Key Point: Government organization of the economy squandered Venezuela's wealth.
Friedrich Hayek famously observed that socialist central planning puts countries on the road to serfdom.
The latest dead end on that highway to hell—already littered with the human victims of past failed attempts in places like Cuba and the old Soviet Union—is in Caracas, Venezuela.
That is where, last weekend, President Nicolás Maduro and the thousands of Cuban communists who actually run his government took the final step to squash the rights of individual Venezuelan citizens and impose an authoritarian dictatorship.
Hayek could have told us: It is the logical last act in the Venezuelan tragedy that began nearly 20 years ago with the election of Maduro’s mentor (and Fidel Castro’s protégé), Hugo Chavez.
As The Economist magazine reported earlier this year, the damage in Venezuela is extensive.
The economy has contracted dramatically—gross domestic product in 2017 will be nearly 25 percent smaller than when Chavez died in 2013. Hyperinflation—and the complete economic collapse it signals—seems to be just around the corner.
Inflation is predicted to exceed 1,600 percent this year and the value of the country’s currency—the bolivar—has plummeted. As wags on Twitter have noted, it is now worth less than the virtual gold tokens in the “World of Warcraft” video game.
Which would be funny, were it not for the immense human suffering right now in Venezuela. People are losing weight because there is not enough to eat in this workers’ paradise.
There are shortages of everything, everywhere. Just like in the old Soviet Union, people line up at the first rumor that some basic item—bread, rice, cooking oil, etc.—might be available.
Food riots are frequent. Medicines are almost nonexistent. Hospitals do not even have running water. Many people are fleeing—thousands of refugees are crossing the border daily into Colombia.
It wasn’t supposed to end this way. The World Bank clucked approvingly in the early Chavez years, when his oil income redistribution schemes improved statistics for inequality.
Meanwhile, the Chavistas looted and destroyed the Venezuelan private sector, seizing and wiping out the efficient companies and farms that had been producing the basic goods people are now fighting over.
As long as oil prices were rising, they got away with it.