The Failure of Socialism in Venezuela, Part III

In Part I of this series, I documented the dramatic decline in living standards ever since socialists took power in Venezuela.

In Part II, I compared Venezuela’s decline to the other Latin American nations, particularly the success story of Chile.

Initially, I planned on this being a two-part series. After all, what else needs to be said when a nation does so poorly that even other socialists try (and fail) to disavow its policies.

But I decided to add Part III because of a remarkable report in the New York Times.

Authored by Isayen Herrera and Frances Robles, it actually acknowledges that socialism has created massive problems. Here are some excerpts.

…a socialist revolution once promised equality and an end to the bourgeoisie. Venezuela’s economy imploded nearly a decade ago, prompting a huge outflow of migrants in one of worst crises in modern Latin American history. …Conditions remain dire for a huge portion of the population…prices still triple annually, among the worst rates in the world. …Half of the nation lives in poverty…one in three children across Venezuela was suffering from malnutrition as of May 2022… Up to seven million Venezuelans have simply given up and abandoned their homeland since 2015… Last year’s inflation rate of 234 percent ranks Venezuela second in the world, behind Sudan.

What makes this story especially noteworthy is that the Times wrote another article about Venezuela’s dismal economy less than three years ago, yet that piece never once mentioned socialism.

So it’s a sign of progress that the paper now acknowledges that statist policies deserve the blame.

And I also think it’s remarkable that the article noted that socialism produces a grotesque version of inequality, with government insiders and other cronies getting rich while ordinary people suffer horrific deprivation..

Venezuela is increasingly a country of haves and have-nots, and one of the world’s most unequal societies… the wealthiest Venezuelans were 70 times richer than the poorest, putting the country on par with some countries in Africa that have the highest rates of inequality in the world.

The poster child for undeserved socialist wealth is Hugo Chavez’s daughter, who amassed more than $4 billion of ill-gotten gains.

P.S. In spite of the wretched state of the Venezuelan economy, some nutty leftists put together a “Happy Planet Index” that ranked Venezuela above the United States. I still haven’t figured out whether that was crazier than the Jeffrey Sachs’ index that put Cuba above America.

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The Failure of Socialism in Venezuela, Part II

Back in 2011, I shared a chart comparing economic growth in Chile, Argentina, and Venezuela between 1980 and 2008.

My simple goal was to show that market-oriented nations enjoy very fast growth compared to nations with “mixed economies  or socialist economies.

Over the past dozen years, I’ve repeatedly shared that chart and featured it in the “anti-convergence club.”

Having written yesterday about the ongoing economic misery of Venezuela, it dawned on me that is it probably time to update the numbers.

So I went to the International Monetary Fund’s World Economic Outlook database.

What did I find? As you can see from the chart, everything I wrote back in 2011 is still true. Except Chile looks even better and Venezuela looks even worse.

The obvious takeaway is that the longer a nation follows good policy, the better the results. And the longer a nation is subjected to socialism, the worse the results.

If you want numbers, inflation-adjusted per-capita output has nearly tripled in Chile over the past four decades. Call that a reward for good policy.

By contrast, economic growth in Argentina has been very anemic, just 21 percent in 42 years. Call that the price of bad policy.

But Argentina’s anemia looks great compared to Venezuela, where per-capita GDP has suffered a 70 percent collapse. I’m not sure there’s a word to describe such a cataclysmic decline. For lack of a better alternative, we’ll say that’s the “reward” for socialism.

I always challenge my leftist friends to respond to my never-answered question. Maybe I should simplify things and simply ask if they still think Venezuela is a role model.

P.S. I’m still amazed that the New York Times published a lengthy article on Venezuela’s economic misery and somehow never mentioned socialism.

P.P.S. While Venezuela is the main focus of today’s column, I can’t resist sharing my concerns about Chile. As documented in my six-part series in 2021, Chile elected a socialist president. It is therefore possible that a future version of his chart will show grim news. But hope is not lost. Chilean voters overwhelmingly rejected a proposal for a new constitution based on socialism. And just a few days ago, the legislature rejected a huge, class-warfare tax increase.

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The Failure of Socialism in Venezuela, Part I

Socialism is an immoral system that has a horrible track record of misery and failure.

One of the most tragic examples is Venezuela.

It used to be the richest nation in Latin America. But per-capita GDP has collapsed according to IMF data.

As you can see from the chart, there were a couple of decent periods, peaking in 2008 and again about five years later.

But those were driven by world oil prices. The overall trend during the Chavez-Maduro years has been negative.

Socialism has been such a disaster that the country is now largely incapable of benefiting when oil prices rise.

By the way, if you somehow think IMF data is suspect, you can also look at the UN’s Human Development Index. Over the past couple of decades, only Syria, Libya, and Yemen performed worse than Venezuela.

In his column for the Miami Herald, Andres Oppenheimer documents Venezuela’s descent into misery.

As Venezuelan dictator Nicolás Maduro celebrates his 10th year in office this week, a reality check shows that his presidency has been much more disastrous than people think. Maduro…has performed an economic miracle in reverse: He has turned what used to be one of Latin America’s richest countries into the poorest one, alongside Haiti. …Venezuela’s gross domestic product has plummeted from $350 billion in 2013 to $60 billion today… Venezuela’s poverty rate has soared from 40% of the population in 2013 to 94% today… Venezuela’s annual inflation rate has risen to nearly 350% this year from 56% in 2013… More than 7.2 million Venezuelans have fled the country during the past decade, according to United Nations estimates. That’s the biggest mass exodus in Latin America’s history.

That’s a depressing indictment.

But there’s more bad news to share. Here are some excerpts from an article by Dominic Wightman for the U.K.-based Critic.

Caracas has grown into one such city from hell. …there’s all-round cynicism, the pongs of death and dank deprivation ubiquitous. …The capital city is flatlining, the flatline only spiked by oases of ill-gotten gains underwritten by Russian gangsters, by wannabe Cuban puppet masters and the Chavistas themselves, whose grip on Venezuela has been transitorily perpetuated by narcodollars… No politics class or textbook can prepare a man for fifteen years viewing first-hand this latest chapter in the failure of socialist doctrine. The descent to hell in Venezuela has been swift and gruesome. …Too often in the West we have discussed Socialism as if it were a cheese on a cheeseboard, some kind of edible mushroom from which we might find nourishment, even as a side dish in a broader menu of political possibilities. The truth is that Socialism is poison, whichever way it is prepared or digested. It is appropriate — no, it is vital — to be so black and white about it.

Wightman’s analysis is particularly persuasive since he is married to a Venezuelan woman and has personally witnessed the nation’s decline over many years.

P.S. I’m still flabbergasted that the New York Times published a lengthy article on Venezuela’s economic misery and somehow never mentioned socialism.

P.P.S. Here’s my description of what it’s like to encounter victims of Venezuelan socialism.

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Socialism and Immigration

I’ve written many columns about the migration from high-tax states to low-tax states.

The obvious takeaway is that people want to move to places where they can keep more of their money. And if they don’t have money, they want to move to places where lower tax burdens create more economic opportunity.

The same principle is true when considering international migration.

Nations with lower tax burden attract more investors, entrepreneurs, and job creators. And they also attract the people who want the new jobs that are created.

We’re seeing an example of this in the Western Hemisphere.

Charles Lane of the Washington Post has a very good column today, explaining a big reason why so many migrants are coming to the United States.

…the exodus from failed left-wing Latin American regimes has global repercussions…many people seeking relief from poverty and oppression go to the wealthiest and freest nation in their own hemisphere: the United States. Right now, escapees from Cuba, Venezuela and Nicaragua make up a rapidly growing share of the influx at the border between the United States and Mexico. …All of the above should inform the debate about “root causes” of migration… the historic debacle represented by the departure of over 6 million from Venezuela… That is a fifth of the entire country. …The foreseeable failure of subjecting the economy to top-down control and denying people basic freedoms can.The exodus is thus a tremendous compliment to the United States and other democratic capitalist countries.

As I said, a very good column. I feel obliged to point out that Mr. Lane was being redundant when he wrote “failed left-wing,” but let’s conclude by examining a couple of policy issues.

First, some people argue that illegal migration can be reduced if American taxpayers send foreign aid to Latin America. But since foreign aid tends to subsidize bad policy, that approach almost surely will backfire.

Second, we should make sure the people who come to America are arriving for opportunity rather than handouts. That’s true whether we have a restrictive policy or an open-door policy.

P.S. The second point doesn’t apply for potential migrants from countries such as Denmark that have overly generous welfare policies.

P.P.S. It’s a problem that Biden wants to drive away highly productive people.

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Is Venezuela a Warning for the United States?

Thanks to socialism, Venezuela is a basket case.

This video from John Stossel asks if the United States can and should learn from this bad example.

The easy answer is yes. Indeed, you can click here and here to get 56 examples of why we should not copy Venezuela’s descent to statism.

The main thing to understand is that the world is an economic laboratory and the various countries are experiments showing what works and what doesn’t work.

Nations such as Venezuela clearly are wretched examples of what happens if there is a large amount of bad policy.

Other nations, by contrast, are examples of what happens if there’s a medium level of bad policy. Think Greece, Argentina, and Italy.

While countries such as the United States and Denmark show what happens if there is a (comparatively) modest amount of bad policy.

All this is depicted in the “socialism slide,” which I created back in 2019 to show how nations score in the Fraser Institute’s Economic Freedom of the World.

The good news is that the United States would have to fall a long way down the slide before approaching Venezuela-style economic despotism.

Even Biden’s plan would represent just a small step in that wrong direction.

P.S. I’m focused on the dangers of copying Venezuela’s bad economic policies, but I agree about the downsides of the other two policies – gun control and speech control – mentioned in the video.

P.P.S. I’ll never stop being amazed that the New York Times wrote about Venezuela’s economic crisis and never once mentioned socialism.

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The Most Painful (for Our Leftist Friends) Tweet of 2021

Two days ago, I shared the most morally reprehensible tweet of the year.

Today, we’re going to share a tweet that also is painful to read, but in this case only our friends on the left will be discomforted.

I’ve opined about Chile’s success and Venezuela’s failure on multiple occasions, but here’s the great José Piñera with an especially powerful comparison of the two nations.

This extraordinary graph is eloquent: the Chilean Model defeats poverty with liberty while the Venezuelan Model creates poverty with socialism.

If the free market candidate @joseantoniokast is elected President this year, Chile's miracle will be back ✌️🇨🇱 pic.twitter.com/oUAyloOvdt

— José Piñera🗽 (@josepinera_en) October 21, 2021

I’ve had dozens and dozens of conversations with friends on the left about Chile and Venezuela and they have no response other than to sputter “Pinochet was a dictator!”

That’s true, I tell them, but please respond to my question about what we can learn when we compare Chile’s successful experience with economic liberty and Venezuela’s awful experience with statism.

At which point they bring up Pinochet again and refuse to deal with the actual data.

Speaking of data, since embedding a chart in a tweet sometimes doesn’t lead to the most user-friendly presentation, I went to the Our World in Data website to create my own version of Jose’s chart.

This type of chart looks at “relative changes” in per-capita economic output, so all nations start at the same place and we then examine which ones grew the fastest.

Or, in the case of Venezuela, which ones declined (and the ones, such as Argentina, that performed poorly).

Here’s another version of the chart, but this one gets rid of all the other nations so we can more easily compare Chile and Venezuela. As José Piñera wrote in his tweet, this is “extraordinary.”

Because Venezuela has a lot of oil, the nation’s economy does face exaggerated ups and downs as energy prices fluctuate.

But it’s easy to see a trend of economic stagnation (the nation’s energy industry was nationalized and is now collapsing, so that will augment Venezuela’s misery).

Our final version of the chart adds the average performance for the world and the average performance for Latin America. As you can see, Chile is still the best performer and Venezuela is still at the bottom.

I’ll close with two final observations.

• First, Venezuela’s decline is particularly depressing because it had the world’s 10th-freest economy back in 1970, but it’s been all downhill since then.
• Second, I’m worried about Chile, particularly since the left is pushing for a new constitution that focuses on entitlements rather than liberties.

But perhaps José Piñera‘s preferred candidate, José Antonio Kast Rist, will win this year’s election and save Chile from going in the wrong direction.

P.S. Venezuela used to be much richer than Chile, so it makes sense that Chile began to converge. But now the two countries are part of the anti-convergence club because Chile is now richer and continuing to grow much faster.

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Great Moments in Foreign Government

Time to update our series on “great moments in foreign government.”

We’ll start with Jersey. I wrote a few years ago about the (relatively) good tax laws in that British dependent territory off the coast of France.

But there are two ways those laws could be improved. First, officials could abolish its income tax because a zero income tax is better than a flat tax.

And with tax policy heading in the wrong direction in the United Kingdom, that would further enhance Jersey’s competitive advantage.

Sadly, the island’s lawmakers haven’t opted for that choice.

But they did approve a second reform. As reported by the New York Times, Jersey has joined the 20th century.

Lawmakers on the island of Jersey have approved scrapping a decades-old law that prevented married women from talking to the tax authorities without the permission of their husband or filing taxes under their own names… a popular tax haven, …its financial laws have not always kept up with the times: Under its current tax law, introduced in 1928, only the husband in a heterosexual marriage can pay taxes, with his wife’s earnings considered part of his income. …Things became a bit more modern in 2013, when a box appeared on income tax forms that husbands could tick rather than giving written permission. When civil unions and same-sex marriages became legal on the island, the law allowed the older partner to take the role of “husband” and the younger “wife.” …Under the proposal backed by a majority of lawmakers on Tuesday, taxpayers would be considered as individuals. …Legislation to bring in the changes will be drafted later this year and should come into effect in 2021.

Next, we’ll visit Indonesia, where the guy who drafted a law actually got some first-hand experience with how the law is implemented. The Daily Mail has the amusing details.

An Indonesian man working for an organisation which helped draft strict religious laws ordering adulterers to be flogged has himself been whipped after he was caught having an affair with a married woman. Mukhlis, who is a member of the Aceh Ulema Council and only goes under one name like many Indonesians, was beaten 28 times with a rattan cane in the provincial capital of Banda Aceh on Thursday. Mukhlis grimaced and flinched during the punishment, before his married companion was brought to the stage and flogged some 23 times.

Now let’s travel to Switzerland, which is a sensible country (at least by standards of the modern world) with all sorts of admirable policies.

But, as reported by the Economist, that nation’s politicians have some weird ideas. Such as a strategic coffee reserve.

The 15 big Swiss coffee retailers, roasters and importers, such as Nestlé, are required by law to store heaps of raw coffee. Together, these mandated coffee reserves amount to about 15,000 tonnes—enough for three months’ consumption. The government finances the storage costs through a levy on imports of coffee. All 15 companies are in favour of maintaining the coffee reserve—as long as they are paid for it. IG Kaffee, a lobby group, asks why the government wants to scrap a stockpile that has served Switzerland so well.

Not as strange as Germany’s coffee tax or Japan’s coffee enemas, but still rather odd.

Last but not least, the Venezuelan government is well known for economic mismanagement.

But BBC reports that it also should be known for military incompetence.

