Many in the media have blamed Venezuela worsening humanitarian crisis on corruption, mismanagement, falling oil prices, or U.S sanctions—anything but the rise of socialism in what was once the wealthiest country in South America, but truthfully, socialism destroyed Venezuela.
Yet corruption and mismanagement were the direct result of increased government control of the economy—socialism—and in reality, lower oil prices and U.S. sanctions have little to do with the crisis. Instead, the mass starvation and exodus faced by Venezuelans are the natural consequence of the socialist policies implemented by dictators Hugo Chavez and Nicolas Maduro.
There are three main policies implemented by Chavez since 1999 that produced the current crisis: Widespread nationalization of private industry, currency and price controls, and the fiscally irresponsible expansion of welfare programs.
One of Chavez’s first actions was to start nationalizing the agriculture sector, supposedly reducing poverty and inequality by taking from rich landowners to give to poor workers. From 1999 to 2016, his regime robbed more than 6 million hectares of land from its rightful owners.
Nationalization destroyed production in affected industries because no government has the capacity to run thousands of businesses or the profit motive to run them efficiently. Instead, government officials face incentives to please voters by selling products at low prices and hiring more employees than necessary, even when that’s the wrong industry decision.
Socialism run rampant—not cronyism, corruption, falling oil prices, or U.S. sanctions—caused the crisis in Venezuela.
As economic theory predicted, as state control of the agricultural industry increased, Venezuela’s food production fell 75% in two decades while the country’s population increased by 33%. This was a recipe for shortages and economic disaster. After agriculture, the regime nationalized electricity, water, oil, banks, supermarkets, construction, and other crucial sectors. And in all these sectors, the government increased payrolls and gave away products at low cost, resulting in days-long countrywide blackouts, frequent water service interruptions, falling oil production, and bankrupt government enterprises.