The collapse of Venezuela would provide invaluable political and economic lessons for Americans if only our media would accurately report what has happened to the country once considered to be the Eden of South America.
For instance, this week the mainstream media (MSM) is reporting that the Trump administration no longer recognizes President Nicolas Maduro but rather an opposition leader, Juan Guaidó, as interim president.
It’s also reporting that both Russia and China have ‘warned’ the U.S. not to interfere in Venezuela’s internal politics. The MSM has even reported the fact that there is widespread chaos in the country and that it’s in an economic free-fall.
But far less mentioned is the reason why Venezuela, with some of the world’s largest proven oil reserves, is destitute, its people dirt poor and fleeing the country by the hundreds of thousands.
It’s a one-word answer: Socialism.
Maduro inherited a ‘socialist revolution’ from the late President Hugo Chavez, but rather than learn from Chavez’s economic mistakes, Maduro decided to continue with Chavez’s socialist economic policies which have, in turn, completely devastated the country economically and has led to the current political and social crisis.
So, what is socialism, really, and why does it fail as an economic model? According to Merriam-Webster, socialism is “any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods.” Further, socialism is “a system of society or group living in which there is no private property” and “a system or condition of society in which the means of production are owned and controlled by the state.”
One of the cornerstones of American liberty, as guaranteed by the Constitution, is private property rights, that’s a given. But what does it matter if the state — that is, the central government — owns and controls all the means of production?
Socialism destroys societies by destroying incentive, motivation, and ingenuity
In a capitalist society that promotes ordered liberty, production is driven by supply and demand. Companies — creators — develop a product or service (incentive and motivation) for which they believe there will be a demand. They set a price for this product or service based on a number of factors such as what the product costs to make or the service costs to deliver; cost of materials and supplies; and the margin of profit needed to keep the business afloat and allow its owner to earn a living.
State-owned production under socialism de-emphasizes any and all motivation to make a better product or deliver a better service because there is no competition, there is only the state. There is also no profit so there is no incentive to ‘be better’ or develop a better product or service; what’s the point of making something better and more efficient or less expensive if the government is simply going to come along and ‘acquire’ that enterprise as well? (Related: After comedian Jim Carrey goes ‘all in for socialism,’ a Venezuelan journalist schools him.)
Meanwhile, as Merriam-Webster notes, “capitalism refers to an economic theory in which a society’s means of production are held by private individuals or organizations, not the government, and where prices, distribution of goods, and products are determined by a free market.”
One of the policies implemented by the Chavez-Maduro governments is ‘price-fixing’ — that is, the government setting of prices for products, goods, and services out of “fairness.” These prices were very often at below-market value, which caused businesses to go bankrupt, which caused a flight of capital out of the country and mass unemployment. That includes the country’s waning oil industry, on which the government depended for the bulk of its operating budget.
The socialist policies of Chavez and Maduro that destroyed Venezuela are backed by a new crop of Democrats — self-described “Democratic Socialists” like Rep. Alexandria Ocasio-Cortez (D-N.Y.). It just makes no sense at all why any American would back them.
Watch this fantastic PragerU primer on Venezuela’s descent into a socialist hell:
Read more about the collapse of Venezuela at Collapse.news.
Sources include:
Please contact us for more information.