A Venezuelan navy coastal patrol boat sank in the Caribbean after allegedly ramming a cruise ship that it had ordered to change direction. …The incident took place near La Tortuga Island, a Venezuelan federal dependency, on 30 March.Columbia Cruise Services, which operates the Resolute, said the cruise ship had been carrying out routine engine maintenance in international waters…shortly after midnight, the Naiguata radioed the Resolute, questioning its intentions, and ordered the captain to follow it to a port on Isla Margarita, to the east. “While the master was in contact with the head office, gunshots were fired and, shortly thereafter, the navy vessel approached the starboard side at speed… and purposely collided with the RCGS Resolute,” it added. “The navy vessel continued to ram the starboard bow in an apparent attempt to turn the ship’s head towards Venezuelan territorial waters.” …the patrol boat began taking on water.

The moral of all these stories is that governments piss away money in very interesting and novel ways.

But while these stories are somewhat entertaining, they also confirm that it’s never a good idea to give politicians more money when they’ve repeatedly shown that they squander the revenues they already have.

P.S. Here are my posts about “great moments in local government” and “great moments in state government.”

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A Grim Indirect Encounter with Venezuelan Socialism

When I share examples of socialism humor and communism humor, I sometimes wonder whether we should laugh about ideologies that have imposed so much death and misery on the world.

For instance, I’ve shared some jokes about the horrid consequences of Venezuelan socialism.

Including jokes dealing with widespread hunger.

But now I feel a bit guilty.

Not because I’ve been mocking communism and socialism. Both are evil and deserve endless scorn.

Instead, I feel a bit guilty because I’ve actually encountered real victims of Venezuelan statism.

I’m currently in Medellin, Colombia, where I’ll be speaking tomorrow to the Liberty International World Conference.

But I first spent a week with some friends in Cartagena, a beautiful colonial city on the Atlantic Ocean.

Great food, nice beaches, friendly people, and perfect weather, but I noticed there were quite a few beggars. But these were not like the well-fed panhandlers you can find at suburban intersections in the United States, or the bums in cities like New York, San Francisco, or Washington.

Many of them were gaunt mothers with young children, and I was told they were all from Venezuela.

I had no way of confirming that information, of course, but we were only a few hundred miles from the Venezuelan border. And since millions of people have fled that nation’s horrific conditions, it makes sense that some of them wound up in Cartagena.

The most heart-wrenching part of my experience is when we left a pizza restaurant one evening. I had a box with about six leftover slices (a nutritious breakfast for the next morning).

But within two blocks, I gave them all away to various children who must have sensed I was a soft touch.

And I couldn’t help but compare their suffering with the multi-billion stash of stolen loot amassed by Chavez’s daughter.

The bottom line is that I still plan on sharing satire about the misery that socialism has caused in Venezuela. But I’ll be very cognizant of the fact that there are countless stories of horrible suffering because of big government.

P.S. I wish Bernie Sanders and the other leftists could see (and understand) how Venezuelan socialism has caused so much human misery.

P.P.S. And I wish reporters from the New York Times had enough sense (or integrity) to recognize that the misery is a consequence of socialism.

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A Case Study of How Venezuelan Socialism Killed the Goose with the Golden Eggs

The economic disintegration of Venezuela is a powerful example how socialism fails. Even in a nation with massive oil wealth.

This video from Reason tells the tragic story.

I think long-run data is especially valuable when assessing a nation’s economic performance.

And Venezuela definitely looks terrible when looking at decades of data on per-capita economic output.

Especially when compared to a pro-market nations such as Chile.

Not that we should be surprised. This is what we find anytime capitalist-oriented counties are compared with statism-oriented countries.

• South Korea vs. North Korea
• West Germany vs. East Germany
• Singapore vs. Jamaica
• Hong Kong vs. Cuba

And there are many other case studies.

But let’s re-focus on the problems of Venezuela. In one of her Wall Street Journal columns, Mary Anastasia O’Grady analyzes the government-caused crisis. She starts by describing what happened.

Efforts to guarantee outcomes are at odds with what it means to live in a free society where equality under the law is the guiding principle. …Hugo Chávez…promised to make everyone in his country equally well-off. The concept sold in a nation that believed it was infinitely rich because it was swimming in oil. …stick it to the haves. When he did, they packed their bags and left. …it is the flight of the knowledge worker that has done the most harm to the nation. …The Bolivarian revolution’s earliest large-scale assault on know-how came during a lockout at the monopoly oil company Petróleos de Venezuela (PdVSA) in December 2002. …the regime used it to purge at least 18,000 PdVSA and related-company employees, gutting the industry of most of its experienced personnel. By replacing fired workers with political loyalists, Chávez believed he was protecting his golden goose. …In 2009 the regime expropriated Venezuelan companies that served the oil industry.

And she concludes by describing the consequences.

as long as oil prices were high, the costs of such recklessness was hidden. The party ended when prices tanked in 2014, government revenues dropped precipitously, and central bank money-printing led to a mega-devaluation of the bolivar. …another wave of oil engineers—this time led by a younger generation—went abroad to work. In the years that followed, more oil technicians threw in the towel on life in Venezuela. This vicious circle of declining revenue and human-capital flight has brought the once-mighty Venezuelan petroleum powerhouse to a standstill. 

In other words, exactly as depicted in the video at the start of this column.

No wonder Venezuelans are eating their pets.

Or joining gangs simply as a strategy to get food.

The bottom line is that socialism doesn’t work. Even in a country that has massive reserves of oil.

Sooner or later, the attempt to achieve coerced equality will mean that too many people are on the dole and too few people are producing. Which brings to mind Margaret Thatcher’s famous observation.

P.S. The New York Times actually wrote a big story about Venezuela’s collapse and somehow never mentioned socialism.

P.P.S. Here are four other videos about the impact of socialism in Venezuela.

P.P.P.S. The situation has become so dire that even some socialists are disavowing Venezuela.

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How Can the New York Times Write about the Failure of Venezuela and not Mention Socialism?

Every so often, I’ll grouse about media sloppiness/media bias, most often from the Washington Post or New York Times, but also from other outlets (Reuters, Time, ABC, the Associated Press, etc).

Let’s add to the collection today by perusing an interesting – but frustrating – article in the New York Times about Venezuela’s near-decimated oil industry.

Authored by Sheyla Urdaneta, Anatoly Kurmanaev and Isayen Herrera, it provides a thorough description of how the energy sector in oil-rich Venezuela has collapsed.

For the first time in a century, there are no rigs searching for oil in Venezuela. Wells that once tapped the world’s largest crude reserves are abandoned… Refineries that once processed oil for export are rusting hulks… Fuel shortages have brought the country to a standstill. At gas stations, lines go on for miles. …The country that a decade ago was the largest producer in Latin America, earning about $90 billion a year from oil exports, is expected to net about $2.3 billion by this year’s end… More than five million Venezuelans, or one in six residents, have fled the country since 2015, creating one of the world’s greatest refugee crises, according to the United Nations. The country now has the highest poverty rate in Latin America, overtaking Haiti.

But here’s what shocked me. The article never once mentions socialism. Or statism. Or leftist economic policy.

Instead, there is one allusion to “mismanagement” and one sentence that refers to government policy.

…years of gross mismanagement… Hugo Chávez, appeared on the national stage in the 1990s promising a revolution that would put Venezuela’s oil to work for its poor majority, he captivated the nation. …Mr. Chávez commandeered the country’s respected state oil company for his radical development program. He fired nearly 20,000 oil professionals, nationalized foreign-owned oil assets and allowed allies to plunder the oil revenues.

Almost 1800 words in the article, yet virtually no discussion of how maybe, just maybe, Venezuela’s hard shift to the left (as illustrated by the chart, economic freedom has steadily declined this century) may have contributed to the collapse of the country’s major industry.

This is journalistic malpractice. Sort of like writing about 2020 and not mentioning coronavirus or writing about 1944 and not mentioning World War II.

For those of you who do care about facts, it’s worth knowing that Venezuela has the world’s lowest level of economic liberty according to Economic Freedom of the World and second-to-lowest level of economic liberty according to the Index of Economic Freedom.

In a column for USA Today, Daniel di Martino writes about the awful consequences of his nation’s drift to socialism.

All my life, I lived under socialism in Venezuela until I left and came to the United States as a student in 2016. Because the regime in charge imposed price controls and nationalized the most important private industries, production plummeted. No wonder I had to wait hours in lines to buy simple products such as toothpaste or flour. …My family and I suffered from blackouts and lack of water. The regime nationalized electricity in 2007 in an effort to make electricity “free.” Unsurprisingly, this resulted in underinvestment in the electrical grid. By 2016, my home lost power roughly once a week. …The real reason my family went without water and electricity was the socialist economy instituted by dictators Hugo Chavez and Nicolas Maduro. The welfare programs, many minimum-wage hikes and nationalizations implemented by their regimes resulted in a colossal government deficit that the central bank covered by simply printing more money — leading to rampant inflation. …I watched what was once one of the richest countries in Latin America gradually fall apart under the weight of big government.

And he issues a warning about what could happen to the United States.

…neither Medicare for All nor a wealth tax alone would turn the United States into Venezuela overnight. No single radical proposal would do that. However, if all or most of these measures are implemented, they could have the same catastrophic consequences for the American people that they had for Venezuela.

The good news, so to speak, is that it would take many decades of bad policy to turn the U.S. into an economic basket case. There’s even a somewhat famous quote from Adam Smith (“there is a great deal of ruin in a nation“) about the ability of a country to survive and withstand lots of bad public policy.

But that doesn’t mean it would be a good idea to see how quickly the U.S. could become Venezuela. As I pointed out when writing about Argentina, it’s possible for a rich country to tax, spend, and regulate itself into economic crisis.

P.S. If you like gallows humor, you can find Venezuela-themed jokes here, here, here, here, here, and here.

P.P.S. I speculated about the looming collapse of Venezuela in both 2018 and 2019. Sadly, it looks like the regime will last at least until 2021.

 

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Hopes and Fears for 2020

Yesterday’s column was my annual end-of-year round-up of the best and worst developments of the concluding year.

Today I’ll be forward looking and give you my hopes and fears for the new year, which is a newer tradition that began in 2017 (and continued in 2018 and 2019).

With my glass-half-full outlook, we’ll start with the things I hope will happen.

Supreme Court strikes down civil asset forfeiture – It is nauseating that bureaucrats can steal property from citizens who have never been convicted of a crime. Or even charged with a crime. Fortunately, this disgusting practice already has attracted attention from Clarence Thomas and other sound-thinking Justices on the Supreme Court. Hopefully, this will produce a decision that ends this example of Venezuela-style government thuggery.

Good free-trade agreements for the United Kingdom – This is a two-pronged hope. First, I want a great agreement between the U.S. and the U.K., based on the principle of mutual recognition. Second, I want the best-possible agreement between the U.K. and the E.U., which will be a challenge since the political elite in Brussels has a spiteful desire to “punish” the British people for supporting Brexit.

Maduro’s ouster in Venezuela – I already wished for this development in 2018 and 2019, so this is my “Groundhog Day” addition to the list. But if I keep wishing for it, sooner or later it will happen and I’ll look prescient. But I actually don’t care about whether my predictions are correct, I just want an end to the horrible suffering for the people of Venezuela.

Here are the things I fear will happen in 2020.

A bubble bursts – I hope I’m wrong (and that may be the case since I’ve been fretting about it for a long time), but I fear that financial markets are being goosed by an easy-money policy from the Federal Reserve. Bubbles feel good when they’re expanding, but last decade should have taught us that they can be very painful when they pop.

A loss of economic liberty in Chile and/or Hong Kong – As shown by Economic Freedom of the World, there are not that many success stories in the world. But we can celebrate what’s happened in Hong Kong since WWII and what’s happened in Chile since the late 1970s. Economic liberty has dramatically boosted prosperity. Unfortunately, Hong Kong’s liberty is now being threatened from without and Chile’s liberty is now being threatened from within.

Repeal of the Illinois flat tax – The best approach for a state is to have no income tax, and a state flat tax is the second-best approach. Illinois is in that second category thanks to a long-standing provision of the state’s constitution. Needless to say, this irks the big spenders who control the Illinois government and they are asking voters this upcoming November to vote on whether to bust the flat tax and open the floodgates for an ever-growing fiscal burden. By the way, it’s quite likely that I’ll be including the Massachusetts flat tax on this list next year.

I’ll also add a special category for something that would be both good and bad.

Trump gets reelected – Because Trump is producing better tax policy and better regulatory policy, and because of my hopes for judges who believe in the Constitution’s protections of economic liberty, it would be good if he won a second term.

Trump gets reelected – Because Trump is producing worse spending policy and worse trade policy, and because of my concerns never-ending Keynesian monetary policy from the Federal Reserve, it would be bad if he won a second term.

Happy New Year, everyone.

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Measuring the Impact of 20 Years of Socialism in Venezuela

Fifty years ago, Venezuela was ranked #10 for economic liberty and enjoyed the highest living standards in Latin America

Today, the nation is an economic disaster. Hugo Chavez and Nicolas Maduro deserve much of the blame. Their socialist policies have dropped Venezuela to last place according to Economic Freedom of the World.

Predictably, this has resulted in horrific suffering.

And it’s going from bad to worse.

In ways that are unimaginable for those of us living in civilized nations.

For instance, the Associated Press reports that grave-robbing is now a problem in the country.

Even the dead aren’t safe in Maracaibo, a sweltering, suffering city in Venezuela. Thieves have broken into some of the vaults and coffins in El Cuadrado cemetery since late last year, stealing ornaments and sometimes items from corpses as the country sinks to new depths of deprivation. “Starting eight months ago, they even took the gold teeth of the dead,” said José Antonio Ferrer, who is in charge of the cemetery, where a prominent doctor, a university director and other local luminaries are buried. Much of Venezuela is in a state of decay and abandonment, brought on by shortages of things that people need the most: cash, food, water, medicine, power, gasoline. …Many who have the means leave, joining an exodus of more than 4 million Venezuelans who have left the country in recent years. …Some people sift through trash, scavenge for food.

And hyper-inflation is creating a barter economy according to the AP.

…the economy is in such shambles that drivers are now paying for fill-ups with a little food, a candy bar or just a cigarette. Bartering at the pump has taken off as hyperinflation makes Venezuela’s paper currency, the bolivar, hard to find and renders some denominations all but worthless, so that nobody will accept them. Without cash in their wallets, drivers often hand gas station attendants a bag of rice, cooking oil or whatever is within reach. …This barter system…is just another symptom of bedlam in Venezuela. …The International Monetary Fund says inflation is expected to hit a staggering 200,000% this year. Venezuela dropped five zeros from its currency last year in a futile attempt to keep up with inflation. …Venezuela, which sits atop the world’s largest oil reserves, was once rich. But the economy has fallen into ruin because of what critics say has been two decades of corruption and mismanagement under socialist rule.

Mary O’Grady of the Wall Street Journal points out that the poor are being hurt the most.

…the gap in living standards between the haves and the have-nots is wider than ever. It wasn’t supposed to be like this. Economic equality is the socialists’ Holy Grail. People are poor, the logic goes, because the rich have too much. Ergo, all it takes to end poverty is the use of state coercion to distribute economic gains evenly. …Tell that to the Venezuelan poor. Not only have their numbers increased under socialism, but the suffering among the most vulnerable has grown more intense. …Venezuela now experiences recurring blackouts and brownouts… in the “ranchos,”…residents now make “lamps” out of mayonnaise jars, diesel taken from vehicles, and pieces of cloth. One local described it to the reporter as going back to “prehistoric” times. With water, sanitation and other public services, the story is the same. …the have-nots are at Mr. Maduro’s mercy.

College students also are suffering, as reported by the Union Journal.

