Yes, the Problem is Socialism!

Out in the 'backyard of the United States' not far from its mainland, Venezuela is a socialist experiment gone wrong, despite its supporters left of centre and left of field, the country has reached a breaking point. Problems for Venezuela started in 1992 when Hugo Chavez, then a soldier in a battalion of paratrooper took part in a coup d'tat to over throw then president Carlos Perez.

Hugo Chavez appeared to Venezuelans as a simple, direct and charismatic figure, and to the international community as the leader of a popular uprising. Poor economic conditions and a crack down on Chavez's supporters by the government only coalesced support around the changes he was proposing. Although the coup failed and Chavez was imprisoned, he formed a new party called the "Fifth Republic" and won the 1998 election.

No one could blame voters for wanting change, with rising oil prices in the '80s and increased state taxation, the flat lining of oil per capita contributed to Venezeula's collapse. Wages alone declined by 70 per cent. When Chavez came to power in 1999 he promised ordinary people a socialist revolution, starting with a referendum to rewrite the constitution without the required mandate from the legislature. Then he packed the national assembly with a majority sympathetic to his cause, which was given power above all institutions in Venezuela.

Venezuela's supreme court was also replaced by judges who supported Chavez, and its traditional legislative body was reduced to powerless body. Chavez's support continued and in his second term using oil revenues that were tied to political loyalties, he directed funds into literacy, health and education but far from what people wanted, poverty has reached over 80 per cent, infant mortality has surged by ten thousand per cent and the minimum wage has fallen by three quarters.

Turning Venezuela into an effective dictatorship, and dragging its economy down to a tragic state of borrowing and begging, inflation rose to over 900 per cent. Venezuela's economy collapsed because with the absolute power he had, Chavez began seizing private property, over-regulating, nationalising public utilities, and setting price controls below the cost of production.

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.

With a growing deficit, a refusal to exercise fiscal responsibility and the break down of OPEC the countries' economy became unstable as did oil prices on which it depended more and more. 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.

The country saw through an almost twenty per cent decline in GDP last year, with imports down by over 50 per cent and a state-wide collapse in industry, leading to a two day work week to save on electricity. It doesn't stop with bad economics; unthinkable levels of corruption exist across the political class, despite promises calls for a recall referendum are denied, state control is extended over the media and the national assembly is filled with Maduro supporters with the power to rewrite the constitution whenever they want.

Central power of the regime is upheld by paramilitaries, opposition candidates are arrested at gun point and multiple different exchange rates exist so foreign currency can be sold on the black market. There's one story that will always especially haunt me about Venezuela, when PDVAL the main publicly owned importer of goods, tasked with distributing subsidised stock left tones of food to spoil in government owned warehouses. 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. As a consequence, the average Venezuelan has lost almost 20 pounds.

With desperation ensuing, the homicide rate climbed to over ten times the global average, zoos were raided for exotic animal meat and the country saw 80 per cent of medicine no longer available sustaining a health crisis.

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 assets and wealth are immaterial.