Venezuela & Italy: A Tale of Two Horrors

Democracy1Contemporary political systems have a very ineffective reward system for meritocracy. Venezuela and Italy are extreme examples of this.

With the benefit of hindsight, it is now crystal clear that the checks-and-balances of contemporary political systems are outdated, highly out of touch with reality, and mismanaging many of the growing and most pressing needs of society.

In many respects, the misalignment of interest between the people and society versus political parties and politicians could not be more abysmal. But how could it be otherwise? The world is essentially operating with the same political system implemented by the US’s founding fathers, conceived over 230 years ago, with no major improvements made so far.

Those chief contributions, at its core, implied a substantial transfer of power to society through the emergence of strong, relatively functional legislative and executive powers. The quantum, virtuous change consisted in forever leaving behind the monarchic, despotic systems of government. The US’s founding fathers were finally able to reap the rewards envisioned since the great Greek thinkers before Christ, retaken and refined by the great political minds of The Enlightenment. The benefits reaped were both huge and almost instantaneous. A true virtuous circle was born.

Understandably but most unfortunately, over 230 years later, that quantum political leap has become stagnant at best, or severely deteriorated at worst. The original checks-and-balances built into this system, which were so successful at first, have proved ad nauseum to be very inadequate, markedly insufficient for the multiple and growing needs of contemporary society. That is, by and large, the chief reason behind the most pressing challenges in employment, income, health systems, and alike.

Both, Venezuela and Italy, are prime, extreme examples, of the ineffectiveness of contemporary political systems.

Venezuela is indisputably a basket case.

Ironically, in many respects, not far from Venezuela is Italy. Not surprisingly, the core reasons behind the coincidental mess in both nations is tellingly similar: highly dysfunctional political systems in both instances.



In Venezuela’s case, it was an extremely poor checks-and-balances political system which allowed a highly unqualified person to win the presidency, back in 1999. Through successive political maneuvering and changes to Venezuela’s constitution, the recently deceased Hugo Chávez became a de facto dictator of that nation. That painful grabbing of power shouldn’t have taken place at all. Only a highly imperfect political system can allow something as destructive as this to occur.

Mexico, was very close to sharing a similar fate to Venezuela’s back in the year 2000, when a Hugo Chávez alike politician (Andrés Manuel López Obrador) barely missed the winning stake for the presidency. In that respect, at that time, Mexico’s political system was not far different from Venezuela’s. So, in that respect, Mexico is also a compelling testimony of the severe shortcomings of contemporary political systems. Fortunately, Mexico seems to have successfully turned the corner in this regard.

Venezuela’s socioeconomic situation consistently went from bad to worse under Chávez’s presidency (disregarding GDP per capita, which has been essentially stable). However, lurking under the surface, lies an unstoppable downward economic spiral, unless drastic and courageous decisions are taken. Among Chávez’s “master strokes” and major economic legacies:


  • A galloping double-digit inflation and an acute shortage of imports and many basic supplies.
  • Despite the recent sizable devaluation of the Bolivar, Venezuela’s currency is still severely overvalued –a quick way to prove this is the booming internal black market for US dollars.
  • He became a de facto feudal lord by taking control of the country’s judicial system and turning PDVSA (the state-owned oil monopoly) and the Central Bank into obscure off-budget spending vehicles, using a substancial part of those proceeds to finance giveaways to the most needy sector of the population. In his own peculiar way, Chávez was very charismatic; and this charisma paired with the unprecedented giveaways, turned him into an almost God-like figure, assuring him a mass of blind and die-hard followers.

How could the population of that country have kept a person like Chávez in power against an overwhelming evidence of incompetence and corruption? We all are well aware how despots’ repressive ways can (most unfortunately) stretch their permanency in power.

What difference does it make to the dead, the orphans, and the homeless, whether the mad destruction is wrought under the name of totalitarianism or the holy name of liberty and democracy? –Mahatma Gandhi

Most worrisomely, keeping all proportions, the case of Italy is not that different from Venezuela’s. Granted, there are some great contrasts among both nations. Italy is a developed nation, Venezuela is not. However, at the core, both nations are remarkably similar: two highly incompetent and corrupt persons have had an excessive influence in their domestic politics. On the surface, Silvio Berlusconi does not seem to share many common features with Hugo Chávez. But beyond the apparent deep differences (Berlusconi is a media tycoon, presumably with a very conservative agenda), deep below they are remarkably similar. Both are populists, and will do almost any conceivable thing in order to remain in power (or to regain it, in Berlusconi’s case). And foremost, their personal interests have clearly been above anybody’s else.

Italy’s electoral results on February 25 were a dramatic reminder about its deep state of political decay. In addition to the relatively surprising return of Berlusconi, with 30% of the vote, another clown (a real one, in this case), Beppe Grillo, captured a surprising 25%. The worrisome conclusion is that the majority of Italian voters have expressed their despair and frustration by voting for extremists, with potentially very dangerous results. Italy’s case, in many respects is still more worrisome than Venezuela’s, since it is not only an EU founding country, but also a pillar of the largest economic bloc on Earth. If things come to worse in Italy, the possibility of a catastrophic economic contagion for the Eurozone is very frightening.

All over the world, to a lesser or greater degree, most politicians use power for their own, and/or their group’s benefit over the people’s interest. Major improvements in governance have to effectively address this issue. Otherwise, the economic mediocre growth rates upon us can become unnecessarily lasting.

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About Martin Marmolejo

Global Investment Manager | Founder & Managing Director at MMA Global Investment Management | Proud husband and father | Follow me @globalmarmolejo.


  1. […] has more to do with his old age —77— than anything else. More on this subject in our articles: Venezuela & Italy. A Tale of Two Horrors and Italy’s Perennially Troubled Political […]

  2. […] Silvio Berlusconi, had an exaggerated political influence for around two decades, until recently. Berlusconi’s influence in Italy’s fate was disproportionately high, unfortunately the wrong type. Berlusconi’s ascension to power in […]

  3. […] To different degrees, what is happening in Hungary is not radically different to the nightmarish situation in Argentina and Venezuela. It is the same malaisse, in different degrees, and with only negligible differences: nations in a clear pathway to deterioration, quite often at an accelerated pace. In many respects, even Italy (under Prior PM Berlusconi) elicited a great resemblance to Argentina and Venezuela nowadays (see Venezuela and Italy: A Tale of  Two Horrors). […]

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