Tag: socialist venezuela

Is Maduro The Venezuelan Allende?

By Rufus Coombe | Venezuela

The tragedy of the Venezuelan economy is as infamous as it is indisputable. However, this is where the agreement on the issue ends. By attempting to explain the economic problems the nation is facing, we can analyze the solutions and compare the current situation to an important historical example, from which we can gain great insight. 

There is no unequivocal answer to the question of why Nicolás Maduro’s economy is in such a calamitous state. Some conservatives point to the nationalization of oil and Venezuela’s notoriously restrictive and pernicious effects of leftist economic policy, with Venezuela being rated 179th in economic freedom by the Heritage Foundation. Socialists, on the other hand, are keen to emphasize the large amounts of private activity in the economy the effects of the 2015 collapse in oil prices.

Despite the inconclusiveness of the attempted diagnosis of the problems, the ailing South American nation has become a flagship example for many right-wing speakers, who use it as a paradigm of the failures of socialism. However, we are not here to delve into the rights and wrongs of Maduro’s government, but to espouse a right-wing solution to the crisis and to utilize the lessons of history to help fix a broken country.

The crux of the problem is the issue of inflation; since the oil crisis of 2015, the value of the Bolivar plummeted, with the inflation rate in 2018 reaching 25,000%. In August, the government scrapped the inflation-riddled Bolivar and replaced it with the Sovereign Bolivar, cutting 5 digits off of the note. The inflation crisis, however, does not seem to have abated, with the value of the currency still falling, albeit at a slower rate. Hyperinflation coupled with falling real wages has taken its toll on the population and in 2016, 75% of Venezuelans lost weight; there is a famine ravaging the country and the elected government seems completely overwhelmed by its task of leadership- still running a deficit of 31%.

It is pointless to delve into the often navigated and regularly investigated failures of the planned economy. Instead, we shall draw a comparison between today’s Venezuela and an astonishingly similar set of events in the history of another South American nation: Chile.

Salvador Allende and Socialist Chile

On the third of September 1973, Salvador Allende, a socialist, was elected president of Chile. Just like Maduro, he was a populist inspired by Fidel Castro and Karl Marx. Allende came to power democratically and promised sweeping economic reforms aimed to aid the proletariat. Both Maduro and Allende were democratic socialists, both strove to reform their nations economies and, as we will see, both failed.

The economic impracticalities of socialism became immediately apparent in Chile unlike in Venezuela where they were masked by large oil wealth. Economies do not react instantaneously and there is often a lag time between policy implementation and their effects. However, the effects of a regulated economy and a large welfare state caught up with Venezuela in 2016 when the economy contracted 16.5%.

Crucially, Allende pursued the same economic policies as Maduro. He began the nationalization and collectivization of Chilean industry and of course, inflation was, once again, the bane of his newly reformed economy, with the inflation rate peaking above 300%.

As you can see, the resemblance is uncanny. Maduro and his predecessor, Chavez, managed to do to Venezuela what Allende did to Chile. The “Venezuelan way to socialism” has proved as disastrous as “The Chilean way to socialism”. In both cases wages went through the floor, inflation rates were in the hundreds, unemployment rates were well above average, large deficits were created, and GDP stagnated, despite both nations being endowed with large quantities of valuable natural resources (oil for Venezuela and copper for Chile).

So what happened? Chile now has the highest GDP per capita in South America. How did its crippled economy go from a stagnating, dire and decrepit mess to the envy of its neighbors? The answer comes in the form of a man named General Augusto Pinochet.

Pinochet’s Coup

Late in 1973 General Pinochet launched a military coup against Allende’s government. The country had enough. He overthrew the democratic government established a military junta. Pinochet was a barbaric man and he is notorious for his human rights abuses. Despite this, he implemented sweeping free-market reforms, which resulted in Chile becoming the economic powerhouse it is today.

During his 17 years in power, wages grew, exports boomed, GDP grew, and Chile got back on its feet. When there was eventually a plebiscite to decide whether he would remain in power, he won 44% of the vote (more than Allende had in 1970). Nevertheless, he stood aside and surrendered power, leaving his beloved Chile one of the most prosperous nations in South America. Due to its economic success, Chile kept the Pinochet economic reforms largely intact. Today Chile is still the 7th freest economy in the world and wage growth has not fallen below inflation since 1990.

