What the World Needs to Learn From Venezuela
How much money do you need to buy a tomato? How much for a roll of toilet paper? If you live in the South American nation of Venezuela right now, you need so many stacks of bundled bills that they won’t even fit in your pockets.
Venezuela is suffering one of the worst cases of hyperinflation in history. Prices rise by the day, and the annual inflation percentage has been in the tens of thousands.
Since 2014, 2.3 million people have fled Venezuela: about 7.5 percent of the population. Proportionally, that would equate to 24 million Americans fleeing the country. Those who remain in Venezuela are facing economic conditions usually associated with a civil war. Some don’t have enough water. Food shortages are massive. In some areas, a family needs the equivalent of 22 minimum-wage salaries just to buy a basic basket of food. The average Venezuelan lost 18 pounds in 2016—and 24 more pounds last year. Last year, nearly 400 children starved to death. Caritas Internationalis, a Catholic humanitarian agency, has estimated that number to reach 280,000 by the end of 2018.
The only free market in the country is the black market, so Venezuelans are getting food and other necessities any way they can. Nearly everyone engages with the black market on some level. Family men find themselves smuggling gasoline and other contraband into Brazil and Colombia. Teachers, doctors and petroleum engineers sell their bodies in prostitution. Formerly respectable people are trafficking drugs. Gangs recruit teenagers by just offering them something to eat. Government officials do business with gangs, drug cartels and terrorist networks. Venezuela is like a nation-size mafia organization.
You have probably seen the images on the news. Stacks of 100-bolívar bills that are almost worthless. Huge lines at supermarkets. Impoverished mothers and children looking into empty refrigerators. Women who prostitute themselves in other countries. Emaciated, abandoned pets. People rummaging through trash for food. Butcheries selling rotten meat at bargain prices to consumers who then treat it in vinegar and lemon juice before consumption. Major power outages. Massive protest marches. Deadly election clashes with police. Venezuelan migrants blocked from leaving the country. Heartbreaking images of malnourished elderly, adults and children.
In 2018, Venezuela is synonymous with government failure, economic disaster and crushing poverty. Venezuela is a failing state, and there isn’t even a war to blame it on.
What happened? Until recently, Venezuela was prosperous. In 1950, its people enjoyed the fourth-largest per-capita income in the world after the United States, Switzerland and New Zealand—$80,000 per person in today’s money. In 1980, Venezuela’s was the fastest-growing economy in the world. As late as 2001, it was the wealthiest country in Latin America. In 2012, Venezuelans’ per-capita gross domestic product hit a high of $18,382 per person.
Venezuela has rich natural resources: gold, diamonds and the largest proven oil reserves in the world. So how did Venezuela go from being the richest country in Latin America to an economic and humanitarian disaster zone?
Socialism
Despite the nation’s wealth, due to government corruption and mismanagement and the falling price of its major export, oil, Venezuela had a poverty rate of an incredible 50 percent in the 1990s. In 1992, one former paratrooper and socialist visionary tried to overthrow the government—and failed. But in 1998, Venezuelans elected that same man, Hugo Rafael Chávez Frías, as president with 56 percent of the vote.
Venezuela’s past welfare programs would pale in comparison to what Chávez was about to do. He promised to end government corruption by giving Venezuela’s wealth to the impoverished masses. He would give power to the people. “Venezuela is a nation of great wealth,” Chávez proclaimed, “but it’s being stolen from its citizens by the evil capitalists and the evil corporations.”
Chávez was wildly popular. He was charismatic, and he appeared on television, speaking directly to his people, for hours at a time. Most importantly, he lavished benefits on the poor. The price of oil, on which the nation’s economy depends, continued to soar. Wealth poured in. Chávez looked like a benevolent genius to his people and to socialists abroad. Over the 14 years of his presidency, he took in an estimated $1 trillion in oil profits, and spent it on massive social programs.
The Chávez regime also nationalized thousands of private companies and industries. He said the government would run them better than private owners, and it would distribute the profits to the people.
As a result, the poverty rate dropped from 50 percent to about 32 percent by the time Chávez was reelected—with almost two thirds of the vote—in 2006.
