Venezuelan leaders thieve, bankrupt industries. The people suffer.
© Getty Images

What do you get when you take an economy out of the hands experts and place it in the hands of a bloated socialist bureaucracy? The answer is Venezuela.

Over the past 20 years, a country with some of the most abundant natural resources in the world, a creative and hard-working population and a near perfect climate, has become one of the poorest nations in the world. Today, Venezuela suffers from hyperinflation and a chronic shortage of basic foodstuffs and life-saving medicine.

ADVERTISEMENT

Much has been written about Chavismo’s policy of price and currency exchange controls. Of course, any free-market economist will wax lyrical about the dangers of these unnatural interferences in the markets. However, there’s another policy that has torn apart the Venezuelan economy from its very roots and laid the foundations for a long-term, structural economic and humanitarian crisis — the policy of expropriation.

 

Hugo Chavez, upon assuming power in 1999, made it a priority to expropriate lands and nationalize industries, factories, businesses, residences and even parking lots. Venezuelan families and businessmen who spent their lives toiling in fields and building successful companies, saw the fruits of their labor taken away over night.  

At the other end of the scale, U.S. companies also felt the brunt of this policy. After winning his reelection in 2006, Chavez went after the oil industry, forcing ExxonMobil and ConocoPhillips, among other U.S. companies, to reduce their ownership stakes if they wanted to continue working in the Orinoco Belt’s extra-heavy crude area.

Chavez also nationalized the telephone company and the electrical company, which were under the control of Verizon and AES, respectively. In just 10 years, Venezuela became a place where no one wanted to do business.

Since 2003, more than 1,200 expropriations have taken place. The government calls it strategic. The business community calls it theft. Energy, power, cement, steel and agriculture were all sucked into the gaping hole of the Venezuelan state. Tragically, it is precisely because of the strategic importance of these industries that Venezuela is in such a sorry state today.  

But why stop there? Between Chavez and his hopeless successor, the corrupt and inept Nicolas Maduro, the expropriations have reached companies producing rice, sugar, milk, coffee, juice, hotels, shopping malls, supermarkets...the list goes on.

In the blink of an eye, millions of hectares of land and hundreds of food companies have been transferred to the government, with profits (if any remained) lining the pockets of the regime’s cronies. The few food companies that are still open are used to feed Maduro’s men, while the vast majority of the country lives in abject poverty.

Socialists don’t like private property. This is nothing new. But when these ideological experiments are taking the lives of the Venezuelan masses, it is no longer good enough just to sit back and say, “Yup, Socialism. It’s bad”.  The current regime is not bad; its actions are pure evil.

The policy of expropriating companies simply doesn't work. Unskilled bureaucrats drive companies into the ground with major production problems, and profits quickly become losses.

The government takes businesses away from hard-working and capable people and hands them over to non-qualified individuals (sometimes relatives of the president or his ministers) who often find themselves completely out of their depth, running a company they know nothing about.

Fertile farmland has been turned into swamp, or desert.  Hacienda Bolivar is a farm that used to have 8,000 cattle and produced 5,000 liters of daily milk. It was just one example of many Venezuelan stories, highlighting what an individual or a family could achieve through private enterprise and hard work.

Four years later, the farm only had 3,600 cattle heads and was producing a pathetic 75 liters of milk. One morning in 2010, just like that, it was expropriated. Taken. 

On a larger scale, PDVSA, the Venezuela state oil company,should be in every economic text book, in every undergraduate economics course worldwide. Chavez fired over 20,000 employees between 2002-2003 to take complete control of the company. Many brilliant executives and capable employees suddenly found themselves on the street.

Back then, PDVSA was producing 2.76 million barrels a day. Today, the company can hardly keep up with the market, barely reaching the 2-million-barrel mark and struggling to pay its massive debts to creditors and service providers.

Likewise, Sidor, a Venezuela steelmaker company, was nationalized in 2008. Back in 2007, it was producing 4.3 million tons of liquid steel annually. Yet, in less than a decade, it is out of business. Reuters recently reported that its workers, instead of producing steel, were growing sunflowers and vegetables on the company premises to fight the food crisis.

While the government hides numbers, one employee told Reuters that only 11,300 tons of liquid steel were produced in January. At that pace, 2017 will end with just 135,000 tons of liquid steel, an annual output of just 3 percent of its installed capacity; the lowest since the company opened in 1963.

Last week, Chavismo’s latest expropriation madness actually hit the Western media. Maduro has called for a “war on bread”, threatening to seize bakeries that don’t produce enough bread, completely disregarding the fact that his government controls the distribution of flour in the country, an essential product that bakeries need.  

His government has already taken control of a handful of bakeries. Unfortunately, the socialist regime doesn’t seem interested in learning anything from past and failed experiences. The facts and figures are indeed shocking. The reality, however, is even worse.  

At the Venezuelan American Leadership Council, we have vowed to stand up and call out this socialist experiment devouring an entire nation, and we call upon you to do the same.

 

Martin Rodil is the president of the Venezuelan American Leadership Council, a Washington, D.C.-based advocacy group for freedom and democracy in Venezuela.


The views expressed by contributors are their own and not the views of The Hill.