy in 1958, when the last dictatorship was overthrown, well, we started having some civil and political rights like freedom of the press, universal suffrage, etc. But our levels of economic freedom started to decline because the political elite that came, got into power, democratically. Well, we think they didn't like private property. The father of our democracy was a communist transforming to a social democrat, as I said in the presentation. He founded the communist party in Costa Rica, and he and his colleagues created a constitution that was hostile to private property since that moment. And when you see some economic indicators, you see that there is no, that's not a coincidence. He started with those, you know, like eroding those economic freedoms. And we started seeing a huge increase in our poverty rates and the exclusion. There were many exclusionary institutions up to the point of 1998 when Chavez was elected president. And you know the story, Rafael knows better the story about what we're living now from that moment. Everything got worse, worse, worse and worse. During the first years of Chavez, probably that was not noticed by people because of the high oil prices. And the problem with Venezuelans, I think, we think that oil is a curse. And what we respond to them is like oil is not a curse. The curse is the state ownership of the oil. That's the problem we're having, we had in the past and we're having now. Yes, the results of the policies implemented by Chavez and Maduro has been very cruel, very hard to the people. For example, the minimum wage, if you know that from May 1999 when Hugo Chavez ordered the first increment for the minimum wage to July 2017 when Maduro ordered the last increment of the minimum wage has been 38 times. So the minimum wage has been increased 38 times. In a little less than 20 years. Yes, more than 180,000% more than that. And if you compare the efficiency power parity, on May 1999 you required it to the 27 minimum wage for buying basic baskets. But today, on July 2017, you need 5.7 minimum wage for buying one basic basket. And the same for all the economic sectors. The economy has been destroyed for these people. So you can raise wages all you want, prices go up faster? Yes, that's the problem. The productivity in our country is decreasing faster and faster. And the minimum wage is increasing and productivity is decreasing and the minimum wage is increasing. We have no inflation. We have hyperinflation. That's the truth. We have hyperinflation. Professor Steve Hanks from St. John's Hopkins University with his index, the misery index of the world said that we are the most miserable country of the world for 2016-2015 in respect to 2017. The economic freedom of the world, the Fraser Institute said that we are the least free country of the world. We are least free than some Africans in Bauer, Republican, Congress, etc. And we in the 1970, in 1970, we were the 10 most free country. In the 1970, we were most free than right now the United States. The United States in this moment is the 16. We were the 10. In the 1970, we were more free than Singapore, than New Zealand. New Zealand was the 20. I don't remember. And Singapore the 30. And now Singapore is the second. New Zealand is the third. So you see that situation. It really is very sad. It's very sad. You know about children under nourishment. People eating garbage. And you have to read some tweets of some recognized academics like Stiglitz, other persons like Bernie Sanders, Pablo Iglesias saying that the socialist of Venezuela is the good one. They always say the same. But I say for that people, come to Venezuela. Go to Venezuela. But like a citizen common. Because you don't find toilet paper. Sometimes you don't find toilet paper. And other basic goods, you don't find food. And you are saying that the socialist seems good. One thing is read about socialism. One thing is heard about socialism. Other thing is surviving in socialism. Socialism. A professor, a university professor in my case in the 1980s. A professor could buy one kilogram, I guess two pounds of beef. Approximately two pounds of beef with just 15 minutes of his salary. 15 minutes. Right now he needs more than 18 hours. More than 18 hours. Okay? That's impossible to believe. That we are surviving in that situation. For that we are fighting, we are working on this project, on the Libertarian project in Venezuela. That is very difficult. Yes, it's very difficult. So many people say that we are crazy. Yes, we are crazy. So many people say that... Even with what's going on now, they say you are crazy. Yes, even now. You go there and talk about these ideas. You are going to have a lot of detractors. We have been insulted many times on the media. We have been also threatened. By both sides, by the opposition and by the government. Because the real problem we have in Venezuela now is that our opposition, I have to say it, is socialist as well. It's like kind of a lighter socialism, but it's the same. It's like Democrats and Republicans here. Yes, something like that. Well, let me just ask you though, technically speaking, when you're approaching maybe a thousand percent annual inflation, what do people physically do with their dollars, with their paychecks, with their bank accounts? And the temptation would be to get as many physical goods as you can and have no money. So what are people doing? Do they get their paycheck electronically generally? Do they get it in cash and then what do they do? Normally, well, as you said, they try to buy as many things as they can when they find them. Another option they have is to buy Bitcoins. I was very excited when you provided that lecture here on Mrs. University about the economy of the