The New York Times and Capitalism

A revealing of bias

Photo by Eduardo Juhyun Kim on Unsplash

The New York Times positions itself as the “paper of record” for the United States. In some ways it does a fantastic job. The New York Times investigative reporting is peerless. The quality of writing is high. Some of their long-form stuff is sensational. They consistently churn out some of my favorite pieces each year. Their bias, however, also shows. The New York Times may be the paper of record, but it’s from a left-of-center perspective. That isn’t the worst thing. It’s a nice counter-balance to The Economist, my favorite media source, which is often right-of-center. Sometimes, though, the bias detracts from its coverage. Their framing has become increasingly left-wing. It’s not as bad as NPR, but sometimes they really whiff.

I agree with Tyler Cowen, who says about the NYT, “The best parts of the Op-Ed section are indispensable… The worst Op-Eds are beyond the pale in their deficient reasoning, and there are quite a few of them... Perhaps most importantly, the NYT has all sorts of random articles that are just great, even if I don’t always like the framing.” I think it would be fair to say I have a love-dislike relationship with the New York Times. I have the utmost respect for their quality of writing, but am worried that their bias is leading to coverage bordering on incoherent platitudes.

To drive the point home, the New York Times recently published an article about the current travails in Venezuela. It included this humdinger that left me speechless:

If the election decision holds and Mr. Maduro remains in power, he will carry Chavismo, the country’s socialist-inspired movement, into its third decade in Venezuela. Founded by former President Hugo Chávez, Mr. Maduro’s mentor, the movement initially promised to lift millions out of poverty. For a time it did. But in recent years, the socialist model has given way to brutal capitalism, economists say, with a small state-connected minority controlling much of the nation’s wealth.”

The socialist model has given way to brutal capitalism? You have to be kidding me. What even is “brutal capitalism”? Venezuela does not have capitalism. Venezuela has socialism. It has for the last quarter century. It defies logic to argue otherwise. In 1998, Hugo Chavez was elected president of Venezuela. His party’s central platform was that Venezuela needed a new constitution, one that didn’t favor the current elites. That new constitution became law in 1999. Since then, Chavez’s political party has held on to power, first as the Fifth Republic Movement and then as the United Socialist Party of Venezuela (PSUV). Chavez even amended the constitution in 2009 to get rid of those pesky term limits, the same term limits his party supported a decade earlier, so he could remain in power forever. Socialists have run the show in Venezuela, without interruption, for 26 years.

To say Venezuela was socialist when it was lifting millions out of poverty, but that it was brutally capitalist when the economy collapsed is utter nonsense. It was socialist then and it’s socialist now. Clearly, the journalists behind this article have some unstated belief that good=socialism and bad=capitalism. This is the type of thinking you expect from a fine arts major at Oberlin, not someone with years of experience writing for one of the world’s most respected media outlets. That isn’t to say the opposite is true, and that good=capitalism and bad=socialism. I prefer capitalism to socialism and think the data shows that capitalism is a superior system (would you rather live in North Korea or South Korea? West Germany or East Germany? Cuba or the Dominican Republic?). History is full, however, of socialist and capitalist political parties that have done a good job managing their countries. It’s also full of examples of socialist and capitalist political parties that have done a bad job. Neither socialism or capitalism is automatically a good or bad thing.

The reductive thinking is most obvious in the brutal capitalism sentence. If, to be successful in a given country, one has to be “state-connected”, then the system is by definition not capitalist. Nor is it necessarily socialist. It’s statist. Statism is where the government runs the economy. Whether the elite are officially state actors (as you see in China) or superficially private business owners (as you see in Russia) is irrelevant. The latter might have been given the moniker crony capitalism, but that’s inaccurate terminology. Capitalism fails when those not connected to the state are allowed to harm others. Statism fails when those connected to the state are allowed to harm others. Venezuela is the latter. And it’s done so under a socialist political party that has been in power so long that most Venezuelans have no memories of any alternative.

Was Venezuela’s socialist party successful for a while? Absolutely. Was it because they were socialist? That’s more a manner of opinion. It’s important to note just how catastrophic the situation in Venezuela has become. When Chavez took power, Venezuela was the wealthiest country in South America. It sounds absurd now, but for decades, Colombians had been migrating en masse to their eastern neighbor. Venezuela certainly had its problems, notably yawning inequality, but it was doing fairly well. That relative prosperity depended on oil. Venezuela was one of the world’s largest producers and exporters of oil throughout the 1980s and 1990s. Much of that wealth, however, accrued to the rich. The oil industry was made up of one state-owned company, PDVSA. Unlike other nations, where independent firms search for oil, pump it out of the ground, and refine it, the oil industry of Venezuela was as much a part of the government as the military.

When Chavez took power, he started anti-poverty programs with oil money that funded infrastructure development and welfare payments. He also, however, stripped the state-owned oil company of its independence. Instead of appointing qualified people to run the engine that powered Venezuela’s economy, only those who were loyal to Hugo Chavez were allowed to manage the golden goose. The results were noticeable immediately. In 2002, massive protests against his mismanagement began. That same year, workers for the PDVSA went on strike. Chavez doubled down, and anyone disloyal to the socialist mission of the government was removed.

For a time this went ok. Two factors enabled this. First, the world underwent a massive commodity boom in the 2000s. Driven largely by China, virtually all developing nations with established resource extraction did well. Second, plain inertia kept things going. Appointing government lackeys to run a complicated industry may work for a few years, but over time more and more holdovers will retire or resign until no expertise is left. The result is clear in this country-defining chart that shows once the collapse began, it led to a freefall:

The socialists of Venezuela, through deliberate action, killed the engine of their economy. Could a non-socialist government have made the same mistake? Absolutely. Military juntas have similar track records in other countries. Both are statist. But socialism does preach that valuable resources should be managed by the government. If the oil industry would have been allowed to develop under the capitalism, where jobs, at least in part, go to the most qualified, this would not have happened. Instead, having a single oil company run by the government enabled a single political party to strangle the source of its success.

The results have been catastrophic. Venezuela has gone through the largest economic contraction in history by a country not involved in a war. An astounding fifth of the pre-crisis population has emigrated. The nation has gone from South America’s wealthiest to one of its poorest. Crime is rampant, electricity intermittent. To say that this is because a socialist party turned to “brutal capitalism” betrays the tired and unfalsifiable belief that real socialism hasn’t been tried and if only it would, success would follow.

Venezuelans deserve better from their government. And Americans deserve better from our media.