In the early 2000s, leftists in America and Britain loved to praise Venezuela. Here was a natural paradise where a socialist visionary was enlarging the government, taking over big businesses, nationalizing the oil industry, making the society dependent on the government, and handing out benefits to poor people. This was socialism in action!
After the examples of the Soviet Union, East Germany, China, Cambodia, North Korea and other socialist states, liberals were eager for a current, real-world example they could hail as a victory for “21st-century socialism.” Chávez’s Venezuela was it.
“[L]ook at the positive changes that have happened economically, that have happened in all of South America because of Chávez [et al.],” said filmmaker Oliver Stone, who made a documentary called My Friend Hugo, in a 2010 press conference in Venezuela’s capital.
“Venezuela is seriously conquering poverty by emphatically rejecting the neo-liberal policies of the world’s financial institutions,” said Jeremy Corbyn, the current leader of the British Labour Party, in 2009.
Chávez had led the “historic liberation of Latin America,” freeing it from 500 years of Western force, going back to the time of the conquistadors, according to prominent American socialist Noam Chomsky in 2013.
“These days, the American dream is more apt to be realized in South America, in places such as Ecuador, Venezuela and Argentina, where incomes are actually more equal today [than in America].” Thus read a 2011 article posted on the website of Vermont Senator Bernie Sanders, who mounted a popular campaign for U.S. president in 2016.
Back then, the message from American and other Western socialists was, Just look at Venezuela!
Authoritarianism
To accomplish his reforms, Chávez took control of all branches of power: executive, legislative, judicial—and military. He and his supporters rewrote Venezuela’s Constitution, eliminated the nation’s Congress and replaced it with a National Assembly, which Chávez controlled. He used this body to extend presidential terms and abolish term limits. He stacked the Supreme Court with those loyal to him. After his government increased state control over the oil industry, Chávez fired company leaders he didn’t like and replaced them with people loyal to himself. He effectively destroyed the private sector by confiscating one industry after another and putting it under government control.
These moves were popular, but there was a problem.
People tend to like some of the short-term effects of a socialist government. But giving the government that much control has consequences. “A government big enough to give you everything you want,” said former U.S. President Gerald Ford, “is a government big enough to take from you everything you have.”
The big government of Venezuela’s “socialist paradise” was indeed strong enough to take things away. Not just businesses and jobs, but freedoms. When journalists criticized the president, he had them jailed. When judges ruled against his decisions, he had them arrested too. When people protested, he had them locked up; some were even shot in the streets. When military officers became uncomfortable with these tactics, Chávez imported agents from Communist Cuba to spy on them.
In 2010, Transparency International labeled Chávez’s Venezuela the most corrupt country in Latin America—a region with plenty of candidates for that dubious designation.
Yet the cash kept coming in. Oil was still selling for more than $100 a barrel, so the government kept receiving money and kept handing it out.
In 2012, Chávez was reelected. This time around, however, there were no international election observers, and there was evidence that the election was rigged. He became yet another “democratic” socialist to gain power by promising to give it to the people—and then hold onto it himself until the end.
Soon thereafter, Chávez announced that he had contracted cancer. After traveling to Cuba for treatment, he died in March 2013. Conveniently for his legacy, the oil money was still rolling in. He never paid the bill for his policies.
But Venezuela would.
Bankruptcy
Less than a year after the inauguration of Chávez’s hand-picked successor, Nicolás Maduro, the inevitable happened: The price of oil dropped. Suddenly the real costs of socialism became obvious.
“The trouble with socialism,” said the late British Prime Minister Margaret Thatcher, “is that eventually you run out of other people’s money.”
With the easy oil money dried up, Venezuela had to now stand on the strength of its other industries, its economic resilience and the free enterprise of its people. But Venezuela had none of that. So it fell.
Since Venezuela’s per capita gdp peaked in 2012, it has shrunk 34 percent. The national economy shrank 16 percent in 2016, 14 percent in 2017, and a forecast 15 percent this year. The nation has gone from being the world’s fourth-wealthiest nation per capita to the 131st. Inflation, the general increase in prices, was 112 percent in 2015. It ballooned to 2,800 percent in 2017, and this year is projected to hit 1 million percent.
