Venezuela: another sample of why socialism doesn’t work
I’m not sure if you are paying attention to the current situation of Venezuela. Actually, whenever you are informed or not, I have found a great article in allfinancialmatters.com where it’s blogger discerns about the ‘Socialism doesn’t work topic’. Most of this was started back when oil prices were high and could support Chavez’s ambitions.
Now Venezuela faces both a recession on rampant inflation. Which is the reason?We can find the answer on this article published in WSJ a few days ago:
Experts in economy say Chavez socialist economic policies are the main problem of the isse, and that his attempted solutions are only likely to make matters worse.
‘Venezuela’s economy is becoming so inefficient that it is having a harder time growing even with higher oil prices,’ declared Tamara Herrera, a reputated economist at Global Source Partners, a Venezuelan economic forecasting group.
At the root of the current trouble was a huge run-up in public spending under Mr. Chávez’s government during the past few years on the back of high oil prices. To try to limit the resulting inflation, the president’s team resorted to price controls, which led to shortages and other problems.
One of the prices the government has tried to set is the exchange rate. But the system has grown in complexity, with effectively four different exchange rates, three set by the government and one set by the market—the black market.
And then which is the resason because Chavez follows such a strategy as socialism? He says it’s to help de poor, but maybe this is not the real truth. Maybe he pursues total control? Chavez isn’t living with his own mistakes, neither the ones of socialism. If he were living like the typical Venezuelan, he might have a different point of view on his policies.
For sure future economic books will have a chapter dedicated to the situation in Venezuela.
