How do you make a wealth country poor?
Start with putting the wrong people in charge and then implement the policies advocated by the no skin in the game intelligentsia.
Below is a chart of Venezuela’s GDP.
Then watch as:
Inflation in Venezuela may hit 10 million percent this year.
Then appoint your mates and other cronies and watch some more.
For example, consider that Venezuela used to be the wealthiest country in South America; and what happens when the country with the world’s largest proven oil reserves (which accounts for almost all of its exports) completely mismanages things and allows production to approach close to zero:
How did this happen? Here is a policy suggestion:
President Maduro has ordered 26 minimum wage increases in his six years in office, including a 300% increase earlier this year (2019).
What else:
Venezuela’s estimated (pre-Covid) unemployment rate stands at a staggering 44%.
And then pepper supporters of this throughout places of influence in Australia …
Warren Mundine signed that letter. He should be ashamed.
Our own governments State and Federal are following a similar path as Venezuela , the Western world keeps putting incompetents in charge of everything and following the socialist mantra ,if at first you dont succeed try it again and agin untill it does ,with enough smashing square pegs can be made to fit in round holes ,all you need is a fascist leftist state to hammer it in .
All the Staffers and public servants now entering Politics and making the decisions and concocting the legislation, are all products of the institutionalised and socialist education system that has been around since the 60/70s. Things will only get worse.
So were the Chavez policies so good that had he not died Venezuela would have maintained that high level of GDP?
Biota, I was thinking the same thing.
Basically yes.
But people have cause and effect wrong.
Chavez policy that boosted GDP was just “sell all the oil as quickly as possible by allowing all the multinationals in and charging a royalty”
He used the money for social programs.
But in typical leftist fashion – the horse is put before the cart, and socialists believe it was the social spending that boosted GDP and living standards, not the production. This is still the prevailing majority view of both the current government and the opposition.
When oil prices fell, which was 95% off their trade, instead of reducing government spending, they pretended that it didn’t matter that the social programs themselves would drive the economy, and doubled down on them.
There is no way out because both sides of politics still believe in the socialism – and just think the reason for the crash is each side being corrupt – not because of oil prices and lack of production.
Also the only reason things are getting better now is… Maduro is now starting to practice Laissez-faire capitalism…. yes really.
In certain pockets he is allowing a whole “black market” operating completely in USD, including jobs, pay,shops, banks, everything.. And he has deregulated them.
The problem is, his supporters, and opposition, and all socialists. So he can’t open it up wife without everyone rioting even more.
A sad situation but this is what happens when the population are not educated and trust the media which spin fed them the idea that the only thing wrong with the country was corruption.
Is that chart showing that dictatorships don’t work but democratic socialism does?
Tell me how it `aint so.
One Latin American studies professor in Tennessee says:
Given that you have to spend money to make money, I guess giving people real assets, training, and cheap loans (through money-printing) would help get more people into production activities (regardless of value), which would kickstart a GDP bubble initially. The foreign currency controls started in 2003 and did not stop the boom. Sounds like things didn’t go really bad until Chavez started doing more central planning in the form of nationalising more sectors, foisting incompetent cronies onto them, and funding “national missions” by intentionally devaluing the currency.
The parallels between Venezuela and Daniel Andrews’ Victoriastan are eerie:
ADF boots in Melbourne is straight out of the Hugo Chavez playbook.
Biota, sfw, mundi,
I’m with biota and sfw here. The story that was told about Chavez is that he was the one who tanked the economy; nationalising the oil industry and chasing all of the oil industry expertise away. Maybe that is represented by the dip at around 2002-3, at a time when (according to macrotrends) oil prices were starting to rise after a trough in November 1998. They spiked from sep 2007 to a peak in Jun 2008, then crashed to trough in Jan 2009, then spiked back to a trend which continued until Jul 2014, before dropping again.
So GDP had started to decline slightly in Chavez’ last year, before starting to fall more steeply during the latter part of his illness, when he was being treated in Cuba. Maduro was Vice-President. The sources I was relying on for information about Chavez weren’t telling me the truth.
Voting seems to stuffed things up.
Think Dan, wax eater, the renovation gal, trumble, slo mo.
Not real socialism again? How many times can you run that argument? Let’s ask iamshiteater.
The Hunchback will be busy renovating his State to get folks off the-dole-he-had-to-have.
Cross City tunnels?
It says so much about the Strayan economy, and popular conceptions of it, that TV news stories which have anything to do with the economy so often show footage of baristas at work – occasionally it will be other high-tech, cutting edge, export-oriented….. activities such as hair stylists and beauticians, or retailers of imported merchandise, but nothing much else seems to be needed for a bonzer economy.