Ruling over this wreck of a nation, Maduro is determined to hold on to power. In 2013, he won the presidency with 51 percent of the vote in an election that was likely rigged. At that point, the poverty rate was around 32 percent. Five years of economic catastrophe, social upheaval and malnourished oil workers later, Maduro won reelection with 68 percent of the vote. His popularity—somehow—rose by one third.
This is puzzling, until you learn that Venezuela again blocked international election observers from participating, and that the British company that provided the voting machines said it found a discrepancy of at least 1 million votes between the vote participation recorded by the machines and the statistic announced by Venezuelan authorities.
Many Venezuelans have rejected the Maduro government’s claims and have protested in the streets en masse. Maduro’s security forces have cracked down on the protesters and journalists. Bolívarian National Guard troops have even arrested people just for recording video of long lines outside supermarkets with food shortages.
Meanwhile, the press reports that, amid the widespread deprivation, Hugo Chávez’s daughter has somehow accumulated an estimated fortune of $4.2 billion.
It turned out that electing a democratic socialist to end corruption, distribute the nation’s wealth, and give power to the people ended up fostering corruption, crushing the economy, and reducing the power of the people!
It is clear that “democratic socialism” has once again produced classic authoritarian socialism. A government big enough to give Venezuelans what they want is a government big enough to tell Venezuelans how they voted.
What a lesson in how socialism can and does go horribly wrong. Just look at Venezuela!
Lessons Unlearned
Yet astoundingly, as this disaster unfolds, what is the hot political trend just north in America?
Democratic socialism.
An August 13 Gallup poll says 51 percent of Americans ages 18 to 29 have a “positive view” of socialism. Only 45 percent have a positive view of free markets. In the Democratic Party, 57 percent have a positive view of socialism, while only 47 percent are positive toward free markets. Democratic National Committee chairman Tom Perez said that one popular self-avowed “democratic socialist” with radical views is “the future of our party.”
This wave of enthusiasm for socialism surged in the last presidential election as young people supported Bernie Sanders. Now, socialists are winning in state primaries. Some could win governor’s offices, and some could join Sanders in Congress.
Already serving alongside Sanders in the Senate is a Harvard Law School professor, a scholar in bankruptcy law, a leading figure in the Democratic Party—one of the finest minds our educational and political system can produce, the way many would view it. Elizabeth Warren is a potential presidential candidate for 2020, and she has a plan. She wants the federal government to control every major business in America.
This is not just rhetoric. Warren has introduced the Accountable Capitalism Act, a nice-sounding bill that would establish government control over every major business in America (any business with more than $1 billion in sales). She is literally calling for the federal government to take control of more than a thousand of the largest companies in America: The government would directly control 87 percent of American businesses by sales and 97 percent of the entire U.S. economy. It would be the largest takeover of private wealth in human history.
Meanwhile in Britain, roughly 40 percent of the electorate supports Jeremy Corbyn’s Labor Party, which unabashedly endorses socialist policies. Five years after praising Venezuela’s wealth redistribution, Corbyn is still calling for similar programs in Britain. And British youth are lining up behind him. Four in ten British Millennials think favorably of socialism, while only three in ten think well of capitalism. Liberals are endorsing the very socialist principles that have Venezuelans literally starving to death.
Somehow, Warren, Corbyn and fellow liberals can look at Venezuela and still say, That is what we want for our nations. We need to look at nations like Venezuela as a model for having universal health care, for universal education, for free college tuition, for massive minimum-wage increases, for redistributing wealth, for certain price controls.
You can make these ideas sound noble. That’s why socialism is such a powerful force. But human beings have been trying these ideas throughout history, and they have led to disasters like the Soviet Union and Venezuela—every time.
In this case, we have a spectacular failure occurring in the news, right now. You don’t have to read a history book to see this. All you have to do is pay attention and learn the obvious lesson.
What History Teaches
Socialists want “equality” at all costs. In Venezuela, as in the Soviet Union, as in other socialist countries, they are getting it: Everyone—except for the very few connected to the government—is equally oppressed and equally poor.
The irrefutable truth is this: Everyone is equal in terms of their value as a human being and their potential. But in almost every other way, we are unequal. We have different abilities, different interests, different opportunities, different strengths, and different levels of achievement. There are exceptions to the rule, but in a free society people who produce more generally end up having more. Hence, “income inequality.” Wealth always tends to be concentrated in a minority.
