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Issues & Insights

Venezuela: There’s No Disaster Quite Like The Collapse Of Socialism

Even while surrounded by military dictatorships and poverty, Venezuela at one time prospered with a strong economy and stable society. Today, three Latin American nations produce more oil than Venezuela, though it has the world’s largest proven reserves of crude, and just getting sick is nearly the same as death for some children. It has rightly been called the “biggest economic disaster in modern history.”

“Hospital shortages,” says the headline of an Agence France-Presse story posted on Yahoo News in late May, are “a death sentence for Venezuelan children.” Half of the children who aren’t dying can’t get enough to eat.

Meanwhile, “OPEC Founder Venezuela Pumps Less Oil Than Three of Its Neighbors,” according to Bloomberg News.

“Venezuela, which sits atop more oil than Saudi Arabia, has fallen behind” Colombia, Brazil, and Mexico, says Bloomberg. This has happened even though Venezuela has more than 302 billion barrels of reserves, Colombia 1.96 billion barrels.

Poor to nonexistent health care and an inability to take advantage of its most abundant natural resource are just two among a growing list of problems confronting the Venezuelan people. Its economy is sinking.

In the third quarter of 2018 the GDP retreated 22.5% over the previous year. The economy contracted by more than half from the third quarter of 2013 to the third quarter of 2018. Venezuelans suffer from shortages of food, water, medication, and consumer goods. Property rights have been weakened, corruption is rampant, as is violent crime, and blackouts are common. When there is food on the shelves it’s rationed by government.

The inflation rate recently exceeded 130,000%. The International Monetary Fund figures the inflation for 2018 was was 929,797%. Venezuela’s currency is virtually worthless.

No one should be surprised millions — 2.7 million in the last four years — have fled.

In 1950, under a military dictatorship that would last another nine years, Venezuela had the fourth-richest economy in the world on a per capita basis. By 1982 it was still the richest nation in Latin America.

Today it’s reverted to Third World status.

These are not fresh revelations. The country’s collapse has been widely documented, as has the direct cause of the collapse (socialism), though not as widely, as the left-leaning media tends to leave out that part because it doesn’t fit its agenda.

Nevertheless, it needs to be said often to drive home the point. Socialism kills. It has ruined Venezuela through price controls, the nationalization of industries, wealth redistribution, and an expansion of the raw power of government. Foreign investment has been driven out, the profit motive robbed. Opponents of the regime are imprisoned. “Government-backed Red-Shirts,” says the Washington Examiner, “have beaten and murdered anti-government protesters with impunity.”

None of these are practices in a free market, or liberal, economy. Or of systems based on limited government. Socialism is an illiberal, opportunistic scheme designed to enable its implementors. Remember this the next time a Democratic candidate speaks.

Editor’s note: The editorial has been updated to correct the spelling of Colombia.


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18 comments

  • Leftist calls for socialism, despite the historic proof that it never works, suggest that the average IQ of leftists is below average.

      • The new Prime Minister of Denmark, Mette Frederiksen is still advocating a socialist model, but is introducing new policies with respect to immigrants, including sending asylum seekers to processing centers outside Europe such as North Africa. While a Social Democrat party member, the Social Democrat party has adopted policies which previously were advocated by the far right as far as immigration is concerned, and according to news articles, the new policies have been adopted by the wider political establishment in Denmark.
        So while socialist policies are still in place, the policies on immigration appear to be changing and the Frederiksen has said in a biography I believe, and she has come from a working class background, that the price of unregulated globalization, mass immigration and the free movement of labour is paid for by the lower classes.
        This concept of unregulated globalization being damaging, even ruinous to the laboring class reflects back on the “tragedy of the commons”. In earlier times, it was the practice for farmers and herders to allow their flocks and herds to graze on common pastures, however since everyone owned the pastures, everyone tried to grace as many animals as possible on the pastue to get their share before it was used by someone else, and then when everyone was using the common pasture, it was overgrazed and ruined, resulting in no one having any grazing and the herds and flocks dying of starvation.
        So while a socialist economy may have some benefits in Scandanavian countries such as Denmark, people are realizing there are limitations, that they can’t provide the socialist economy for unlimited immigrants as well as the people living there, so there appeaers to be some changes happening, even in the Scandanavian countries.