Is there a lesson that Venezuela could learn here? One has to hope so. Fresh leadership is needed to take Venezuela out of these dark times. If Maduro is the new Allende, will we see their version of Pinochet rise?


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Collectivism Has Destroyed Venezuela

By Trey Johnson | Venezuela

Millions of Venezuelans escape a country destroyed by bad government and coercive collectivism.

The border of Colombia and Ecuador is full of Venezuelans who are doing their earnest to escape the clutches of a coercive regime in search of free markets and better opportunities. Common tourists, amongst the droves of Venezuelans, must wait hours and hours in a line that wraps around the immigration office here in Ipiales, Colombia. During peak days, it can take over 24 hours to cross the border between Colombia and Ecuador.

The border crossing’s elevation is 2898 m (9500 ft), which makes the experience a rather cold one as nighttime approaches. Individuals in line are able to stay warm with the help of vendors selling coffee, hot dogs, and empanadas.

Most South American countries have no choice but to allow free movement of these refugees due to treaties signed by UN member states. The strain of this situation hampers economic stability and the free flow of goods and services due to long lines at the border.

While in the line, one can also learn of the tragedies affecting the people of Venezuela and understand why they are leaving their beloved homeland. Men and women full of fond memories and past success, now crushed by coercive collectivism. Doctors, welders, and professionals of all sorts are throwing away their experience to land a job in a neighboring country, hoping to make the minimum wage of $300 per month in favorable countries such as Chile and Peru. Ecuador and Colombia are not desirable, and Brazil’s language barrier makes the destination unattainable.

To date, an estimated 4 million Venezuelans have left the country. Hyperinflation is the sole reason these people have left. “There is a lot of work, but there is no money.” The minimum wage is currently 2,000,000 Bolivars per month which equates to $3 USD per month. That is $36 per year. The price of a kilogram of beef in Venezuela is $3 dollars and the price of shampoo is also $3.

To make matters worse, the Venezuelan government instituted new currency controls on money entering the country through financial institutions. In order to send money to your family members stuck in Venezuela, you must have a bank account in both Venezuela and an outside country. One refugee believes this policy is “choking the people.”

The current administration’s new constitution would completely eliminate the ability to own private property. This market uncertainty makes investments impossible.

The people who are working to stay in the country are almost at the end of what seems to be the brink of collapse. Schools are functioning, but they have no food to feed their students. Most of the faculty members leave the schools in search of new opportunities. Revolutionaries like the violin playing patriot and Oscar Pérez have become heroes to Venezuelans trying to take back their country.

The Venezuelan regime is continuing to provide a box of food to each family in accordance with its collectivist agreement. This box is called CLAP and contains two packages of flour and rice along with powdered milk “if you are lucky.” The frequency of these food distributions is about once every 5 to 6 months according to a refugee waiting in the 24-hour line.

One wealthy Venezuelan had a stable career for over 15 years. He had a house, a car, and “a whole complete life.” He went on trips with his family inside and outside the country. Right now he is busy moving groups of Venezuelans to more favorable environments scattered throughout South America. He understands the attraction of collectivism and believes “the Venezuelans have to learn the lesson.”

A Colombian bus driver passes and asks, “are you going to Cúcuta?”, a town on the border of Venezuela and Colombia, 32 hours in the opposite direction from this particular crossing.

It is truly a sad state of affairs for the people of Venezuela who slowly lost their grip on freedom and their country. Experts believe it will take 30 years to bring this country back to its former self. Many Venezuelans will most likely never return to their homeland, which is but another civilization lost to socialism and coercive collectivism.

Thousands of Venezuelans at the Border of Colombia and Ecuador

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I Survived Socialist Venezuela

By Austin Anderholt | United States

Andrés is your average Latino teenager who enjoys his summer like any typical American kid. He’s relaxing on vacation and watching the World Cup with family and friends. Life is laid back, and adulthood isn’t even a problem yet for the brown-haired soccer enthusiast.

However, Andrés’s story hasn’t always been that nice. From 2000-2009, Andrés survived the socialist hell of Venezuela.

The South American country is home to over 31 million inhabitants, known for its warm and wet tropical climate, rich oil reserves, mountain ranges, diverse wildlife, incredibly delicious dishes such as meaty and cheesy arepas, and oh yeah… a failing economy created by the socialist dictator Hugo Chavez.

“In the seventies,” Andrés tells me, “Hugo Chavez nationalized the oil. He expanded the welfare state, and all government services relied on oil. In other countries, when oil prices go down, it’s not that big of a deal, but in Venezuela, it crashes down on everything. Innovation and economic growth and technology collapse.”

