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Economic Collapse in Venezuela Due to Low Oil Prices and Corruption– versus Socialism

2016-05-16

Venezuela, a country with one of the largest oil reserves in the world, is suffering an economic emergency that is combined with a social and medical emergency.

There are a number of factors coming together in this country, all of which are negative in themselves; together they are disastrous.  Rightists in the United States claim that Venezuela’s problems all stem from its “socialist” economic system, but that is irrelevant to its current problems.  The leaders of the country have been socialist and/or communist for at least seventeen years, and when oil prices were high, they appeared to be doing well.  Now, however, oil prices have collapsed and hollowed out Venezuela’s economy.

Venezuelan oil, although present in large quantities, is expensive to produce and refine.  This is very different from the situation in other oil-rich countries like Saudi Arabia and Iraq, where the oil is cheap to pump and easy to refine.  In those countries, it is still profitable to pump oil at current prices, but in Venezuela, profit margins were thin even when prices were high, and now there is no margin.  The government made this situation even worse by failing to save any money while prices were high, instead siphoning off profits into graft and corruption that enriched the political elite and powerful private corporations.

Another disaster that has exacerbated Venezuela’s problems is their dependence on hydroelectric plants to power their country’s electric grid.  Several years of drought have left the hydroelectric plants stalled and there has been no provision for alternate power generation systems.  As a result, there is insufficient electric power to run the country and everything has been blacked out more than half the time.

The worst suffering from this situation has been in health care.  Needed medical supplies, medicines, diagnostic equipment: everything that we take for granted here is missing in Venezuela.  Antibiotics are available only on the black market.  Public hospitals are operating under conditions resembling those of wartime.  The New York Times (NYT) has an article today about the medical emergency that the country faces.  It makes for sickening reading.  Additional articles recently have described the rampant corruption and graft that has poisoned the country for years; only now, with the crash in oil prices, has the corruption been exposed.

The government of Nicolas Maduro has even prevented help from entering the country from outside.  Operating under emergency decrees since January, Maduro has threatened legal action against any outside agencies that attempt to provide emergency aid and promised seizures of factories that have been idled by the economic crisis.  The United States has little influence in Venezuela and has been blamed for meddling in its economy.  American intelligence sources say that they fear rioting and collapse of the government, with a remote possibility of a military coup.  Violent change in the Venezuelan government seems likely and foreign intervention would probably be resisted.

These problems are not limited to Venezuela; other South American countries are in trouble as well, though perhaps not as severe.  Argentina and Brazil have similar problems, especially with official corruption and impunity of powerful private interests.  These problems are not readily amenable to solution, either from within the countries affected or by outside intervention.  The root causes of South American problems seem to relate to unlawful behavior by powerful interests both within government and in private combines.

Poor economic planning and lack of foresight by government agencies responsible for economic stability have a lot to do with these problems.  Rightists in the United States and elsewhere have been quick to blame “socialism” for South America’s problems but that charge is a mischaracterization.  The real problems have more to do with poor economic planning and graft by government agencies combined with opportunistic behavior of private interests, all mixed with rampant corruption and self-enrichment by government officials.

It is possible that the severity of these problems has some relation to overpopulation; certainly fewer people would have led to a smaller problem.  If overpopulation has some partial causative  relationship to the collapse of the Venezuelan money economy then it fits well with predictions that were made by biologists in the late 1960s and early 1970s.  In 1970, I recall being told as a student that human overpopulation would cause damage and collapse within fifty years, that is by the year 2020.  It is now May 16, 2016 and we are on the way to fulfilling that prediction with the increase in boreal wildfires in Canada this spring.

Nonetheless, if we are aware of the source of the problems in South America cannot we step forward and fix them?  There is some doubt that a procedure exists to resolve the corruption in the leadership of government parties, but this step would seem essential to improving the situation of parties affected by the crisis.  If we do not address the corruption but merely supply the want then there is a risk of losing much of what is given to corrupt officials.  That is what happened to the Americans in Iraq.

It is more realistic to expect that this crisis will continue in some form, that is evolve independently of any conceivable action by human agency, for a time again independent of human action.  In Venezuela the medical crisis will be partially ameliorated by emergency assistance but the death rate will continue to be high.  It is possible that Doctors Without Borders will offer some assistance.  Clearly, the New York Times would like to see some effect of publicity, and anyone reading the articles who could help would be motivated to do so.

 

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