Not Even Large Oil Reserves Can Save Socialist Venezuela

Via Media:

WaPo reports that demand for the US dollar is skyrocketing in the country, whose weak economy is pushing people onto a shady currency black market:

Because the bolivar is artificially overvalued and practically worthless outside of Venezuela, everyone here is desperate for dollars, from auto-part importers to supermarkets to ordinary Venezuelans planning to travel abroad. Even government officials and the politically connected businessmen who have made fortunes off the free-spending state search out and trade in dollars. [...]

“The only way your savings are really savings is by turning them into dollars,” said Fernando, the black-market dealer. “If you have them as bolivars, they will devalue so utterly fast that there’s just no point.”

The result is that the black market is doing a booming business, selling dollars at 28 bolivars per dollar. This price is over four times the official exchange rate at 6.3 bolivars to the dollar. But that’s not all:

Hundreds of state-run companies are moribund and private industry has been paralyzed by state interventions. Rolling blackouts leave much of the provinces in the dark. Crime is so rampant that Venezuela is more violent than many countries at war, crimping investment. Hamstrung by byzantine currency controls and a dearth of dollars, foreign companies — among the few employers to create jobs here — struggle to repatriate profits.

Funny, all these years the Castro brothers blamed Cuba’s grinding poverty and economic failure on two big problems: the US embargo and a lack of energy reserves. Now here comes Venezuela, no embargo and some of the largest oil reserves in the world, and Castro policies are producing Castro results. It’s almost as if socialism tends to produce oppression and poverty in any country it controls— along with bureaucratic thuggishness, cronyism, and corruption.

Meanwhile, the WaPo story reports that, according to central bank data, one out of every five basic products isn’t available. The government is responding to this by attacking the media for causing a toilet paper shortage. But don’t worry, the shortage should go away soon; the last independent TV station in the country has recently been taken over by a group friendlier to the powers that be.