Lawrence Reed on Bolsonaro’s Presidency, Maduro’s Plight, and the Future of the EU

A wide-ranging conversation with FEE President Lawrence Reed.

Editor's Note: This article is a transcript of Lawrence W. Reed's recent interview with Crusoé magazine in Brazil. The Portuguese version of this article can be found here.

1. Why did the Maduro government go bankrupt?

The Maduro government, being a socialist one, was always morally and intellectually bankrupt. It takes a little while for socialist regimes to financially bankrupt themselves and the countries they run, but Chavez and Maduro managed to do it in almost record time. In less than twenty years, they took one of the wealthiest nations in Latin America and turned it into one of the poorest. They proved what Margaret Thatcher famously said—that socialism seems to work “until you run out of other people’s money.”

Call it “Reed’s Law” if you want to: The time it takes for socialists to destroy an economy depends on how quickly they implement socialism. Sip the poison slowly and the patient may live decades. Drink it from a fire hydrant and the patient goes fast. Either way, it’s still poison. Socialism is nothing more than a scheme to steal and redistribute, which eventually kills off production. That’s why I say that in those countries where partial socialism seems to “work,” it’s only because the capitalism they haven’t yet destroyed is keeping them alive.

Economic bankruptcy is the inevitable outcome of policies that crush entrepreneurship, wealth creation, and private property. Socialism is nothing more than a scheme to steal and redistribute, which eventually kills off production. It’s rooted in hate, anger, envy and victimology—an evil concoction that never ends well.

The Chavez/Maduro governments confiscated property and then put bureaucrats and generals in charge of it. They imposed all kinds of idiotic controls—on prices, rents, exports, imports, etc., none of which have worked in the last 5,000 years. Then they printed paper money until it was worthless. This is what the Austrian economist Ludwig von Mises called “planned chaos.” Why would any reasonable person expect anything but bankruptcy from such a toxic brew?

2. Why is Maduro still in power?

He has lots of guns and bullets—almost all of them, in fact. In other words, brute force. Because socialism concentrates and monopolizes power, ordinary people are helpless until they can find the courage en masse to rise up and liberate themselves. Maduro uses public funds to buy off the top military people, who know that if the regime is removed, they may have to answer for their crimes. He also exerts considerable control over who gets food and who doesn’t.

The opposition has previously been divided, unorganized, and demoralized. That is now changing, and I predict that Maduro will be gone soon.

Never underestimate the power of people whose patience has run out, who are determined to free themselves.

This can happen very quickly. I remember being in Poland in November 1989, celebrating the end of communism in Eastern Europe. Over dinner in Warsaw one evening as word came that the “Velvet Revolution” was underway in neighboring Czechoslovakia, I asked a Polish friend, “When do you think the Ceaucescu dictatorship in Romania will fall?” He shook his head and said, “That will take a long time because his security apparatus is so powerful.” As it turned out, Ceaucescu was gone the very next month.

Never underestimate the power of people whose patience has run out, who are determined to free themselves.

3. What lessons can the Maduro government give to Latin America?

Lessons from the tragedy of Venezuelan socialism are huge and numerous. They apply to every country, not only those in Latin America.

Power attracts the corrupt and corrupts them even further.

First, don’t buy into what Nobel Prize-winning economist F. A. Hayek called “the fatal conceit.” That’s the idea that an elite can plan society, that they can just push people around like pawns on a chessboard and create an earthly Utopia. When adults combine that arrogant, childish fantasy with guns and political power, the result is always violent and regressive. Always. Power attracts the corrupt and corrupts them even further.

A second lesson is this: Government has nothing to give anybody except what it first takes from somebody, and a government big enough to give you everything you want is big enough to take away everything you’ve got. Government is essentially redistributive, not creative. When it keeps the peace, it’s a good thing. When it decides to be your nanny, your doctor, your teacher, your news media, your gas station, and your restaurant, it only disturbs the peace.

A third lesson is aimed especially at all those people everywhere who have ambitions to run other people’s lives: Your days are numbered. If you live by the sword, the chances are good that you’ll die by it, too. You will answer, sooner or later, for your stupidity and your hubris. You will be remembered someday as trash without a conscience. So you may want to rethink your premises and find another line of work.

