By a decisive margin, Venezuelan voters removed all term limits for officeholders yesterday. And they did something else, at least according to President Hugo Chavez, who will now be allowed to run for a third consecutive term in 2012.  “Those who voted ‘yes’ today voted for socialism, for revolution,” he said.

In a sense, the pudgy revolutionary is right.  Yesterday’s referendum was a setback of enormous proportions for representative governance and capitalism in Venezuela.
Chavez evidently wants to be president for life, but in his public pronouncements he talks about leading the country until 2049, when he will be 95.  “Effectively this will become a dictatorship,” says opposition leader Omar Barboza.  Just about everyone agrees.  Now in control of the government, Boss Hugo can do what he wants.

Maybe.  The one thing Chavez cannot do is control the price of oil, which makes up 94 percent of his country’s exports and produces about half of the national government’s revenue.  His current budget assumes oil will average $60 a barrel, but it is now about $37.  Global energy markets have figured out that we’re in a severe and long downturn, so oil prices will stay low.  Even if producers can force prices up, they will be able to do so only with drastic production cuts, which will end up reducing proceeds to governments like Venezuela’s.  The problem is even worse than that for Chavez because his “21st-century socialism” has led to results that 20th century socialists would find familiar.  For instance, his state oil company, PDVSA, is laying off workers and cannot meet its payroll or pay bills.

Now that Chavez has even more power, he is bound to go overboard and bring his nation to ruin even faster.  The dominant narrative is that the global downturn is proof that capitalism must be tamed, so the world needs another lesson in the power of socialism to destroy wealth and ruin societies.  Let’s all join in thanking President Chavez, who will remind us why collectivism does not work.

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