Category Archives: Conservatism

Psychopathy Is Hard To Diagnose

Justin writes:

How would you distinguish between someone with a massive chip on the shoulder and an annoying obsession with one idea, it can be any idea, as opposed to some sociopathic, or is it the same thing?

For instance, I told you all about the smart homophobic racist college graduate Trump supporter who, when being around him, you get the impression somebody molested him at some point, lol.

Psychopathy or sociopathy is one of the hardest conditions of all to diagnose, and I work in mental health. Even Hare says he has met sociopaths who he saw every day and it took him up to 6 months-1 year to figure out that they were psychopaths, and Hare is the world’s leading expert on the subject.

I asked my last therapist whether a good psychopath could fool him, and he said no. But then he thought a bit and said, “Some of them are pretty slick, let’s put it that way.” He then said then he often could not spot the right away, but given enough time, he could spot one for sure. He also said that he had dealt with many sociopaths in his career and that they were completely hopeless and incurable. He was a Clinical Psychologist with a 160 IQ, and he was one of the smartest men I have ever met. He was also a superb clinician.

I have been studying psychopaths for decades, and I still do not understand them. If you want to understand psychopaths, study the condition. Study it as much as you wish – the more the better. After a while, you may well meet a few people in real life who resemble the folks you have been studying.

In response to the question, the terms insufferable asshole, scumbag, piece of crap, lowlife, dirtbag, lousy person, amoral prick and even criminal are not the synonyms for the word psychopath. Sure, sociopaths are usually very lousy human beings who can typically be characterized as above, but not all lousy people and POS’s are sociopaths! A sociopath is a particular sort of scumbag, and they are a lot different than your ordinary dickwad.

There is also a difference between sociopathic behavior and being an actual sociopath. Many high positions in business and politics nearly require you to behave like a sociopath. However, the people forced to behave that way may or may not be sociopaths. I do not think Obama is a sociopath because, while of course he acts like one (you have to act like a psychopath to be President of the US), I get the feeling that he resents being forced to act like a dick, and he also feels guilty about it.

He also seems to be rebelling against a lot of the more sociopathic policies that his aides and agencies are always pushing him into. I feel the same way about Joe Biden. Biden actaully feels bad at being forced to act like a monster.

But John Kerry and Hillary Clinton really scare me. I have long thought that Kerry is sociopathic and I started thinking that about Hillary as well. Many of the new neoconservatives seem sociopathic and in fact, one can argue that neoconservatism in and of itself is a sociopathic philosophy.


Filed under Conservatism, Democrats, Mental Illness, Neoconservatism, Obama, Personality Disorders, Political Science, Politics, Psychology, Psychopathology, Psychotherapy, Sociopathy, US Politics

Leo Strauss and the Neoconservatives

Quite of a few of the most prominent neoconservatives struck me as as sociopathic. In fact, their hero, Leo Strauss, seemed like a psychopath himself to me. Strauss supported the Nazi regime until it started to go after the Jews. What most do not know is that many German Jews were incipient Nazis and they supported the Nazis until they went after their own kind.

Some of Strauss’ most famous works were written almost like crossword puzzles. They were supposedly analyses of Plato or other major philosophers, but they were written in this sort of “code” in which there was another, usually sinister, reading deep down inside. The Straussians were a cult of grad students and later professors who formed a Straussian “cult” whereby they were the “keepers of the Straussian flame” who had “access to the sacred Straussian texts,” and so were in a sense in on a big secret known only to themselves. Almost like Masons with their secret handshakes.

Strauss of course was a Jew, and many of the Straussians were Jews. Paul Wolfowitz was a prominent Straussian. Straussians are at heart nasty, fascist-like people who believe like Nazis that “the masses are asses,” are too stupid to govern themselves and therefore must be led by an aristocratic ruling class. Straussians are quite clear that the aristocrats must rule the peons (you, me and everyone not an aristocrat). Hannah Arendt, another much more humanistic Jewish philosopher, famously took Strauss to task over his views and more or less accused him of promoting fascism.

Along the same lines, Straussianism can be summed up as “the strong must rule the weak,” because the masses, in addition to being idiots, are also weak people. Society can only be ruled by the strong and not by the weak. If the weak rule, moral rot sets in along with cultural decay and what Straussians would call “too much democracy,” which is synonymous with the lack of aristocratic rule.

