It is 1997. Venezuela is the richest country in Latin America. It has the region’s highest growth rate and the lowest levels inequality. It is also the most stable of the democracies in the Americas. The crime rate is low, unemployment is even lower.
The Bolivar is at a record low of 0.05 to the dollar. Venezuela has an annual growth rate of 3.3% or more on a consistent basis with basically zero inflation. Gasoline is subsidized by the government and costs under 5¢ a gallon. The government builds schools, playgrounds, clinics, and hospitals for the people. Everyone drives around in GM
Few people don’t have food or medical care. They are living in a virtual paradise, subsidized by the money coming in from their oil reserves. They have not been involved in any wars, had any terrorist incidents and crime is at historically low levels.
There are poor people in Venezuela to be sure. But some people are just poor and no matter what you do, they’ll remain poor, no matter how many social programs you devise and or how much money you spend.
Granted, Venezuela had created problems for itself. They’d neglected their economy and rely on the oil industry for 90% of the country’s income. This was a mistake but could be remedied.
This was in 1997. Before Hugo Chavez. Remember, when Chavez took over, the Bolivar was at 0.05 to the dollar?
Today it is 248,520.9 Bolivars to the dollar. This means the Bolivar was worth 4,970,418 times MORE in 1997 than it is today!
Venezuela’s inflation rate has gone from 0% to 1,000,000% since 1997.
90% of Venezuelans now live in poverty.
The average Venezuelan has lost 24 lbs. (11kg) in the past year alone. But Maduro is more obese than ever.
Chavez somehow convinced the Venezuelans that corruption and poverty were epidemic in the country and he was the answer. In December 1998 he took office with the promise to tackle these problems.
He started spending billions on social programs, more schools, hospitals, etc. for the poor. He also siphoned off billions for his personal bank accounts.
Chavez decided that the gringos were at the root of their problems. It was the foreign investments and foreign workers that were “ruining” the country. So he nationalized industries and greatly increased the size of the already bloated government.
He then kicked out all the foreign workers, which meant Venezuela lost a majority of it’s engineers, tradesmen, skilled workers, financial managers, and other highly skilled, highly educated workers.
So soon the oil refineries were shutting down as they had nobody capable of keeping them up and running or repairing the equipment. Then many of the other industries started closing their doors as they were unable to procure parts, produce a P&L, manufacture products, etc.
Within a few years, Venezuela couldn’t even make toilet paper, let alone gasoline and diesel fuel.
Fast forward to 2019. Chavez died and left his buddy, a bus driver, Nicolas Maduro, to take his place and run the country. Saddled with massive debt, crumbling infrastructure and a hungry and unemployed populace.
Maduro ruled through patronage. He gave the military control of the drug and food trade plus he put them in charge of the gold mining industry. As things continued to go south, the bus driver/El Presidente Maduro thought that printing more money would fix the problem.
And print money he did. Soon he was unable to pay for the subsidies and welfare programs though because it was Monopoly money. This drove up inflation, making even the most basic items too expensive for the average Venezuelan.
So he instituted price controls and fixed the currency exchange rate.
Bad decision. Businesses shut down. What little foreign investment and investors remained left the country. Imported goods became extremely expensive. And inflation continued to grow, and fast.
Food stores became stores of empty shelves. When they had any items for sale, there would be huge queues of hundreds of people that would line up to buy whatever was for sale. Often the people wouldn’t even know what was for sale, but they’d line up to buy it. Meat, soap, laundry detergent, whatever it was. It was more than they had yesterday, whatever it was.
Food became scarce, public unrest soon boiled over and Maduro’s survival was hanging by a thread. He had to give handouts to the people, but he could not afford to continue. The economy was ruined.
Street violence and crime exploded. With no jobs and lots of time, people had to to whatever they could to survive. People were, and are still, eating out of garbage cans and from the garbage dumps.
With the government stores empty the black market for provisions exploded as well. These people, once stalwart government supporters, now relied upon the informal economy to support themselves. They grew more violent and more difficult to control.
Maduro sent the army and police to violently contain the people, but it was just a bloodbath. Eventually, many of the police and military turned to criminal activities to support their families.
Today, country’s economic and humanitarian crises have reached deep into Venezuelan society. Most Venezuelan’s remained hungry over the Christmas holiday as they couldn’t even afford the most basic foods for a Christmas dinner. Even if they had the money, where would the food come from? The stores are still empty.
Families must worry about paying for housing, food, medicine and other essentials, so there is no money left over for gifts. Two years ago Maduro had nearly 4 million toys confiscated from private businesses to give out to poor children as presents from the Socialist government. He had business owners arrested for wanting to sell their toys to make a profit.
So today, Venezuelans have little food and medicine, very little industry, no viable banking system, very few operational hospitals, only a couple of oil refineries (out of dozens) are operational, schools are mostly closed, and people are leaving the country by the thousands each day.
And the Socialists of the world, including in America, continually tout Venezuela as a shining star of Socialism, what we should aspire to.
Viva Venezuela! Viva Maduro!