Does Venezuela show the fragility of economies in a global age?

The world has been getting richer but Venezuela has been in the news lately for going in the opposite direction (Slate). It might be that the issue is as simple as a growing population and oil revenues that haven’t kept up (i.e., perhaps Hugo Chavez would be regarded as an economic genius if oil were worth $200 per barrel). Yet the things that Venezuelans voted for and implemented weren’t actually all that radical. They expanded their government’s role in allocating housing and food, for example, and subsidized various things that they thought everyone should be entitled to. This isn’t obviously different than what the U.S. government does, for example. I’m wondering if the rapid decline of Venezuela shows that a country’s economic prosperity is more fragile today than 50 years ago. Skilled workers can emigrate while using air travel and telecommunications to keep in touch with friends and family (see “Dumb towns getting dumber; smart towns getting smarter?” from 2006, regarding mobility within the U.S.). Capital is more mobile than in the past. If a country is only a slightly worse place to do business than competitors there can be a dramatic decline that wouldn’t have happened in the mid-20th century when most of these political ideas regarding the proper role of government were cemented.

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4 Comments

  1. bobbybobbob

    July 8, 2016 @ 9:19 pm

    1

    Socialism always and everywhere winds up in dire shortages. The only question is how long it takes. Venezuela is just 20 years ahead of us because they had less capital to burn.

  2. Billg

    July 9, 2016 @ 8:54 am

    2

    “The problem with socialism is that you eventually run out of other people’s money.”
    – Marget Thatcher

  3. mark

    July 9, 2016 @ 11:20 am

    3

    I think the first commenter from your 2006 post had the right idea;

    “The ease of communication does work the other way too – you can now communicate with the interesting folks without moving to Manhattan.”

    This is especially true when you consider the rising costs of real estate vs. the somewhat level costs of travel.

  4. Jackie

    July 10, 2016 @ 2:35 pm

    4

    I don’t think Socialist Venezuela was/ is only a slightly worse place to do business than it’s competitors, it is a marked worse place, where the government regarded honest businessmen as “hoarders”, expropriated their property and their businesses, etc. while Chavez and his family and cronies grew rich on corruption and his followers got a few scraps. Socialism operates like the farmer who tried to train his cow not to eat – just when he had her ALMOST trained not to eat anything, she died. If you implement Socialism rigorously and with vigor, that only means that your cow will die sooner.

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