4. How can it shape leftist parties in the region?

One can hope that from Venezuela’s experience, so-called leftist parties will learn to stop worshiping the state. Maybe they will learn basic economics. Most importantly, we can hope they learn that legalized plunder and buying votes with other people’s money are dead-end streets.

At the very least, perhaps the leftist parties in the region will learn to rely less on “good intentions” and more on actual results.

5. Why are Russians supporting Maduro? Does it have something to do with the Soviet Union?

The Russian government probably does have a lot of nostalgia for the old days when the country was a much bigger player on the world stage. I wish it would just get over it and focus on its own country’s affairs. Of course, that’s the same advice I would give every government, including the one in Washington.

As the Chavez/Maduro regime vilified America and its allies, it sought closer relations with communist and former communist governments. It made deals with Russia and China, so the Russians and the Chinese have a stake in Venezuela. They’re all tied up together in a web of deals regarding oil, debt, and other stuff.

6. You’ve commented about “Reed's Law.” When did you create it? Did you propagate it before?

I’ve said it many times in speeches and in articles, but it didn’t occur to me until this interview to put my name to it. So your magazine is the first!

Every year seems to bring confirmation of it: The time it takes for socialists to destroy an economy depends on how quickly they implement socialism. One of the greatest economists of all time and one whose thinking has greatly influenced mine, Ludwig von Mises, said something similar but even more profound:

A man who chooses between drinking a glass of milk and a glass of a solution of potassium cyanide does not choose between two beverages; he chooses between life and death. A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society.

Socialism aims to accomplish three objectives: 1) the forcible redistribution of wealth; 2) government ownership of the means of production; and 3) the concentration of power to plan and command the economy. None of those things is productive, efficient, or moral, and all of them require coercion. So right from the start, socialism eats away at productivity, efficiency, and morality. The more socialism you have, the quicker you flush your country down the economic toilet.

7. How do you consider the Trump presidency? Are his policies in favor of more liberalism, private initiative, and free markets?

The Trump administration is a mix of good, bad, and in between. On the good side, it has accomplished considerable deregulation and tax cuts. Judicial appointments have been largely very good because the men and women chosen are serious people. They do not see the Constitution as a plaything to push aside when you want to grow government.

On the bad side, the reckless spending of the previous administration is continuing, and it’s piling up mountains of debt. So far, there’s been no focus on fixing the long-term fiscal problem of unsustainable entitlement (welfare state) spending. Budget deficits, in spite of strong economic growth, are getting bigger instead of smaller. These are awful trends that neither party seems willing to address but which will produce a crisis in the future if not dealt with.

The trade war is not helping. If it ends up causing everybody to reduce tariffs, then I’ll applaud that. But for now, it’s causing enormous costs and dislocations, which is historically what trade wars always do.

And I do wish the president were more articulate and possessed even a small portion of the grace, temperament, and likeability of a Ronald Reagan. Because of his abrasive, overly-sensitive personality, he shoots himself in the foot even when he’s right. But it’s still hard for me to see the last two years as anything but much better than what we would likely have gotten under Hillary Clinton.

8. How do you consider Brexit? Are Brits doing the right thing in leaving the European Union?

Given the massive, intrusive bureaucracy and regulatory apparatus that the EU has built, I don’t think the Brits had any choice but to leave. Margaret Thatcher was right about where the EU would likely go if given the chance—in the direction of centralizing power in a giant super-state. Better to get out now than to be dragged further into that morass. If the EU had just focused from the start on a truly free-trade zone without the centralization, it would have been a great idea.

The problem now is, of course, how to get out of it. A so-called “hard Brexit” that has no deal with the EU is a real possibility at the end of March. I’m one who believes the danger of that is overblown and that Britain would come through it in good shape and be the happier for it. Much will depend, however, on Britain’s ability to negotiate free trade agreements on its own. I’m afraid the European project is too ambitious, too controlling, and too corrupt to prevail. I think the US should move quickly to adopt free trade with the Brits and offer the same to the rest of Europe if it relents on its attempts to punish Britain.

As to the long-term prognosis, I’m afraid the European project is too ambitious, too controlling, and too corrupt to prevail. Britain isn’t the only country unhappy with it. It’s fraying at all its edges, mainly because it has attempted to do too much at the expense of freedom and national sovereignty.

