Interview with Venezuelan Libertarian Think Tank Econintech

Ryan Lau and Indri Schaelicke | @RyanLau71R @ISchaelicke

Econintech is a libertarian think tank in Venezuela, one of the only of its kind. They were the first organization to promote Bitcoin as a means of helping combat hyperinflation and advocate for free markets and sound banking. I had the pleasure of interviewing Dr. Rafael Acevedo and Luis Cirocco, the founders of Econintech, alongside 71 Republic’s Vice President of Operations, Indri Schaelicke, at the Mises Institute in Auburn, Alabama. We discussed the roles of Bitcoin and gun control in the Venezuelan crisis, what Americans can do to help, and whether or not there is any glimmer of hope for the socialist country. A transcript (lightly edited for clarity) and audio file of the interview are both below.

Lau: I’m Ryan Lau with Indri Schaelicke representing 71 Republic today, speaking with Luis Cirocco and Rafael Acevedo, who are both from Venezuela, libertarians, and part of the Austrian School (of economics), here to discuss the situation in Venezuela.

Schaelicke: Would you like to introduce yourselves?

Cirocco: Sure; I am Luis Cirocco and I’m an electronics engineer in Venezuela, I teach at the University, economics engineering. With Rafael, I founded our own libertarian think tank to spread the ideas of economic freedom in our country.

Acevedo: I am Rafael Acevedo; I used to be an associate professor at a university in Venezuela. For more than a year, I’ve been living here in the United States. I’m a research associate at Texas Tech University for the Free Market Institute at the moment. I have a Ph.D. in management, a master’s in economics, and my bachelor’s in public accountancy.

Lau: Great. To start off, I was wondering if you guys could talk about your story a little, how you went from Venezuela to the United States, how you became an Austrian or how you became involved in the liberty movement.

Acevedo: That’s a great story because I got my master’s in economics in a mainstream school, of course, as many of the master’s in economics around were. But after I finished my Ph.D., I started to found an institute where we could promote the free market in Venezuela. As we’d never founded an institute with these characteristics, we founded Econintech. Searching on the web, I found, and that’s where the history with this institution starts.

Cirocco: In my case, when I was doing my master’s degree in Venezuela, I met a professor who was a lover of Hayek’s and Mises’ ideas and he first introduced me to Austrian thought. When we came together to found this think tank, Econintech, we started searching around the web for places, institutions, in which we could establish bridges of cooperation. We found the Mises Institute and things have been great.

Lau: That’s great to hear.

Schaelicke: What role are Bitcoin and other cryptocurrencies playing in alleviating the economic crisis in Venezuela, perhaps with black markets?

Acevedo: It’s very interesting, because, at the beginning of our think tank, we started to promote Bitcoin. We were the first think tank in Venezuela that promoted using and saving Bitcoin because it’s the only way to protect your money. The Bolivars, the national currency, depreciate every day. So what happens now? With the volatility problem with Bitcoin, some people are very afraid of investing in Bitcoin, but we have other problems. On the other hand, we have a problem with internet connection. For this reason, people know about Bitcoin and have used it, but at this moment, on the streets, you find more people in the market requesting cash, requesting U.S. dollars, but in cash.

Schaelicke: Which do you think is more viable at the moment, gold or Bitcoin?

Cirocco: I don’t think gold is an option right now for Venezuela. Of course, we would like to all move to the gold standard, but it’s not an option. I think Venezuelans, for commercial reasons and tradition, are more prone to using the U.S. dollar. The use of Bitcoin was expanding in Venezuela up to a certain point, but given the volatility of price and that it hasn’t been established as an official medium of exchange, many people are still reluctant to use it. But I think that volatility is nothing compared to the hyperinflation conditions that we have in Venezuela. So if you had Bolivars, the local currency, it’s much much better for you to try to access Bitcoin or U.S. dollars than to keep the Bolivars. It depreciates every hour.

Acevedo: Yes, but the problem at the moment is the internet connection. Remember that we’re talking about a country in which the minimum wage is $9 per month. So not everybody has a smartphone; it’s very difficult to have access to this technology at the moment.

Lau: Makes sense. Transitioning, how accurate would you say is the media portrayal of the situation as a whole, and on the flip side, is there anything that you think Americans should know that the media is either intentionally omitting or neglecting to say?

Cirocco: I think in general, the media tried to underestimate. I think it’s on purpose, but that’s only my personal point of view. At least many of them underestimate the fact that socialism did not start with Chavez in Venezuela. It started decades before. Chavez was just an exacerbation of the past mistakes made in our economy and a reaction of the huge levels of corruption and mismanagement that we accumulated during 40 years of democracy. He was just a reaction.

It was worse, of course. From democratic socialism, we went to more radical socialism and now, after Chavez, came Maduro, his inheritor. There is total militarization of the economy. It’s practically tyranny. We have noticed that the media tried to underestimate the fact that socialism is the real cause, not mismanagement or a bad government. Of course, we had that, we have a really bad government, we have mismanagement, we have criminals in the government, but that’s not the cause. The cause is socialism, which engendered all of those scourges.