…5 youngsters had fainted and two of them have been whisked away in an ambulance. The faintings on the major college have turn into a daily prevalence as a result of so many college students come to class with out consuming breakfast, or dinner the evening earlier than. In different faculties, youngsters wish to know if there’s any meals earlier than they resolve whether or not to go in… Venezuela’s devastating six-year financial disaster is hollowing out the varsity system… Starvation is simply one of many many issues chipping away at them now. Thousands and thousands of Venezuelans have fled the nation in recent times, depleting the ranks of scholars and academics alike. …Many colleges are shuttering within the once-wealthy nation as malnourished youngsters and academics who earn nearly nothing abandon lecture rooms to scratch out a residing on the streets or flee overseas. It’s a significant embarrassment for the self-proclaimed Socialist authorities.

In a column for the New York Times, Nicholas Kristof shares some sad observations about the consequences of Venezuelan socialism.

This country is a kleptocracy ruled incompetently by thugs who are turning a prosperous oil-exporting nation into a failed state sliding toward starvation. …Serrano, 21, lives in the impoverished, violent slum of La Dolorita, where I met her. The baby was fading from malnutrition in May, so she frantically sought medical help — but three hospitals turned the baby away, saying there were no beds available, no doctors and no supplies. …Daisha…died at home that night. …President Nicolás Maduro’s brutal socialist government is primarily responsible for the suffering, and there are steps Maduro could take to save children’s lives, if he wanted to. …Venezuela may now be sliding toward collapse and mass starvation, while fragmenting into local control by various armed groups. Outbreaks of malaria, diphtheria and measles are spreading, and infant mortality appears to have doubled since 2008.

By the way, Kristof argues that sanctions imposed by Obama and Trump are making a bad situation worse.

That’s true, but it doesn’t change the fact that Venezuela’s awful government deserves the overwhelming share of the blame.

Let’s measure how the people of Venezuela have suffered. Here are the per-capita GDP numbers since Chavez took power in 1999. There’s volatility in the data, presumably because of changes in oil prices. But the trend is unmistakably negative.

The bottom line is that Venezuela’s living standards have collapsed by about 50 percent since the socialists took over.

That makes Greece seem like an economic powerhouse by comparison.

Let’s close, though, by comparing Venezuela to Latin America’s most market-oriented nation.

As you can see, per-capita economic output in Chile (in blue) has soared while per-capita GDP in Venezuela (in red) has collapsed.

In other words, free markets and small government are the right recipe if the goal is broadly shared prosperity.

P.S. I’ve explained on many occasions that lower-income people in Chile have been the biggest beneficiaries of pro-market reforms.

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Venezuela and the Socialism Slide

How do we measure the cost of Venezuelan socialism?

• Is it people eating household pets?
• Is it people dying of malnourishment?
• Is it women selling their bodies?

Actually, it’s all of the above.

And there’s plenty of additional evidence. All of which shows that more socialism results in more misery.

Let’s review some examples.

Venezuela has the largest oil reserves in the world. But with government running the industry, producing petroleum products has been a challenge. To put it mildly.

Venezuela — home to the world’s largest oil reserves — has started introducing in some areas to tackle extreme fuel shortages. …for ordinary Venezuelans, it is a cruel joke without a punchline — a driver recently died of a heart attack after waiting in line for days to fill his tank. …Lopez had been waiting in line to fill her tank for six hours in Lara’s capital Barquisimeto, but had to leave without getting any fuel because she had to go search for medicine for her ailing brother, who suffers from meningitis. “It’s a joke!” she fumed again as she left the gas station empty-handed, despite the fact that between state-regulated gas prices, hyper-inflation and black-market dollar exchange rates, a dollar could technically buy almost 600 million liters of fuel. …According to the Organization of Petroleum Exporting Countries (OPEC), Venezuela’s oil output has dropped from 3.2 million barrels per day a decade ago to 1.03 million barrels in April this year. Other estimates put that output as low as 768,000 barrels per day.

Here’s another sign of Venezuela’s descent into third-world status.

…the Center for Malaria Studies in Caracas..is not immune to Venezuela’s economic crisis and is struggling to treat patients. This is a country that lacks 85 percent of the medicines it needs, according to the pharmaceuticals industry. …Scientists who would later work for this clinic contributed in 1961 to helping Venezuela become the first country to eradicate malaria. However, there was a resurgence seven years ago, worsening to become an epidemic in 2016, according to the Red de Epidemiologia NGO. Today the clinic is in a sorry state: yellowed microscopes, a dishwasher stained by purple chemicals, refrigerators corroded by rust. …According to the World Health Organization, Venezuela registered more than 400,000 malaria cases in 2017, making it one of the hardest-hit countries in the Americas. Noya, though, believes the true extent of the epidemic is “close to two million” people affected.

I have no idea if Juan Guaido, the putative leader of the opposition, has what it takes to lead Venezuela out of the dark ages (maybe he’s another Macri rather than a Thatcher). But he’s definitely getting some first-hand experience with socialism.

On Thursday, Juan Guaido woke up and doused himself with a bucket of water. It was his shower. Like millions of Venezuelans, the man who dozens of countries recognize as the legitimate leader of his broken country can’t rely on the taps to run. …“It’s going to get worse” before things turn, he warned.

Reuters reports on how parts of Venezuela are descending into autarky and barter.

At the once-busy beach resort of Patanemo, tourism has evaporated over the last two years as Venezuela’s economic crisis has deepened and deteriorating cellphone service left visitors too afraid of robbery to brave the isolated roads. …These days, its Caribbean shoreline flanked by forested hills receives a different type of visitor: people who walk 10 minutes from a nearby town carrying rice, plantains or bananas in hopes of exchanging them for the fishermen’s latest catch. With bank notes made useless by hyperinflation, and no easy access to the debit card terminals widely used to conduct transactions in urban areas, residents of Patanemo rely mainly on barter. It is just one of a growing number of rural towns slipping into isolation as Venezuela’s economy implodes amid a long-running political crisis. …In the mountains of the central state of Lara, residents of the town of Guarico this year found a different way of paying bills – coffee beans. Residents of the coffee-growing region now exchange roasted beans for anything from haircuts to spare parts for agricultural machinery.

One can only wonder, by the way, why the collapse of trade isn’t creating more jobs and prosperity. Could it be that Trump is wrong on the issue?

But I’m digressing. Let’s get back to our main topic.

What can you say about a country that’s so poor that even criminals are suffering?

Venezuela’s crippling economic spiral is having a negative impact on an unlikely group in society: criminals, who are struggling to afford bullets, and unable to find things to steal as the country’s wealth declines rapidly. …While bullets are widely available on the black market, many muggers cannot afford the $1 price tag anymore, a criminal known as “Dog” told the news organization. …Another gangster, “El Negrito,” who leads a gang called Crazy Boys, has found it increasingly hard to support his wife and daughter with assaults. Firing a bullet is a luxury now, he said. …homicide rate…went down by nearly 10% last year— though Venezuela remains one of the most violent countries in the world. The non-profit, which aggregates the data from morgues and media reports, partly attributes this decrease to the reduction in muggings — because there is nothing to steal. …Shoemaker Yordin Ruiz told The Washington Post: “If they steal your wallet, there’s nothing in it.”

What a perfect symbol of socialism! People are so poor that there’s nothing left to steal.

I want to conclude by emphasizing a point that I’ve made before about greater levels of socialism being associated with greater levels of misery.

As you can see from this chart (based on EFW data), Hong Kong has the most freedom, though it isn’t perfect.

Then you have nations such as the United States and Denmark, that have some statist characteristics but are mostly market oriented. Followed by France, which has a lot more socialist characteristics, and then Greece, which presumably can be described as a socialist nation.

But Venezuela is an entirely different category. It’s in the realm of near-absolute statism.

P.S. Cuba and North Korea presumably rank below Venezuela, but they’re not part of the EFW rankings because of inadequate and/or untrustworthy data.

P.P.S. It’s hard to believe, given the pervasive statism that now exists, but Venezuela in 1970 was ranked in the top 10 for economic liberty.

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Around the World, Ranking Best and Worst Economic Outcomes for 2018

Looking through an economic lens, what’s the best country in the world?

If your benchmark is economic liberty, then Hong Kong is the answer according to both the Fraser Institute and Heritage Foundation.

If per-capita GDP or per-capita wealth is your benchmark, then Monaco wins the prize.

And you get different answers if you focus on specific features such as competitiveness (the United States) or ease of doing business (New Zealand).

You can also measure national performance by looking at key economic variables.

And that’s what Professor Steve Hanke of Johns Hopkins University has done.

In the sphere of economics, misery tends to flow from high inflation, steep borrowing costs and unemployment. …Many countries measure and report these economic metrics on a regular basis. Comparing them, nation by nation, can tell us a lot about where in the world people are sad or happy. …To answer this question, I update my annual Misery Index measurements.

Hanke explains the evolution of the Misery Index and how he puts together his version.

The first Misery Index was constructed by economist Art Okun in the 1960s as a way to provide President Lyndon Johnson with an easily digestible snapshot of the economy. That original Misery Index was just a simple sum of a nation’s annual inflation rate and its unemployment rate. The Index has been modified several times, first by Robert Barro of Harvard and then by myself. My modified Misery Index is the sum of the unemployment, inflation and bank lending rates, minus the percentage change in real GDP per capita. Higher readings on the first three elements are “bad” and make people more miserable. These are offset by a “good” (GDP per capita growth), which is subtracted from the sum of the “bads.”

You can see the entire list of 95 nations (some countries don’t report adequate data, so they aren’t counted) by clicking here.

And here are the nations with the best scores (remember, this is a Misery Index, so the top results are at the bottom of the list).

Professor Hanke comments on Thailand’s first-place results and Hungary’s second-place results.

Thailand takes the prize as the least miserable country in the world on the 2018 Misery Index. It’s 2018 rank of No. 95 out of 95 countries is a stunner. …Hungary delivered yet another stunner, making a dramatic improvement from 2017 to 2018.  It comes in at No. 94 as the second least miserable country in the world. While the European Union and the international elites have thrown everything they can throw at Prime Minister Viktor Orbán, it’s easy to see why he commands a strong following at home.

Keep in mind, by the way, that Hanke’s list is a measure of annual economic outcomes.

So a relatively poor country can get a very good score. Indeed, they should get comparatively good scores according to convergence theory.

Assuming, of course, that they have decent policy.

However, if you look at the nations with the most miserable outcomes, you can see that many countries don’t have decent policy.

Here’s Hanke’s analysis of the world’s worst performers.

Venezuela holds the inglorious title of the most miserable country in the world in 2018, as it did in 2017, 2016, and 2015. The failures of President Nicolás Maduro’s socialist, corrupt petroleum state have been well documented… Argentina jumped to the No. 2 spot after yet another peso crisis. Since its founding, Argentina has been burdened with numerous economic crises. Most can be laid at the feet of domestic mismanagement and currency problems (read: currency collapses). To list but a few of these crises: 1876, 1890, 1914, 1930, 1952, 1958, 1967, 1975, 1985, 1989, 2001, and 2018.

For what it’s worth, if you look at the actual Misery Index numbers, Venezuela is in first place by an enormous margin. Chalk that up as another “victory” for socialism.

Moreover, I’m not surprised to see that Jordan, Ukraine, and South Africa are doing poorly. Sadly, there’s not much hope for improvement in those nations.

It’s also not a surprise to see Brazil on the list, though there may be room for optimism if the new government can adopt meaningful reforms.

P.S. Professor Hanke noted that Arthur Okun created the first Misery Index. Okun also is famous for his explanation of the equity-efficiency tradeoff. Okun supported redistribution in order to increase equality of outcomes, but he was honest and admitted that this would mean less prosperity. Too bad international bureaucracies such as the OECD and IMF don’t share Okun’s honesty.

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Venezuela’s (Hopefully-Ending-Soon) Statist Nightmare

I listed the collapse of Venezuela’s socialist dictatorship as one of my “hopes” for 2018.

That didn’t happen, so I included the same hope in my list for 2019.

But will it happen? David Asman seems very confident in this clip from a recent interview.

I was a bit less hopeful. Or at least more guarded in my ability to predict.

But one thing I can state with full certainty is that I hope it happens as soon as possible.

Though I have become a bit jaded. I no longer share lengthy compilations of everything that is going awry in the country.

As far as I’m concerned, the real debate is now whether a new government will adopt the right policies when Maduro is finally evicted (in other words, is there any hope for Chilean-style economic liberation?).

But there are a couple of stories and columns about the ongoing crisis that caught my eye.

Especially ones written by Venezuelans.

Andres Malave wrote for Investor’s Business Daily about what has happened to his country.

Hugo Chavez took power, promising to usher in shared prosperity for all with his “21st century socialism.” …So, when Teen Vogue tweeted recently, “Can’t #endpoverty without ending capitalism!” my initial reaction was, “Let them come to Venezuela.” Venezuela was once the most prosperous country in Latin America, but today almost 90% of its population lives in poverty. Venezuela’s economy is in shambles. …Venezuela’s misery means that it is not uncommon to see children rummaging through the garbage for food. And as basic medical supplies and medicine run dangerously low, newborns and the elderly die unattended in Venezuelan hospitals. …In a 2006 column, Sen. Sanders wrote: “These days, the American Dream is more apt to be realized in South America, in places such as Ecuador, Venezuela and Argentina,” all practitioners of 21st century socialism. …What’s particularly galling about Sen. Sanders waxing poetic about the virtues of socialism is that he looks the other way as socialist leaders live in opulence while the masses starve.

A retired professor who still lives in Venezuela explained the wrenching descent of his nation in the U.K.-based Spectator.

The descent began in the early 2000s when the Hugo Chavez government began to take control of…private companies, the judiciary and the police. The descent turned into a nosedive when Nicolas Maduro came to power and the state tightened its grip on oil production, our country’s main source of revenue. Investors fled and skilled workers emigrated. As living standards plummeted, the response was to print more money. Hyperinflation has been the result. …my friends and relatives have lost a lot of weight. We call it the ‘Maduro diet’. …Not so long ago, I lived as you do. I would have thought it impossible that my country, with its hard-won progress, could fall so quickly into the abyss. The wrong politicians with the wrong ideas can have a bigger effect than anyone can imagine.

I don’t want to discriminate against non-Venezuelans, so let’s look at excerpts from some other authors.

In a column for CapX, Kristian Niemietz points out that Venezuela was supposed to be an example of modern “democratic socialism.”

Chávez fans frequently emphasised the many ways in which Venezuela differed from the old Eastern Bloc. They were especially proud of the fact that there was no apparent conflict between socialist economics and political democracy. They also pointed out that the Chavez government, rather than just nationalising lots of big companies like the socialists of yore, was experimenting with lots of different models of social ownership, looking for alternatives to both private enterprise and conventional state-owned enterprises. And they were right. Chávez and Maduro never tried to imitate the former Soviet Union or any of its allies. They tried, really hard, to build something new. And look how that turned out. …Previous socialist experiments have gone through the same honeymoon period as Venezuela, during which they were widely and enthusiastically praised by Western intellectuals.

Notwithstanding, I’m sure we’ll still hear about how “real socialism hasn’t been tried.”

Actually, I’m open to the argument that what happened in Venezuela was a different form of statism.

Though the end result is always the same.

In the case of Venezuela, it’s like Atlas Shrugged in real life.

Francisco Toro opined in the Washington Post about the recent collapse of Venezuela’s power system.

