Ah socialism - the utopian dream for social justice and equality. Take Venezuela for example. When Hugo Chavez took power in 1999, he promised more jobs, more educational opportunities for the poor, a higher living standard - in fact he promised more goodies for all Venezuelans! But he forgot one thing - only entrepreneurs and the private sector can create economic wealth.
PDVSA the state-owned oil and natural gas company was producing 3.5 million barrels of oil when Mr. Chavez and his cronies took the reins of government. Three years later in 2002, he purged 20,000 employees because they were not his brand of "political correctness". Chavez replaced them with loyal supporters but most of them were not trained for oil work. Then he nationalized foreign -owned oil assets. Investment fell, accidents went up and in 2012, the huge Amuay refinery blew up. Today, under Chavez's hand-picked successor President Nicolas Maduro, Venezuela produces 2.3 million barrels of crude oil daily - down 35% from 1999. And in the July issue of Veneconomy Monthly published in the capital Caracas, the editorial board, after analyzing PDVSA'S 2013 Annual Report, concluded: "Sadly, what information is available confirms perceptions that PDVSA is headed for insolvency".
The oil crisis is just the tip of the iceberg. As inflation and poverty worsen, President Maduro announced last week that his government may default on repayment of $80 billion of foreign debt. If that happens, Venezuela will be branded a pariah by the investment community. It gets worse. Simple consumer goods like shampoo, diapers, meat, medicines etc. etc. are in short supply. Even fresh water is becoming scarce, particularly in high-poverty areas. Soviet-style labour laws and massive government regulations and restrictions are strangling the private sector - the very engine of growth needed for the country's economic survival!
But the socialist dream lingers on - an idealistic ideology untouched by reality. I don't want to sound too cynical, but I wonder how President Maduro and his government cronies are faring in this swamp? I'll bet there's no shortage of shampoo for his fresh-water showers.
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