Straussians actually believe that the aristocratic rulers of society must start wars every now and then in order to keep the people strong-minded and to keep weakness and moral rot from setting in. They also believe that the people must be distracted with “bread and circuses” which the masses, being weak-minded idiots, will of course fall for, which will leave the aristocratic rulers of society to do as they please. In these senses, especially in the democracy causing weakness and moral rot and the need to start wars now and again to prevent this, Strauss resembles modern European philosophers like Kojeve.

Straussians also believe in “the necessity of the lie.” This is dressed up in moral clothing by calling it “the necessity of the noble lie,” but if you see the sort of things that Straussians push for, it’s clear that a lot of the lies that they tell are not so noble. Aristocrats love to dress up their self-serving and anti-Democratic policies in moral language because it makes them feel better about what they are doing, and it makes their program go down easier with the masses.

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Filed under Conservatism, Culture, Europe, European, Fascism, Germany, Government, History, Jews, Modern, National Socialism, Nazism, Neoconservatism, Philosophy, Political Science, Politics, Psychology, Race/Ethnicity, Regional, Sociopathy, War

Robert Stark Interviews Ray Sawhill

Great interview. A bit too conservative for my tastes, and he is obviously very much into money and moneyed people, which is another major turnoff to me, but besides that, I found this interview very much worth listening to. Very smart guy and talks about a lot of things of relevance to this blog.

Interview here.

Ray Sawhill worked as an arts and culture reporter for Newsweek. He has also written for and blogs at Uncouth Reflections as Paleo Retiree. He splits his time between New York and Santa Barbara.

Topics include:

How Robert and Ray both have personal connections to Santa Barbara and how the city is almost too idyllic.
Crime fiction novelist Ross Macdonald whose work captures Santa Barbara.
Santa Barbara as a place with strict zoning laws that was modeled after Andalusia in Spain.
The contrast between life in Santa Barbara and New York City.
How New York City has changed in Ray’s time there in the 70’s, 80’s and 90’s.
How cuisine is the one area that has seen increased innovation in New York.
Ray’s cameo in the film Exposed set in New York in 1983 staring Nastassja Kinski.
How films such as Exposed and Taxi Driver are documentaries for New York in that era.
The new peculiarly-shaped skyscrapers going up in New York today.
“See through buildings” where wealthy foreigners are buying up real estate in New York and leaving them empty.
How Ray is drawn to architecture because it is art you can experience and changes the world in a way that regular art doesn’t.
How most of the general public has little input and interest in architecture.
How places without zoning laws tend to lack any aesthetic value.
How the main rule in urbanism is not to do anything that harms the city.
Art Deco and how it succeeds in bringing tradition into one.
Architectural Revivalism which seeks to recreate older forms of architecture
Robert Stark’s Artwork.
Ray’s work at Newsweek as a reporters covering art, culture, literature, film, and theatre.
How Ray’s most significant interviews were with writers Philip Roth and John Updike, filmmakers Francis Coppola and Robert Altman and architect Christopher Alexander.
How conservatives tend to avoid culture and leave that domain to the Left.
English Philosopher Roger Scruton as a model for a cultured conservative.
Front Porch Anarchist Bill Kauffman.
New Urbanism.
The The Retro Cocktail and Locavore movements.
James Howard Kunstler.
Ray’s involvement with Environmentalism and Bioregional Anarchism.
How the environmental movement abandoned the overpopulation issue due to political correctness and mass immigration.
The Alternative Right.
How the real political divide is between globalism and decentralization
Cultural trends and how Ray views himself as a cultural radar.
The trend towards a focus on muscles for young men and men are more self-conscious about their bodies.
The value of pleasure and leisure.
Erotica and the debate about what’s art and what’s pornography.
Controversial nude photographer Jock Sturges, who Ray interviewed.
How society is a taking contradictory paths towards lewdness and prudishness.
Students Still Sweat, They Just Don’t Shower.
How having taste and style has become equated with homosexuality.
Young women moving to New York City because of Sex and the City.
Sex Scenes which is a raunchy, satirical audio entertainment that Ray created with his wife playwright Polly FrostCheck it out.