Lau: Going along with that, do you think that with the recent military opposition and Juan Guaido trying to seize power, if he was successful, would it be a radical return to a capitalist economy or more of the same?

Acevedo: First of all, Venezuela has never been a capitalist country, in the whole context. Venezuela has never enjoyed real freedom. Some years in the 1950s, we enjoyed a lot of economic freedom, but we had no civil and political rights. Venezuelans do not trust our military. Why? Because all the components of the army in Venezuela are linked and related to drug trafficking, terrorism, corruption, all of the scourges that socialism brings to all countries where it’s implemented. So the great problem here is that people in other countries think that maybe, changing Maduro and changing some faces in the political arena will solve the problems. But no, that will not suffice. We have to change, completely, this radical system for a radical system of free markets. That’s what we need to do to bring real change.

Cirocco: To make a long story short: no, we do not trust that Guaido is going to command something like a movement towards real capitalism. He’s a social democrat. He belongs to the international socialist organization. I think the best we can aspire for if he gets into power is to have an economic rebound, and that’s not going to be long-run prosperity. The changes, according to our view, must be structural, and he doesn’t agree with that.

Schaelicke: On the popular sentiment of the people: do they still believe in socialism? Or does everyone want to see a big shift like you two are fighting for?

Acevedo: That’s a great question. If you ask 20 Venezuelans: “do you like socialism?”, all of them will say “no”. but when you continue talking with those Venezuelans, they say “we need to liberalize the economy but wait. We need free healthcare, we need free education, we need free or subsidized housing.” So the great problem in Venezuela is the culture. Venezuelans have believed and still believe, in those promises that you, the young Americans, are hearing at this moment: the free stuff. No. If you allow the “for free” culture to be instilled in America, you will lose. That’s what happened in Venezuela. The real answer is no, Venezuelans don’t like the word socialism, but they still believe in the roots of socialism.

Cirocco: If you someday happen to study the story of Venezuela, you’re going to see that the destruction caused by socialism was not all at once. It was progressive through years, decades. It’s so rooted in the Venezuelan culture that it’s too difficult to fight against. I think the best way is the emerging new leadership, especially from young people, who are tired of all of these things from both the official government and the opposition. They are very well-educated in free markets and economic freedom, the ones who can promote all of these ideas, who, maybe in the near future, can take power in Venezuela and change institutions. Once a structural change is produced and people start seeing the benefits of it, then the culture will start to change. But not before.

Lau: Do you see any signs of the culture starting to change, or any other groups with a strong organization trying to promote liberty on a larger scale?

Acevedo: There is a political party in Venezuela, headed by a woman. Supposedly, she declares herself a liberal. But the great problem is not to say you’re a liberal, libertarian, classical liberal. The problem is in the reforms and plans that she proposes. She still wants a central bank, a monetary monopoly for the state. She still wants state ownership of the commanding heights, the strategic sectors. And she still promotes protectionism, mercantilism, protecting the infant industries. That’s a great problem in Venezuela. She still is part of the official opposition.

But there are other groups, very low-profile in Venezuela, that are promoting and learning free-market ideas and want to implement them. In those young people, we have some hope. We believe that maybe in a few years, these young people will take power in a democratic way and implement their ideas. My hope for Venezuela is like Georgia. After communism started a social democracy and became corrupt, new leaders promoted a real free market. That’s my hope with Venezuela.

Schaelicke: Talking about revolutionary change, one of the things that prevents real change in the U.S. on the scale we’ve seen in Venezuela is that there are so many guns in circulation that private citizens possess. That’s always a threat to the government, when there’s a potential that some people rise up with guns. What is the state of gun ownership in socialist Venezuela and do you think that has contributed to the change toward socialism?

Acevedo: Before Chavez, the ownership of guns was restricted, very controlled by the government. But when Chavez arrived, he eliminated completely your right to have a gun. So it’s very difficult to really enjoy your own self-defense if you have no weapons. At the moment, Maduro is supported by maybe 15% of the population. The other 85% do not support the Maduro regime. But the great problem is that 15% has 100% of the guns. Politicians protect the socialist regime by eliminating the right to have guns.

Cirocco: I’m not an expert on that subject, but that’s right. We don’t have the firepower; it’s all concentrated in the hands of the government. There’s no equilibrium there, in terms of a free society to protect their private property and their lives. I think that has contributed. He has all the power, and it’s terribly difficult to remove him from power, especially when you add international collusion and an opposition that doesn’t oppose. That’s how we see it: they just want to change the government, the faces in power, but not the system.

Lau: Do you think that there’s anything Americans can do to help the situation, either to raise awareness or contribute in other ways?

Cirocco: Yes. What’s happening there has to be spread all over the world, through media, especially among young people like you at universities and institutions like the Mises Institute. It has to be known, because this mistake that we made in Venezuela, it shouldn’t happen anywhere else. That’s one of the things here in the states. 20 or 30 years ago, you couldn’t imagine someone like Bernie Sanders or Ocasio-Cortez being considered heroes, but now that’s happening with many people. Not all of the people, of course, but socialist ideas are penetrating society and progressively gaining attention. Those ideas are based on very bad incentives and very bad behavior.

