As the United States faces the not-impossible prospect of an openly socialist president, Sen. Bernie Sanders, it is worth a quick revisit, from The Washington Post today, to how Venezuela's socialist government is doing.
It ain't pretty, though wonk Matt O'Brien isn't too quick to blame socialism or its goals per se:
[Venezuela's] economy shrinks 10 percent one year, an additional 6 percent the next, and inflation explodes to 720 percent. It's no wonder, then, that markets expect Venezuela to default on its debt in the very near future. The country is basically bankrupt.
That's not an easy thing to do when you have the largest oil reserves in the world, but Venezuela has managed it. How? Well, a combination of bad luck and worse policies. The first step was when Hugo Chávez's socialist government started spending more money on the poor, with everything fromtwo-cent gasoline to free housing. Now, there's nothing wrong with that — in fact, it's a good idea in general — but only as long as you actually, well, have the money to spend. And by 2005 or so, Venezuela didn't.
Why not? The answer is that Chávez turned the state-owned oil company from being professionally run to being barely run. People who knew what they were doing were replaced with people who were loyal to the regime, and profits came out but new investment didn't go in. That last part was particularly bad, because Venezuela's extra-heavy crude needs to beblended or refined — neither of which is cheap — before it can be sold. So Venezuela just hasn't been able to churn out as much oil as it used to without upgraded or even maintained infrastructure. Specifically, oil production fell 25 percent between 1999 and 2013.
Like state's do, they resorted to just making more money when they needed it and thus "Venezuela's currency has, by black market rates, lost 93 percent of its value in the past two years."
Which predictably lead to government attempts to rein in its own inflationary monster with price controls. Then no one can keep their own heads above water selling goods legally. And:
That's left Venezuela's supermarkets without enough food, its breweries without enough hops to make beer, and its factories without enough pulp to produce toilet paper. The only thing Venezuela iswell-supplied with are lines.
Although the government has even started rationing those, kicking people out of line based on the last digit of their national ID card.
People who have read the work of that objectively insane and worthless enemy of humanity Ayn Rand and her Atlas Shrugged, who appeals only to idiot children, will weirdly understand a bit of what comes next with more clarity and predictability than their intellectual and spiritual betters who understand how great socialism is:
Socialist president Nicolás Maduro has changed the law so the opposition-controlled National Assembly can't remove the central bank governor or appoint a new one. Not only that, but Maduro has picked someone who doesn't even believe there's such a thing as inflation to be the country's economic czar. "When a person goes to a shop and finds that prices have gone up," the new minister wrote, "they are not in the presence of 'inflation,' " but rather "parasitic" businesses that are trying to push up profits as much as possible. According to this — let me be clear — "theory," printing too much money never causes inflation. And so Venezuela will continue to do so. If past hyperinflations are any guide, this will keep going until Venezuela can't even afford to run its printing presses anymore — unless Maduro gets kicked out first.
But for now, at least, a specter is haunting Venezuela — the specter of failed economic policies.
You can call it "socialism" Mr. O'Brien. Bernie isn't the Democratic candidate yet.
My last visit to the rubble socialism is creating down South American way, from back in August