Filed under Art, California, Cinema, Conservatism, Culture, Environmentalism, Europe, Gender Studies, Homosexuality, Immigration, Left, Literature, Man World, Northeast, Philosophy, Photography, Political Science, Politics, Pornography, Regional, Sex, Sociology, Spain, Urban Studies, USA, West

Robert Stark Interviews Bay Area Guy about the New American Civil Wars

Superb interview with Bay Area Guy, a former commenter on this blog who went off with another frequent commenter here to form their own site, Occident Invicta. Many of the more conservative commenters here actually followed BAG and Dota over to their new site, which is quite ok by me.

This interview is superb, and I agree with most things that Bay Area Guy says here. I wish BAG would not be so serious, but maybe that’s just the way he is. Radical Centrism sounds like something I could really get behind, and maybe a lot of you commenters could too.

Interview here.

Robert Stark and co-host Alex von Goldstein talk to Bay Area-based blogger Bay Area Guy of Occident Invicta.

Topics include:

How Bay Area Guy is one of the Alt-Right’s few Bernie Sanders supporters.
How Bernie Sanders was the only candidate to not attend AIPAC, and Bay Area Guy’s view that the Alt-Right gave Trump a free pass for pandering to AIPAC and the Neocons.
How the most crucial aspect of Trump’s campaign is his role in expanding the Overton window and undermining the establishment.
How Trump supporters are primarily anti-establishment rather than conservative ideologues.
How Donald Trump is running to the left of Hillary Clinton and whether he will appeal to disaffected Sanders supporters.
Red State article about Trump Democrats “ruining” the GOP, who are described as racist Democrats who want handouts for White people.
The decline of Conservative Inc.
How the political coalitions on the left are also breaking down.
How Bernie Sanders undermines the Neoliberal/Social Justice Warrior Alliance.
Thomas Frank’s (What’s the Matter with Kansas?) new book Listen, Liberal: Or, What Ever Happened to the Party of the People
Social Justice, Social Darwinism, and the Curious Case of SF’s Housing Squeeze
Steve Sailer’s article San Fran Whitening Plan.
The civil war among the Bay Area’s Left on the housing issue, including wealthy NIMBY‘s, anti-capitalist anti-gentrification activists, and pro-density groups such as BARF.
Michael Hudson’s book Killing the Host about the FIRE economy based on the Finance, Insurance, and Real Estate sectors.
London’s new Muslim mayor Sadiq Khan, and how Bay Area Guy views him as another Identitarian neoliberal like Obama.
The California Senate Race and how the Democratic front runner Kamala Harris also fits that mold.
Why Bay Area Guy views the Democratic runner-up Loretta Sanchez as preferable to Harris.
Senate Candidate Ron Unz’ Radical Centrist Platform, which combines the best aspects of the Left, Right, and Libertarianism, and how Radical Centrism is an emerging trend in politics.


Filed under Britain, California, Capitalism, Conservatism, Democrats, Economics, Europe, Left, Liberalism, Libertarianism, Neoconservatism, Neoliberalism, Political Science, Politics, Regional, Republicans, Sociology, Urban Studies, US Politics, USA, West

Daily Stormer Hits a New Low

Here. Just when you thought Anglin couldn’t stoop any further, he just did. He’s so low now his feet are halfway to China, I swear.

And Anglin’s site is the world’s number one Alt Right site. I could actually believe that. And I guess the mask is off for good now. Alt Righters are exactly what we always thought they were: a bunch of Nazis!



Filed under Conservatism, Crime, Florida, Political Science, Racism, Regional, South, Terrorism, USA, White Nationalism

The Birth of the Neocons

Judith Mirville writes:…Actually the neocons that used to write in Commentary started out as American populists of a more enlightened kind opposing the mainstream view of the Jewish university world they stemmed from.

Another hotbed of American neoconservatism was disappointment with the new Negro delinquent culture stemming from the Civil Rights period, the very same disappointment the White majority felt, when many Jewish activists that had fought for Southern Black emancipation while dreaming the spirit of classy jazz would rule American culture at last and prevail over trite Western ballads faced what was to become the gangster rap culture instead. Neoconservatism is a very broad movement to which many dissident and contradictory figures such as Lyndon Larouche (also a former Trotskyite) also belong.