      • You present an excellent argument (use of the commons) for the value of socialist governance. As you state: “This concept of unregulated globalization being damaging, even ruinous to the laboring class reflects back on the “tragedy of the commons”. In earlier times, it was the practice for farmers and herders to allow their flocks and herds to graze on common pastures, however since everyone owned the pastures, everyone tried to grace as many animals as possible on the pastue to get their share before it was used by someone else, and then when everyone was using the common pasture, it was overgrazed and ruined, resulting in no one having any grazing and the herds and flocks dying of starvation.” Looks like the pesky capitalists ruined the “commons”.

      • Except, the “Scandinavian countries” don’t practice socialism in their economies. They’re free market economies with some taxes to pay for a welfare state tacked on. Very different.

  • The cancer called socialism will continue to be a growing threat as traditional values — such as individual responsibility and the notion that you should earn what you get — are under attack by sjw’s and politicians who buy power with other people’s money (redistribution). All the whining you hear about “inequality” is designed to manipulate people into believing they are owed what someone else has, and a vote for some grasping politician will fix some contrived injustice.

    Venezuela demonstrates the inevitable result at the end of this path.

  • A technical disagreement– what’s happening in Venezuela is not a disaster. A disaster is a sudden event, like an accident or natural catastrophe, which results in significant damage. The tragedy now taking place in Venezuela is merely the unfolding of the natural sequence of events attendant upon the implementation of socialism some years ago. There is nothing sudden about it.

  • The economy of Venezuela was doing quite well from @ year 2000 to about 2015 (during the reign of Hugo Chavez). It began to turn in 2015 after the initial sanctions imposed by Obama and accelerated by more potent sanctions instituted by Trump. I wonder if our economy would thrive if we were not able to sell our oil on the international markets, participate in international banking and the theft of our gold held in foreign banks. Looks like the “capitalists” have tilted the playing field in their favor. Has anyone noticed that many independent socialist leaning countries (most with oil) are being “transformed” not by a superior system but at the point of a gun?

    • Sorry, but that’s not factually correct. In 2014 GDP in Venezuela shrunk by 3.9%. That’s hardly “doing quite well” until 2015. There were a few outlier years, but Venezuela has been on a negative slope since 1991. Certainly since 1998. Output in Venezuela in various industries which were nationalized was cut in half or more following that nationalization, also well before 2015.

      A couple examples:
      1. From 1998 to 2018, oil production in Venezuela is down from 3.5 million barrels per day in December of 1997 vs 2 million in October of 2017. From Wikipedia, “After Hugo Chávez officially took office in February 1999, several policy changes involving the country’s oil industry were made to explicitly tie it to the state under his Bolivarian Revolution.”
      2. Steel production in Venezuela increased from 3400 tons in 1998 to about 4600 tons in 2008. The steel industry was nationalized by the Venezuelan government in 2008 and production declined to under 1600 tons.

      Similar stories of lower production and losses in the other industries after they were taken over: aluminum, cement, gold, iron, farming, transportation, electricity, food production, banking, paper and the media. It’s not a coincidence. It’s also not tied to oil prices, that’s been debunked plenty of times as well.

      • I believe you may stand corrected: Examine the GNI (Gross National Income per Capita) for VenezuelaVenezuela GNI Per Capita 1963-2019 There was an an upward trend during the Chaves regime and for a year after his passing. Further decline in the GNI can be attributed to the fall in ooil prices, US imposed sanctions and the efforts of Venezuelan leadership. If you look at the history of GNI in Venezuela you will most certainly see that it was elevated mostly during the regime of the socialist Chavez.

  • Socialism is great on paper. Unfortunately, people don’t live on paper.

  • Why does every 2nd or 3rd generation have to learn the hard way that socialism sounds good on the surface but can never work due to several inherent flaws that cannot be “fixed”? … For one, socialism assumes that everyone is identical, with no differences in attitude, motivation to excel or better themselves, while others are just lazy and willing to take whatever “free” stuff they are given to survive. Then, there’s the fact that professional politicians will always enrich themselves at the expense of the common workers, whether it be the U.S. Congress or the old Soviet Politburo. These and other basic flaws make socialism an impossible form of government.
    .

  • Note to authors/editors: In an otherwise good analysis, you lose a lot of credibility when you can’t even spell the name of a nation correctly: It is Colombia not Columbia.

  • The real enemy is big government folks. Socialism is but one type of big government.

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