Venezuelan Apocalypse II: More updates on the epic failure of socialism in oil-rich Venezuela

Venezuelan Apocalypse II: More updates on the epic failure of socialism in oil-rich Venezuela

Despite having more oil reserves than Saudi Arabia, and in fact more proven oil reserves than any country in the world (8 times more than the US), oil-rich Venezuela’s economy is imploding and collapsing under the crippling burden of socialism, and economic conditions there have deteriorated so dramatically that they probably now qualify as the “economic apocalypse” that some left-leaning economists were predicting just a few years ago would never happen in Venezuela. Some links and updates about Venezuela’s economic apocalypse appear below (see my previous CD post Venezuela Apocalypse I from May):

I wish I could find an address of 12 to 15 different families that need food and each week ship them some sugar, flour, dried soup, and some other things.

No! But socialism is so, so good and works so, so well!!! It stops economic “inequality” and poverty!!! :rolleyes:

Socialism tends to look a bit like ‘crony capitalism’ in practice. Folks using their political power to reward their friends/allies/supporters.

I wish I knew more about this. In particular, I wonder about the degree to which non-investment has perhaps crippled productivity to the degree that good and services don’t get produced and people don’t have the money to pay for them anyway.

I recall being struck by one of A.S. Solzhenitzyn’s statements about the economy of the Soviet Union. He said it was “…where labor is cheap and capital dear, unlike in the West where it’s the other way around.”

Why was capital dear in the Soviet Union and cheap in the West? Because the weird socialism of the Soviet Union consumed its capital; like an improvident farmer eating the seed corn he needed for next year’s crop. I wonder if that’s the situation in Venezuela? It probably doesn’t take a lot of disinvestment to cause an oil field to stop functioning, and it sure doesn’t in farming or manufacturing.

Possibly, they “ate the seed corn” buying loyalty among the poorest classes, and finally ate it all so there was no money to fix anything, let alone improve it.

I really do wonder.

Now, why is “labor dear” in the West? Well, it takes capital to make labor productive. A farmer with a tractor (capital) produces a lot more than one who only has a hoe. And so the labor of the farmer with the tractor is worth more than that of the guy with the hoe.

In the U.S., the shares of labor and capital in national income almost never vary since 1929 when they first started keeping statistics. Capital almost always gets 1/3 and labor 2/3, and both tend to move up and down together. Labor’s share is a little higher at full employment than when there is a lot of unemployment, but capital also suffers when there is a lot of unemployment.

It might just be that the 1/3-2/3 ratio is always necessary, so if one takes away too much capital for social programs or whatever, it goes out of whack and labor’s income plummets with capital’s.

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