La Rouche is a neocon? I do not know what to make of that.

But the rest is all correct.

In the first part, Judith discusses neoconservatism as a movement against the Leftwing Jewish culture that had sprung up via the universities and Jewish intellectuals. This was what I would call a rightwing Jewish movement of reaction against the Jewish New Left represented by the universities and intellectuals.

But there was more to it than that. The neocons were at core conservative Jews who are appalled by the excesses of the counterculture, which itself was heavily Jewish and often had Jewish leaders. They were like the Jewish parents reacting in disgust against their rebellious Jewish hippie sons and daughters. They were disturbed not just by the Counterculture’s politics but also by what the neocons saw as a basic lack of civilized behavior and work ethic replaced with hedonism, sexual license, all manner of drug-taking and slovenliness. The neocons were outraged by this movement and did not want to be associated with it as Jews, hence their rebellion.

Something else happened: the Six Day War in 1967. This was the turning point in US Jewish culture when US Jews finally all fell in line in support of Israel. Not coincidentally, this is also when the US itself started to massively support Israel, due in part no doubt to powerful Jewish lobbying.

However, the American people also fell into line, as they saw plucky Israel, outpost of Western values, being threatened with another Holocaust by unshaven, uncouth, uncivilized and un-Judeo-Christian Muslim Arab-Nazis. The overwhelmingly Jewish media went wild with propaganda during this war. I remember it. I was 10 years old, and I remember the headlines in Life Magazine. The press played it up like the Second Holocaust of the Jews was soon to be visited on millions of Jews in the Levant.

The second point Judith makes is very important, and there is a seminal essay by Norman Podhoretz, father of John Podhoretz, along these lines, although I do not recall the name of it. Norman was one of the first neocons at Commentary, and John has long been a leading neocon figure. The essay appeared in the early 1960’s in the Jewish press, possibly in Commentary. The topic of the essay is exactly what Judith refers to: the pain and sense of loss felt by Jewish liberals like Norman who had worked so hard for the Liberation of the Blacks only to see their handiwork degenerate into mass crime and chaos.

The article also references Black criminals preying on Jews, often elderly Jews, who remained in the large cities. These older Jews were often the parents of the younger pre-neocons. The piece has a poignant tone. Norman seems to be saying that he is still a good liberal, he still loves Blacks, and he doesn’t want to be racist…but…it’s hard. It’s hard not to be racist considering the wreckage Black criminals and rioters were visiting on the cities and especially the parents of Norman’s generation. Towards the end of the essay, Norman equivocates and wonders whether it was all worth it.

At this time, Norman was still a good Jewish Civil Rights liberal, or at least he comes across that way. He seems to be struggling internally not to be racist…but…it’s hard.

This is one of the seminal essays of the late 20th Century, and if you are interested, you ought to go see if you can dig it up and read it. It is also very well-written; Norman was an eloquent writer. And it’s a bit sad too.

So in reaction to what these Jews saw as Black ingratitude towards Jews for helping them in Civil Rights, the neocon movement sprung up as sort of a counter to the blissful liberal antiracism of the time. The reaction was not so much racist as what I might call Jewish Race Redpill or maybe Jewish Race Realism.

It was these three things: reaction against the Counterculture, reaction against the wreckage of the Civil Rights movement, and a new passionate embrace of the Israeli state, that birthed the pre-neocons in the 1960’s, even though the first actual neocon intellectuals and publications did not appear until the early 1970’s.


Filed under Anti-Racism, Arabs, Blacks, Civil Rights, Conservatism, Culture, Israel, Israel-Palestine Conflict, Jews, Left, Liberalism, Middle East, Neoconservatism, Political Science, Race Relations, Race/Ethnicity, Regional, Sociology, War

The Enemy Is Populism

From a friend of mine:

It is obvious to me the two forces which (justifiably or not) fear a Trump presidency the most are the Robert Kagan Jewish neocons (he just wrote another attack piece) and the “small government free-trading business conservative oligarchs.”

It’s not so much the Jews as it is the neocons. Neoconservatism is nothing more than the foreign policy (ramped up US imperialism) of the US elite. Hillary is a neocon. Bernie Sanders is a neocon. The only one who is not a neocon is Trump and that is why they hate him so much. Before that was the rightwing populist Pat Buchanan who also rejected neoconservatism.

