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Nov 27 2018

Short History of the Ruin of Venezuela

Recently the wealthiest country in Latin America, Venezuela is now a basket case, the economy having shrunken by 50% in 5 years. We owe it to Venezuelans to at least learn from their mistakes, so that their suffering is not for nothing. There is more to the story than Hugo Chávez taking power and then flushing the country down the toilet of socialism. As explained at sponsor, the roots of the moonbattery go back much earlier…

Venezuela started with promise, combining abundant natural resources with respect for property rights. Things started to go wrong when Marcos Peréz Jiminéz took power in 1948. Although the economy did well under his military rule, he started the statist ball rolling by creating the government-owned steel company SIDOR and encroaching on the hospital industry.

Peréz Jiminéz’s heavy-handedness brought to power leftist radical Rómulo Betancourt, who became president in 1959. This former communist toned down his extremism; however,

Betancourt’s socialist lite vision was reflected in the Venezuelan Constitution of 1961, which set the foundation for a vast series of government interventions – labor rights, land reform, and oil industry regulation.

Betancourt devalued the bolivar, tripled income tax, and oversaw years on end of fiscal deficits.

Venezuela sits on the largest proven oil reserves in the world. In the 1970s, oil came to the rescue — but government kept growing:

When President Carlos Andrés Pérez came into power in 1974, he ushered in an unprecedented era of government growth. At the time, the world was going through a profound energy crisis, from which Pérez sought to profit. Like any sympathizer of big government, Pérez channeled petroleum rents to finance his extravagant spending program.

Pérez nationalized the oil industry, as well as the iron industry, also imposing tariffs and import quotas. He effectively nationalized the Central Bank. Now,

Venezuelan politicians had a printing press and a petroleum revenue piggy bank to finance their government largesse.

It couldn’t last. Under Pérez’s successor Luis Herrera Campins, Venezuela was forced to devalue the currency in 1983 and imposed exchange controls to prevent capital flight.

Carlos Andrés Pérez made a comeback in the late 1980s. By then,

Not only was Venezuela heavily indebted due to its extravagant spending programs, but it was non-competitive at the international level thanks to its protectionist policies.

Pérez imposed a value-added tax, but he also made some attempt to get the government off the neck of the economy through tariff reductions and privatizations, though the crucial oil industry remained in the corrupt and incompetent hands of Big Government.

His attempts at reform were seen as austerity measures. A population accustomed to the short-term perks of irresponsible deficit spending pushed back. Dissatisfaction led to the 1989 Caracazo incident, which left hundreds of protesters dead in Caracas.

Hugo Chávez´s Revolutionary Bolivarian Movement-200 began to take root within the military. Two coup attempts failed in 1992. That same year, Pérez was impeached for corruption.

The country hobbled along under Rafael Caldera, who made half-hearted attempts to apply responsible economic reforms. Inflation spiked at 100% in 1996.

By 1998, Venezuela had given up on the political status quo, and was ready to elect Hugo Chávez, who followed the Castro model of lurching far left once in power.

Property rights went out the window once Chávez had full control of the state apparatus. Expropriation of private property became the norm during the Chávez years. According to some reports, the Venezuelan government confiscated upwards of six million acres of farmland.

The government even looted foreign companies like ExxonMobil and ConocoPhillips.

Currency and price controls deranged the economy, leading to the shortages that Venezuela is best known for today. Hyperinflation took wing.

After Chávez died in 2013, Nicolás Maduro picked up right where he left off, trying to force the ineptly managed government-controlled oil company to carry the entire economy on its back.

That brings us to today:

Long lines to get basic food items. Hospitals running out of medical supplies. Starving people eating zoo animals.

The autopsy report for Venezuela would list the following causes of death:

state intervention in the marketplace, widespread institutional decay, private property seizures, fiat money, and rampant corruption – all pursued in the name of a socialist utopia…

Too bad they don’t have a Second Amendment in Venezuela. If someone other than criminals and tyrants had guns, there might have been enough resistance when Chávez started expropriating that the current catastrophe could have been avoided.

Let’s not follow Venezuela down the road to ruin. The alternative consists of property rights, free markets, and a well-armed populace able to resist dictators.

Read the whole piece at Stock up on ammo while you’re there.

One Response to “Short History of the Ruin of Venezuela”

  1. […] Meanwhile, the socialism they succumbed to forces Venezuelans to eat pets and zoo animals. […]

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