Bitcoin. Because that's one of the only options we have now. One of the few options people have to protect their money and they're buying Bitcoins. I think not to exchange Bitcoins to buy or something like that, but just to hold that investment. In fact, I did it in January with a little bit of money, but I did it. That's pretty much what happens. Other people, for example, have parents or relatives living abroad and they exchange dollars. They send some dollars to these people living in Venezuela. They exchange at the black market rate, of course, because there is a huge difference between the official rate and the black market rate. It's enormous, the difference. You exchange that and you get money. You get money to pay your expenses to buy things. That's another option. The other option is to have political connections. That's the only way, but that's for a real minority of the population. You have political connections. You buy dollars at 10 believers per dollar. 10, I don't know what's the official rate. Then you sell it on the black market at 10,000, 1,000 times more. Then you become rich. That's creating a huge inflation as well. After you become rich, you go to the United States. You say that the United States is the empire. They love to live here in Florida. You can find a lot of Chavistas living with the corruption money that they obtained during his work in Venezuela. We'll talk about the Banco Central. Obviously they've had examples in Venezuela, in Zimbabwe, in Argentina. Does the media even talk about this or do they suppress this and imagine that they can deal with this through central banking? I don't know. The problem in Venezuela is that most of the intellectual people, obviously politicians and all of them are either Keynesians or Marxists. They support the central bank. Is it cranking out physical money? Yes. It's cranking out physical money too. The money supply has been increased many times during the last years. I think that started when we decided to create the central bank in 1939. As I said before, it's not an exclusive policy of Chavez and Maduro. We had that from many decades before. We started showing the seeds of our destruction. We started devaluing the currency, creating huge inflation, no matter what people suffer. That's the reason why Chavez came into power. That's the reason why he was there and did all he did. Of course, the Monetary and Exchange policies in Venezuela have been implemented by Keynesians or Marxist economists. In Venezuela, today, it's difficult to understand that. Today, there are a lot of academics well-known from excellent universities around the world, here in the United States, Ivy League, etc. But I don't know what happened with those guys. Those guys say that it's important to maintain the control of the exchange. Why? Well, because you can devaluate to increase the productivity and competitiveness. That's Marxism or Keynesians. But when Luiz and I say that that's not the good way, that it's wrong, almost everybody says, hey, but Luiz and you, who are? Who are you? They are guys with an academic credential, etc. From other countries, etc. So the media in Venezuela support these species. That's the big problem and we are fighting for that. We'll take a typical professor at a Venezuelan university. Maybe they went to school at the Ivy League or in the US. Are they generally supportive of Maduro or are they generally in the opposition party? Or it depends. But probably now they will say they belong to the opposition. But I think the opposition is the same. I mean, it's the same as policy-wise. Yeah, policy-wise, yes. Philosophically, they support socialism even though they say they're not socialists, they're socialists. You see, for example, one of the leaders of the opposition, his party belongs to the international socialist organization. And his wife has declared publicly that they are socialists. The Polo Lopez. He's talking about the Polo Lopez. And I'm not saying we agree with what's happening to him because we think what the government did to him was an atrocity. I mean, he was just calling people to protest, to go on the street to protest because our rights were really diminished by Chavez and Maduro. And for that, he was sent to prison. We do not agree with that. But I have to say that we do not share his thoughts, the way he thinks, the way he says the economy will evolve under his policies. We do not think, we do not support that. Same happens with Capriles, which is the other leader of the opposition. The same happens with all of the guys in the opposition. And many intellectuals, they say, yeah, I do not support the government. I support the opposition, but I believe in Keynesianism. I believe that the central bank has the solution for our problems. I believe that we can keep very high tariffs and show that to favor our own businesses here, no matter what happens with the people, the expense of the welfare of millions of people there. Let's keep quotas, for example. And all that stuff. Let's have control of the currency so that we can devalue when oil prices go down, et cetera, et cetera. Exactly the same policies we had before Chavez and during Chavez. So I don't see any change in the institutions they propose. We think that everybody that is in the mood, everybody, the socialists, because they support a lot of socialist policies like the control of the currency. This is very important. And we focus our speech in this in Venezuela, the monetary freedom. Venezuela, if Venezuela had the monetary freedom, we were not in this situation. But these academics and other politicians, when we speak, we say we need monetary freedom as a constitutional right. They say no, no, no, no, no. We have to control it. We have to control