In a country already trudging through a serious humanitarian crisis, the collapse of the electric grid is a final catastrophe. Venezuelans were already chronically hungry, with large numbers reportingthey lost weight because they could not afford enough food. …The stories coming out of hospitals up and down the country have been harrowing. Only some had working back-up generators, and virtually none were designed to carry a whole hospital over many days. A video of a nurse using a hand pump to try to keep an infant alive has been circulating on social media. Thousands of kidney dialysis patients, unable to receive treatment, may face a slow and agonizing death. …the Maduro government has blamed U.S. sabotage for the power crisis. …sabotage accusations against the United States lack any semblance of credibility: Venezuela’s power grid has been in gradual decline for over a decade. …over the past 12 years, the government has run the grid into the ground. After nationalizing the utility companies, the government simply stopped investing in routine maintenance of power stations or transmission lines, setting off a slow deterioration that has made the grid unstable for years.

A story from Fox looks at the wretched circumstances of ordinary Venezuelans.

Thousands upon thousands of Venezuelans pour into Colombia over the crowd cross-country bridge, their faces gaunt, carrying little more than a backpack. Rail-thin women cradle their tiny babies, and beg along the trash-strewn gutters. Teens hawk everything from cigarettes to sweets and water for small change. …the Venezuelans – many with university degrees or decent jobs in what was once the wealthiest nation in Latin America – are now resorting to whatever it takes to survive. …Women sell their locks to local wigmakers in Colombia for around $10-30, depending on length and quality. Other women sell their bodies. Girls as young as 14 line the Cucuta streets available “for hire,” earning around seven dollars “per service.” …more than 55 percent of the healthcare professionals – doctors, nurses, and others – have left the country. Resident doctors who have stayed in Venezuela earn the equivalent of $24 a month, while specialists make just a little more, at $30.

I’ve saved the worst for last.

BBC reports that Venezuela has become such a basket case that graves are being robbed.

At Caracas’s largest cemetery, Cementerio del Sur, most of the graves have been looted, for jewellery, gold teeth, or even bones, which can be sold for use in rituals. For grieving relatives like Eladio Bastida, who checks on his wife’s grave every week to make sure it’s not been looted, the situation is a metaphor for that of embattled Venezuela as a whole.

As far as I know, Venezuela has yet to experience cannibalism, so I suppose things can still get worse.

But that begs the question. Why did Bernie Sanders and other leftists and socialists lavish so much praise on Venezuela?

And now that the chickens have come home to roost and the economy has collapsed, why are they dodging questions about their past support?

Most important of all, why do they want similar policies for the United States?!?

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Socialism in the Modern World, Part I: The Collapse of Venezuela

With the surprising success of Senator Bernie Sanders in the last presidential race and the more-recent instant-celebrity status of Representative Alexandria Ocasio-Cortez, some are wondering if the United States is about to enter a “socialist era”.

I’ve criticized some of the proposals that are part of this movement, such as confiscatory tax rates and the so-called Green New Deal, so it goes with saying that I’m not a fan.

To learn more about the implications of socialism, let’s look around the world.

We’ll start with Venezuela, which is the focus of a very interesting article in the Washington Post. Here are some excerpts.

Did socialism kill Venezuela? Blessed with the world’s largest oil reserves, this South American nation was once the region’s richest per capita. Twenty years after the launch of the late Hugo Chávez’s Bolivarian Revolution, it is now one of the poorest. …In Washington…Republicans are seizing on Venezuela to score points against those Democrats who have newly embraced the term… But socialism’s role in Venezuela’s collapse, observers say, is not as clear as either side likes to think. At least fleetingly, socialist policies propped up by state petrodollars helped bolster the country’s status as one of the Western Hemisphere’s most equitable societies. But state-heavy policies that distorted prices and exchange rates, coupled with corruption, mismanagement and official repression, turned Venezuela’s economic landscape into scorched earth. …But it is also not communist Cuba or North Korea, where foreign investment and private ownership are strictly limited. …wealthy Venezuelans still own private companies and high-walled mansions in elite neighborhoods. They play golf at country clubs and are taxed at a relatively manageable 34 percent.

This is very fair reporting.

All the main points are accurate: Living standards have plummeted in Venezuela, oil money complicates the analysis, and the economy isn’t quite as statist as Cuba and North Korea.

The article goes on to cite the views of several Venezuelans.

“All the wrongs were created under Chávez,” said Henkel Garcia, head of Econometrica, a Caracas-based financial analysis firm. “The economy only survived as long as it did because of high oil prices.” …Today, roughly a third of the nation, pollsters say, still appears to back socialism — although only half that many remain loyal to Maduro. …With hyperinflation causing acute shortages of food and medicine, more and more former Chavistas, or adherents of Chávez’s ideals, are saying mea culpas and increasingly turning out against Maduro. “Before I die, I want socialism gone from Venezuela,” said Yessid Merlano, a 50-year-old waiter. …Scarcities of food and medicine first surfaced years ago but are now so chronic that he and millions of other Venezuelans have shed pounds and sought work abroad. Before returning to Caracas last year, he spent 10 months working as a laborer in neighboring Colombia, “where all I saw were Venezuelans begging in the streets,” he said. “I feel guilty that I was a Chavista,” he said. “It’s all my fault, all the suffering.”

I’m glad that many Venezuelans now realize that socialism is misguided.

Though I wonder if they will support the reforms that will be necessary once the current regime is deposed (and given the perverse incentives of politicians, I’m even more worried whether a new government will implement those reforms).

The article concludes with some damning data on the country’s economic decay.

State health care, once a pride of the socialists, collapsed as hyperinflation and shrinking resources left hospitals with shortages of syringes and antibiotics, as well as broken equipment too expensive to repair. …Chávez purged skilled managers, engineers and technicians from the state-owned oil giant PDVSA, stocking it with government loyalists. That set it up for a catastrophic failure as global prices fell from record highs. Venezuelan oil output is now at its lowest levels since the 1950s. Industries nationalized by Chávez, who expropriated 1,500 companies, collapsed as regulated prices distorted markets. In two decades, the government seized nearly 5 million acres of productive farmland that has now been largely abandoned. In 1999, there were 490,000 private companies in Venezuela. By last June — the most recent count available — that number had fallen to 280,000.

None of this is a surprise. Venezuela is a basket case.

But that’s not our topic today. We’re focusing instead on whether there are any lessons that the United States can learn from the Venezuelan debacle.

Or, to be more accurate, I think the key question is whether advocates of democratic socialism in America have learned anything from Venezuela’s miserable performance.

Plenty of leftists, including Sen. Sanders, praised the awful policies of Chavez and Maduro.

Now that the chickens have come home to roost and Venezuela’s economy has tanked, have any of them apologized? Or tried to rationalize what happened? Or even expressed second thoughts about the supposed wisdom of socialism?

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Let’s Cheer for this Caravan of Migrants

Years ago, I shared a joke about American leftists fleeing to Canada.

But since Canada actually has a lot of pro-free enterprise policies (completely decentralized education and school choice, welfare reform and reduction, privatized air traffic control, etc), it doesn’t make much sense for statists to head north.

Last year, I followed up with some humor asking why leftists don’t move to places where socialism actually exists, such as Venezuela.

Well, the satirists at Babylon Bee have big news.

The caravan of Central American migrants heading to the U.S. is going to cross paths with a southbound caravan.

A migrant caravan full of leftists desiring to enter the socialist paradise of Venezuela departed the United States Thursday and began marching toward through Mexico, stating they will demand asylum so they might experience the far better life that socialism offers. …”Everyone there has the same quantity of possessions and food,” said one marcher. “Everyone makes millions of dollars, and very few people work. It’s a real paradise.” The refugees have complex motivations, but the vast majority simply want to see everything socialism has to offer after suffering the amazing benefits of capitalism for too long. …At its current pace, the caravan is expected to arrive just in time for Venezuela to run out of food entirely.

That sounds like a good trade to me.

Venezuela gets a bunch of crazies who will revel in equal levels of poverty (with the exception of the ruling elite, of course), and America will get a bunch of folks who want to work hard for a better life (an outcome that will be more likely since there will be fewer statists offering them welfare and telling them not to assimilate.

Speaking of assimilation, I suspect the leftists will have a very hard time adjusting to life under socialism.

P.S. Sticking with satire, American refugees have also fled to Peru.

P.P.S. If leftists don’t want to leave, maybe they’d go with this proposed national divorce agreement?

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The Venezuelan Tragedy Shows Why Workers and Capitalists Should Be Allies in the Fight against Statism

I periodically explain that labor and capital are the two factors of production and that our prosperity depends on how efficiently they are allocated.

But I probably don’t spend enough time highlighting how they are complementary, meaning that workers and capitalists both benefit when the two factors are combined. Simply stated, workers become more productive and earn more when investors buy machines and improve technology.

In other words, the Marxists and socialists are wrong when they argue that workers and capitalists are enemies. Heck, look around the world and compare the prosperity of workers in market-oriented nations with the deprivation of workers in statist economies.

This becomes painfully clear when you read this Wall Street Journal story on the statist hellhole of Venezuela.

Irish packaging giant Smurfit Kappa recently joined other multinational companies abandoning Venezuela…President Nicolás Maduro’s socialist government. But this case comes with a twist. Hundreds of employees, who counted on the Irish company for transport, education, housing and food, continue to show up at work. They take turns protecting idled heavy machinery from looting that has become rampant as Venezuela plunges into hyperinflation and economic chaos. …“Help, we need a boss here. We’re desperate,” said Ramón Mendoza, a Smurfit forestry division worker for 17 years. “We’re so scared because we now know that all the government does is destroy everything, every business.” Their plight underscores the devastation that rural Venezuelan communities face as private companies pull out of a country that was once Latin America’s richest. The economy has shrunk by half over the past four years.

Wow, Mr. Mendoza hit the nail on the head when he explained that “all the government does in destroy everything.”

Maybe he can replace Obama as Libertarian Man of the year. Except he would get the award on merit rather than satire.

But let’s not digress. Here’s more bad news from the article.

Workers who live in the surrounding area had received interest-free loans from Smurfit for their houses. Residents said they no longer can count on the four ambulances that the company paid for to serve communities of tin-roofed shacks. At the Agricultural Technical School in the nearby town of Acarigua, which was entirely financed by Smurfit, nearly 200 children living in extreme poverty used to receive an education, lodging, as well as hot meals that have become a luxury as public schools collapse. Over two decades, many of its graduates had gone on to work for Smurfit. The academic year was supposed to start on Oct. 1. But with no money to feed and transport students, there’s silence in the halls… “It’s like poof,” Ms. Sequera said, snapping her fingers. “Our whole future was taken away.”

Needless to say, the thuggish government of Venezuela has no idea how to fix the mess it has caused.

In recent days, the cash-strapped Maduro administration said it had come up with a solution for the Smurfit plant: That the workers would run it themselves. The government said it wouldn’t nationalize it but named a temporary board to help restart operations. The Labor Ministry offered no details over how it would replace Smurfit’s distribution network through which the company supplied its own subsidiaries abroad. But the workers say they can’t run the plant on their own and insist they want bosses—just not from the government. “We know how to move the lumber from here to the plants. What do we know about finances and marketing?” said Mr. Mendoza.

My heart goes out to the former Smurfit workers.

They simply want to do honest work in exchange for honest pay. But the wretched policies of the Venezuelan socialists have made that impossible.

By the way, I’m not implying that employers are motivated by love for workers. Nor am I implying that workers are motivated to create profits for companies. The two sides are in a constant tug of war over how to slice the pie.

But the key thing to understand is that the pie grows when markets are allowed to function.

Which is why this old British political cartoon is a powerfully accurate depiction of real-world economics.

Indeed, I’ll have to add it to my collection of images that teach economics.

• The Wizard-of-Id parody about work incentives.
• The philoso-raptor contemplating supply-side economics.
• Lessons about double taxation and harvesting apples.
• Showing looters are the enemy, not rich people.
• The size of the pizza is more important than how it’s sliced.
• A lesson about socialism and incentives.

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Can We Predict When Venezuela’s Statist Nightmare Will End?

Ever since 2010, I’ve been pointing out that Venezuela is a horrifying and tragic example of what happens when the private sector in a country is almost completely suffocated by excessive government.

And with the country now in a death spiral, you would think it’s a perfect time for further commentary. I sometimes wonder, though, what I can write that isn’t ridiculously repetitive.

But a couple of recent conversations have convinced me of the need to address two points.

First, it’s important to emphasize that not all statism is created equal. When writing recently about Denmark, I created a chart to show how that country was much more pro-market than France. And that same chart showed that France was much more capitalist than Greece.

And guess which country was the most statist? If you said Venezuela, you’re right.

And the lesson from this data is that the degree of statism matters. Venezuela is a total mess because of total statism, Greece is in trouble because of lots of statism, France is anemic because of run-of-the-mill statism, and Denmark does okay because it’s only statist in one area (fiscal policy).

Imagine you were a teacher and these countries were students. Here are the grades you’d assign for economic policy.

F – Venezuela
D – Greece
C – France
B – Denmark

Second, I want to answer a question that often gets asked, which is how long can the current government survive?

Unfortunately, I don’t have a good answer. That’s partly because bad policy doesn’t cause overnight collapse (Adam Smith noted more than 200 years ago, “there is great deal of ruin in a nation”).

Venezuela historically has propped up its statist regime with oil revenue, but that’s shrinking as an option because of government incompetence.

Thousands of workers are fleeing Venezuela’s state-owned oil company, abandoning once-coveted jobs made worthless by the worst inflation in the world. …Desperate oil workers and criminals are also stripping the oil company of vital equipment, vehicles, pumps and copper wiring, carrying off whatever they can to make money. The double drain — of people and hardware — is further crippling a company that has been teetering for years yet remains the country’s most important source of income. …Venezuela is on its knees economically, buckled by hyperinflation and a history of mismanagement. Widespread hunger, political strife, devastating shortages of medicine and an exodus of well over a million people in recent years have turned this country, once the economic envy of many of its neighbors, into a crisis.

At the end of the day, the regime can rely on force. And Venezuela’s politicians cleverly have put the army in charge of graft and shakedowns, thus earning at least temporary loyalty.

Venezuela’s military has come to oversee the desperate and lucrative water trade as reservoirs empty, broken pipes flood neighborhoods and overwhelmed personnel walk out. Seven major access points in the capital of 5.5 million people are now run by soldiers or police, who also took total control of all public and private water trucks. Unofficially, soldiers direct where drivers deliver — and make them give away the goods at favored addresses. President Nicolas Maduro’s autocratic regime has handed lucrative industries to the 160,000-member military as the economic collapse gathers speed, from the mineral-rich region of the Arco Minero del Orinoco to top slots at the state oil producer to increasingly precious control over food and water.

Moreover, it’s difficult for people to revolt since the regime has followed the totalitarian playbook and banned private guns.

So it’s no surprise that many disaffected people (the ones who otherwise might revolt) are simply escaping the country.

Hundreds turn up each day, many arriving penniless and gaunt… Once they cross, many cram into public parks and plazas teeming with makeshift homeless shelters, raising concerns about drugs and crime. The lucky ones sleep in tents and line up for meals provided by soldiers — pregnant women, the disabled and families with young children are often given priority. …this is happening in Brazil, where a relentless tide of people fleeing the deepening economic crisis in Venezuela… The tens of thousands of Venezuelans who have found refuge in Brazil in recent years are walking proof of a worsening humanitarian crisis that their government claims does not exist. …more Venezuelans are leaving home each month than the 125,000 Cuban exiles who fled their homes during the 1980 Mariel boat crisis.