Those “Robert Kagan Jewish neocons” are nothing more than the people who run US foreign policy right now, except that they are not all Jews. The Gentiles are all like this too. Hillary was a neocon Secretary of State. Now John Kerry is a neocon Secretary of State. They represent both the Republican and Democratic Parties, with the wilder neocons in the Republican Party and the less wild but still very dangerous ones in the Democratic Party.

Obama has always been a bit dubious of this sort of thing, but he has been captured by his advisors.

Of all of the Presidential candidates, only Trump has gone against neoconservatism and even realism, both of which are internationalist, interventionist and imperialist projects. Trump is pushing good old fashioned rightwing populist isolationism, which was once very popular back in the 1930’s. Pat Buchanan was also pushing something somewhat similar. Trump is not ideal in terms of a noninterventionism and isolationism, but he’s pushing the most nationalist and anti-internationalist foreign policy of any Presidential candidate  in recent memory. One would have to go back to the 1930’s to find anything similar.

The domestic policy of the elite is free trade austerity neoliberalism. On this, the parties do not differ much either as both the Republican Democratic Establishments are committed to this project. The Republicans are simply a lot more vicious about it, while the Democrats wish to retain some protections for the workers and poor who are ruined by Democratic free trade austerity economics.

The alternative is populism or nationalism, a project that puts America and its workers, consumers and environment first, ahead of the interests  of the rich and the corporations. It’s pretty much People Before Profits. Really no one in the Democratic Party supports this except Bernie Sanders. This is exactly what Sanders is pushing.

Trump is also pushing a sort of populism and nationalism, but his is a rightwing nationalist populism, while Bernie’s is a leftwing nationalist populism. Trump rejects or pretends to reject free trade austerity neoliberalism, and this is he real reason why the Republican Establishment was up in arms over him. He’s out to overturn a good part of their ideology that they have built up since Reagan.

Buchanan’s rightwing populist project was pushing something similar, and that’s why the elite was so up in arms over Buchanan too.

This is all really a battle between the populist nationalists and the aristocratic internationalists.

Both parties have committed themselves to an anti-populist, pro-elite internationalism that is catastrophic in terms of its devastation US workers, consumers, ordinary people and the environment. Trump and Sanders both represent populist and somewhat nationalist rebellions of the workers, consumers, ordinary people and environmentalists who have been screwed over by the pro-1% internationalists of both parties for 25 years now.


Filed under Conservatism, Democrats, Economics, History, Imperialism, Internationalism, Nationalism, Neoconservatism, Neoliberalism, Obama, Political Science, Politics, Republicans, US, US Politics

The Rule of the Masters of the World: “Anything Goes to Get What We Want”

Obama’s early foreign policy advisors were people called foreign policy realists. They’re terrible, but they are lot saner than neocons, which admittedly isn’t saying much. But I will say that the background of their view of the world is at least reality-based. What they want is still sleazy,

Foreign policy realists live in reality, and they see the world as it really is, not as Politics dictates it to be or as Neocons create it to be. Their world view is the opposite of the self-created and -creating fantasy worlds of the neocons, who view reality and changeable and see reality as whatever they want it to be or more accurately what they are going to turn it into.

These folks see themselves as actually in charge or reality or better yet History. They think they are Gods. Reality and surely History is whatever they are going to create it to be. If the truth does not match up to their self-created reality, then the truth is wrong, and the fantasy is what is real. This is the crazy world in which the neocons and people like Bush operate.

Bush’s domestic policy was similar. To these people, there was no objective reality – there was only Politics. Reality was simply whatever Politics dictated that it should be. If truth conflicted with Politics, then truth was wrong.

Their moral philosophy is:

Truth: Whatever is good for or justifies our Politics or ideology.

False: Whatever is bad for or rejects our Politics or ideology.

The neocons of course operate in a similar way. We say the neocons are crazy, but they are not cray at all. Crazy like a fox? Sure. But nuts? No way. They’re more evil than nuts.

We also say that they are idiots, but they are not stupid at all. Instead they are very dangerous and reckless people. We see their danger and recklessness, and we say that they are foolish or stupid, but they are really not either. They’re about as stupid or foolish as Hitler or Stalin.

