From the January/February 2019 issue of Discern Magazine

Venezuela Crisis: From Riches to Rags

Venezuela is in the throes of an economic death spiral. The resulting violence and hunger have propelled a mass exodus that threatens the entire region. What led to the implosion, and could it spread?

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With conditions deteriorating daily, an estimated 3 million Venezuelans had already fled the crisis-wracked country as of October 2018, according to a United Nations estimate.

Colombia, Peru, Ecuador, Argentina, Chile and Brazil are on the fault lines of this crisis that has become the largest mass migration in Latin American history.

A hyperinflation nightmare

Venezuela, noted The Atlantic, is suffering “the kind of implosion that hardly ever occurs in a middle-income country like it outside of war.”

Though blessed with the world’s largest oil reserves, Venezuela suffers from a perfect storm of an economy in meltdown, runaway inflation, despotism, mass emigration, criminality, disease and starvation. As a result, by the end of 2018, its economy will have shriveled by about half in the last five years. Prices doubled approximately every 25 days in 2018.

In a desperate move, Venezuela officially lopped five zeros from prices and its currency as part of what has been dubbed one of the greatest currency devaluations in history.

Suffering spreading like a plague

The limited foreign press coverage focuses on shortages of basic consumer goods—from toilet paper to toothpaste. But examples of the nation’s financial torment are far-reaching. Four-hour blackouts and lack of access to clean water are standard.

An epidemic of violence has given the capital of Caracas the world’s highest murder rate. Shopping malls, grocery stores and food trucks are targets of mass looting attacks, and the nation’s food is now transported under armed guard.

According to Foreign Affairs, drug trafficking has emerged alongside oil production as a source of income for those close to the ruling elite. “The offices of the Treasury, the central bank, and the national oil company,” details Foreign Affairs, “have become laboratories where complicated financial crimes are hatched” (Moisés Naím and Francisco Toro, “Venezuela’s Suicide,” November/December 2018).

A “health holocaust”

The worst consequences of a financial implosion always fall on a country’s poor. Venezuela’s health care and medicine have reverted back to 19th-century conditions. The country recorded its first case of polio in over 30 years, and the newspaper El Nacional dubbed the growth in untreated health conditions a “health holocaust.”

Though Venezuela was the first country certified for eradicating malaria in its most populated areas back in 1961—even before the United States did—the disease has returned with a vengeance, as has measles.

The infant mortality rate has increased a hundredfold. Growing numbers of Venezuelan parents are tragically reported to be dumping their children in Colombian border towns or abandoning them at orphanages because they can no longer look after them.

Hobbled by the nationalization of farms as well as price and currency controls, Venezuela can no longer feed its people. Fields lie fallow for lack of fertilizers or equipment.

Despite the deprivation, the government has rejected aid from many countries. The Maduro regime is skillfully using hunger as a weapon to quash dissent.

Even if food were available, 61 percent of Venezuelans live in extreme poverty, and nine out of 10 citizens say they do not have enough money to feed themselves. Half of Venezuelan children now miss school due to hunger.

How Venezuela struck it poor

Venezuela was not always an economic basket case. In 1914 the discovery of oil brought Venezuela enormous wealth. By 1950 Venezuela was a world leader in oil output, enjoying the fourth-highest per capita income in the world. Riding a spike in oil prices, in 2001 Venezuela boasted of being Latin America’s wealthiest country.

Though socialism had already proven to be globally discredited, Hugo Chávez skillfully mined discontent after his election to Venezuela’s presidency in 1999. He promised to redeem the downtrodden by crushing centuries-old perceived tyrannies through his own brand of socialism.

Mr. Chávez benefited from about $1 trillion in oil sales during his 14 years as president. This enabled him to launch massive social spending programs to secure votes. “He could,” according to historian Daniel Pipes, “even afford to kill the goose laying golden eggs, replacing competent professionals at the government-owned oil company with agents, stooges and sycophants” (“Venezuela’s Tyranny of Bad Ideas,” Wall Street Journal, Aug. 26, 2018).

Natural resource wealth—oil accounted for 96 percent of Venezuela’s revenues—turned into a curse as oil prices cratered.

Nothing left to steal

When Mr. Chávez came to power, there were more than 800,000 private businesses in Venezuela. Today fewer than 230,000 remain. Wealthy, university-educated and entrepreneurial-minded Venezuelans left. Over time the government took over industry after industry.

After Mr. Chávez’s death, his even more brutal handpicked successor, Nicolás Maduro, took the helm in 2013. Mr. Maduro doubled down on socialism by nationalizing significant chunks of the Venezuelan economy, then running them into the ground.

