How Socialism Failed Venezuela
Just 2 years ago, Venezuela had a GDP of $371.34 billion. Oil prices were high, and oil constituted 100% of Venezuela’s exports. Generally, things looked good as oil prices hit $105 a barrel. But the good times weren’t to last for long. Oil prices fell to under $50 by the end of 2014. Since then, the price of crude oil has remained at $50, more or less.
There are other countries that have been affected by the fall in oil prices as well. But none that have suffered economically as much as Venezuela. Venezuela today faces massive shortages in toilet paper, milk and diaper. A lot of people in Venezuela have been forced to leave the country and cross the border into Colombia after facing extraordinary hardship, just to get food for their families, or a bar of soap.
Venezuela faced massive power shortages. There’s just no money to run the nation’s power stations. The country is actually running out of paper money as it can no longer afford to run printing machines. According to the IMF, inflation in Venezuela is expected to cross 1,600% this month.
Why is Venezuela in such a mess? If one remembers, Venezuela was always a rich country. It was a country full of sophisticated people. Venezuelan women were famed for their beauty and set a record for winning the highest number of international beauty pageants. Venezuelan economy was strong and the most successful in Latin America.
Then, in 1998, something happened, which changed not just Venezuela, but had a massive bearing on the future of countless Venezuelans. Socialist Hugo Chavez became the President of Venezuela, after winning a landslide victory.
That was it. That was the moment that changed the course of Venezuelan history. Chavez was an unapologetic socialist who brought in a new constitution. He passed laws to redistribute land and wealth, and passed what he called as “land reforms” according to which all large estates held by the wealthy were abolished and their mansions were given to the poor.
That was only the start. Chavez then took over major oil projects run by American companies and nationalized the Venezuelan operations of all multinational oil companies. That forced all major international oil companies to flee Venezuela for good.
Chavez then proceeded to nationalize all banks, petrol stations and distributors in Venezuela. He introduced price controls when the inflation became 27% in 2011 and was starting to get out of hand. Fortunately for Chavez, he did not live to see what his policies had done to Venezuela, having died in 2013, when high oil prices could sustain his insanity.
Since then, the country has lurched from bad to worse. Chavez’s successor Nicolas Maduro seems to have no clue as to what is going on. Maduro spends much of his time blaming USA and the World Bank for Venezuela’s self-destructive policies based on the most ridiculous socialist principles.
Venezuela is a country in deep trouble, and the people are starving – but its leadership is only interested in finding excuses and fighting imaginary enemies. Venezuela is an example of how quickly things can go wrong for a country when you vote for the wrong people.
Author: Raghav Hegde – India