We are running a continental-scale Ponzi scheme, based on debt-funded consumption, and most of what is being talked about as solutions to our economic mess involves getting Ponzinomics revved up again as soon as possible.
From the chart you might think that Chavez’ policies were a success, and Maduro’s a failure.
That would be reading it wrong. As TAFKAS notes, almost all Venezuela’s legal export earnings come from oil, and these earnings sustain other parts of the economy. Oil prices went from a range of $20-40 a barrel when Chavez came in to $100-120 a barrel late in his reign. They were already starting to fall when he died, and were back to $60 or so before Covid sent them even lower.
Venezuela’s GDP would have gone through the roof in the naughties and collapsed in the 2010s no matter what policies were in place, as long as the oil could be got onto ships.
A more instructive way of evaluating Chavez’ and Maduro’s policies is to compare GDP now to what it was just before they came in. From the chart, it’s actually fallen slightly over that 20 years, meaning they achieved negative growth. But the real fall is much greater, because the chart is in nominal USD, and the USD has lost about 35% of its purchasing power over the period. So their policies have contracted the Venezuelan economy by 2-3 per cent a year. Even that understates the welfare loss, since despite recent outflows of economic refugees, Venezuela’s population is still about 20 per cent higher than in the late 90s. So per capita GDP has shrunk 3-4 a year for 20 years. Must be one of the worst peacetime performances of any country in history.
Like Saudi Arabia most of the oil was produced by foreigners. As soon as the locals tried to go it alone production (and revenue) collapsed. Resources are hard.
The exodus of engineers and other middle class types from Venezuela had started long before the crash. In the years 2000-2010.
You probably have a few living in your suburb. Quiet Latin professionals, not vibrant multicultis.
They could see what was coming, and what was happening to them already.
The oil crash happened in Nov 2014 and got real for most producers in 2015/16. As you can see, Venezuela was already on the way down in 2013, during the peak!
Why? Why? Why? My kingdom for a Y (or a proofreader).
The UK media, BBC etc does this too.
They only see the street-window businesses. They think that’s “the economy”.
I was in Venezuela in 2013 for Maduro’s “election”, having traveled the East coast from Buenos Aires. At the shown “peak” prosperity you couldn’t order off the menu at restaurants, rather you’d build your own meal from available ingredients.
The official Bolívares/USD exchange rate was ~6/1, yet I’d negotiate ~60/1 on the black market. A restaurant meal would cost <AUD1, similar for a several hour bus trip (remember AUD was above parity with USD:-)
The entire country felt ready to explode. Only fear and the leftist-lemming population (common throughout South America) lead the population off the socialist cliff.
After ~4 months I flew back to Argentina to return home. During my absence the Peso had depreciated another ~25% (black market). I'd eat at the finest steak restaurants in the capital, of the finest steaks in the world for AUD25!
Hint today; ensure sure your money is in easily convertible assets.
Lock it down in the face of a manufactured influenza crisis in which over a period of seven months more than 91% (361 of 396) of deaths occurred in people aged 70 years and above, many of them with co-morbidities.
https://www.health.gov.au/resources/covid-19-deaths-by-age-group-and-sex
The graph at the link seems to be updated daily.
Total registered deaths in Australia from influenza and pneumonia in 2018 were 3,102. The median age at death was 89.3 years.
https://www.abs.gov.au/ausstats/[email protected]/Lookup/by%20Subject/3303.0~2018~Main%20Features~Australia's%20leading%20causes%20of%20death,%202018~1
How do you make a wealthy country poor?
Of course trade and banking sanctions have nothing to do with it.
Graphs like this are used to suggest that things were going really well under Chavez and it was Maduro that tanked things, but nothing could be further from the truth.
Also GDP is not a measure of anything, mixing government spending together with actual production.
The most widely used defence of Venezuela, and other socialist s/holes, is that the economy is not doing well due to US embargo on the said countries. I know it’s not the main reason, but it’s hard to argue against this, since there are no readily available facts and numbers.
How would you reply to this claim?
@PB
>Trade and banking sanctions
That happened AFTER the country went full communism? Not again with “not real communism”!
When oil prices peaked and Venezuela was reaping profit the regime did not use this money wisely. Instead they used the money to import and distribute luxury foods and even basic items and distributed these at a low cost to win affection from the people. Farmers and other producers were put out of business, farming machinery left rusting and food production and manufacturing virtually stopped. The regime also spent billions propping up other leftist causes in other countries and this money was spent on rebels and guns. And there were also the big infrastructure icon projects for cities that were pie in the sky before they were completed. When oil prices fell and they could no longer import they had nothing to fall back on.People were reduced to living off greens sown in flower boxes in windows. What was left on farms was pillaged.