Congratulations to the socialist government of Venezuela, whose economic policies have allowed the economy to scale new heights of pain and suffering.
There is nothing ordinary about Venezuela’s socialists, nor is there anything ordinary about the annualized inflation rate they’ve created: more than 40,000%, according to a researcher at Johns Hopkins who has been tracking prices in the country for two decades.
Steve H. Hanke, an applied economics professor at Johns Hopkins University, told Business Insider on Friday that annual inflation in the country has risen as high as 41,838%. Hanke, who calculated the inflation figure, has tracked prices in the country for more than two decades.
Venezuela’s government has largely stopped reporting economic data, including internal measures of inflation. The Central Bank of Venezuela, which did not immediately respond to request for comment, has not independently released inflation figures in at least a year.
Venezuelan President Nicolas Maduro has passed blame for the roiled economy onto others, including opposition activists and officials in Washington. At a campaign rally in May, he blamed hyperinflation on “criminal mafias.”
Well, Maduro has a point. His government is made up of a bunch of cutthroats, thugs, extortionists, and murderers. Sounds like a “criminal mafia” to me.
But economists point out that Maduro runs the unorthodox policies they say have pushed the country into economic crisis. The socialist leader has repeatedly refused international aid to Venezuela.
“It’s internal,” Hanke said. “Government spending continues to accelerate and the sources of revenue start drying up.”
Their main source of revenue — the oil industry — is so incompetently run that output has been falling precipitously while prices worldwide have been skyrocketing:
As state-run oil industry PDVSA falls apart, economists say a rise in global oil prices is adding to the pain. Brent crude oil is up more than 64% this year. And as President Donald Trump cracks down on Iran via zero-tolerance oil sanctions, the international benchmark has rallied more than 8% this week.
Production at PDVSA — which accounts for 95% of export earnings in the country and a quarter of gross domestic product — was cut in half from January 2016 to January 2018, according to the US Energy Information Administration. And as the crisis deepens, operations are continuing to wane.
What all this adds up to is incredible pain and suffering for the Venezuelan population. How bad is it?
But economists and activists say hyperinflation’s presence now is clear. A recent university study found that about 90% of civilians were living in poverty last year and most of those surveyed had lost an average of 25 pounds in body weight.
“The hyperinflation is devastating the economy,” said Andres Abadia, a senior economist at Pantheon Macroeconomics. He expects the economy to contract in 2018, for a fifth consecutive year, and sees no turnaround in the near-term.
As socialism begins to crawl out from under the rocks and see the light of day in America, you would think that Venezuela would be a cautionary tale for U.S. voters. Such will not be the case. The disease will not be eradicated until it is actually experienced in all its horror.
This has been the case since the fall of Communism. Thus it will ever be.