it. It sounds like what you need is a black money, a black market and money. I know Bitcoin is the store of value, but also the US dollars, Swiss francs, Euro, whatever. Talk about other black markets that are operating. Government tries to suppress markets. Black markets arise. It sounds like this is terrible, but the military engages in black marketeering with food. Yes, it's correct. When A&I in economy, there are a lot of countries, immediately the black market appears. The black market appears when the controls are in an economy. So that is happening in Venezuela. You have black market for everything, for everything. For medicines, for food, for clothes, for everything. For dollars, for everything. For everything, you have black markets. Let's get back briefly to oil. Venezuela is one of the most, if not the most oil-rich country on the planet. A couple of huge oil price declines in, I guess, 2009 and again just a couple of years ago. Do Venezuelans equate oil with wealth or equate it with a curse, as you mentioned earlier? It's nationalized for once. So talk about that. Talk about the state oil company and its management or mismanagement. Yeah, I think, well, our economy is totally dependent on the oil prices. Totally, totally, completely. And given the fact that it fluctuates, it's volatile, I don't know how to say it. Our economy is volatile too. So it's attached to what happens to the oil prices. Part of the reason your economy is so linked to oil is because you haven't had markets to develop other things. You've had dictators, right? If oil is volatile, you need other industries. Correct. But if you ask that question to those intellectual guys in Venezuela, they will respond that, okay, we need the central bank intervened, we need to create more banks to help develop the agriculture or the iron industry, et cetera, et cetera, et cetera. No, you need to create a system that protects free markets, that protects private property. That's what we have to do. But they seem not to understand it or they don't want to understand it. And you need to privatize everything in Venezuela. You need to privatize all the state-owned companies, including PDVSA, PDVSA. Okay, PDVSA, the state-owned oil company of Venezuela. But these guys don't want. Because they prefer maintaining the control, the control, okay? You know, in Venezuela, ever, ever in Venezuela. Not just in Chávez and Maduro's regimes. Before Chávez, the elites, political and economics elites, were who real-managed all these resources. And that's what they are looking for, the commanding heights on his power, okay? That's what the guy wants. And we are saying in everything we are, no, no, sir, we need to privatize and we need to institutionalize the free markets. We need to protect the free markets. Well, I guess something about human nature, you'd rather be an elite in an impoverished country than give up any control to make the country wealthier. That sounds like a sickness. But I'm a little shocked to hear that there isn't any real intellectual opposition. I mean, I guess you guys represent it to the extent it exists. There isn't as robust a libertarian thought as, let's say, Brazil. Well, I think, well, we're trying to do our best, you know, for that libertarian movement to emerge. We need a new leadership, definitely. With this leadership we have now, we can maybe improve the situation if opposition gets into power. But we're not going to solve the root cause of the problem. And the root cause of the problem is that our nation, as a society, we are socialists. We need to change that. Libertarian movements. It's really difficult in Venezuela. The environment there is very hostile to classical liberals and libertarians and all those guys to come up. But we're trying to do our best. It's really difficult without having funding, without having economic support from abroad because in Venezuela it's really impossible to have economic support there. Especially because many people don't believe in free markets and entrepreneurs and businessmen don't believe in that because they have been all, most of them have been protected all the time by the state, by the government. So that's the way they have created their own wealth. But they haven't created wealth by competing in markets, by being efficient, by satisfying what the markets want. And that's a huge problem without having funds. But we're trying to do our best. We have an accounting tech. Our think tank is in charge to disseminate these ideals of freedom in Venezuela, trying to educate people, trying to create a counterweight. But it's really difficult because we are very small now so far. We have made some alliances with another non-profit organization which is called Movimiento Libertad Venezuela. They are our allies. And we're trying to do some other movements or emerging too in Venezuela, but we are still very small. It's very, very difficult to consolidate an effort of such magnitude. Yes, and we have the shadow of the mood that the majority of the mood is trying to appear on the rest of the world like the right wing of Venezuela. And no, they are not free markets. They don't promote the free markets. They promote light socialism. Most of the people that we had the opportunity to talk with, with them during the Mrs. University of other countries said to us, hey, but we believe that Lopoldo, Capriles, Maria Corina, et cetera, any of these members of the mood were free markets. No, they are not free markets. They are socialists. But they say they want to appear to the world like free markets or right wing. Because I think it's the way to catch supporters out of Venezuela. But they are socialists. By the way, when he says the mood, MUD is the opposition. It's the way they