And the ones who haven’t left still have some options besides starve or revolt.

A few years ago, there were so many donkeys, or burros, in the Venezuelan state of Falcón that they were a problem — herds everywhere, causing highway crashes and blocking airport runways. But over the past three years, the herds have shrunk dramatically as thousands of burros have been slaughtered for their meat by Venezuelans suffering through a near-famine. …The collapse of the Venezuelan economy is radically changing the eating habits in the oil-producing country, where large sectors of the population are being forced to pick through garbage and slaughter domestic animals to sate their hunger. …The clandestine slaughter of the animals also has become a sanitary and environmental problem, Stefaneli added. There are no sanitary controls, and the burro has been disappearing from its native habitats. …Years back, residents of Paraguana used to eat goat, fish and beef. And when those were in short supply they ate rabbits, grains and even iguanas. Burro meat was not liked because it’s tough and smells, even from far away, according to residents who have eaten it. But it has become a necessity for many people.

The bottom line is that Venezuela is in free-fall, but I don’t know where the bottom is. And I don’t know what will happen when the country hits rock bottom.

But if you hold a gun to my head, I’ll predict that the regime somehow collapses in 2020.

P.S. The silver lining of Venezuela’s dark cloud is that we have some grim humor from inside and outside the country.

P.P.S. Venezuela is such a disaster that even the World Bank acknowledged Chile’s market-oriented system is far superior.

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Rich Nations that Enact Big Government Don’t Remain Rich

Move over, Crazy Bernie, you’re no longer the left’s heartthrob. You’ve been replaced by Alexandria Ocasio-Cortez, an out-of-the-closet socialist from New York City who will enter Congress next January after beating a member of the Democratic leadership.

Referring to the boomlet she’s created, I’ve already written about why young people are deluded if they think bigger government is the answer, and I also pointed out that Norway is hardly a role model for “Democratic socialism.”

And in this brief snippet, I also pointed out she’s wrong to think that you can reduce corporate cronyism by giving government even more power over the economy.

But there’s a much bigger, more important, point to make.

Ms. Ocasio-Cortez wants a radical expansion in the size of the federal government. But, as noted in the Washington Examiner, she has no idea how to pay for it.

Consider…how she responded this week when she was asked on “The Daily Show” to explain how she intends to pay for her Democratic Socialism-friendly policies, including her Medicare for All agenda. “If people pay their fair share,” Ocasio-Cortez responded, “if corporations paid — if we reverse the tax bill, raised our corporate tax rate to 28 percent … if we do those two things and also close some of those loopholes, that’s $2 trillion right there. That’s $2 trillion in ten years.” She should probably confer with Democratic Socialist-in-arms Sen. Bernie Sanders, I-Vt., whose most optimistic projections ($1.38 trillion per year) place the cost of Medicare for All at roughly $14 trillion over a ten-year period. Two trillion in ten years obviously puts Ocasio-Cortez a long way away from realistically financing a Medicare for All program, which is why she also proposes carbon taxes. How much she expects to raise from this tax she didn’t say.

To be fair, Bernie Sanders also didn’t have a good answer when asked how he would pay for all the handouts he advocated.

To help her out, some folks on the left have suggested alternative ways of answering the question about financing.

I used to play basketball with Chris Hayes of MSNBC. He’s a very good player (far better than me, though that’s a low bar to clear), but I don’t think he scores many points with this answer.

I think a good answer for "How will you pay for your agenda?" is "We're a very rich country. We'll figure it out."

— Chris Hayes (@chrislhayes) July 27, 2018

Indeed, Professor Glenn Reynolds of the University of Tennessee Law School required only seven words to point out the essential flaw in Hayes’ approach.

Venezuela was once a very rich country. https://t.co/8n3kGiVJdD

— Instapundit.com (@instapundit) July 28, 2018

Simply stated, there’s no guarantee that a rich country will always stay rich.

I wrote earlier this month about the importance of long-run economic growth and pointed out that the United States would be almost as poor as Mexico today if growth was just one-percentage point less every year starting in 1895.

That was just a hypothetical exercise.

There are some very sobering real-world examples. For instance, Nima Sanandaji pointed out this his country of Sweden used to be the world’s 4th-richest nation. But it has slipped in the rankings ever since the welfare state was imposed.

Venezuela is another case study, as Glenn Reynolds noted.

Indeed, according to NationMaster, it was the world’s 4th-richest country, based on per-capita GDP, in 1950.

For what it’s worth, I’m not familiar with this source, so I’m not sure I trust the numbers. Or maybe Venezuela ranked artificially high because of oil production.

But even if one uses the Maddison database, Venezuela was ranked about #30 in 1950, which is still impressive.

Today, of course, Venezuela is ranked much lower. Decades of bad policy have led to decades of sub-par economic performance. And as Venezuela stagnated, other nations become richer.

So Glenn’s point hits the nail on the head. A relatively rich nation became a relatively poor nation. Why? Because it adopted the statist policies favored by Bernie Sanders and Alexandria Ocasio-Cortez.

I want to conclude, though, with an even better example.

More than seven years ago, I pointed out that Argentina used to be one of the world’s richest nations, ranking as high as #10 in the 1930s and 1940s (see chart to right).

Sadly, decades of Peronist policies exacted a heavy toll, which dropped Argentina to about #45 in 2008.

Well, I just checked the latest Maddison numbers and Argentina is now down to #62. I was too lazy to re-crunch all the numbers, so you’ll have to be satisfied with modifications to my 2011 chart.

The reverse is true as well. There are many nations that used to be poor, but now are rich thanks to the right kind of policies.

The bottom line is that no country is destined to be rich and no country is doomed to poverty. It’s simply a question of whether they follow the right recipe for growth and prosperity.

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World Bank Compares Chile and Venezuela

I’m in China this week, giving various lectures at Northeastern University in Shenyang. My topic today was “Real-World Examples,” which gave me an opportunity to share many of the charts I’ve developed showing how market-oriented nations enjoy much more long-run success.

One of the charts shows how Chile has enjoyed strong growth since it shifted to free markets, especially compared to Venezuela, which is burdened by a vicious form of statism.

But I noticed that I created that chart back in 2011 and it only shows data for the years between 1980 and 2008. And I thought that might lead students to think I was deliberately omitting recent years because the data somehow contradicts my message about free markets and small government.

So it’s time for me to update my comparison of Chile and Venezuela. And I’m going to have lots of evidence to share because the World Bank published a lengthy report on Puzzles of Economic Growth just a couple of years ago. And chapter 7 specifically compares the two countries we’re examining today.

Chile and República Bolivariana de Venezuela are South American countries of similar size and population. They…share a similar history, cultural heritage and comparable social structures. In 1971, they recorded a similar level of per capita income, that is, $6,603 (chained dollars with a base year of 20001) in Chile and $7,231 in República Bolivariana de Venezuela.

The report explains how neither country enjoyed much success in the 1970s, though oil-rich Venezuela at least benefited from rising energy prices.

What’s most relevant, at least for today’s discussion, is how Chile then jumped over Venezuela thanks to pro-market reforms,

In 2003, this value was nearly twice as high in Chile ($12,140) as in República Bolivariana de Venezuela ($6,253). …Chile became a stellar economic growth example in the region and has been outperforming República Bolivariana de Venezuela ever since. The ratio of GDP per capita in Chile and in República Bolivariana de Venezuela changed from 0.75 in 1983 to 1.94 in 2003.

Here’s a chart from the report, showing how Chile’s economy grew rapidly while Venezuela languished.

The report is filled with lots of data.

One item that caught my attention (in part because of Trump’s short-sighted policies in America) is how Chile dramatically reduced trade barriers while Venezuela was more protectionist.

From 1979, Chile’s economy was characterized by the lowest level of tariff restrictions in all of Latin America (10 percent) and a lack of nontariff barriers… República Bolivariana de Venezuela increased its trade restrictions to force consumers to purchase goods produced by the nationalized industries.

But Chile’s success goes well beyond trade policy.

Here’s a table looking quality of governance and red tape.

And here’s some data looking at obstacles to entrepreneurship. As you can see, it took almost four times longer to open a business in Venezuela in 1999.

I assume the numbers are even worse today. Assuming, of course, than anyone even wanted to open a business in that sad country.

Here are some excerpts from the conclusion of the World Bank report. This is a pretty good summary of how Chile reversed its descent to socialism while Venezuela doubled down on bad policy.

In 1971–2003, both Chile and República Bolivariana de Venezuela experienced periods of growing statism in their economic policy. In Chile, however, it was only a short episode (Allende’s socialist experiment in 1971–73), while in República Bolivariana de Venezuela this policy direction was maintained nearly for the entire period covered by the analysis (with its culmination being Chávez’s populist administration elected in 1998). During these periods, state-owned enterprises grew in both countries; market mechanisms were additionally disturbed by administrative price controls and restrictions imposed on freedom of entry into the market—and constrained business activity in many sectors of the economy… Furthermore, severe restrictions on foreign trade and capital flows were imposed. In Chile, the statist experiment was interrupted after three years—once it had driven the economy into a state of profound imbalance with a giant deficit and unchecked inflation. A radical program of economic stabilization and reforms broadening the scope of economic freedom was initiated. This dramatic change in economic orientation produced positive results. From the second half of the 1980s until the end of the analyzed period (2003), Chile was the fastest-growing country in South America.

Now it’s time for me to share an updated version of my chart (though I’m removing Argentina so we can focus just on Chile and Venezuela). As you can see, the updated numbers from the Maddison database tell the exact same story as my 2011 chart.

And why has Chile grown so much faster? As I told the students here in China, it’s because there’s more liberty to engage in voluntary exchange.

In the latest report from Economic Freedom of the World, Chile is ranked #15 while Venezuela is at the very bottom.

P.S. Some people have tried to portray Chile as a failure, but such assertions are easily debunked.

P.P.S. Kudos to the World Bank for publishing a very substantive report. For what it’s worth, it’s the international bureaucracy most likely to produce sensible publications.

• The negative economic impact of government spending.
• How money-laundering laws hurt the poor.
• How tax complexity breeds corruption.
• The benefits of privatized Social Security systems.
• The superb reports on Doing Business.
• How free markets produce better outcomes.

P.P.P.S. The only bad World Bank study I’ve encountered equated high tax burdens with a good report card.

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The Statism-Generated Misery of Venezuela, Captured in Four Videos

Yesterday’s column looked at the continued government-caused decay of Venezuelan society. To put it mildly, it’s a very sad story of how pervasive statism can destroy a country.

I also wondered whether leftists such as Bernie Sanders, Michael Moore, and Jeremy Corbyn will ever change their minds and (hopefully) apologize for giving aid and comfort to the evil Chavez-Maduro regime. (I’m not holding my breath.)

Today, let’s revisit the issue.

But instead of citing news reports, let’s look at four videos on the tragedy in Venezuela. We’ll start with Reason‘s excellent summary.

I like how the video concludes with a warning that America should avoid the same mistakes.

And that’s not just a throwaway line. Venezuela did not become a basket case overnight. There wasn’t an on-off switch that Chavez or Maduro used to turn the country from capitalism to statism.

Instead, it was the combined effect of decades of bad policy decisions.

In other words, gradual deterioration eventually turned into major disaster. Which may help explain why I’m so distressed about the creeping statism of the Bush and Obama (and perhaps Trump) years.

But I’m digressing. Let’s get back to the videos. Our next item is a report from the New York Times. It’s disappointing (but not overly surprising) that there’s no mention of the big-government policies that have reduced people to scouring for garbage, but you will learn about the horror of daily life for the poor.

Our next video, from Prager University, is a very straightforward description of how socialism has destroyed Venezuela.

I especially like how she concludes with a warning about how big government erodes societal capital, which then makes it very hard to restored liberty.

And the part about classifying involuntary weight loss as the “Maduro Diet” also was a highlight, at least if you like dark humor.

Our last video is an excerpt from a speech by a Venezuelan economist.

The part that grabbed my attention was the downward cycle of government-created inflation and government-imposed minimum-wage hikes. One bad policy leading to another bad policy, over and over again. Lather, rinse, repeat.

And while he doubtlessly exaggerated when he said that every single person in Venezuela would be happy to eat out of America’s trash cans, it’s still horrifying that a big chunk of the population would welcome such an opportunity.

So where will all this lead? At the start of the year, I expressed hope that the people of Venezuela would rise up and overthrow their tyrannical government. I don’t know if I should turn that hope into a prediction, but it certainly seems like it is only a matter of time before something dramatic happens.

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From Bad to Worse: The Ongoing Implosion of Venezuelan Statism

As far as I’m concerned, everything you need to know about capitalism vs. statism is captured in this chart comparing per-capita economic output in Chile and Venezuela.

Ask yourself which country offers more opportunity, especially for the poor? The obvious answer is Chile, where poverty has rapidly declined ever since the country shifted to free enterprise. In Venezuela, by contrast, poor children die of malnutrition thanks to pervasive interventionism.

Indeed, having shared several horrifying stories of human suffering and government venality from Venezuela (including 28 separate examples in April 2017 and 28 different separate examples in December 2017), I’ve reached the point where nothing shocks me.

So now I mostly wonder whether leftist apologists feel any shame when they see grim news from that statist hellhole.

For instance, what does Joe Stiglitz think about this report from the Miami Herald?

At 16, Liliana has become the mother figure for a gang of Venezuelan children and young adults called the Chacao, named after the neighborhood they’ve claimed as their territory. The 15 members, ranging in age from 10 to 23, work together to survive vicious fights for “quality” garbage in crumbling, shortage-plagued Venezuela. Their weapons are knives and sticks and machetes. The prize? Garbage that contains food good enough to eat. …A year ago, the gang was “stationed” around a supermarket at a mall called Centro Comercial Ciudad Tamanaco that generates tons of garbage. But a feared rival gang from the neighborhood Las Mercedes also wanted the garbage.

And what does Bernie Sanders think about this story from NPR?

The Pharmaceutical Federation of Venezuela estimates the country is suffering from an 85 percent shortage of medicine amid an economic crisis… The entire Venezuelan health care system is on the verge of collapse, says Francisco Valencia, head of the public health advocacy group Codevida. Some hospitals lack electricity, and more than 13,000 doctors have left Venezuela in the past four years in search of better opportunities. “They don’t give food to the patients in the hospital…” Government data shows infant mortality rose by 30 percent in 2016… The International Monetary Fund predicts inflation will soar to 13,000 percent this year and the economy will shrink by 15 percent. …The monthly minimum wage for many Venezuelans is now equal to $3, according to the AP. …Maduro blames the country’s growing crisis on…the U.S…leading an effort to wipe out socialism in Venezuela.

I’d be curious to know what Michael Moore thinks about this news from CNN?

Venezuela’s devastating food crisis means wheat flour has become a rare commodity in the country. Some churches have run out of the ingredient needed to make the sacramental bread that is central to celebrating the Holy Eucharist… So, members of the Catholic diocese of Cúcuta, Colombia, braved heavy rain this week to deliver the wafers over a bridge that connects the two countries… Venezuela’s economic crisis, fueled by a decline in oil production, shows no signs of improvement.People are starving because of routine food shortages. They are dying in hospitals because basic medicine and equipment aren’t available.

And what does Jeremy Corbyn think about this Bloomberg report?

