Policy wonk digest: Venezuela’s broken edition

This is part of a semi-regular series where we point out government policies in the countries we travel to of interest to policy wonks like ourselves. In this case it’s sort of a what not to do. Here are some snippets of policies that are causing Venezuela to break down right now.

Nationalisation

  • The government nationalised a wide range of businesses. These businesses are inefficient, and corruption is rife. The national oil industry has three times more staff than previously, but produces less oil.
  • The nationalisation of key industries also means the absence of competition in production of key goods. When the government run business is inefficient at producing, say, toilet paper, no toilet paper gets to the shelves of Venezuelan supermarkets.

Currency exchange

  • We’ve already talked about Venezuela’s fixed exchange rate with the USD. To sustain this policy the government needs to keep foreign reserves – basically a big pile of USD that it can use to counterbalance its currency fixing. But it’s running out. And so…
  • Airlines have been told that any money they receive from selling tickets must stay in Venezuela. The government will not allow them to exchange VEF for USD. This is a massive problem because they need to pay for things at the destination of their flight. One by one, airlines are pulling out of Venezuela. This is devastating for Venezuelan travelers and airline geeks alike.
  • You can still technically apply for a Venezuelan passport, but you won’t be issued one any time soon. Waits of a year or more are common. Neither will the government allow you to buy USD. It is a massive indictment of any government to stop their citizens from choosing to leave. If you won’t let your people run away you can’t claim to be governing with consent.

Guns

  • During his fifteen-year reign, Chavez cultivated a bunker mentality among Venezuelans. He scaremongered about invasion from the US, who would come to Venezuela and forcibly take its oil.
  • To back this up, the government facilitated the distribution of arms to citizen militia who would protect against fascist invasion. The groups armed were also fiercely pro-government, and have been allowed to operate with broad impunity.
  • The violent crime rate skyrocketed. It’s not a long bow to draw to suggest causation here: there are more guns about and folk start to consider what to do with them.
  • There have been some attempts to disarm groups, but the government has struggled. They can’t get the toothpaste back in the tube.
  • Until his death Chavez  continued to attribute the country’s lawlessness to the stubborn adherence of some Venezuelans to a capitalist value system, despite his efforts to install “21st-century socialism” throughout the land.
  • The concentration of guns in pro-government hands is a key reason for our prediction that the current protests will turn to civil war.

Business as bad guys

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The government claims that the current economic problems are the fault of local businesses who have greedily been charging too much for everyday goods.  The government is going to investigate, and is planning to fix more prices. The slogan for this investigation is a good one: Guarantee of Power for the People. Of course, government policy could not be creating economic problems in Venezuela.

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