9. Do you have any opinion about the Bolsonaro government?

I am guardedly optimistic about the Bolsonaro government. It faces huge challenges that stem from so many years of deep corruption and one-party rule. If you have the cancer of socialism, you don’t just take a policy aspirin. You have to cut it out and throw it away. Its general direction is what Brazil desperately needs: improving the business climate, cutting down big government, rooting out cronyism, and fighting socialism in all its guises. If President Bolsonaro can do these things faster, he should. He should take advantage of this natural “honeymoon” period to get as much done as possible, especially the painful things that must be implemented for prosperity to return.

In two or three years, we’ll know how successful the Bolsonaro government is by just how much bigger or smaller the central government is. If he doesn’t make a huge dent in that, if government is actually bigger than it was, then we have to say it was a failure. He must be bold and decisive and steadfast. If you have the cancer of socialism, you don’t just take a policy aspirin. You have to cut it out and throw it away.

Even so, it’s not enough for policies to change. Public opinion must shift too—toward a greater appreciation for things like private property, liberty, entrepreneurship, free markets, personal responsibility, and character. So there has to be a concerted effort to educate and inspire Brazilians in these ideas once again.

Bolsonaro should listen to the good people at organizations like Mises Brasil and Objetivismo Brasil in Sao Paulo; Instituto de Formacao de Lideres (in several cities); Instituto Liberal, Livres, and Instituto Millenium in Rio de Janeiro; Instituto Atlantos, Instituto de Estudos Empresariais and Instituto Liberdade in Porto Alegre; Clube Farroupilha in Santa Maria; Líderes do Amanhã and Grupo Domingos Martins in Vitória; the Instituto Liberdade e Justiça in Goiânia; Grupo de Estudos Dragão do Mar in Fortaleza; the Instituto Antônio Lacerda in Salvador; and the Center for Economic Freedom at Mackenzie Presbyterian University in Sao Paulo. They and others are doing great work to educate for liberty.

10. How can socialist ideas prevail for so long in countries like Brazil, even with socialist countries elsewhere going bankrupt?

Socialism makes endless promises that are mostly empty temptations that carry enormous costs, but they are still powerful. The politicians will take care of you! They will know what to do! They will give you stuff! They will do it now! Of course, the politicians who promise these things are, like everyone else, thinking mostly of power, money, and glory for themselves.

People must think long-term, not just for the moment. Socialism always sounds good today but inevitably produces disaster tomorrow. People must understand that the best security comes from self-reliance, personal independence, family and friends, and civil society institutions, not from politics. Socialist ideas prevail when people neglect the importance of character or fail to think of the long-term.

11. Why are there so many socialist teachers in schools? Is it a global phenomenon?

That’s like asking why are there so many Catholics in cathedrals. That’s where Catholics go!

When schools are owned and run by governments, over time they become a magnet for people who will faithfully teach what the government wants them to. Teachers work for the government, and they (many of them) want the government to get bigger. That should surprise no one. Governments should never be expected to teach either liberty or character. They can’t and they won’t because it’s not in government’s interest to do so. Indoctrination is more important to governments than education.

Yes, this a global phenomenon. And it’s a good reason to separate school and state everywhere. I don’t trust the government to do a good job running schools any more than I would trust it to do a good job running restaurants or oil companies.

12. Will the Venezuelan's dictatorship fall by itself or do you think a foreign military intervention may be needed?

I fear that military intervention from the US would backfire and give Maduro some legitimacy he does not deserve.

The Maduro dictatorship would probably fall of its own accord sooner or later because of socialism’s inherent defects, though it might take enormous bloodshed. But I am hoping and expecting that the people of Venezuela, with the support of the international community, will push it off the cliff in a matter of weeks.

Few things would please me more than to see Maduro and his criminal cronies face justice. The best scenario is for this to happen entirely from within the country. If neighboring countries in the region want to step in, that’s up to them. I fear, however, that military intervention from the US would backfire and give Maduro some legitimacy he does not deserve. For your readers who may be interested, I recently wrote an article suggesting things that a free Venezuela will need to do to put the country on the road to recovery, you can view it here.