Ruiz’s weekly salary of 110,000 bolivares — about 50 cents at the black-market exchange rate — buys him less than a kilo of corn meal or rice. His only protein comes from 170 grams of canned tuna included in a food box the government provides to low-income families. It shows up every 45 days or so. “I haven’t eaten meat for two months,” he said. …Hunger is hastening the ruin of Venezuelan’s oil industry as workers grow too weak and hungry for heavy labor. With children dying of malnutrition and adults sifting garbage for table scraps, food has become more important than employment, and thousands are walking off the job. …Venezuela, a socialist autocracy that once was South America’s most prosperous nation, is suffering a collapse almost without precedent.

Or how about getting Sean Penn‘s reaction to this story from the New York Times?

For the past three weeks, Wilya Hernández, her husband and their daughter, 2, have been sleeping on the garbage-strewn streets of Cúcuta, a sprawling and chaotic city on Colombia’s side of the border with Venezuela. Though Antonela, the toddler, often misses meals, Ms. Hernández has no desire to return home to Venezuela. …“I sold my hair to feed my girl,” Ms. Hernández said, pulling back her locks to reveal a shaved head underneath, adding that wigmakers now walk the plazas of Cúcuta where many Venezuelans congregate, wearing signs advertising that they give cash for hair. …“If I can’t afford to go the bathroom, I’ll go on the street,” Ms. Hernández added. “That’s when guys walking by say creepy things.”

I wonder if Noam Chomsky has any comments about this Washington Post story?

A friend recently sent me a photograph…, just a blurry cellphone shot of trash… And yet I can’t stop thinking about it, because strewn about in the trash are at least a dozen 20-bolivar bills, small-denomination currency now so worthless even looters didn’t think it was worth their time to stop and pick them up. …according to the “official” exchange rate, …each of those bills is worth $2. In fact, as Venezuela sinks deeper…into…hyperinflation…, bolivar banknotes have come to be worth basically nothing: Each bill is worth about $0.0001 at the current exchange rate… It’s easy to see why the thieves left them behind.

Last but not least, I wonder what Jesse Jackson thinks about this news from the U.K.-based Guardian?

More than half of young Venezuelans want to move abroad permanently, after food shortages, violence and a political crisis escalated to new extremes in 2017, according to a new survey. Once Latin America’s richest country, Venezuela’s economy is now collapsing… One of the most painful effects of the current crisis has been widespread hunger. In 2015, when inflation and food shortages were well below current levels, nearly 45% of Venezuelans said there were times when they were unable to afford food; in the latest study, that figure had risen to 79% – one of the highest rates in the world. …Norma Gutiérrez, a radiologist in eastern Caracas, is one of those…would-be migrants. Acute shortages in the hospital where she works depress her, and she says the idea of emigrating crosses her mind at least once a week.

By the way, in an example of unintended humor, the Socialist Party of Great Britain has a ready-made answer to all those questions. The misery is the fault of capitalism. I’m not kidding.

And folks on the establishment left occasionally try to imply that it’s all the result of falling oil prices.

Two years ago, I concocted a visual showing the “Five Circles of Statist Hell” and speculated that Venezuela was getting close to the fourth level. Though I still don’t think it’s nearly as bad as North Korea.

P.S. Since I mentioned unintentional humor, you’ll be amused to know a “Happy Planet Index” created by radical environmentalists places Venezuela above the United States.

P.P.S. And here’s some intentional dark humor about hunger in Venezuela.

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The Incomprehensible Horror of Venezuelan Socialism

It’s now a pattern. I’ll come across a soul-sapping story about terrible suffering caused by statism in Venezuela and I think the country has hit rock bottom. Such as back in September, when I read about people literally starving.

But then I will read another report about incredible misery and realize that the socialist regime is even worse than I thought. Such as back in December, when I read about economic deprivation ruining sex for the women of the country.

And then I find another horrifying example of how big government destroys lives and I’m forced to reconsider the definition of failure. Such as last month, when I read about criminal gangs using food to recruit children.

Despite this pattern, I’m going out on a limb and asserting that nothing possibly could be worse than this Washington Post story of Venezuelan parents giving up their children because they can’t afford to feed them.

In September, her mother left her at a subway station with a bag of clothes and a note begging someone to feed the child.  Poverty and hunger rates are soaring as Venezuela’s economic crisis leaves store shelves empty of food, medicine, diapers and baby formula. Some parents can no longer bear it. They are doing the unthinkable.  Giving up their children. …it was a challenge to actually meet the tiniest victims of this broken nation. My requests to enter orphanages run by the socialist government had gone unanswered. One child-protection official — warning of devastating conditions, including a lack of diapers — confided that such a visit would be “impossible.” …A child-welfare official in El Libertador — one of the capital’s poorest areas — called the situation at public orphanages and temporary-care centers “catastrophic.”  “We have grave problems here,” said the official, who spoke on the condition of anonymity out of fear of reprisals from the authoritarian government.

Fortunately, there are still some private facilities that help families.

But even though such institutions are run more efficiently and compassionately, it’s still a tragedy that they have to exist. And the stories the reporter uncovered are heartbreaking.

“I didn’t know what else to do,” said Angélica Pérez, a 32-year-old mother of three, near tears. …she showed up at Fundana with her 3-year-old son and her two daughters, ages 5 and 14. She lost her job… Her plan: leave the children at the center, where she knew they would be fed, so she could travel to neighboring Colombia to find work. She hoped she would eventually be able to take them back. Typically, children are allowed to stay at Fundana for six months to a year before being placed in foster care or put up for adoption. “You don’t know what it’s like to see your children go hungry,” Pérez told me. “You have no idea. I feel like I’m responsible, like I’ve failed them. But I’ve tried everything. There is no work, and they just keep getting thinner.

Here’s another incomprehensibly sad example.

For many Venezuelan families, hunger presents an excruciating choice.  I met Dayana Silgado, 28, as she entered Fundana’s new food center for parents in economic crisis. Silgado seemed drained. The shoulder blades on her thin frame protruded from her tank top. In November, she surrendered her two youngest children to Fundana after losing her job… At the center, she knew, they would get three meals a day. Fundana’s home for children did not accept older kids, so Silgado was still trying to feed her two eldest — ages 8 and 11 — at home. …After eating dinner, Silgado said, her children tell her, “Mom, I want more.” “But I don’t have more to give,” she said.

What a terrifying awful country.

Shame on Bernie Sanders. Shame on Joe Stiglitz. Shame on every leftist who offered support for the evil government of Venezuela.

Since we’re on the topic of that despotic regime, here are a few additional stories that are worth a mention.

We’ll start with a lesson about inflation.

Street vendors in Venezuela are weaving baskets from banknotes after 13,000 per cent inflation rendered them practically worthless. …Cash is worth so little there bank notes are often seen littered on the streets. …street seller Wilmer Rojas has found a use for them. …The 25-year-old is selling origami-style handbags, purses, hats and baskets – all made out of money. …Mr Rojas, a father-of-three, said: ‘People throw them away because they are no good to buy anything. …These things are no good for buying anything. At least I am putting them to good use rather than throwing them away.’ …Jose Leon, a 26-year-old designer, draws the faces of Star Wars characters over the image of Simon Bolivar and other famous Venezuelans pictured on the notes. Foreign customers pay him up to £14 ($20) for each piece of ‘money art’, which he said increases the note’s value by nearly 5,000 per cent.

Wow. I periodically gripe about the Federal Reserve, but I guess I should consider myself lucky.

Now let’s look at our next story. Rather than weave money, some Venezuelans have turned to crime.

When he set off at sunset from the town of La Grita in western Venezuela on his 900-km (560-mile) journey, Aguilar knew he was taking his life in his hands. With hunger widespread amid a fifth year of painful economic implosion under President Nicolas Maduro, Venezuela has seen a frightening surge in attacks on increasingly lawless roads. Just a few days earlier, Aguilar said he sat terrified when hundreds of looters swarmed a stationary convoy, overwhelming drivers by sheer numbers. They carted off milk, rice and sugar from other trucks but left his less-prized vegetables alone. “Every time I say goodbye to my family, I entrust myself to God and the Virgin,” said the 36-year-old trucker. …looting of cargoes on roads has soared in Venezuela in recent times and appears…directly linked to growing hunger and desperation among the population of 30 million. …“The hunger and despair are far worse than people realize, what we are seeing on the roads is just another manifestation of that. We’ve also been seeing people stealing and butchering animals in fields, attacking shops and blocking roads to protest their lack of food. It’s become extremely serious,” said ORC director Oswaldo Ramirez. …The dystopian attacks in a country with one of the world’s highest murder rates are pushing up transport and food costs in an already hyperinflationary environment, as well as stifling movement of goods in the crisis-hit OPEC nation.

Given these horrifying condition, is it any surprise that people are doing whatever they can to escape the socialist hellhole of Venezuela?

Thousands of desperate Venezuelans are trying to enter Colombia in a bid to escape the hunger and soaring crime rate caused by the spiralling economic crisis. Incredible pictures show the mass exodus of refugees crossing the Simon Bolivar international bridge trying to flee the political crisis threatening to engulf Venezuela. Colombia – along with its neighbour Brazil – has sent extra soldiers to patrol their porous border with the country after officially taking in more than half a million migrants over the last six months of 2017. …In a visit to a border city at the epicenter of Colombia’s mounting migration crisis, President Juan Manuel Santos on Thursday announced new measures that could make it more difficult for Venezuelan migrants to cross into the country illegally or remain there without any official status. ‘Colombia has never lived a situation like the one we are encountering today,’ Santos said. Migration into Colombia has surged as Venezuelan President Nicolas Maduro has moved to consolidate his rule and the nation’s economy plummets. Colombia migration authorities say there are an estimated 600,000 Venezuelans currently in Colombia – double the number six months ago.

I also know from my visits to Panama that the Venezuelan population has exploded there as well. And I wouldn’t be surprised if the same is true for other nations in Latin America as well.

In other words, this image may be humorous, but it’s also true.

P.S. To be fair, while Venezuela has an awful government, it does allow citizens to escape. So it’s not as bad as the despotic dictatorships of Cuba and North Korea. At least not yet.

P.P.S. Some leftists are disowning Venezuela. But only because it isn’t sufficiently socialist!

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Just When You Thought Venezuelan Statism Couldn’t Get any Worse…

In recent months, I’ve written two very lengthy columns about the deterioration of Venezuela’s evil government.

And I’ve also looked at long-run economic data to show how statism produces awful results for ordinary people.

But I sometimes think anecdotes are the most persuasive for the simple reason that ordinary people can relate. That’s why I shared last month the story about how the government has even made sex less pleasurable.

The Miami Herald has a story that underscores the horrible consequences of statism.

…on the streets, walking around with a bag of groceries can attract more thieves than a full wallet. The critical food shortages pummeling Venezuela have started to change the nature of crime in the country, at times increasing what some experts have started to call “hunger crimes” and at other times turning food into a valuable item to be taken by force. …The crisis has forced millions of Venezuelans to eat just once a day, and thousands of others to regularly search garbage cans in hopes of finding something to eat, according to recent surveys.

This is very grim, but it gets worse.

Not only are people committing crimes because of hunger, children are being recruited into gangs because that is the way to eat.

Venezuelan gangs are no longer recruiting youths in some poor areas by offering them easy money to buy clothes or the latest cell phones. Instead, they are offering food baskets. …Criminal gangs are also using food to recruit children and teenagers in Venezuela, a country with one of the world’s highest crime rates. …“The recruitment techniques, the bait that in the past used to be fashion or luxury goods, have been replaced by the offer of basic food items,” said the report, published this week. That’s how “crime gangs are gaining ground in conquering thousands of youths who are joining in the violence and whose destiny is death, prison and the frustration of so many dreams and hopes forged by their families and communities,” the report added.

As a parent, this is a horrifying story. Imagine not being able to feed your children and then watching getting lured into a life that almost certainly will not end well.

Utterly depressing. A very bad situation keeps getting worse.

The only good news is that leftists used to make excuses for Venezuela and now some of them are trying to disown that brutal regime.

P.S. In spite of the wretched state of the Venezuelan economy, some nutty leftists who put together a “Happy Planet Index” that ranked Venezuela above the United States. I still haven’t figured out whether that was crazier than the Jeffrey Sachs’ index that put Cuba above America.

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Hopes and Fears for Policy in 2018

Happy New Year!

We listed yesterday the good and bad policy developments of 2017, so now let’s speculate about potential victories and defeats in 2018.

Here are two things I hope will happen this year.

• Welfare reform – If my friends and contacts on Capitol Hill are feeding my accurate information, we may see a bigger and better version of the 1996 welfare reform in 2018. The core concept would be to abolish the dozens of means-tested programs (i.e., redistribution programs targeted at low-income people) in Washington and replace them with a “block grant.” This could be good news for federal taxpayers if the annual block grant is designed to grow slowly. And it could be good news for poor people since state government would then have the ability and flexibility to design policies that help liberate recipients from government dependency.
• Collapse of Venezuela – Given the disastrous deterioration of the Venezuelan economy, it’s difficult to envision how the Maduro dictatorship can survive the year. Yes, I know the regime is willing to use the military to suppress any uprising, but I suspect hungry and desperate people are more likely to take chances. My fingers are crossed that the corrupt government is overthrown and Venezuela becomes another Chile (hopefully without a transition period of military rule).

Here are two things I fear may happen in 2018.

• Pulling out of NAFTA – America dodged a bullet in 2017. Given Trump’s protectionist instincts, I worried he would do something very dangerous on trade. But pain deferred is not the same thing as pain avoided. The President has made some very worrisome noises about NAFTA and it’s possible he may use executive authority to scrap a deal that has been good for the United States.
• A bad version of Brexit – Given the statist mindset in Brussels and the continent’s awful demographics, voting to leave the European Union was the right decision for our British friends. Simply stated, it makes no sense to stay on a sinking ship, even if it sinking slowly. But the net benefits of Brexit depend on whether the United Kingdom seizes the moment and adopts pro-growth policies such as tax cuts and free-trade pacts. Sadly, those good reforms don’t appear likely and it appears instead that the feckless Tory leadership will choose to become a satellite member of the EU, which means living under the thumb of Brussels and paying for harmonization, bureaucratization, and centralization. The worst possible outcome in the short run, though at least the U.K. is better positioned to fully extricate itself in the future.

I’m adding a new feature to my hopes-and-fears column this year.

These are issues where I think it’s likely that something consequential may occur, but I can’t figure out whether I should be optimistic or pessimistic. I sort of did this last year, listing Obamacare reform and Italian fiscal crisis as both hopes and fears.

It turns out I was right to be afraid about what would happen with Obamacare and I was wrong (or too early) to think something would happen with Italy.

Here are three things that could be consequential in 2018, but I can’t figure out whether to be hopeful or fearful.

• Infrastructure reform or boondoggle – I put an “infrastructure boondoggle” as one of my fears last year, but the President and Congress postponed dealing with the issue. But it will be addressed this year. I’m still afraid the result may be a traditional pile of pork-barrel spending, but it’s also possible that legislation could be a vehicle for market-based reform.
• Normalization of monetary policy – I try to stay clear of monetary policy, but I also recognize that it’s a very important issue. Indeed, if I was to pick the greatest risk to the economy, it’s that easy-money policies (such as artificially low interest rates) have created a bubble. And bursting bubbles can be very messy, as we learned (or should have learned) in 2008. The Federal Reserve supposedly is in the process of “normalizing” monetary policy. I very much hope they can move in the right direction without rattling markets and/or bursting bubbles.
• A China bubble – Speaking of macroeconomic risks, I’m very glad that China has partially liberalized and I’m ecstatic that reform has dramatically reduced severe poverty, but I also worry that the government plays far too large a role in the banking sector and interferes far too much in the allocation of capital. I’m guessing this eventually leads to some sort of hiccup (or worse) for the Chinese economy, and all I can do is cross my fingers and hope that the government responds with additional liberalization rather than the bad policies being advocated by the OECD and IMF.

