The economic horror

Such, such are the joys of a fundamentally market economy - no, this is not socialism - managed by people fundamentally opposed to capitalism.

Venezuela, where a hamburger is officially $170

The official exchange rate is 10 bolivars to the US dollar.

The real rate - the black market rate - is 1,000 bolivars to the dollar.

That burger at 1,700 bolivars costs $1.70, a much more reasonable price.

Hyperinflation completely wiping out savings is only one of the problems wrecking the country.

Combine it with wage and price controls and you get nullified incomes, empty shelves, and long lines of desperate people waiting for they know not what.

French left-wing intellectuals notwithstanding, this nonsense is the real economic horror.

If the only arrows in the quiver of your blockhead socialism are redistribution, nationalization, land reform, default, and wage/price controls you are in for a rough ride to chaos.

Particularly if you try to finance a hugely magnified welfare state with oil revenues and the global market for oil just collapses.

And you combine all this with a policy of "redistributing" actual businesses from their owners and operators to poor people without the least capacity to operate them competently.

Remember Idi Amin, the Last King of Scotland, kicking the Indians out of Uganda and handing control of the railroads overnight to totally unprepared black Africans?

All this sort of rot lends piquancy to Ayn (pronounced "Ann" by everybody when I was young and she was a living public figure) Rand's characterization of the left as looters.

Venezuela: how the socialist paradise turned into debt and hyperinflation hell

Maduro's only coping mechanism is repeated declaration of states of emergency and further lurches in the direction of dictatorship, no doubt to be followed by socializing surrencheres making an ever greater shambles of things.

Venezuela is now suffering from the effects of a deep recession and hyperinflation as the government prints money to try to plug a gap between revenues and spending that is on course to hit 25pc of gross domestic product (GDP) next year.

The International Monetary Fund has been banned from conducting its annual economic healthcheck of the country since 2004, but believes growth won’t get back to positive territory until the next decade, while inflation is on course to hit 4,505pc in 2021.

A recent study by the Council for Public Security and Criminal Justice ranked Caracas as the world’s most violent city.

Venezuela is also one of the most unfriendly places to do business, ranking 186th out of 189 countries in the World Bank’s Doing Business index.

Only Libya, Eritrea and South Sudan are further down the list. 

. . . .

The Venezuelan government is now desperately trying to reduce its imports in order to close the massive black hole that has opened up in the country’s public finances.

Its efforts have surprised everyone. 

“We’ve had a 40pc year-on-year contraction in the first three months of this year, which takes the first quarter back to the same level of imports we had in 2004,” says Alejandro Arreaza, an economist at Barclays.

“If we keep on going at this pace, that would represent a contraction of almost £20bn compared to Venezuela’s imports last year.

These are very aggressive cuts.” 

The social costs of such a move have been laid bare for all to see. Hospitals and pharmacies are desperately short of even basic medicines.

“People in Venezuela now say they can’t afford to get ill because when you turn up at the hospital there is nothing,” says Moya-Ocampos.

. . . .

Maduro’s grip on power is weakening.

Around 1.85 million Venezuelans have signed a petition to recall the president.  

While this is far above the 200,000 signatures needed to kick-start the process, it has been complicated by the government’s control of the national electoral council.

Even if the names are verified, the opposition must gather more than four million signatures in a second round to secure a recall referendum.

This must be completed before January 10 next year to remove Maduro from office and trigger fresh elections. 

Any later, and the constitution states that vice-president Aristóbulo Isturiz will serve out the remaining two years of Maduro’s term.

Isturiz has been a loyal sergeant, claiming that Venezuelans have “acted too late” to meet the January deadline. 

“You don’t like Maduro? Deal with it,” he said last week.