The situation in Venezuela is becoming grim. Hospitals are leaving infants to die. A country sitting on a lake of oil is experiencing huge power outages thanks to a drought. Their inflation is so bad they literally can’t buy paper to print the money on and India is proposing a return to the barter system where they would get drugs in exchange for oil.
In the last two years Venezuela has experienced the kind of implosion that hardly ever occurs in a middle-income country like it outside of war. Mortality rates are skyrocketing; one public service after another is collapsing; triple-digit inflation has left more than 70 percent of the population in poverty; an unmanageable crime wave keeps people locked indoors at night; shoppers have to stand in line for hours to buy food; babies die in large numbers for lack of simple, inexpensive medicines and equipment in hospitals, as do the elderly and those suffering from chronic illnesses.
This is not a visitation of fate. The collapse of oil prices is part of it (as I previously noted) and many former Chavez defenders are trying to weasel out of their previous words by citing oil prices and drought. But it’s not just that. Oil prices have fallen all over the planet. Drought and natural disaster happen all the time. Only Venezuela is imploding like this. It’s because of fundamental flaws in their system:
The real culprit is chavismo, the ruling philosophy named for Chavez and carried forward by Maduro, and its truly breathtaking propensity for mismanagement (the government plowed state money arbitrarily into foolish investments); institutional destruction (as Chavez and then Maduro became more authoritarian and crippled the country’s democratic institutions); nonsense policy-making (like price and currency controls); and plain thievery (as corruption has proliferated among unaccountable officials and their friends and families).
A case in point is the price controls, which have expanded to apply to more and more goods: food and vital medicines, yes, but also car batteries, essential medical services, deodorant, diapers, and, of course, toilet paper. The ostensible goal was to check inflation and keep goods affordable for the poor, but anyone with a basic grasp of economics could have foreseen the consequences: When prices are set below production costs, sellers can’t afford to keep the shelves stocked. Official prices are low, but it’s a mirage: The products have disappeared.
You can check out more from Reason and Hot Air. In the aftermath of this epic economic implosion, many people are digging up old articles that praised the Venezuela model. It’s important to remember just how many “wise” people though Chavez had successfully upended the free market consensus.
The situation in Venezuela isn’t funny. It’s tragic. It is the direct result of a flawed broken system that was enabled by apologists in wealthy countries who should have known better. And things are just going to get worse. They’re going to get a lot worse.