History shows that this often leads to the majority becoming resentful and restless and, in some cases, rising up in revolt. Leaders can gain a following if they promise the masses to redistribute the wealth.
The problem is, moving wealth doesn’t create more wealth. Production creates more wealth. And handing people money doesn’t make them more productive. Generally, it makes them less productive. And taking money from producers makes them less productive as well.
On top of that, the more violent the revolution, the more wealth is destroyed in the process.
So the result of such revolutions tends to be a general loss of wealth, and a loss of productivity. And once that redistributed wealth is spent, then poverty comes roaring back with a vengeance.
This is not just a recent phenomenon: This has happened throughout history. As Pulitzer Prize-winning historians Will and Ariel Durant wrote in The Lessons of History: “The experience of the past leaves little doubt that every economic system must sooner or later rely upon some form of the profit motive to stir individuals and groups to productivity. Substitutes like slavery, police supervision or ideological enthusiasm prove too unproductive, too expensive or too transient. Normally and generally men are judged by their ability to produce ….”
Socialists fail to understand or they reject this fundamental truth of human nature, taught by thousands of years of human experience.
But the Creator of human beings understands it perfectly. This is why His Word says that if anyone does not work, neither should he eat (2 Thessalonians 3:10). This means everyone works, because even the laziest person will work once he gets hungry.
God’s Word promotes the economic system encapsulated by every man under his own vine and his own fig tree. It states that we all eat the fruit of our doings, that we all receive our own reward according to our own labor, that we each must give an account of ourselves, that He rewards each man according to his works and renders to every man according to his deeds. This is why His Word says that the responsibility of feeding each family rests on the head of that family providing for his own, especially for those of his own house (1 Timothy 5:8). It does not say to rely on government social programs that pay you diminishing amounts of benefits in return for you relinquishing your vote, your power and your responsibility over and accountability for your own life.
When a government simply takes from the producers and the wealthy, and gives to the poor in exchange for votes, it is ignoring these basic biblical truths and commands.
Every time we do what seems right in our own eyes, we create problems rather than solving them. Our ideas might seem to produce good results for a short time, as they did under Chávez, but the reckoning always comes. It’s a law, like physics. And the place to learn the fundamental laws of human life is not in the mind of Chávez, Lenin or Marx.
How flawed is the human mind? Americans live in an economic system that has done more to eliminate poverty and generate wealth than any other system in history—it has lifted millions upon millions of people to a standard of living higher than any other people have enjoyed in history. Yet we are turning toward socialism.
We should be turning in the opposite direction, toward a system based more on biblical principles, not less.
Why can we not just believe God? Certainly the free market and capitalism are not the perfect systems of God, but they are far more consistent with biblical principles than socialism, communism, feudalism, corporatism or any other economic system besides the actual economic system outlined in the Bible itself.
The Socialists’ Power Grab
The Venezuela case study in socialism teaches us more than just this economic lesson. It teaches us that “democratic socialist” governments transform into authoritarian socialist governments.
Behold the evils of human nature. When you give a leader or a government an enormous amount of power—to control the economy as well as the military, policy, international relations and everything else—the power to take from these people and give to those people—this is what it so often leads to!
Over and again, leaders use “democratic socialism” to come to power, and then they consolidate that power and never let it go. Most democratic socialist revolutions in history end up becoming authoritarian. Many turn into full-blown dictatorships.
Once the people of a nation concede their individual rights to give their government overwhelming power over their lives, it’s easy for that government to be controlled by a small group or even a single person. And what is raging inside those people or that person? Human nature.
These leaders always say they live to help the people. But what they really want is power to remake the nation as they want it. Some of them just want the power and wealth for its own sake.
And whether people want to admit it or not, this is exactly what is motivating the socialist movement in the United States. Avowed socialists are openly talking about nationalizing health care, nationalizing 97 percent of the economy, raising taxes, and taking money so that politicians can distribute it the way they believe is just—for example, to provide “free” education in institutions that teach new generations about the glories of Marxism!
This isn’t about equality at all. This is a massive power grab!
