EDITORIALS

Venezuela stuck on socialism

To be a Venezuelan of a certain age is to have endured a staggering turn of fortune. Venezuela was once the richest country in Latin America, measured by per capita GDP. It sits atop the world’s largest proven oil reserves, has copious arable land, and once boasted healthy government institutions and an educated population.

 That was then.

 Today, Venezuela is a country collapsing before our eyes, with horrific consequences for its people. The economist Benjamin Powell recently tallied up the sorry score: Inflation is running at about 18,000 percent (not a typo). There were 800,000 private businesses in 1998; today, there are 230,000. Hunger and poverty are rampant, with people trying to survive by eating rats and dogs. The average Venezuelan lost 24 pounds last year (after losing 19 the year before).

Reliable data are hard to come by, but the International Monetary Fund estimates that the country’s GDP shrank by 17 percent last year alone. Crime has skyrocketed, and desperate Venezuelans are fleeing the country, creating a crisis in neighboring countries, including Colombia. The U.N. High Commissioner for Refugees estimates that 5,000 Venezuelans leave every day. At that rate, 1.8 million people will depart this year.

 What happened?

 In 1998, Venezuela elected socialist strongman Hugo Chavez to be president. He did what militant socialists tend to do: Expropriate private industries, spend like a drunken sailor, and chase away private capital.

For a while, the regime could get away with this, as oil prices were high. (About 95 percent of Venezuela’s export revenues come from oil.) But after Chavez died in March 2013, oil prices tanked, and newly installed president Nicolas Maduro, a former bus driver, found himself in a tricky situation.

 Mr. Maduro doubled down on Mr. Chavez’s socialist policies. To make up for falling revenues, he simply printed money, leading to the ruinous inflation mentioned above. Now starved for foreign currency, Venezuela can’t import anything, hence the grievous shortages of basics like medicine and toilet paper. Mr. Maduro’s price controls, meanwhile, ensure that the few remaining private businesses don’t stock necessary items: they can’t make any money on them.

 As is often the case, as economic liberties have withered, so have political freedoms. Venezuela, on May 20, held a sham election, one roundly condemned by the United Nations, the European Union, the United States, and much of Latin America.

Mr. Maduro “won” of course, taking more than two-thirds of the vote. (Turnout was anemic, though, suggesting that Venezuelans were too demoralized to participate in this sick joke.) But much of the opposition was barred from running. The National Electoral Council, which administers the elections, is packed with Maduro stooges. The media are safely under Mr. Maduro’s thumb.

 Following the election, the United States, Canada, and others slapped sanctions on the regime. The U.S. banned buying Venezuelan debt. That’s a good thing; Mr. Maduro and the kleptocrats around him must have their avenues to corruption shut down.

It is hard to see any path out of the people's misery as long as the current regime holds power and pursues catastrophic policies.

What has happened to Venezuela is a tragedy. It also serves as a sobering warning to the West about what results when freedoms and free markets are taken away, even for supposedly compassionate ends.