Venezuela is one of the world’s largest oil producers. The nation owns the oil and collects all the revenue generated from its sale. It is also a nation suspended somewhere between deep socialism and true communism. Everytime anyone gets a tad out of line, President Hugo Chávez goes a little further into communism, seizing private property, taking over private companies.
With all that oil money, one would assume that Venezuela could provide equally for all its people. It should be able to give everyone a decent home, a good education, good health care, and a healthy diet. Wrong.
Venezuela is suffering from food shortages. People line up hours before a store opens, hoping to buy something, anything to feed their families. They are short of staples like milk, meat and even toilet paper. Government-owned stores receive a shipment of goods once a week. The trucks never contain enough goods for the people who need them. Even stores in up-scale neighborhoods suffer from shortages. You could buy quail eggs, but not toilet paper, in La Castellana. Even coffee was running out.
And it is beginning to get back on President Chávez. When a store manager was asked recently where one could buy milk, he responded, “At Chavez’s house.” The fact that Chávez traveled to Cuba for treatment of his cancer isn’t sitting well either. It tells the Venezuelans that their health care isn’t good enough for their own officials.
Venezuela was always a very rich country, but the income gap had gotten extreme. Chávez won election in 1999 on the promise of greater equality. The Chávez administration insists that price controls are needed to make goods available to all at reasonable cost, but prices rose 27.6% last year, one of the highest inflation rates in the world.
The government blames capitalism for the shortages, saying companies are withholding goods to drive up prices. In response, they have ordered price cuts on more than a dozen products, including juice, disposable diapers and toothpaste. Chávez said recently, “We are not asking them [companies] to lose money, just that they make money in a rational way, that they don’t rob the people.”
Economists say the government is making the situation worse. They have cut prices so much that companies cannot make a profit, so they are producing less. Farmers are growing less because they can’t get decent prices for their produce. Retailers are cutting stock. And many of the products are from companies that the government seized and is running. Chávez says it is in the nation’s best interest that they run these companies, but ownership has not increased production.
Chávez is seeking re-election to another six-year term in October. The food shortages are becoming a major issue for him. He has threatened to nationalize any company that fails to keep its products on the shelves. His vice-president, Elías Jaua is warning of an opposition campaign to cause people to hoard and increase the shortages. The government is using “Bread for today is hunger for tomorrow” as a campaign slogan. Though economists say that new price controls might score some points for the election, in the long term, they will just make things worse.
Venezuela has run out of coffee. They used to be a coffee exporting nation, but now they don’t have enough coffee for the domestic market. Roasters say they cannot get beans, and the government has had to import coffee beans for them. Other agricultural products are suffering the same shortages.
There has been one small benefit to the shortages. The lack of cooking oil has altered diets. People are eating less fried food and stretching what foods they can buy by making stews and soups. Some shoppers are reporting inadvertent weight loss as a consequence. The North Koreans probably felt the same way fifty years ago.
There is a fine line that an economy must tread between encouraging capitalism and maintaining a good safety net, between providing the means of acquiring wealth and the need to prevent unreasonable income gaps. Almost all revolutions have had their foundation in economics, not politics. The wider the wealth gap, the more the poor feel they have no hope of advancement, the greater the chance of revolution. A little controlled socialism saves a whole lot of capitalist ass. Chávez tipped the scale the wrong way. Too much socialism, the tipping over into communism, results in equality in poverty. It is a lesson that China and Cuba have learned, and so they are converting to private enterprise and ownership. The politics will come later. They are avoiding the chaos caused by the collapse of communist governments without a solid private economy. As closely as Chávez has allied himself with the Castros, they have apparently not been able to teach him their most hard-earned lesson….communism is dead.