By the way, I fully expect the Democrats to sweep the 2018 elections. And since the Party is now much farther to the left than it used to be, that could lead to very bad news in 2019 – particularly if Trump unleashes his inner Nixon.

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The Best and Worst News of 2017

Since it’s the last day of the year, let’s look back on 2017 and highlight the biggest victories and losses for liberty.

For last year’s column, we had an impressive list of overseas victories in 2016, including the United Kingdom’s Brexit from the European Union, the vote against basic income in Switzerland, the adoption of constitutional spending caps in Brazil, and even the abolition of the income tax in Antigua and Barbuda.

The only good policies I could find in the United States, by contrast, were food stamp reforms in Maine, Wisconsin, and Kansas.

This year has a depressingly small list of victories. Indeed, the only good thing I had on my initial list was the tax bill. So to make 2017 appear better, I’m turning that victory into three victories.

• A lower corporate tax rate – Dropping the federal corporate tax rate from 35 percent to 21 percent will boost investment, wages, and competitiveness, while also pressuring other nations to drop their corporate rates in a virtuous cycle of tax competition. An unambiguous victory.
• Limits on the deductibility of state and local taxes – It would have been preferable to totally abolish the deduction for state and local taxes, but a $10,000 cap will substantially curtail the federal tax subsidy for higher taxes by state and local government. The provision is only temporary, so it’s not an unambiguous win, but the whining and complaining from class-warfare politicians in New York and California is music to my ears.
• No border-adjustment tax – Early in 2017, I was worried that tax reform was going to be tax deform. House Republicans may have had good intentions, but their proposed border-adjustment tax would have set the stage for a value-added tax. I like to think I played at least a small role in killing this bad idea.
• Regulatory Rollback – The other bit of (modest) good news is that the Trump Administration has taken some steps to curtail and limit red tape. A journey of a thousand miles begins with a first step.

Now let’s look elsewhere in the world for a victory. Once again, there’s not much.

• Macron’s election in France – As I scoured my archives for some good foreign news, the only thing I could find was that a socialist beat a socialist in the French presidential election. But since I have some vague hope that Emanuel Macron will cut red tape and reduce the fiscal burden in France, I’m going to list this as good news. Yes, I’m grading on a curve.

Now let’s look at the bad news.

Last year, my list included growing GOP support for a VAT, eroding support for open trade, and the leftward shift of the Democratic Party.

Here are five examples of policy defeats in 2017.

• Illinois tax increase – If there was a contest for bad state fiscal policy, Illinois would be a strong contender. That was true even before 2017. And now that the state legislature rammed through a big tax increase, Illinois is trying even harder to be the nation’s most uncompetitive state.
• Kansas tax clawback – The big-government wing of the Kansas Republican Party joined forces with Democrats to undo a significant portion of the Brownback tax cuts. Since this was really a fight over whether there would be spending restraint or business-as-usual in Kansas, this was a double defeat.
• Botched Obamacare repeal – After winning numerous elections by promising to repeal Obamacare, Republicans finally got total control of Washington and then proceeded to produce a bill that repealed only portions. And even that effort flopped. This was a very sad confirmation of my Second Theorem of Government.
• Failure to control spending – I pointed out early in the year that it would be easy to cut taxes, control spending, and balance the budget. And I did the same thing late in the year. Unfortunately, there is no desire in Washington to restrain the growth of Leviathan. Sooner or later, this is going to generate very bad economic and political developments.
• Venezuela’s tyrannical regime is still standing – Since I had hoped the awful socialist government would collapse, the fact that nothing has changed in Venezuela counts as bad news. Actually, some things have changed. The economy is getting worse and worse.
• The Export-Import Bank is still alive – With total GOP control of Washington, one would hope this egregious dispenser of corporate welfare would be gone. Sadly, the swamp is winning this battle.

Tomorrow, I’ll do a new version of my annual hopes-and-fears column.

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Even (some) Socialists Are Disowning Venezuela

I wrote a lengthy column yesterday on the horrific situation in Venezuela.

As I thought about the suffering, especially among the poor, I wondered whether Bernie Sanders and Joe Stiglitz are still willing to defend that country’s barbaric government.

And I also contemplated whether there are any comments from Jeremy Corbyn, Sean Penn, Jesse Jackson, Michael Moore, and Noam Chomsky, who also carried water in the past for that despicable regime.

Would these people still defend Venezuelan statism? And if they did, what could they possibly say?

It’s not my job to give advice to Sanders, Stiglitz, et al, but they may want to borrow the strategy of the Socialist Party in the United Kingdom. Those folks are actually arguing that the real problem with Venezuela is that it’s not socialist enough.

I’m not joking.

Let’s look at some recent tweets.

Venezuela has a capitalist economy with leftists managing it. Socialists want a class-free state-free money-free society of equals. Stop reporting fake news. pic.twitter.com/KHI7vytGLB

— The Socialist Party (@OfficialSPGB) December 10, 2017

To be fair, since there is still some degree of private ownership in the nation, the statism practiced in Venezuela is probably closer to fascism than pure socialism, so there was a tiny bit of merit to that tweet.

The U.K.’s socialists double down on this argument by claiming that true socialism only exists when there is collective ownership of the means of production.

Failed LEFTISM in Venezuela is being used to attack ‘socialism’ by those who support huge inequality and selfish greed. Let’s nail this lie. pic.twitter.com/tK9UfWQsOq

— The Socialist Party (@OfficialSPGB) August 4, 2017

That’s also a reasonable point. But on that basis, then it’s silly for anyone (like Bernie Sanders) to claim that places such as Denmark and Sweden are socialist.

Let’s take a look at one final tweet from Socialist Party on the other side of the Atlantic. What makes this one special is that they actually claim that North Korea is an example of capitalism.

Look, if you are really an ‘economics professor’, then you ought to know about economics. Especially the fundamental difference between capitalist and socialist economics. Any economy where production is intended to make profits (like Venezuela) is capitalist — not socialist. pic.twitter.com/XcqhPJvfGJ

— The Socialist Party (@OfficialSPGB) November 26, 2017

This is utterly bizarre. Are they smoking crack? In North Korea, the government does own and control the means of production (factories, mines, railways, etc).

If you read the fine print on the last row, you’ll see that they define socialism to exist only in a make-believe world where there’s basically no state. Anarcho-socialism, or something like that.

If that’s how they want to redefine socialism, then I have no problem with it. If a bunch of people want to set up some sort of commune based on voluntary sharing of everything, that’s fine with me so long as they don’t try to force me to either pay for it or be part of it.

I’ll simply close by noting that the Pilgrims used that model when they first landed in America and many of them starved to death.

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Six Months and 28 Examples of Venezuelan Horror

What country has the world’s worst government? It’s not an easy question. There may be a different set of answers based on whether the focus is political oppression or economic mismanagement.

Regardless of methodology, there are some nations that will probably show up on just about any list.

• Cuba
• North Korea
• Zimbabwe

Today, though, I want to make the case for Venezuela. That unfortunate country used to be rich compared to other Latin American nations, but decades of bad policy have now morphed into awful policy. The long-run drop in economic freedom – from 10th-freest to 159th-freest – is staggering.

Wow. Combined with growing political oppression, the country may zip through the fourth circle of statist hell and soon find itself in the fifth and final circle.

To grasp the horror of the situation, let’s look at what’s happened since April, when I put together a column of 28 headlines to capture the death throes of Venezuelan socialism.

Now, in just the last six months, we have another 28 examples.

On May 30, a column in the New York Times catalogued the misery in Venezuela.

…huge protests rocking Venezuela… President Nicolás Maduro has responded with an iron fist. More than 50 people have been killed, 1,000 injured, and 2,700 arrested, and that last figure doesn’t include the country’s more than 180 long-term political prisoners. …economic and humanitarian crisis. It is hard to overstate the severity of the suffering of the 31 million people of this once-rich country. …hospitals lack 98 percent of needed medical supplies and 85 of 100 drugs are totally unavailable. As a result, in the last year, some 11,500 infants died before their first birthday… Cases of malaria are up 76 percent and diphtheria, which had been eradicated 20 years ago, has returned to Venezuela.

On June 1, we learned about the bravery and ingenuity of protestors.

Daniella Liendo is gaining frontline practical experience as she completes her medical studies. …On the streets of Caracas this week, the second-year student treated a demonstrator who had been shot at close range with a marble pellet in the city’s Chacao neighbourhood. “Once we get to a patient we must decide with the more senior doctors if [the injured] must be taken away for treatment,” she said. “The most common problem is asphyxia from the tear gas. We’ve also had a lot of head traumas and burns to deal with.” …An exodus of Venezuelan medical graduates has meant that even those with the most basic training are in demand. An estimated 15,000 doctors have left to work abroad since 2003.

On June 2, Reuters exposed the gilded lives of the government elite.

One is shown blowing a kiss from a private jet. Another is seen posing in front of a store of luxury jeweler Cartier in China. Others grin as they tuck into a plate of lobster or a massive birthday cake. Venezuelan activists are increasingly posting details of locations and lifestyles of leftist officials and their families, depicting them as thriving off corruption while the population struggles to eat in a devastating economic crisis. …One Twitter account published photos purportedly showing the wife of Vice President Tareck El Aissami enjoying champagne and lounging on a pristine beach with her sisters. In another case, an alleged lover of a powerful Socialist Party official is shown on trips to the Middle East. Venezuela’s opposition accuses officials of profiting from currency controls and a decade-long oil boom to fill their pockets. The opposition-led congress estimates that at least $11 billion have “disappeared” from state-run oil company PDVSA .

On June 5, Fox reported on women driven to prostitution by poverty.

As a humanitarian and political crisis in neighboring Venezuela deepens, a growing number of Venezuelan women are working in bars and brothels across Colombia. “I didn’t do this in Venezuela. I never ever imagined I’d be doing this in Colombia,” said Maria, who…charges $17 for 15-minutes of sex, and the money earned is spent on buying medicine for her mother who has cancer. …According to Asmubuli, a Colombian sex workers association, currently there are around 4,500 Venezuelan sex workers in the country. …It’s not just women who say they have no option but to sell their bodies for sex, but young Venezuelan men too. Dorian, 25, started working in Bogota’s Lourdes Park about two weeks ago. “It’s disappointing. I’m disappointed in myself,” said Dorian, a business studies university graduate unable to find a job and with no money to pay for rent and food.

On June 6, we learned about the current regime’s utter depravity.

Norma Camero Reno has been shipping a steady supply of desperately needed medicines from the United States to Venezuela. Reno and other members of her nonprofit, Move Foundation, pack painkillers, cold medicines and other supplies to be distributed to hospitals, health clinics and churches throughout the beleaguered nation. Two weeks ago, however, that all changed. …Reno discovered that none of the recent medicine shipments had made it to her contacts in the country. …“They are stopping everything from going in,” Reno told Fox News. “They are taking everything for themselves.”

On June 28, a column in the New York Times condemned Maduro’s brutal regime.

Every day, Venezuelans of all stripes pour into the streets protesting the loss of their freedom and their constitutional rights by a tyrannical regime that condemns them to scarcity, illness, malnutrition and outright hunger. …There has been terrible economic and social destruction. Across 15 years, a trillion dollars’ worth of oil income has been squandered and 80 percent of Venezuelans have fallen into poverty. …Venezuela has become the Zimbabwe of the Americas, a shameless alliance of corrupt politicians and the military acquiescent to the dictates of Cuba. …They have kidnapped the Latin American nation that is richest in oil resources, which they wish to appropriate for themselves, permanently and at whatever human cost it may require.

On July 3, we learned that poor people are waking up to the downside of socialism.

In Caracas, the rich and poor are suddenly less divided. For most of Venezuela’s two-decade socialist experiment, the city’s wealthier, whiter east has been the hotbed of anti-government sentiment. Now, noisy protests are erupting in poorer-but-calmer western neighborhoods that were strongholds for embattled President Nicolas Maduro as crime explodes and medicine and food are scarce and expensive. …They’re increasingly demanding a change in government, infuriated by mismanagement… “Everyone protests, without differences, because the hunger of the stomach and the hunger for democracy have been united,” said Carlos Julio Rojas, a La Candelaria activist… Services are shaky in Caracas, particularly in the slums that surround the capital. Water pipes go dry for days at a time, trash sits rotting and lights go out.

On July 20, the Economist shared news of despair about the plight of Venezuelan women.

Barbara and her cousin Sophia have more serious business: they hope to make enough money from selling sex to live decently after fleeing Venezuela, where survival is a struggle. Barbara, who is 27, prefers her former occupation as the owner of a nail and hair business in Caracas, Venezuela’s capital. But polish and shampoo are as hard to find as food and medicine, and so she has come to Medellín. In an hour a sex worker can make the equivalent of a month’s minimum wage in Venezuela. Colombian pesos “are worth something”, unlike Venezuela’s debauched currency, the bolívar, Barbara says. “At least here one can eat breakfast and lunch.” …Some 4,500 Venezuelan prostitutes are thought to be working in Colombia… The sex workers are joined by electricians, mechanics, empanada vendors—all of whom are seeking a way to cope with their country’s shortages and queues, and an inflation rate expected to exceed 700% this year.

On July 30, a column in the Wall Street Journal analyzed the crumbing of Venezuela.

Hungry, hurting Venezuelans are done talking. The country is in the early stages of civil war. …In polls, some 80% of Venezuelans oppose Mr. Maduro’s “constituent assembly.” But the opposition boycotted Sunday’s election because they know Cuba is running things, that voter rolls are corrupted, and that there is no transparency in the operation of electronic voting machines. …faith and hope in a peaceful solution has been lost. One symptom of this desperation is the mass exodus under way. On Tuesday the Panam Post reported that “more than 26,000 people crossed the border into Colombia Monday, July 26… But a citizens’ revolt, led by young people whose families are starving, is already under way.

On July 31, we got a thorough analysis of economic chaos in Venezuela.

With per capita GDP down by 40% since 2013, Venezuela’s economic catastrophe dwarfs any in the history of the US, Western Europe, or the rest of Latin America. And yet headline GDP numbers actually understate the magnitude of the economy’s decline. …Venezuelans clearly want out – and it’s not hard to see why. Media worldwide have been reporting on Venezuela, documenting truly horrible situations, with images of starvation, hopelessness, and rage.

On August 2, the Associated Press published a first-person look at the country’s decline.

The first thing the muscled-up men did was take my cellphone. They had stopped me on the street as I left an interview in the hometown of the late President Hugo Chavez and wrangled me into a black SUV. …I had thought that being a foreign reporter protected me from the growing chaos in Venezuela. But with the country unraveling so fast, I was about to learn there was no way to remain insulated. I came to Caracas as a correspondent for The Associated Press in 2014, just in time to witness the country’s accelerating descent into a humanitarian catastrophe. …the men trained a camera on me for an interrogation. One said that I would end up like the American journalist who had recently been beheaded in Syria. Another said if I gave him a kiss I could go free. …In the end, the secret police cut me loose a few hours after they arrested me, with a warning not to return.

