A Tragic Socialist Experiment is Ruining Venezuela


Credit: durdaneta/wikimedia

City. A.M. Editor Allister Heath has written a great article that highlights the awful situation in Venezuela and its experience with socialism.

From City A.M.:

Food is running out, as are other essentials, even though the country claims the world's largest oil reserves. There are shortages of toilet paper and soap, empty shelves and massive crowds queuing for hours in front of supermarkets. Patients are sometimes having to buy their own medicines; doctors are warning that 95 per cent of hospitals have only five per cent of the supplies they need. The central bank's scarcity index has reached a record of 28 per cent, which means that more than one in four basic goods are out of stock at any time; and the situation has worsened considerably since the figures were last compiled.

The reason? A brain-dead rejection of basic economics, and a hardline, anti-market approach of the worst possible kind. There are maximum prices, other prices controls, profit controls, capital controls, nationalisations, expropriations and every other statist, atavistic policy you can think of. An extreme left wing government has waged war on capitalism and won; and as ever, ordinary people are paying the price.

Heath goes on to mention Venezuela's very high murder rate:

Independent observers estimate that there were close to 25,000 murders in 2013, five times the amount seen in 1998, when the current regime took over and really started to wreck the country.

Heath points out that the U.K., which has more than twice the population of Venezuela, recorded 532 murders in the year to June 2013.

The Venezuelan Violence Observatory estimates that Venezuela's murder rate was 79 per 100,000 people last year. The U.S., which is one of the developed world's most homicidal nations, recorded a murder and nonnegligent manslaughter rate of 4.8 per 100,000 people in 2012.

Heath concludes by saying that the situation in Venezuela is just as relevant as the situation in Ukraine because economic illiteracy is not geographically restricted:

This is a hugely important story and yet one which has been covered insufficiently prominently in the UK, partly because we are understandably more concerned with what is happening closer to home in Ukraine. Yet the political blunders and the economic illiteracy at play in Venezuela have universal applicability, and are therefore just as relevant to us than Putin's power grab.

The lesson from all of that is clear. Socialism doesn't work. Price controls don't work. Stealing people's property doesn't work. Chasing away foreigners doesn't work. Destroying the supply-side of an economy doesn't work. Supply, unsurprisingly, has collapsed, as has investment, and that means fewer goods in the shops as well as reduced incomes. Companies aren't allowed to increase prices, despite rampant inflation, so they are not selling at all. It is a spectacularly horrible case of what FA Hayek called the Road to Serfdom. The world must pay more attention to Venezuela's plight.

Ongoing anti-government protests began earlier this year. Today it was reported that a student leader was shot dead at a protest in western Venezuela. According to journalist Rafael Osío Cabrices, the protests have prompted the government to respond "with massive military force, raiding offices and houses without judicial orders, imprisoning civilians in military compounds and applauding the killing of protesters by paramilitary groups."

Perhaps unsurprisingly the Venezuelan government's behavior didn't stop the actor Sean Penn from recently posing with Venezuelan President Nicolas Maduro for a selfie. 

More from Reason.com on Venezuela here.