are called there. But they are mood. Let me ask you a big question. In terms of change people's minds and the psyche of the country, what role do you think colonialism and Catholicism play in current Venezuela? Is there a long history there as being a Spanish colony and also being a majority Catholic country? Well, I think there is a paper from Dr. Hugo J. Faria. He wrote a paper with Dr. James Guarni from Florida State University. I think they pretty much capture what you're saying. Our institutions were like a legacy of the colonies we were from when we were. I mean from Spain, for example. Most of those colonies were like supportive of above all mercantilist institutions. And that's our legacy. That's what we got from them. It's really difficult to change because it's really rooted in the culture and the mind of people that we need to work with a state that provides us with everything, that protects our industry against the competition, et cetera, et cetera. It's really difficult. And it's more difficult when all media and especially the education system teaches that. I mean, if you happen to study, for example, economics in Venezuela and you go to a university, either private or public, no matter, you're going to study Keynesianism and Marxism from the beginning to the end. And maybe if you're lucky, you're going to have like one or two free market subjects that are going to be optional for you. If you want to take them, you take them. If you don't want to take them, don't take them. But you're going to... I mean, how can we expect a free market supporter to emerge from that education system? I don't know. It's too difficult to fight against that. Yes, and when you ask about Hayek Mises, Rothbard and Randt, et cetera, Hayek Mises, Hayek Mises, no. They are no economists. They are philosophers. They say that. They say that. Because you have a lot of math in their books, so they are philosophers. No economists. Everything can be planned or put into a formula. Yeah, correct. And actually, I used mathematics. That was one of my main worries when I came here last week. I asked many times the same question. I use mathematics because of my background. But I use it and we use it in our think tank to support the theories or the hypothesis we're trying to back up what we're saying. Not to create new theories or to predict things and that stuff. And I think that's pretty compatible with the Austrian economics. We love the Austrian theory. We think it has the solution for the problems in Venezuela. But that is the point. That the Austrian economics in Venezuela has been omitted and really the people need to know it. They need to know it because that's the solution. I would strongly recommend your audience to read a paper from Dr. Hugo J. Faria, if you allow me to say it. Sure, we'll link to it. Yeah, it's called Hugo Chavez Against the Backdrop of Venezuelan Economic and Political History. It was published in the Independent Review. And it's great, great to understand our history, what we presented in our lecture. It's great. That's the philosophical backup of our presentation. I strongly recommend it. Well, socialism has become a little more in vogue in the United States. It used to be a fairly dirty word, but now Bernie Sanders and his mother people have brought that word out of the shadows a bit. People in the US and in the West say, well, Venezuela is not real socialism. Or they have a dictator, so it's not a true socialist society. What would you say to people who say, well, that could never happen here in the US? Well, the same we said in Venezuela. No, no. Venezuelans never seen the Venezuelan destroy by the socialist. Venezuela is not Cuba. That's what we said. Venezuela is not Cuba. So the socialism here is going to work. Not the way it's working in Cuba because they have a dictatorship. The same thing. They have a dictatorship there and we have the one that works. That's very, you know, socialism is a transition to communism. That's the way I see it. I think Hayek or Mises said that it's just a transition to communism. And we believe that socialism never ever works, no matter where you are. If it's Venezuela, if it's Norway or Sweden or by the way, they're not socialist. That's a myth. I think they're not socialist. But our politicians take them as examples. So, yeah, it never works. It's going to get, you know, the same thing we said when Chávez during the first years of Chávez. This is the one that works. Look at the welfare we have. He was a master of redistribution because of the high oil prices and he controlled everything. In fact, he didn't have, for example, the oil industry, Pedevesa, our state-owned company. It's not an efficient company. It's not a competitive company. He's not, you know, trying to embrace more and more markets because they are efficient. No. It's because he belongs to a cartel that manipulates prices and manipulates production just to, you know, for their benefit, for their own benefit. That's it. That's what Pedevesa does and what has done during decades. So, if we really want to move to an efficient and competitive industry, we'll have to privatize the company. Well, we have a proposal. In fact, we have a proposal for changing our institutions. Along with Movimiento Libertad Venezuela, we wrote some proposals. And we're trying to disseminate the ideas there. So, let's see what happens. Well, Luis Socho and Dr. Rafael Acevedo, thank you so much for your time. Thank you. Thank you for coming to Auburn. Thank you very much. People can get in touch with you through your Twitter feed at Econ in Tech. It's E-C-O-N-N-I-N-TEC-T-E-C-H. Ladies and gentlemen, have a great weekend. Thanks, gentlemen. Thank you very much. Or listen on Mises.org and YouTube.