The best way to keep going is to spread your ideas, educate people on the real consequences of socialism. Whether you experience them in the short run or long run, if you go down the path of socialism, sooner or later you’re going to fall. You’re going to have a crashed society. That’s happened everywhere in the history of humanity, so I don’t know why some people say that this time it’s going to work. It’s not possible; it’s a fallacy.

Acevedo: Yes. The best thing that young American people can do, not only for Venezuela but for the United States and the world, is to not believe in the promises that other countries have given. For example, all of the “free” stuff, that’s a scam. That’s garbage. That’s never worked. Even here in the United States, at some point in the future, it would run out of money. You would have no money to support the “free” stuff people are promising. So the best thing you can do is to not believe in socialism. Do not ever believe in socialism.

Schaelicke: What would your response be to someone who does believe in socialism in the U.S. but says that Venezuela is not real socialism?

Cirocco: Haha. That’s an excuse or misinformation. It’s on purpose, spread by the media, in the case of Venezuela. Even in the educational system, since it’s almost all public, that spreads on purpose. Yes, we have mismanagement; we have corruption; we have a bunch of criminals in power and people who haven’t invested in the strategic sectors of the economy. But all of those scourges were caused by socialism and that’s what people have to understand. Socialism causes all of those things. There is no possibility for good socialism against bad socialism.

People like Bernie Sanders tend to point to Scandinavian countries as an example of very good socialism. But what he doesn’t tell people is that those countries were much better when they were not socialist, when they didn’t embrace radical socialist policies, and when they didn’t embrace the welfare state which they are now in. If you look at the economic data of those countries, the performance was much better. The wealth of those countries came before the welfare state, not because of it. That’s the key point. And in fact, performance there has deteriorated over the years with the welfare state and socialist policies that Bernie Sanders admires.

I think it’s a fallacy that there is a socialism that works. It’s, sooner or later, going to drive you to a crashed society because incentives are perverse. People will behave according to incentives because people respond to incentives. I think that’s one of the key lessons that Human Action from Mises teaches us.

Acevedo: Many people say that Venezuela is not real socialism because supposedly, many sectors of the economy are in the hands of the private sector. In other words, there is still private property in many sectors of the economy. But you have to remember something. I recently finished editing a book, Prosperity and Liberty: What Venezuela NeedsIn Chapter 10, Dr. Hugo Faria, a noted Venezuelan economist teaching at the University of Miami, explains this question. He says we have to view the situation in Venezuela like Lenin’s regime. He thought that socialism was compatible with a country having some private property if the commanding heights are owned by the government. That’s what’s happening in Venezuela. All of the commanding heights of the economy are owned by the state; that’s a point that nobody can deny.

Cirocco: You have certain rights for private property. I would say that’s theoretical only, but since you have them, people tend to think that that’s not real socialism. But according to that definition, which comes from Lenin, if you have the commanding heights of the economy under government control, which they call the strategic sectors in Venezuela, such as the oil industry and iron industry, that’s socialism. It doesn’t matter if you have marginal sectors of the economy in the hands of the private sector. As long as you have the commanding heights of the economy under government control, that’s socialism.

Acevedo: Remember that the socialist system needs its own cronies, political capitalism. Socialists need their cronies.

Lau: Right. To wrap things up, do you see any warning signs in today’s America that would indicate that we’re on a similar path to the one Venezuela has been over the last few decades?

Acevedo: Yes. Sadly, I have seen that many young Americans are believing in those promises of Ocasio-Cortez, the Green New Deal, Bernie Sanders. At the moment, everybody wants free education and a free healthcare system. Remember that the United States is my new home. I’m trying to start my life again here. For that reason, I accept and I attend all invitations to speak about Venezuela, to let the people know what would happen in the United States.

I don’t know where or when it will happen. In Venezuela, we needed 60 years of socialism to cause the misery we have today. How many years would it require here in the United States? I don’t know, maybe more than 60, 80, 100 years. But we have to remember that people will be leaving at that time. I want to raise awareness in young people because I really don’t want to see my great-great-grandchildren here in the United States running away as I had to.

Cirocco: In my modest opinion, maybe it’s going to take longer in the United States because of the culture. You have been a reference worldwide of a capitalistic society, no matter if you have deteriorated from that level over the years. I think it could take longer in the United States, but you have to be really aware, especially young people. You have to be aware of the consequences of socialism because you can realize anytime that you’re already in a socialist society. You have to be careful with the promises you hear, with the books you study, with the television programs you watch. It’s really important for you to create that awareness. What you’re doing, I think that’s great. You’re contributing, spreading the word. For me, you’re heroes, young heroes here, and you have to keep doing it.

Lau: Thank you very much for the praise and for sitting down with us! Once again, Luis Cirocco and Dr. Rafael Acevedo from Econintech in Venezuela.

Schaelicke: Best of luck.

Acevedo: Thank you.

Cirocco: Thank you.

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