What Caused Venezuela's Collapse Is No Mystery — Except To Economically Illiterate Journalists
http://www.investors.com/politics/editorials/what-caused-venezuelas-collapse-is-no-mystery-except-to-economically-illiterate-journalists/5/04/2017
Economics: Why is it that reporters keep scratching their heads about Venezuela's descent into extreme poverty and chaos? The cause is simple. Socialism. End it and you will end the misery.
When the New York Times wrote about Venezuela's ongoing collapse a year ago, it described how the country was suffering "painful shortages … even of basic foods," and how "electricity and water are being rationed, and huge areas of the country have spent months with little of either."
Here is how the Times explained the reason for Venezuela's dire situation: "The growing economic crisis (was) fueled by low prices for oil, the country's main export; a drought that has crippled Venezuela's ability to generate hydroelectric power; and a long decline in manufacturing and agricultural production."
There's no mention — not one — of the fact that Hugo Chávez tried to turn Venezuela into a socialist paradise, policies that his successor Nicolás Maduro has continued. The Times' coverage is par for the course.
Venezuela was never a model free market economy. A couple decades ago, the Heritage Foundation gave it a 59.8 ranking on its Index of Freedom — which measures how free or government-controlled an economy is. That put it at the edge of being "moderately free."
Then Chavez nationalized the oil industry, agricultural operations, transportation, power generation, telecommunications, steel production, banks. Today Venezuela is the third least free economy in the world, ahead of only Cuba and North Korea.
As a direct result of those actions, Venezuela went from being on the wealthiest countries in South America — one rich in natural resources — to a country where people are literally fighting for scraps of food. Last year, Venezuela's economy shrank 18%. The unemployment rate is 25% and climbing. Inflation could reach 2,068% next year. Riots have become routine.
As we have noted many times in this space, it is socialism, not oil prices or the weather or greedy businessmen or any other such factor that's to blame for Venezuela's economic crisis. This is what socialism produces. Always and everywhere. It is as close to an iron law of economics as there can be.
Yet reporters continue to obfuscate, if not totally ignore, this economic reality when they try to explain to readers what is going on down there.
The Los Angeles Times says that it's only "anti-government protesters" who "blame Venezuela's economic crisis on the policies of Maduro and his predecessor, Hugo Chávez." While "supporters of the government say the culprits are a drop in international oil prices as well as 'corrupt' business leaders."
There's no attempt made by the reporter to say who is right.
An explainer by the Associated Press says the "oil boom and bust" is to blame for the crisis. "The plunge in world oil prices has left the government owing money across the board, from foreign airlines to oil service companies. Most of the anti-poverty gains made under Chavez have been erased and people are grappling with severe food and medicine shortages."
USA Today said that the reason Venezuelans were resorting to hunting dogs and pigeons for food was because "although Venezuela has the world's largest petroleum reserves, the country has suffered from a combination of lower oil prices and tight limits on dollar purchases that have cut off vital food and most other imports. The result has been a plunging economy and the world's highest inflation rate — above 700%."
Others blamed a drought for the country's problems. The Wall Street Journal reported last spring that "the newer hardships are water scarcity and increasingly critical power blackouts — a byproduct of the lack of water in a country dependent on hydroelectric dams."
Why do reporters ignore the obvious? We'd surmise that it's largely because liberal journalists are infatuated with the idea of socialism....