But, just as Margaret Thatcher once warned about socialism, “they always run out of other people’s money.” With no more companies to confiscate, the government has increasingly turned to creating money to make up the difference between revenue and political promises.

This has led to massive inflation, the devastation of the currency and economy, and the recent admission from President Maduro that the socialist economic model has “failed.”This has led to massive inflation, the devastation of the currency and economy, and the recent admission from President Maduro that the socialist economic model has “failed.”

Socialism as savior?

Socialism—where theoretically everyone in society equally owns the factors of production—sounded great to a vast underprivileged class. They were promised that evil capitalists and corporations would no longer be able to exploit them. Instead, Venezuela provides a cautionary tale on how socialist policies hollow out and destroy a nation.

Despite this reality, an August 2018 Newsweek cover proclaimed, “The Capitalism Crisis: Is America Really Turning Socialist?” This was after a recent Gallup survey purported to show that Americans—especially a generation of young people who have lived in astounding affluence—are enamored with socialism.

It has been just over a generation since the failure of Soviet communism—the most extreme of the many forms of socialism. In spite of that history, Gallup notes socialism is growing more popular among young people, who now have “a more positive image of socialism than they do of capitalism.”

Some point to the Nordic countries as socialist success stories, but we should remember they rely on vast natural resources to fund their social programs. And their version of socialism could really be defined as “compassionate capitalism” according to Jeffrey Dorfman in Forbes. It is quite different from Venezuelan socialism.

Still, unless you look past the superficial appeal of socialism, you may fail to see its inherent flaws.

The problems with socialism

Though socialism often starts off with high ideals and sounds compassionate, its application in the real world hasn’t brought a desired utopia because it is antithetical to both the laws of human nature and biblical principles.

The foundation of socialism is based on a materialistic worldview, where suffering is blamed almost entirely on the unequal distribution of resources.

But Venezuela is a graphic example of the greatest potential danger of socialism—corrupt, tyrannical dictatorships. When the state is given greater control of economic resources, there is greater opportunity and temptation for those in power to exploit that control for their own gain. Many historical examples show the inherent proclivity of socialist regimes toward tyranny (consider the Soviet Union, China, North Korea, Cuba, etc.).

Jesus Christ specifically condemned the abuse of authority by those in power (Mark 10:42-43). To be fair, we must also remember that tyranny can emerge out of nonsocialist systems as well. But history shows that socialist or communist regimes are particularly susceptible to this danger.

More fundamental to socialism’s failing, though, is that it intentionally buries God, substituting as false messiahs human leaders who promise security and blessings.

The Bible is very direct about the necessity for individuals and societies to care for their poor and helpless (Exodus 23:11; Proverbs 14:21). God also condemns greed and neglecting to care for the needy (Luke 6:30-31; Proverbs 22:16). But it also teaches that a laborer is worthy of his or her wages and that workers should be able to enjoy the fruit of their own labor (1 Timothy 5:18; Psalm 128:2).

What the philosophy of socialism fails to account for and cannot control is covetousness and greed—lusting for and desiring the wealth of others (Exodus 20:17). One could argue that these are the underlying motivations of socialism. And, yes, one could also argue that the same is true of capitalism—and any other human government, for that matter!

The fact is, humanity’s track record of ignoring God and governing ourselves in any form inevitably leads to disappointment and failure. When you consider socialism, Winston Churchill’s discernment of the dogma’s false promise and danger was right. He stated, “The inherent virtue of socialism is the equal sharing of misery,” and he followed that with, “Socialism is the philosophy of failure, the creed of ignorance, and the gospel of envy.”

Will other nations learn the lessons of Venezuela?

Winston Churchill’s wisdom is increasingly being ignored, especially in Great Britain and the United States, where many of our readers are. Younger generations have been raised in broken education systems replete with moral equivalency and a jaundiced view of their own nation’s history. So they don’t learn from the history of the failed economic theory that is now crippling the people and economy of Venezuela.

God’s Word tells us that people will be blessed for obedience or cursed for disobedience on both a personal and national level (Leviticus 26). Will the United States and Great Britain learn the lessons of history and choose to follow God, or will their people choose the path of socialism? Time will tell. But whatever path they choose, if it is not God’s, these countries will face terrible times ahead because of their sins.

For more information about the incredible history and future of the United States and Britain, read our booklet The United States, Britain and the Commonwealth in Prophecy.

About the Author

Neal Hogberg

Neal Hogberg is a member of the Church of God, a Worldwide Association, and attends the Dallas, Texas, congregation.

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