The Decline and Fall of a Once Glorious Republic

from Investors Business Daily

Venezuela trudged further down its road to serfdom when a sham election on May 20 returned Nicolas Maduro to the presidency for another six-year term. Venezuela's experiment with democratic socialism has now run its course from early optimism through economic dysfunction and now ever-closer to political tyranny.

A mere 20 years ago Hugo Chavez ran for president on a populist campaign promising socialist economic policies. He won the 1998 election with 56.2% of the vote in what was considered a fair election overseen by international observers, including former U.S. President Jimmy Carter.

Venezuela quickly became the poster child for successful socialism. Unlike the other socialist governments, Venezuela's was democratically elected and political freedoms were maintained. Incomes rose; poverty, illiteracy, and inequality all fell. Venezuela seemed to deliver socialism's promise unlike anywhere else in the world.

Leftists in the United States praised Chavez after his death in 2013. Salon.com claimed "Chavez racked up an economic record that a legacy-obsessed American president could only dream of achieving."

Bernie Sanders, Oliver Stone, Michael Moore and many others praised Chavez for his leadership and Venezuela's economic achievements.

Except it was all a mirage. Venezuela sits atop the world's largest proven oil reserves and Chavez cashed in on strong global oil prices. His socialist policies, meanwhile, caused dysfunction throughout the economy.

A 2016 study by economists Kevin Grier and Norman Maynard, published in the Journal of Economic Behavior & Organization, compared Venezuela's economic performance under Chavez to what it "likely" would have been if Chavez "had not been elected to the Venezuelan Presidency in 1998" and the existing policies had remained in place.

Their conclusion: "Although average incomes rose somewhat during his time as president, they lagged far behind where they might have been if Chavez had not taken office."

Venezuela Dies

The same held true in other key measures, such as life expectancy, infant mortality and poverty. Life expectancy improved, but by less than it should have. Infant mortality and poverty decreased, but by no more than would have been expected without Chavez's policies.

Venezuela's economic mirage collapsed when oil prices tanked and revealed an economy incapable of feeding itself.

The average Venezuelan lost 24 pounds last year — 19 the year before. Agricultural production is way down: rice, corn, and coffee by 60% over the last decade.

The cattle herd decreased 38% over the last five years. When Chavez came to power, there were more than 800,000 private businesses. Today, fewer than 230,000 remain.

Chavez's successor, Maduro, has resorted to the printing press to "pay" for import supplies. As a result inflation is skyrocketing. In March and April alone, inflation registered 18,000%.

Meanwhile, price controls make it unprofitable to produce anything. The result is the downward spiral Venezuela finds itself in.

It's hard to imagine any sitting president anywhere getting reelected when voters are literally starving amid hyperinflation. Yet Maduro claimed victory with a record 68% of the vote.

Not surprising, since the government had banned the largest opposition parties and had violently repressed anti-government protests. The election was a fraud.

Many voters went directly from the voting booth to nearby "Red Spots," where the government checked their IDs and handed out food rations.

The connection was not lost on them. It's hard to maintain your political independence when the ruling party hands out your food and determines your economic future.

Nobel Prize-winning economist Friedrich Hayek spelled out the intimate connection between economic freedom and political freedom in his 1944 book, "The Road to Serfdom."

He argued that only within a capitalist system is democracy possible and that when a country "becomes dominated by a collectivist creed, democracy will inevitably destroy itself."

Venezuela's democratic socialism is no more. Its socialist policies created economic dysfunction while curtailing economic freedoms. Now its citizens are losing their political freedoms while Venezuela joins the long list of totalitarian socialist regimes.