In the first installment in this series, we took a look at the origins and cultural impact of socialism. To read the full analysis, CLICK HERE.
It was nighttime in Caracas, Venezuela.
A man was walking down the street, carrying what appeared to be a wooden baseball bat. Venezuela has a long history of great baseball players, but he wasn’t going to play baseball. Venezuela has a high crime rate, but he wasn’t going to serve vigilante justice to an enemy.
No, the man was searching for food to feed his starving family. Whether it be a rat, a dog, a bird, or any other creature that could be killed and eaten, this man, armed only with the most basic of weaponry, was willing to take the risk to keep his family alive for another day.
This scene has been repeated countless times across Venezuela. The citizens are suffering due to a lack of food, water, and medicine. Any income they make buys them less food at the end of their workday then it did at the beginning. (Due to hyperinflation of their currency). The crime rate is rising, and the government under Nicolas Maduro has become increasingly authoritarian.
Why are the citizens suffering in this way?
The answer is simple: Socialism.
In the 1970s, Venezuela was one of the most prosperous countries in Latin America. However, in the last four years, their economy has shrunken by 35%. This collapse can be traced back to 1999 when the socialist Hugo Chavez became president. Chavez was heralded as being the purveyor of a “socialist paradise.” He received visits from actors Danny Glover and Sean Penn. He received praise from Bernie Sanders, who claimed that you were “more likely to achieve the American Dream in Venezuela than in the United States.”
Chavez went to work nationalizing the oil industry. He put inexperienced cronies in charge of the oil refineries, causing multiple fatal accidents and fires. Despite high oil prices, oil output fell by 25 percent during Chavez’s reign. Chavez decimated the country’s manufacturing industry. By nationalizing the industry, he caused output to fall back to 1965 levels.
He took control of the farms and supermarkets, causing food shortages. He placed price controls on many goods, prompting producers to produce less. He instituted social welfare programs that caused large budget deficits. The poor got subsidized food and free housing. The politically connected received up to $30 billion a year in subsidies.
Healthcare and other services were provided at the government’s expense. These services forced the government to borrow at high rates. At the time, it was believed that Venezuela’s large stockpile of oil would continue to sustain the high spending. But the price of oil tanked, and so did the Venezuelan economy.
Chavez’s successor, Nicolas Maduro, picked up where his predecessor left off. His regime has become increasingly authoritarian in its rule. Food shortages, hyperinflation, diminishing rule of law, a failing healthcare system, and the suppression of the opposition have become the norm under his rule.
Venezuelans are poor— brutally poor. Nearly 90 percent of the country lives in poverty according to global economic standards. They can’t afford food or other basic goods. Nine out of ten Venezuelans cannot afford enough food to feed their families. This has caused some parents to abandon their children; they are leaving them at shelters and orphanages with the hopes that they will be fed there.
Children are dying at alarming rates. A record number of children have been admitted to the hospital for severe malnutrition, and child mortality increased 100 percent between 2012-2015.
Venezuelans reported losing nearly 25 pounds on average last year, and 60 percent reported waking up hungry because they did not have enough money to buy food.
A large reason for this poverty is the hyperinflation of the currency, the bolivar. The IMF recently reported that inflation could rise to one million percent (that is not a typo!) The reason for this is simple: The government has spent large amounts of money funding social programs and nationalizing industries. To finance these programs, the government began printing money to pay for the spending. However, the increase in the money supply caused prices to rise.
For example, the cost of one single egg was 200,000 Bolivars last year, a one-month salary would buy you just one cup of coffee, and one American Dollar can be exchanged for 3.5 million Bolivars on the black market. To keep up with the rising prices, Maduro has raised the minimum wage to 5 million Bolivars, which is the equivalent of 41 American Dollars.
Hyperinflation has caused consumers to increasingly turn to bartering. Parking spots are paid for with granola bars, a haircut is exchanged for eggs, cigarettes are exchanged for a cab ride, and a burrito can be exchanged for paper napkins at a restaurant. Their currency is becoming so worthless that some artists use it to make art to sell to collectors.
One of the claims made by supporters of socialism is that it will lead to the end of the wealthy and politically connected citizens benefiting at the expense of the lower classes. However, Socialism does not put an end to the upper class; it just replaces the upper class with those favored by the government.
In Venezuela, the Government decides who gets running water; they seize water trucks and tell the drivers where to deliver the water. (They often force them to deliver it to the homes of Government officials). The military guards the subsidized food supply and decides who gets fed.
Socialism invariably leads to the development of a black market where goods are sold that are in short supply. In Venezuela, government officials take their cut of the black market, too. They take half the proceeds from the goods, leaving the resellers with less— and the people who the goods were originally intended for often receive a fraction, if any, of what they originally ordered.
Reporter Anatoly Kurmanaev wrote about attending an event held by the President of the Central Bank of Venezuela, Nelson Merentes. Merentes is the man responsible for increasing the money supply to levels that have caused such misery to Venezuelans. Kurmanaev described the event as being a “beach party where vodka and rum flowed—and where Merentes waved maracas and danced with a bevy of young women in tight denim shorts.” While his monetary policy was causing his fellow citizens to suffer; Merentes was having a party you would expect to see at the Playboy Mansion.
In Venezuela, like other Socialist countries, the rule of law has broken down. Caracas has become the murder capital of the world, while the paramilitary rounds up political prisoners every single day. Opposition to the government is suppressed. Citizens fear to speak out against the government for fear of being arrested or killed. The scene in Venezuela is reminiscent of George Orwell’s 1984.
Security officials trail reporters. An ABC News correspondent and his production team were arrested for five days for reporting on medical shortages and barbaric conditions in a hospital. The officials intimidated the ABC team by threatening to call in the Venezuelan secret police if they did not pay them a bribe. Scenes like these are played out daily across Venezuela.
Venezuela follows the pattern of other socialist countries (many of which we’ll cover in this series). Their country is ruled by an authoritarian, Nicolas Maduro. Their people are starving due to food shortages caused by the government dictating what gets produced, and at what price. Venezuelan citizens are suffering and living in inhumane conditions, and violence has become rampant.
THAT is the true face of socialism, and it shows exactly why it cannot be allowed to take root in the United States.
Stay tuned to FreedomWire tomorrow for Part 2, in which we’ll analyze one of the best-known examples of socialism: the Soviet Union.