Venezuela’s Long Road to Ruin

Few countries have provided such a perfect example of socialist policies in practice

By Mary Anastasia O’Grady of The WSJ. Excerpts:

"By the time Chávez was elected, Venezuela already had 40 years of socialism under its belt and precious little, if any, experience with free markets."

"When Venezuela promulgated its 1961 constitution, Betancourt immediately suspended Article 96, which read: “All can freely engage in the profitable activity of their choice, without any limitations other than those provided for in this Constitution and those established by law for security, health or other reasons of social interest.”

This crucial protection remained on the shelf for 30 years, as a string of socialist governments employed price and exchange controls in counterproductive attempts to raise living standards.

Rent control in Venezuela dates to 1939 but was not enforced by Pérez Jiménez. In August 1960 Betancourt revived it, passing a new rent-control law and prohibitions on eviction. Since then, “not one apartment rental building has been built,” writes Vladimir Chelminski in his 2017 book, “Venezuelan Society Checkmated.” The legendary slums that climb Caracas’s hillsides are a testament to this socialist stupidity.

Carlos Andrés Pérez took the presidency for the first time in 1974. World oil prices had shot up as President Nixon’s domestic price controls crippled U.S. production. As a result, Venezuela felt rich. The national assembly granted CAP, as the president was popularly known, an “enabling law” so that he could rule by decree. He mandated salary increases for the entire nation and implemented, for the first time, a minimum wage. He froze prices and issued crazy edicts. All commercial buildings had to employ elevator operators, and all public restrooms had to have attendants.

CAP put limits on foreign investment in everything from telecom and banking to food and electricity distribution, forcing foreigners to sell what they owned in Venezuela. He nationalized oil in 1976. The state expanded its role in iron, steel and aluminum and took control of coffee, cocoa and the previously independent central bank."