Like Hugo Chávez, these politicians believe that the problems in the free market can be solved simply by stripping power from private individuals and giving it to the government. As if only private individuals have selfish, evil human nature—whereas socialist leaders have pure, altruistic nature and can be trusted implicitly to always act in the public interest. Their bottom line is, The more power we have, the better off everyone will be!
For more than a century, this anti-Bible ideology has been progressively infecting America’s government, transforming it from a limited federal government to an increasingly massive central government.
Yet people like Elizabeth Warren think the government doesn’t yet have enough power!
This is exactly the opposite to the thinking of America’s founders. More importantly, it is opposite to the principles of the Bible.
Whom to Trust?
America’s founders understood many biblical principles. They understood that God was not leading America in the same way that He led ancient Israel through Moses—but they formed a system of government that at least accounted for the truth about human nature revealed in the Bible. They put the opportunity, the responsibility and the accountability for a man’s life where it belonged: on the shoulders of that man himself.
The biblical model of government places responsibility for an individual’s life on that individual. The governmental system of the Bible is very lean. It gives individuals and families tremendous economic and personal freedom—and accountability—before God.
Socialist governments tax 60, 70, 80 or even 90 percent of people’s incomes and assume the responsibility of doling out the money and benefits that they think people should have. God’s system operates on an exceedingly spare 10 percent flat tax—known as the tithe. That alone shows you the difference in scope of God’s government versus human socialist government.
The big-government socialist model ignores the principles of human nature contained in the Bible, ignores the limitations of human beings revealed in the Bible, ignores the system of government established in the Bible. It boldly, blindly insists that human nature—at least the human nature of government leaders—is fundamentally good and that the more power you give a socialist government, the better it will be for everyone. It promises that socialism will supply your needs. It insists that corruption will not flourish. It insists that the only problem is people who don’t trust the ever growing government.
The Bible says, Cursed is the man who trusts in man! (Jeremiah 17:5).
God wants to help all people to learn responsibility, to work and to grow, and to learn to look to Him for our help, and to trust Him! Blessed is the man who trusts in the Lord—and whose hope the Lord is (verse 7).
Learn the Lesson
We must learn the powerful, dire, costly lessons of what is happening in Venezuela right now.
Something is very wrong with the thinking of Americans and Britons who indulge in God-rejecting socialist fantasy while a nearby nation implodes after a 20-year experiment in socialism.
The U.S. and British people are proving to be unteachable. We won’t learn the lessons of the Bible. We won’t learn the lessons of history. We won’t even learn the lessons unfolding on the news before our eyes. Socialists say that the Soviets got this detail wrong, or the Chinese got that detail wrong, and that America could succeed if it tried “real” socialism. We are bold enough to say this even though we cannot name a single example of successful, sustainable socialism—and all evidence points to the fact that the premise of the system itself is fatally flawed!
We reject the obvious lessons because we are too convinced of our own wisdom. We trust our human reasoning against all challengers—and we will pay a terrible price for that ignorance and arrogance.
What will it take to make us teachable?
The Bible tells us the grave answer. Our rejection of God and our unteachability will lead directly to terrifying consequences worse than what is happening in Venezuela. Biblical prophecy shows that America and Britain will be at the center of the worst suffering in human history. That is what it will take for us to recognize the flaws of human nature, including our own, and the foolishness of trusting in men, including ourselves.
God will allow and even apply much of this punishment and suffering. Not because He hates us: If He hated us, He would destroy us. But He loves all of the human beings He has created, and He knows that to achieve our potential, to make our lives worthwhile, we must learn. When we reject Him at every turn and in every way, we leave Him no choice but to punish us for our sins until we learn the error of our “we are right, no matter what” attitudes.
Beyond this period of terrible punishment and suffering, our loving Creator has revealed that another revolution is coming. It’s a revolution in government. It’s a revolution in economics. It’s a revolution in human happiness and fulfillment. And it can come about only by the leadership of Jesus Christ.
The good news for suffering Venezuelans and for this whole world is that the King of kings, Jesus Christ, will soon return to literally and directly rule all nations. Only He and God the Father understand human nature. Only they have the ability and capacity to rule human beings the way they should be ruled. Only He and God the Father can guide human beings to fulfill not just their income potential or their happiness potential, but the eternal, incredible human potential for which they were born.