Venezuela-Revisited

Bernie Sander's rallies draw large, enthusiastic crowds of naive young people and aging Leftists. He talks about lots of "free" government programs for young people, and rails against "millionaires and billionaires" in language that is very, very close to the words of socialist/communist demagogues of the past. He tells them that the economy is "rigged" and that big government is the solution. Bernie wants a socialist America, one that follows the failed model of other socialist utopias, now long gone or struggling to survive.

With that in mind, let's take our bi-annual look at Venezuela — a country that bought into the socialist promises of Hugo Chavez and his predecessor, Nicolas Maduro. The Washingon Post reports:

The only question now is whether Venezuela's government or economy will completely collapse first.

The key word there is "completely." Both are well into their death throes. Indeed, Venezuela's ruling party just lost congressional elections that gave the opposition a veto-proof majority, and it's hard to see that getting any better for them any time soon — or ever. Incumbents, after all, don't tend to do too well when, according to the International Monetary Fund, their economy shrinks 10 percent one year, an additional 6 percent the next, and inflation explodes to 720 percent. It's no wonder, then, that markets expect Venezuela to default on its debt in the very near future. The country is basically bankrupt.

That's not an easy thing to do when you have the largest oil reserves in the world, but Venezuela has managed it. How? Well, a combination of bad luck and worse policies. The first step was when Hugo Chávez's socialist government started spending more money on the poor, with everything from two-cent gasoline to free housing. Now, there's nothing wrong with that — in fact, it's a good idea in general — but only as long as you actually, well, have the money to spend. And by 2005 or so, Venezuela didn't.

Why not? The answer is that Chávez turned the state-owned oil company from being professionally run to being barely run. People who knew what they were doing were replaced with people who were loyal to the regime, and profits came out but new investment didn't go in. That last part was particularly bad, because Venezuela's extra-heavy crude needs to be blended or refined — neither of which is cheap — before it can be sold. So Venezuela just hasn't been able to churn out as much oil as it used to without upgraded or even maintained infrastructure. Specifically, oil production fell 25 percent between 1999 and 2013.

With smiling faces, enthusiastic cheers and righteous moral preening, Bernie Sander's followers cheer a septuagenarian crypto-communist as he offers to lead America on Venezuela's path. They, like the citizens of Venezuela did, cheer Sander's class warfare rhetoric. They, like the citizens of Venezuela did, idolize their "Chavez"—a champion of the people, after all. They, like the citizens of Venezuela, are either too stupid, too naive, or too ideological to learn the lessons of Venezuela—to understand that unemployment, food and drug shortages, (even worse) government corruption, and bad times accompany the socialist model as surely as empty election promises and crowds fade into memory. They're too uninformed to recognize that "free" stuff isn't free, that redistributionist policies will not lead to "income equality," that big intrusive government will hurt, not help, those in need.

Bernie sometimes talks about Denmark—you know the country which has an effective tax rate that comes close to 80%, ranks 192nd out of 213 countries in economic growth, and has per capital indebtedness that is among the highest in the West. Odd that he never mentions Venezuela.