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Yes, the Problem is Socialism!


Almost every socialist regime has its admirers in the Labour party, Cuba, Nicaragua, Yugoslavia, Romania, even the USSR, at least up until their collapse and then the line is always the same "it wasn't real socialism". Venezuela is hardly an exception; now its reached a breaking point.

It was praised and held up as an alternative to "austerity and cuts" by Jeremy Corbyn, Ken Livingstone, Diane Abbott, John McDonnell, Owen Jones and others. Now poverty has reached over 80 per cent, infant mortality has surged by ten thousand per cent, the minimum wage has fallen by three quarters, the homicide rate is over ten times the global average, inflation is over 900 per cent and the political class is reacting by reverting itself into a dictatorship, yet its the same excuse being trotted out.

"Hitler wasn't a real Christian", "Venezuela isn't real socialism" in the end it's the same argument.

Its almost hard to imagine that while sitting on the world's largest oil reserves and Venezuela having, two decades ago been one of the richest countries in Latin America (and one of the richest in the world as late as the 1920s) its now fallen to a state of tragedy, borrowing and begging until tax recites come in. The socialist governments under Chavez and Maduro seized private property, locked up opposition members, nationalized public utilities and saw through an almost 20 per cent decline in GDP last year, with imports down by over 50 per cent and a state-wide collapse in industry.

Still, there's a whole variety of crack pots who live in denial over Venezuela. Venezuela has a weakened private sector, yes but private enterprise is a necessary not a sufficient condition for greater trade, commerce and prosperity.

Today the country has the third most regulated economy in the world, price controls set below production costs make it unfeasible for small businesses to market staple goods, petrol is sold at well under market value requiring huge subsidies, the average Venezuelan has lost almost 20 pounds in the last year. Reports of zoos being raided for flamingo meat are not all that uncommon. It would almost be a joke had the cost not been all too human–this is invariably what socialism produces.

The poverty reduction and social programs are tied to political loyalties and since the 1998 election of Hugo Chavez, funded through the countries oil reserves. Even before Chavez the country experienced a false boom which raised its currency and in conjunction with its socialist policies created its dependency on oil (as other Venezuelan-exports became very expensive) provisions under FIEM to counter expectant, falling oil prices were reversed by Chavez and the socialist regime.

Soon it became that even on a good year, Chavez's central planning of the economy ran a deficit, add to that the nationalization of oil companies and the break down of OPEC, oil prices became unstable. Rather than implement fiscal responsibility, the state borrowed huge amounts leading to unsustainable levels of debt.

That's not even the worst part–huge amounts of corruption exist in Venezuela–the supreme court is filled with partisan representatives of Chavez and Maduro, paramilitary groups are supported by the regime, opposition candidates are arrested at gun point, multiple different exchange rates exist so foreign currency can be sold on a black market. Calls for a recall referendum are denied, state control is extended over the media, the national assembly is filled with Maduro supporters with the power to rewrite the constitution, and on and on.

The consequences for ordinary people are catastrophic, grocery stores were left with empty shelves when PDVAL the main publicly owned importer of goods, tasked with distributing subsidized stock left tones of food to spoil in government owned warehouses. Soon enough people realize its virtually impossible to have a state that big without corruption, resulting in riots and other public demonstrations; PDVAL was being funded by revenue collected from those same petroleum operations. When oil prices dropped, there was no profit to be made in distributing the food, so it was left to spoil. So much for the inherent "selfishness" of capitalism.

Its not just food either, toilet paper is a commodity that no longer exists in the country, 80 per cent of medicine is no longer available sustaining a health crises and the state has since implemented a two day work week to save on electricity. This was all a socialist experiment gone right.

What Venezuela has taught us is that a country is not rich in proportion to its natural resources. Without the rule of law, the principles of justice and liberty and the enterprise economy to develop those resources its wealth is immaterial. As Churchill once put it:

"Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery."

Comments

  1. Venezuela's dependency on oil is a result of socialist policies, price controls, over regulation, seizing private companies etc.

    ReplyDelete

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