On August 7, a CNN story looked at Venezuela’s looming default.

he country, which is engulfed in crisis, …has other payments coming due in the near future and could fall short on those if the economy continues to tailspin… “This model is broken, and default is inevitable,” says Siobhan Morden, an expert in Latin American bonds at Nomura Holdings. …Venezuela’s economy continues to spiral our of control. The unofficial exchange rate that most Venezuelans use has more than doubled since late July. Inflation is expected to soar 720% this year and and over 2,000% next year, according to the International Monetary Fund.

On August 13, we learned about the plight of Jews in Venezuela.

Jews in Venezuela are increasingly fleeing the country amid the rising political instability and violence under President Nicolas Maduro, with a growing number decamping for Israel. Estella and Haim Sadna, a religious couple with four kids from the Venezuelan capital Caracas, described the food scarcity and rampant crime that drove them to move the Jewish state. …While Venezuela once had one of the largest Jewish communities in the region, numbering some 25,000 in 1999, only about 9,000 Jews are believed to remain in the country.

On August 15, the Miami Herald reported that even the military must beg for food.

Venezuelan soldiers — armed and in uniform — were caught in neighboring Guyana last week begging for food, local police reported, another sign of Venezuela’s deepening hunger crisis. …Hunger is on the rise in Venezuela, amid triple-digit inflation and the government’s inability to import basic goods. And neighboring Colombia, Brazil and Guyana have seen a spike in Venezuelans looking for food. …That soldiers would cross into Guyana is telling. The two nations have been locked in a centuries-old border dispute over a swath of Guyanese territory known as the Esequibo and are not on good terms.

On August 29, the incompetent brutality of the government was discussed.

…socialist policies exacerbated the oil crisis and created the poverty we see in Venezuela today. …the poorest economies in the world are characterized by oppressive government intervention. …In Venezuela’s case, a government takeover of the oil industry reduced supply, sowing the seeds of future impoverishment. …When Hugo Chavez took power in 1999, he…closed Venezuela’s oil fields to foreign investment and stopped reinvesting oil proceeds in the company. He fired 18,000 workers at PDVSA, replacing professional oil employees with inept but politically loyal workers. …Healthy non-oil industries could have diversified Venezuela’s economy and blunted the impact of falling oil prices. By strangling them, Chavez and his successor, Nicolas Maduro, forced the economy to rely more on oil at precisely the wrong time. …Commentators who dismiss Venezuela’s suffering as being caused by the oil crisis need to explain why other oil-dependent countries have not collapsed. According to the World Bank, seven nations rely more on oil than Venezuela. All seven saw economic growth from 2013 to 2017.

On September 11, it was reported that even the United Nations is appalled by the regime’s actions.

The United Nations human rights chief has said that Venezuelan security forces may have committed “crimes against humanity” against protesters and called for an international investigation. …Zeid said the government was using criminal proceedings against opposition leaders, arbitrary detentions, excessive use of force and ill-treatment of detainees, which in some cases amounted to torture. …Last month, Zeid’s office said Venezuela’s security forces had committed extensive and apparently deliberate human rights violations in crushing anti-government protests and that democracy was “barely alive”. …Venezuela is among the 47 members of the Human Rights Council, where it enjoys strong support from Cuba, Iran and other states.

On September 15, we learned more about the depravity of the socialist government.

The association Prepara Familia denounced yesterday the death of 11-year old Cristhian Malavé, contaminated with a bacteria from the hemodialysis unit of the the J. M. de los Ríos Children’s Hospital. He’s the fifth child to die of this cause. Others die of unattended complications and their records are blurred and their names are lost in view of a State unable to offer a response to our simplest and most urgent needs. …Tamara Suju, head of the Casla Institute, denounced in fron of the OAS the tortures and violations committed by public force officers against 289 people, protesters and citizens. There are complaints of assaults and rapes (with batons or firearms), feces force-feeding, electroshocks, beating, in most cases, and psychological torture, in all of them. The huge majority of victims are men, 79% between 18 and 30 years old. Torture in Venezuela went from selective to massive and no government representative has denied torture cases.

On September 22, the Miami Herald reported on the tragic growth of prostitution.

At a squat, concrete brothel on the muddy banks of the Arauca River, Gabriel Sánchez rattled off the previous jobs of the women who now sell their bodies at his establishment for $25 an hour. “We’ve got lots of teachers, some doctors, many professional women and one petroleum engineer,” he yelled over the din of vallenato music. “All of them showed up with their degrees in hand.” And all of them came from Venezuela. As Venezuela’s economy continues to collapse amid food shortages, …waves of economic refugees have fled the country. …with jobs scarce, many young — and not so young — women are turning to the world’s oldest profession to make ends meet. …“Prostitution obviously isn’t a good job,” she said. “But I’m thankful for it, because it’s allowing me to buy food and support my family.”

On September 25, we learned more about the suffering of the people.

As the economic and political crisis deepens in, so do the levels of hunger. A survey by a top university found the average Venezuelan has lost nine kilogrammes in the past year. Many families are now forced to scavenge for food in what was once South America’s richest country. At a soup kitchen run by the Catholic Church in Caracas, …many of the children are given a special formula after arriving, when they are found to be severely malnourished. …Venezuela’s prolonged and acute economic crisis – characterised by food shortages and hyperinflation – has seen infant mortality rise to almost 35 percent and maternal mortality to 65 percent in just the last year. Anemia is rampant.

On October 6, Reuters reported on the country’s miserable business environment.

With Venezuela’s economy in shambles, Ford has furloughed Nunez and 1200 colleagues at its moribund plant here in Valencia, Venezuela’s third-largest city. …Nunez hasn’t reported for work in ten months, save for a few days in September… But he still collects a quarter of his weekly salary of 50,000 bolivars, the equivalent of just $1.70 at the widely used black-market exchange rate. The father of two teenagers counts himself lucky. …Ford is among roughly 150 multinationals still hanging on in Venezuela. The once-prosperous OPEC nation is now in the fourth year of a recession caused by a fall in oil prices and, economists say, failed policies of its socialist government. …As of April 2016, half of Venezuela’s working population was either jobless or employed only in part-time, “informal” jobs.

On October 11, the horror of Venezuela was captured by a single story.

Conditions in socialist Venezuela are so diabolical that people are forced to eat cats in the street. A stomach-churning video shows a homeless woman sitting on the roadside with her possessions around her and a dead domestic cat in front of her. She painstakingly skins the cat and then slices off pieces of its body before popping them in her mouth. …Viewers have blamed the socialist government for leaving people penniless and hungry with price controls, soaring inflation and shortages of basic essentials.

On October 19, we learned more about the exodus from the socialist hellhole.

Ana Linares…earns about $15 a day — more than she made in a month in her native Venezuela. …Linares arrived in Lima last May after enduring a six-day bus trip from central Venezuela, her 8-month-old son on her lap… Life in Venezuela had become intolerable, with millions struggling with hyperinflation, food shortages, lack of work and lawlessness. “Everything there has turned ugly. There’s hunger and crime. You can’t leave your house after 5 p.m. because you’re going to be robbed or killed,” Linares said, adding that she now earns enough to afford three meals a day, an impossibility for many these days in Venezuela. …as many as 500,000 Venezuelans have fled their country in the last two years and a total of 2.1 million since 1998.

On November 3, Katherine Mangu-Ward of Reason correctly assigned blame for the horrible situation.

Venezuela—which is the midst of a brutal food shortages brought about by a brutal socialist regime—…continues to worsen. Good soldiers are rewarded with scarce basic necessities such as toilet paper. Citizens are urged to eat rabbits. Opposing forces have taken to the streetsas the country’s socialism descends into dictatorship. Meanwhile the government is reserving food aid for loyalists and others turn to bitcoin to survive.

On November 4, we learned that animals in zoos are on the menu because of starvation.

In a country that once was rich, but where people are beginning to starve, few animals are safe. One morning in August at the metropolitan zoo in the torrid city of Maracaibo, workers were shocked to find the bones of a buffalo and some wild pigs inside their cages with clear signs of mutilation. …In west Caracas, …the same sort of thing happened. Watchmen found the bones and offal of a black horse inside its enclosure. Apparently the perpetrators only took the edible parts of the animal.

Though the people eating zoo animals are the lucky ones.

Every Saturday, Natalí wakes up…dresses in a hurry and whenever she can she feeds something to her sons and daughters and tells them to wait patiently for her return. …Natalí takes a four-wheel-drive car, then a bus, and then the train from Antímano to municipal Coche Market in south Caracas where, for the last three and a half months, she has made her pilgrimage to dig through the garbage left by the vendors—trying to find a half-rotted vegetable, a piece of fruit, or, if luck is on her side, chicken skin to take back home and feed her children.

On November 19, a column in the Wall Street Journal points out that the misery is deliberate policy.

Venezuelan shortages of everything are widely acknowledged. But there is less recognition that strongman Nicolás Maduro is using control of food to stamp out opposition. Hyperinflation has shriveled household budgets and the government has taken over food production and distribution. Most damning is evidence that access to government rations has become conditional on Maduro’s good favor. The hardship is killing and deforming children. …some communities are experiencing undeniable “famine” and that in some parts of the country 50% of the children have left school because of hunger.

On December 14, USA Today looked at the people escaping Venezuelan tyranny.

Although Venezuelans for years have been fleeing the “socialist revolution” first launched by the late Hugo Chávez in 1999, in recent months the trickle has turned into a flood as living conditions become ever more dire — from hyperinflation to acute shortages of food and medicine to one of the worst homicide rates in the world. …In response to…the once-wealthy country’s seeming demise, …many exiles had fled to the United States, surging numbers, like the Sequieras, now head to other Latin American nations. …From Mexico to Argentina, immigration agencies are reporting skyrocketing numbers of Venezuelan arrivals, doubling and even tripling the total for previous years.

On December 17, the New York Times exposed the pervasive hunger and horror in Venezuela.

Kenyerber Aquino Merchán was 17 months old when he starved to death. …Hunger has stalked Venezuela for years. Now, it is killing the nation’s children at an alarming rate, doctors in the country’s public hospitals say. …Riots and protests over the lack of affordable food, excruciating long lines for basic provisions, soldiers posted outside bakeries and angry crowds ransacking grocery stores have rattled cities, providing a telling, public display of the depths of the crisis. But deaths from malnutrition have remained a closely guarded secret by the Venezuelan government. …doctors at 21 public hospitals in 17 states across the country said that their emergency rooms were being overwhelmed by children with severe malnutrition… Parents like Kenyerber’s mother go days without eating, shriveling to the weight of children themselves.

On December 18, we got the latest details on the victims of Venezuelan statism.

Joel Rodriguez, a one legged panhandler, bursts into tears as a young man dressed as Santa Claus gives him food and clothing — a rare scene of holiday cheer in economically-depressed Venezuela. “Sometimes we eat out of the garbage,” said Rodriguez… In a Caracas with no Christmas lights or decorations this year because of the economic crisis, …Venezuelans are enduring acute shortages of food and medicine, and inflation is forecast by the IMF to hit a staggering 2,349 percent in 2018. “…are you doing the Maduro diet?” people shouted… They were using a popular expression used to refer to President Nicolas Maduro and people who have lost weight because of the hard economic times. This is so common it has been documented by Venezuelan universities.

Now that we’ve caught up with the calendar, let’s return the economic freedom scores from the Fraser Institute.

We started today’s column looking at Venezuela’s amazing (in a bad way) loss of overall economic liberty since 1970. Now let’s look at the specific issue of monetary policy. The country has gone from an almost-perfect score to the world’s most abysmal rating.

When I look at that data, it makes me glad that at least some Venezuelans are able to protect themselves with either offshore bank accounts or bitcoin.

And it makes me grateful to be in the United States. In my video on the history of central banking, I groused that the dollar has lost 95 percent of its value since the Federal Reserve was created in 1913. But that’s a heck of a lot better than losing 95 percent its value every year, which seems to be what’s happening in Venezuela.

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Everything You Need to Know about Statism in One Story

One of my specialty pages deals with the unfortunate nexus between sex and government. You can find columns about taxes and sex, Obamacare and sex, and licensing and sex.

My new addition to that collection involves the venal government of Venezuela.

Here’s a story from the Washington Post that will forever symbolize the utter failure of statism. It seems that big government can even ruin sex.

In a country beset by shortages, this is one of the most difficult: the disappearance of contraceptives. When she couldn’t renew her supply of birth-control pills, Gutierrez and her husband…tried to be careful, but soon she was pregnant with her second child. “We barely eat three times a day now,” said a distraught Gutierrez, a former hair washer in a beauty salon who lost her job because of the economic crisis. “I don’t know how we’re going to feed another mouth.” In Venezuela, …nearly two decades of socialist policies…has sparked a severe recession and one of the world’s highest inflation rates. People often wait hours in line to buy bread. Prices for staples jump almost by the day. Medical short­ages range from antibiotics to cancer drugs.

Socialism is infamous for creating shortages of critical things like food and important things like toilet paper.

So I guess we shouldn’t be surprised that it produces shortages of birth control. With grim consequences.

Venezuelan doctors are reporting spikes in unwanted pregnancies and sexually transmitted diseases that are adding to the country’s deepening misery. …media outlets have published articles about the “counting method” of contraception that women can use to calculate when they are ovulating and likely to get pregnant. An article on the Venezuelan website Cactus24 offered “15 home remedies to avoid pregnancy,” including eating papaya twice a day and drinking two cups of tea with ginger. …Facebook, Instagram and Twitter have become informal exchanges for the purchase or trading of birth-control pills, intrauterine devices and implants — albeit at black-market ­prices.  Other women beg friends and relations to bring them contraceptives from outside Venezuela.

There is a black market, which helps a few people, but that option is prohibitively expensive given the horrific state of the Venezuelan economy.

…a female customer in her 20s looking for pills was told, “We only have the imported ones” — implying they would be sold at a black-market rate. The manager offered her a single pack of 21 pills for 120,000 bolívares. That’s about $3, equal to one-third of Venezuela’s monthly minimum wage. …condoms, meanwhile, have disappeared from store shelves. But the cheaper brands taking their place are still imported, and therefore still unaffordable for many. A three-pack can now cost several days’ minimum-wage pay.

By the way, I hope this next anecdote about condoms doesn’t mean what I think it means.

…said Juan Noguera, 28, an unemployed economic researcher…“we just share them between friends. This is the sharing economy.”

For what it’s worth, I’ve always though recycling was overrated.

That being said, a shared condom may be better than nothing.

…the gynecologist from Caracas University Hospital, said the number of patients with STDs she is seeing has soared. “In my private practice, out of every 10 patients, five or six now have an STD,” she said. “Two years ago it was just two or three.” Making matters worse, drug shortages are so severe that doctors often lack what they need to treat patients with STDs. “Something as simple as penicillin — the cheapest antibiotic in the world — can’t be found in the country,” said Moraima Hernández, an epidemiologist at Concepción Palacios Maternity Hospital.

Unsurprisingly, government officials have no defense of the terrible situation.

Officials at Venezuela’s Health Ministry did not respond to emails and phone calls seeking comment.

I’d be curious, however, to see comments from pro-Venezuelan leftists in America. Do Bernie Sanders and Joe Stiglitz still think Venezuela is a praiseworthy role model?

I remarked last year that Venezuela was entering the fourth circle of statist hell. Why don’t we stipulate that the country in now fully and (un)comfortably ensconced in that grim position. Who knows, maybe it can join North Korea in the fifth circle if Maduro clings to power a few more years.

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