The increasing flood of Venezuelan refugees is putting so much pressure on neighboring countries that the Norwegian Refugee Council (NRC) is calling for help. More than four million people have left Marxist Nicolas Maduro’s socialist “paradise” in just the last four years, and the numbers are increasing. They are finding temporary refuge in Brazil, Colombia, Ecuador, Peru, Chile, Argentina, Mexico, Costa Rica, Panama, Aruba, and Spain; however, those countries are being pushed to their limits.
The NRC stated that the “international community … must step up efforts immediately to provide much-needed protection and humanitarian assistance … a comprehensive and rapid response to food, education, documentation and health needs [is] vital throughout the region … [we are] requesting an immediate $2.5 million … particularly on the border areas between Colombia and Venezuela.”
But, as the NRC itself admits, “emergency relief alone cannot resolve the underlying drivers of displacement and humanitarian need.” More permanent solutions to what ails Venezuela must be found in order to stop the hemorrhaging and begin the rebuilding of what was once a thriving country and economy.
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As recently as 1980 the Fraser Institute’s Economic Freedom of the World index placed Venezuela in 14th position. Today it is at the very bottom of its list, at 159th.
Volumes have been written about what’s wrong with Maduro’s paradise, but a single example will suffice. Just before Christmas a year ago Maduro’s “consumer protection agency,” Sundde, discovered that a toy distributor had profit margins that exceeded the agency’s rules and seized nearly four million toys from its warehouse. As Benjamin Powell, a senior fellow at the Independent Institute, noted crisply, while “this action might have made some toys freely available this past Christmas, it also destroyed the incentive for any company to attempt to provide toys [for the] next holiday season.”
Indeed, that is the core philosophy of socialism: destroy the profit motive and one destroys capitalism. Destroy capitalism and one destroys the economy. Destroy the economy and freedom ceases to exist. Those who can, leave. Those who can’t, stay behind and suffer.
Entrepreneurs who try to meet needs of the people suffer the most. When they try to keep up with the runaway inflation that has all but destroyed the purchasing power of the country’s currency by raising prices, the government’s “consumer protection agency” swoops in, closes their business and arrests and jails them.
The disconnect from reality is evident by Maduro’s response: he wants to encourage tourism! If this hadn’t been written by the Washington Post’s South American/Caribbean bureau chief, Anthony Faiola, few would believe it. Faiola quoted Marleny Contreras, Maduro’s “tourism minister,” as saying that “tourism is the oil that never runs out.”
But who wants to come to Venezuela when so many of its people are desperately trying to leave? Those left behind and able even to afford a room at a local hotel are way beyond stealing towels. Those few hotel guests are now stealing lightbulbs and coffee makers to such an extent that hoteliers are requiring them to sign an inventory list which is then checked through a room inspection before they leave.
As recently as 2008, Venezuela enjoyed a tourism industry that generated $1 billion a year in revenues. Today that number has dropped almost to zero. And those who do show up are attacked. As Faiola reported:
[A] family-owned hotel … was filled with Europeans and Americans as recently as two years ago. But the foreigners have mostly stopped coming. A Belgian tourist did show up last April. But he was spotted in town, the hotelier said, and one day after he checked in, six masked gunmen barged into the hotel lobby. They forced a front-desk clerk to take them to the man’s room.
“It was horrible. They stole everything,” the hotel owner said. “His iPhone, his clothes. Everything.”
Welcome to Venezuela!
If socialism is the problem, then what is the solution? It’s too easy to say: get rid of Maduro and his thugs and replace them with free market executives. In Venezuela the culture of dependency will take generations to repair and replace. But there is one move that a new government could take immediately that would start the process: sell the state-owned oil company PdVSA to private interests. Under Maduro that company’s production of crude oil has been cut in half, from over three million barrels a day to less than 1.5 million. It would take millions to rehab and refurbish what Maduro’s political cronies running the place have done to it, but the investment would be returned rapidly. With oil selling at more than $60 a barrel on the world markets, the new revenue stream would be a very welcome $90 million, every day. Those new revenues would flow out to Venezuelans working for the now-private company, rewarding them for their expertise in squeezing every drop of oil out of the country’s vast proven oil reserves. In turn those jobs would create other jobs as once-excoriated and threatened entrepreneurs rush to fill the needs of those workers. The ripple effect would be enormous and would almost by itself reignite the country’s moribund economy that has suffered so much under Maduro.
Photo of Venezuelans in Canada: The Photographer
An Ivy League graduate and former investment advisor, Bob is a regular contributor to The New American magazine and blogs frequently at LightFromTheRight.com, primarily on economics and politics. He can be reached at [email protected].
