I feel sorry for the Venezuelan people, but I’m perversely glad that the country is collapsing.
That’s because it’s nice to have proof that Margaret Thatcher was right when she famously warned that the problem with socialism is that you eventually run out of other people’s money.
To be sure, we already had proof from Greece, France, the Soviet Union, Brazil, and many other places. But it’s still nice to have another piece of evidence that big government eventually produces very dire results.
I also confess that I’m enjoying Venezuela’s economic decay because I get a warm feeling of Schadenfreude when watching leftists try to explain what’s happening in that formerly rich nation.
Even the New York Times feels the need to report on the mayhem in Venezuela.
“The courts? Closed most days. The bureau to start a business? Same thing. The public defender’s office? That’s been converted into a food bank for government employees. Step by step, Venezuela has been shutting down. … Venezuela keeps drifting further into uncharted territory. … that is only the start of the country’s woes. Electricity and water are being rationed, and huge areas of the country have spent months with little of either. … the Mexican company that bottles Coke in the country, has even said it was halting production of sugary soft drinks because it was running out of sugar.”
And why is the economy in free fall? Is it possible that the left-wing policies the NYT wants for the United States are failing when tried elsewhere?
Not according to the story. It’s the fault of external forces. Or maybe even rich people.
“The growing economic crisis — fueled by low prices for oil, the country’s main export; a drought that has crippled Venezuela’s ability to generate hydroelectric power; and a long decline in manufacturing and agricultural production. … Venezuela’s government says the problems are the result of an ‘economic war’ being waged by elites who are hoarding supplies.”
Finally, in the 27th paragraph, there’s a mention that maybe, just maybe, some of the blame belongs to government.
“… most economists agree that Venezuela is suffering from years of economic mismanagement, including … price controls that led many businesses to stop making products.”
Hmmm…, I guess we can safely assume that “most economists” does not include Joseph Stiglitz.
Another story in the New York Times specifically examines how this mess was created. Finally, an opportunity to learn how leftist policies are a recipe for economic failure, right?
Hardly. The report starts by pointing out the obvious. Yes, the economy is a disaster.
“Supermarket shelves in Venezuela are chronically bare, and power shortages are so severe that government offices are now open only two days a week. The health care system has collapsed, the crime rate is one of the world’s worst, and inflation is rapidly eroding what remains of the currency’s value.”
It then addresses the question of how this happened.
And as you can see, we’re supposed to believe it’s the result of falling oil prices and drought, even though many other oil-producing jurisdictions are avoiding economic chaos and droughts in other nations normally don’t lead to societal collapse.
“The price of oil, Venezuela’s only significant export, has plummeted, which means revenue could fall by 40 percent this year. The government’s huge borrowing, partly a legacy of the years when oil prices were far higher, has helped bring the crisis to a head because Venezuela now has far less money to repay its foreign debt, forcing Mr. Maduro to slash imports in order to avoid default. On top of that are the consequences of a drought, which has shriveled the country’s hydropower generation, a critical source of electricity.”
Farther down the article, in the seventh paragraph (of a much shorter story), there’s a grudging admission that at least some economists blame statist policies.
“… many economists say his policies of state ownership, unfettered spending, subsidies and domestic price controls are at least partly responsible for the crisis today.”
Gee, how generous of the NYT to acknowledge that some people have this strange belief that big government doesn’t work.
The column also notes that price controls are causing shortages, which is a nice admission even if there’s no clear conclusion in the article that the policy is bad.
“Subsidized food and fuel sold by state-run stores are priced far lower than they are really worth. This has created enormous lines of shoppers for goods that quickly sell out.”
While it’s amusing to dissect the verbal gymnastics of the New York Times, it’s even more fun to observe the dour reaction of Bernie Sanders when asked about the issue.
The folks at Newsbusters have the video, and here’s the relevant transcript if your stomach’s not strong enough to actually watch the Vermont Senator on screen.
Huh, the guy’s been waxing poetic about the glories of socialism and big government his entire life, so much so that he reportedly was kicked out of a Marxist commune for being too much of a blowhard, but now he’s suddenly so “focused” on his campaign that he can’t comment on the biggest story about socialism since the fall of the Berlin Wall?!?
Too bad the reporter didn’t ask the logical follow-up question: “So what makes you think the policies that have failed in Venezuela will work in the United States?”
Heck, I would like some journalist to present my two-part challenge for leftists and see if anyone can name a single successful statist jurisdiction.
P.S. Interestingly, the Washington Post does not appear to be as reflexively left wing as the NYT.
At least if these blurbs from an editorial last year are any indication.
“… one of the worst crises of governance Latin America has seen in modern times. The country’s collapsing economy, soaring crime … Mr. Maduro … inherited the mess created by the late Hugo Chávez and then greatly worsened it … Venezuelans are furious about endemic shortages, triple-digit inflation and a poverty rate that exceeds that of 1999, when the Chavista movement first came to power. … That Mr. Maduro … threatens violence probably is a reflection … of the regime’s deep-seated criminality. Two of the president’s nephews are being held in New York on drug-trafficking charges, and U.S. authorities are reportedly investigating numerous other senior figures, including the current president of the National Assembly, Diosdado Cabello, who is considered the regime’s second most powerful official.”
To be sure, the Post editorial doesn’t explicitly tie the wretched conditions in Venezuela to left-wing policy, but at least there’s no ambiguity about the fact that Maduro is a bad guy.
Now if we can get the Post to cease being reflexively supportive of statism in the United States, that will be real progress.
Daniel J. Mitchell is a top expert on tax reform and supply-side tax policy at the Cato Institute. Mitchell is a strong advocate of a flat tax and international tax competition.