They’re out to get what they want, and they will do just about anything to get it. If they have to tell a million lies to get what they want, they will do it. If they have to kill people, arrest people, frame people, beat people up, torture people, ruin economies, give people diseases, blow up, ruin or damage perfectly good infrastructure, destroy whole industries, stage military coups, cause violent riots in the streets, assassinate people, they will do it. It’s pretty much anything goes to get what we want.

This is the philosophy of most of the powerful people in the world today: Anything goes to get what we want.


Filed under Dangerous Idiots, Democrats, Ethics, Government, History, Idiots, Neoconservatism, Obama, Philosophy, Political Science, Politics, Republicans, US Politics

One Party

As Bretibart News has previously reported, Ryan’s views on foreign migration, foreign trade, and foreign wars are more similar to Hillary Clinton’s views than those of GOP presumptive nominee Donald Trump.

One party, under Mammon, with freedom and justice for fuck all.

Clinton and Ryan are Republicrats. The Republicrat Party consists of the RINO’s in the RNC and DINO’s in the DNC. They hate each other, and they are very different, but they are more alike than you think. The RNC-DNC “Centrist” coalition is nothing less than the US elite, itself divided into “conservative” and “liberal” wings. Granted, there are strong differences between these wings, but on some issues, they are the best of friends. The Republicrat Party and the Central Committees of both parties simply represent those where the liberal and conservative wings of the US elite agree and unite.

If there is one thing we can say about this area of coinciding interests is that it represents internationalism. The US elite are internationalists, not nationalists. They take the internationalist position on immigration (open borders), trade (“free” trade or the corporate rule of the world) and foreign policy (US imperialism, US hegemony, the US as ruler of the world).

The first two are very bad for US workers. The last is very bad for foreign workers, and US workers get no benefit. All of the three benefit the US rich and multinational corporations. So the Republicrat US elite is opposed to the interests of US and foreign workers and believes in the US and Multinational Corporation Rule of the World. In other words, the US elite are the invade the world, invite the world crowd. This is what the US rich and large corporations want: invade the world, invite the world. let corporations rule the world. There is nothing in any of this for the average US or foreign worker. It’s lose-lose for all of them. It only benefits the bosses, the rentiers and the trust fund kids – the enemies of the workers.

The US elite represents the US rich and multinational corporations, the wealthiest and most powerful Americans. Granted, the US ruling class is split into liberal and conservative wings, but these wings are constrained by their class interests, and on a number of issues, their class interests converge.

Trump, while a member of the elite, is a US nationalist, which makes him odd man out and persona non grata among the internationalist US elite.

This gives added weight to the notion that:

There is no Right and Left anymore, there are only nationalists and internationalists.

– Marine Le Pen, French nationalist


Filed under Conservatism, Democrats, Economics, Immigration, Imperialism, Internationalism, Labor, Liberalism, Nationalism, Neoliberalism, Political Science, Politics, Regional, Republicans, US Politics, USA

In Venezuela, Dismantling a Weapon of Mass Destruction

This is actually one of the main things that is driving the economic crisis in the country – the black market in dollars. Maduro has to get rid of this black market. And the only way to do that is by floating the currency and allowing it to depreciate. This is a rather extreme thing to do though, and most governments balk at letting their currency float like this because there are also sorts of time-bombs and other problems associated with it. On the other hand, there are all sorts of problems associated with using a fixed and overvalued rate of exchange.

Bottom line is Venezuela’s currency is seriously overvalued, and it needs to be allowed to depreciate. Of course the Western press usually sees depreciation of currency as a symptom of economic failure, but that is not necessarily the case at all. The Western media will scream about everything the Chavistas do and call it a failure. At any rate, we are getting to the point where there is no alternative to depreciating the currency, and failure to do so would constitute a serious error on Maduro’s part.

In Venezuela, Dismantling a Weapon of Mass Destruction

By Mark Weisbrot – CEPR

March 25th 2016

The government of Venezuela has often denounced an “economic war” against it, and of course this is part of the current situation. The primary weapon of mass destruction in this war is the black market for the dollar. It is no coincidence that the main source of information for this market – the extreme right-wing DolarToday – is run by someone who played an important role in the U.S.-backed military coup in 2002. He was then an army officer – Colonel Gustavo Díaz Vivas – and he now resides in Alabama, with DolarToday operating out of the U.S.