Because the socialist government is trying to survive on its oil exports alone, acquiring goods is a hardship in Venezuela. It’s a common sight for many people wake up in the early hours of the morning to wait in long lines for basic necessities such as toilet paper and food.

“The lines are just…you have to wait literal hours. And you can only buy one thing per week. If you miss that week, you’re done.”

The constant food shortages aren’t even the worst part about the communist ruin of the Venezuelan economy. The minimum wage was recently hiked up 150% to one million bolivars (the official Venezuelan currency) per month. However, this staggering amount of money earns you a whopping $1.61 on the Venezuelan black market. Not even close to enough for a family to survive for a month.

Starting in 2015, it was just as extreme: “One carton of eggs was three million Bolivars. A month of work to earn. Which by official exchange rate is less than a dollar.”

So how do Venezuelans survive the brutal left-wing economy? Andrés, who still has family stuck in Venezuela, has some ideas.

“For my family, we have to send money to our family in Venezuela just to feed them. They’re moving out, my grandma, three uncles, and an aunt.”

Venezuela hasn’t always been known as the economic hell that it is now. Back in the 60s, it was a much more capitalist social democracy and even known as “The Cancún of Latin America”. Even JFK visited the country, with Jaquelyn Kennedy delivering a speech in Spanish. “Her accent was bad, but whatever.” Remarks Andrés.

“Before Chavez, we used to compare Venezuela to Switzerland. It would be considered crazy for a Venezuelan to want to leave, and Colombians would illegally cross the border to live here. Even Americans flocked here. Now, it’s the opposite. Everyone wants to move out. We’re like the Syrian refugees of Latin America.”

Andrés’ family was lucky. As upper-class citizens, they enjoyed the ability to legally move to the United States. Ironically, many children of socialist Venezuelan politicians did just the same during this time period. However, most Venezuelans aren’t so fortunate:

“People try to cross the border or swim, but that’s impossible. Some people try to stay on their visas in America.”

I asked Andrés if people can still believe in socialism after coming out of a nation filled with starvation, shortages, and a daily struggle for survival. His response was unsurprising:

“Unless you’re linked to the government, it’s very hard to come out of Venezuela a socialist. Some are Keynesian. It’s very hard to be a Venezuelan and a socialist unless you’re a corrupt official or very very very very very poor person.”

Noam Chomsky, Michael Moore, and Bernie Sanders have endorsed Venezuelan socialism. Once the government started gunning down protesters in 2017, they started saying ‘It’s not real socialism!’. Once the whole system collapses, it’s never real socialism.”

Andrés goes on to tell me that his whole family is made up of anti-authoritarian republicans, and he identifies as a libertarian. Either way, Venezuelans are sick of starving and are sick of their corrupt government. They want change, and there are a few ways to go about this.

There is always old-fashioned political voting. Groups such as the Movmíento Libertario are examples of young leaders trying to turn Venezuela away from its left-wing dictatorship.

However, a civil political movement might not be a good idea:

“The Chavista government gives welfare to people that vote for them. It will even promise housing to their supporters. Also, the regime gives 3-4 licenses to fans of Hugo Chavez and Nicolas Maduro. These licenses give them superhero names like ‘Batman’ or ‘Superman’. Also if you’re registered to vote, and don’t vote, the regime votes for you.”

“The only opposition is democratic socialists, so they’re not much of an ‘opposition’. They just kind of preach ‘peace and love’.”

“Some parties (like ‘Vente Venezuela’, a free market political party and one of the only right-wing Venezuelan political parties) are virtually illegal. And anyone who protests has the constant possibility of being arrested, or murdered by the Chavista regime.”

Decentralization is another huge option. Venezuela has a thriving black market and it is one of the only reasons that the populace can stay alive. André’s advice?

“Buy crypto. When the Inflation hit, people switched to Cryptocurrency on the black market. Bitcoin is being used to protect from people the regime from printing money to pay back debt and overinflating the market. However, the Chavista Government started cracking down on crypto traders, arresting anyone who wasn’t using the Nationalized cryptocurrency, called ‘el petro’. Crypto isn’t specifically illegal, but the government does whatever it wants.”

So what does the future hold for Venezuela? Only time will tell, but it seems like liberty and decentralization are a shining beacon of hope for a South American nation, enslaved by leftism.


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