by Michael Hudson
I just had a disastrous and embarrassing interaction with Bloomberg, and feel that I was ambushed and sandbagged by having my comments taken out of context in a hit piece Bloomberg’s journalists wrote on Venezuela – evidently trying to distort my own views in a two-for-one job.
On Monday, March 27, I received a message from a Bloomberg reporter asking me about a very nice compliment that the President of Venezuela and Secretary General of the Non-Aligned Movement, Nicolás Maduro, had said about me:
I was reading one of the greatest American economists, Michael Hudson, I don’t know if you know him, I recommend reading his work. He is an economic thinker, worked as an economist for a long time on Wall Street, knows this world very well, and has been insisting on the need for construction of a real economy. He’s been alerting for a long time through conferences, writings, books and interviews of the danger that the world has, because he says in his research that of every $20, $19 arise from the speculative economy and only $1 arises from the real economy.
More than 90% of the country’s economic apparatus is in the hands of private companies.
The reporter, Christine Jenkins, asked if I knew President Maduro or could explain what he found of value in my writing. I said that I thought he probably was referring to my discussion in Killing the Host of a September 2014 Harvard Business Review article by William Lazonick, “Profits without Prosperity,” calculating that for the decade 2003-2012, the 449 companies publicly listed in the S&P 500 index spent only 9% of their earnings on new capital investment. They used 54% to buy back their own stock, and 37% to pay dividends. I told the reporter that I thought the President’s point was that the financial sector was not financing capital formation and employment to increase output.
I told her that I had not followed Venezuela’s economy closely in recent years. I did say that I had discussed how Argentina and Greece were subjected to austerity as a result of foreign debt, and my belief that no sovereign nation should be obliged to impose austerity on its population to pay foreign bondholders. That has indeed been the problem confronting Latin America for decades, and is a central theme of all my books since Super Imperialism in 1972.
And to cap matters, of course, U.S. foreign policy has mobilized the World Bank and IMF to back creditor interests, foreign investment and privatization – while isolating countries from Cuba through Venezuela (and now Greece) to demonstrate that neoliberal diplomacy will make such a country a pariah if it makes a serious attempt to oppose austerity and financialization.
Apart from that, we had no substantive discussion. The reporter ran down some recent economic facts about Venezuela’s economic crisis, and I replied to the effect that it sounded like a real quandary. She said that the country looked like it was straining to pay its foreign debts and might soon default. I replied with the same advice that I had given Greece: If you are inevitably going to default on sovereign jjunkecondebt, it’s best to stop paying now and keep what foreign exchange you have, and try to renegotiate the debt to bring it within the ability to be paid. Otherwise, you will end up suffering the legal tangle of default, but be stripped of funds needed by the domestic economy to survive.
I said that I didn’t have a solution to this problem. I haven’t studied the legal status of Venezuela’s foreign debt, or what alternatives the government might have had open to it in the face of strong opposition from its domestic oligarchy as well as foreign pressure.
The reporter, Christine Jenkins, said that she would read my books to see how they might have attracted the attention of President Maduro. On Wednesday, she got back to me, and said that she was going to write up an article for Bloomberg.
I asked for a copy, and she wrote back that “Hi – so we actually aren’t allowed to send articles before publication!” That’s what raised a red flag in my head. My impression is that every serious reporter checks back with his or her source to ascertain that the report is accurate. This seems to be basic journalistic ethics.
The article was to appear at 6 AM Thursday morning. She tried to allay my fears by telling me “a little bit about what it says … we make it very clear that you don’t consider yourself a Venezuelan expert, like you said, but that if the government sees that default is inevitable, that its better to get it over with. We mention your recent book, and also that Killing the Host is the one that probably got Maduro’s attention. And we talk about how you’ve gotten an international following, advising some governments, but the one thing I wanted to give you a heads up about is that we call you a somewhat obscure economist – and I hope you agree that’s fair, that you’re definitely not in the mainstream, not a household name, and like you talked about your area of coverage not being taught at the typical universities, etc.”
But by noon I still had not received a copy. I asked for it, and when I got it, it was nothing at all like what I had said. It made me appear to be criticizing Venezuela’s politicians and, by implication, President Maduro. But at no point had I criticized Venezuela’s attempts at reform. Rather, I had criticized the problem of neoliberal opposition to countries trying to uplift their populations along the lines that Venezuela had done, using debt leverage to force countries to impose austerity. It looks to me like Venezuela is getting the “Greek treatment.”
I was appalled to find the article a hit-piece on Venezuela, and to make me appear to criticize President Maduro by implying that the country is not helpable. I never said that I was not “a fan of the socialist leader.” I applaud his attempts to maneuver as best he can within the corner into which Venezuela has been painted. I did indeed repeat the headlines of the day – that the country “has entered a period of anarchy.” There were riots going on, and a constitutional crisis led to the Supreme Court suspending its congress. That wasn’t a criticism, just my “umm-hmm” comment on what the reporter was telling me about the situation.
Venezuela has made herculean efforts to pay its bondholders in recent years. This has been a political decision to avoid the even deeper problems that default would cause. I’m in no position to second-guess President Maduro or other Venezuelan policy makers. They’ve probably steered the best course available to them – bad as all the choices are.
The article concluded that I would “be disinclined to add an advisory role to his busy schedule if asked to.” That’s not my language. I said that I hadn’t been following the situation and have hardly spent any time in Latin America. Of course I would help in any way that I could, if asked.
The real damage came from the right-wing paper Caracas Chronicles, which did a guilt-by-association attack piece by Jose Gonzales Vargas, “Hudson on the Guaire.” Asking rhetorically “Who the hell is he?” the article identified me with
“anti-establishment outlets across the political spectrum like CounterPunch —who not long ago was posting apologetic pieces on chavismo − and Zero Hedge, which … was called by a former contributor a cheerleader for “Hezbollah, Tehran, Beijing, and Trump.” Speaking of things that may be linked to Russia, he has also been on RT a couple of times.”
I have never written for Zero Hedge, although they sometimes reprint articles that I publish on Naked Capitalism and CounterPunch. The nasty quip about being “a cheerleader for “Hezbollah, Tehran, Beijing, and Trump” was not about me; it was written by a Zero Hedge member who was criticizing his own publication when he left it.
Neither publication noted that I’ve written numerous op-eds for the Financial Times, the New York Times, 3 cover articles for Harpers, and have been featured on the BBC and on Bloomberg radio.
The kicker of the article was its last sentence: “Well, at least they’ve still got Weisbrot and Ciccariello-Mahler and those Podemos guys. They would never turn against the Bolivarian revolution, right?… Right?”
The implication is that I’ve broken ranks and that “the left” is turning against President Maduro. For my part, I can’t think of a better advisor than Mark Weisbrot. I have no advice to give Venezuela in its current economic straits that its leaders have not already thought of. But of course I would like to help if asked. As I wrote to the Bloomberg reporter after reading her story: “The problem is that I AM sympathetic with the AIMS of Chavez etc. The problem is the hostility all around him that is undercutting the economy. That’s what makes the problem insolvable.”
None of my beliefs are what Bloomberg and Caracas Chronicles implied.