This is also no coincidence. Washington has been trying to topple the Venezuelan government for at least 15 years, and almost every journalist I have talked to during this time – including from every major international media outlet – has been well aware of this effort; although they almost never write about it.

The black market for the dollar is especially destructive because it is part of an inflation-depreciation spiral that has been growing since the fall of 2012. When the price of a dollar on the black market rises, importers must pay more for the dollars that they need, and this increases inflation. But then the higher inflation encourages more people to buy dollars on the black market, as a store of value. This pushes up the black market dollar price, which increases inflation, in a continuing spiral. In October 2012, inflation was at 18 percent and the black market dollar was at 13 Bf. At the end of 2015, inflation hit 181 percent, and the black market dollar had passed 800.

The main reason that the current spiral does not get even worse is that the economy is in recession. It shrank by 5.7 percent last year. But attempts to stimulate the economy through government spending would likely feed the inflation-depreciation spiral. This means that the economy is currently trapped in recession.

The government must therefore incapacitate this weapon of mass destruction. The only way to do that is to unify the exchange rate.

Many people are afraid of this vital change. Some think that everyone’s savings would suddenly rush into dollars, and the equilibrium rate would be even worse than today’s black market. It is true that many Venezuelans prefer to save in dollars (this is also true in Peru, Uruguay, and other Latin American countries). But they do not want dollars at any price; that is why the black market rate settles at an equilibrium price, e.g., at the current rate of about 1,000. If the government let the currency float – which is what it would have to do in order to terminate the black market – it would also settle at some equilibrium price, and it would be far less than the current black market price.

Others say that the government has no dollars to sell on a floating exchange rate market. But that is not true. Although its current oil revenues are not enough to pay for all of the country’s imports, it has tens of billions of dollars in international assets (and even more internally) that it could sell for cash.

It would need to auction off about 9 to 10 billion dollars a year (about $36 million per day) in order to adequately supply the foreign exchange market. Last year it sold about $12 billion, but about 95 percent of that was sold at extremely low prices of 6.3 and 10. Much of this money was never used for imports, since it could be sold for superprofits on the black market. The whole system creates enormous incentives for corruption.

Interestingly, President Chávez allowed the currency to float on February 12, 2002. In the year prior to this move, there had been a lot of capital flight, and therefore falling Central Bank international reserves. But despite the political instability – this was just two months before the military coup – reserves actually grew after the float, until the oil strike near the end of the year.

Others argue, from the left, that a floating exchange rate is “neoliberalism,” and that keeping the fixed, overvalued rate is “socialist.” But this is also deadly wrong. The worst economic crises of the late 1990s – in Argentina, Brazil, Russia, Indonesia, Thailand, and other countries – were brought on by fixed, overvalued currencies. Most of these fixed, overvalued currencies were strongly supported by the International Monetary Fund and other neoliberals until they collapsed.

It is the black market that is “savage capitalism” – uncontrolled and unregulated. And it is a way of subsidizing capital flight, and feeding the government’s enemies. You give them cheap dollars and they take them out of the country, worsening the balance of payments problem. By contrast, letting the currency float is a way of taxing capital flight: Whoever wants dollars must pay more for them.

And Venezuela is very lucky compared to other countries that have faced this problem: the vast majority of the country’s dollars come to the government through oil revenue. This means that the government will have much more revenue to spend, in domestic currency, when the currency has been floated. It can use this revenue, as well as other funds in domestic currency, to finance subsidies for food and medicine.

This makes much more sense than trying to subsidize food or other essentials through the exchange rate. And the price controls on food are not working very well: Food inflation for 2015 was 300 percent, nearly twice the (181 percent) rate of overall inflation.

Unifying the exchange rate is thus the first and most important step toward economic recovery. Once that is done, it will become possible to address other imbalances and problems – including shortages, price controls, inflation, and economic growth. But first things have to come first.

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Filed under Americas, Capitalism, Conservatism, Economics, Geopolitics, Government, Journalism, Latin America, Neoliberalism, Political Science, Regional, South America, Venezuela