I blog periodically on the plight of Venezuela, a once prosperous nation spiraling downward in the grip of socialism. Venezuela’s National Assembly is now controlled by the democratic opposition, but President Maduro still controls the executive and judicial branches of government, so change is difficult. The government acknowledges an inflation rate of 275% but the actual rate is certainly much higher, and the rate is climb further. Citizens wait in line for food and gas in a country with the largest oil reserves in the world. Protests are a daily occurrence.
I just returned from a conference where I spoke with several Venezuela professionals. I won’t discuss their individual experiences and observations, but they underscore several points:
- The Chavez-Maduro regime has lasted 17 years, during which time it has institutionalized socialism. Reversing it will not happen overnight.
- Markets still work in Venezuela. Price controls, current exchange restrictions, and other regulations have choked off much of the formal economy, but a black market functions to sell goods and services people cannot get elsewhere. Prices are high and goods are scarce. While the official exchange rate for the Venezuelan currency (the bolivar) is about 6 per US dollar, the black market rate is about 1000.
- There is a sense that the end of the current socialist regime is near—perhaps a year or two away—but it is unclear how it will end and what the replacement will look like. Socialists often enter through elections, but they rarely exit in the same manner.
Venezuela is a modern socialist experiment conducted in one of Latin America’s most prosperous and resource-wealthy nations. It teaches us about collectivism’s serious and long-term consequences. The black market has ramped up to address needs where official markets will not, but supply is low and costs are high. Its no longer about redistribution of income, but about getting food and other necessities of daily life.
The case of Venezuela also underscores a key reality about socialism. In less than a generation, its leaders can impart a system of cronyism and dependence that now requires more than a simple election to reverse. Let’s hope force is not required to reverse the trend in Venezuela. The protest videos we currently see make me wonder.
What is happening in Venezuela is not in our near future, but Americans must understand the dangers of playing with fire. Socialism has been creeping in the US for some time. It always creates a dependency class. Calls from the left to expand government programs—free college, single payer healthcare, and so on—would only expand this realm of dependence, and those receiving government support rarely give it up without a fight. The national debt has already surpassed $19 trillion. The deeper we slide, the more difficult the turnaround.