Socialist paradise Venezuela isn't doing so well

Things are not looking good at all for socialist paradise Venezuela. President Nicolas Maduro declared a state of emergency a couple days ago due to unrest and a shortage of supplies, including flour. It’s so bad, some U.S. officials told Reuters they don’t expect Maduro to stay in power that much longer.

They said one “plausible” scenario would be that Maduro’s own party or powerful political figures would force him out and would not rule out the possibility of a military coup. Still, they said there was no evidence of any active plotting or that he had lost support from the country’s generals.

The officials appeared to acknowledge that Washington has little leverage in how the situation unfolds in Venezuela, where any U.S. role draws government accusations of U.S.-aided conspiracies. Instead, the administration of President Barack Obama wants “regional” efforts to help keep the country from sliding into chaos.

“You can hear the ice cracking. You know there’s a crisis coming,” one U.S. official said. “Our pressure on this isn’t going to resolve this issue.”

The biggest issue is the fact the country’s economy is in the toilet, with its debts basically forcing the state to cut imports. Venezuela’s economic czar told Bloomberg that’s the only way to save the economy.

“We’ve applied a very austere program,” Vice President for Economic Policy Miguel Perez Abad said at an interview at his office in Caracas, adding that imports would probably fall to about $20 billion this year from $37 billion in 2015. “We’re going to maintain this level of restriction to force the productive sector of the economy to increase output. Hopefully we could cut imports to as low as $15 billion.”

The comments are pretty important because Venezuela relies heavily on the oil and gas sector for its economy, but has only two companies “competing” in the country. The gigantic one is PDVSA which is state-owned, while privately-owned Trebol Gas C.A. has a small share of the market. The same goes for the steel market with one company owned by the state (SIDOR), with smaller Sivensa operating as the privately-run one. The aluminum market is controlled by state-owned Alcasa. The state basically runs the economy, which is one reason why things aren’t going so well. There’s no diversification and everything goes through the government, meaning bureaucracy chokes the life out of the economy.

Maduro isn’t planning on going away, and is stealing from predecessor Hugo Chavez’ playbook by saying America is plotting against Venezuela. He’s even claiming foreign powers (aka USA) are going to try to invade. Via Bloomberg.

Speaking in Caracas’s Ibarra Square after a march Saturday by several hundred supporters, Maduro said his opponents are orchestrating foreign military intervention in Venezuela. Exercises by the army and militia groups would prepare “for any scenario,” Maduro said.

“The oligarchy’s plan is to disturb the peace so they can justify foreign intervention in Venezuela,” Maduro said in televised remarks at the rally. “I’m not an extremist for saying this, but they’re extremists for wanting to carry this out.”

It’s easy for those on the Right to sit down and cackle at the failure of socialism in Venezuela. We can yell, “Told you so!” without actually thinking about possible solutions to the Venezuelan economy and if there’s a way to prevent the people from staying in poverty. This doesn’t mean the U.S. government should consider donating any money to Venezuela, but maybe businesses should look at moving into the country to help (IF the country decides to liberalize its economy). This means more people get to work, wages increase, and people enjoy the benefits of the free market. But it also means the U.S. needs to resist the urge to move towards a centralized economy or electing leaders who want this. For every politician out there promising lip service to free markets, there are plenty more who’d prefer to see the government pick winners and losers via regulations, contracts, etc. This means talking to millennials about the problems in Venezuela and how socialism caused things to fail. But those on the Right who care about free markets also have to point out what free markets actually mean (no government involvement at any level) and why it’s important to keep government and business separate.

The failure of socialism in Venezuela is just another in a long line of failures for Karl Marx’s ideology and philosophy. There are obviously lessons for the U.S. to learn from an economic standpoint, but also from a foreign policy standpoint. Maduro and Chavez are able to claim the U.S. is trying to oust them because of the 1954 Guatemalan coup, the invasion of Panama, and whatever happened in Haiti in 2004 (thanks Roosevelt Corollary to the Monroe Doctrine and more involvement in foreign conflicts we shouldn’t be involved in). Perhaps it’s time to consider going back to Coolidge’s Good Neighbor policy, instead of heavily trying to influence policy in Latin America. This way, strongmen don’t always get in power in other countries and the U.S. can show the world the best government is the one which governs least and keeps its fingers out of every pie possible.