July 8, 2016—While half watching-baseball highlights one morning, a familiar voice buzzed in my ear, with something not commonly heard in a sports broadcast.
Legendary Dodgers announcer Vin Scully, during a 1-1 ball game in the 6th inning, noted the visiting Brewers’ third baseman Hernan Perez is a Venezuela native. Scully then rallied against the evils of socialism, going on to say, “Socialism failing to work as it always does, this time in Venezuela. You talk about giving everybody something free, and all of a sudden there’s no food to eat. And who do you think is the richest person in Venezuela? The daughter of Hugo Chavez. Anyway its 0 and 2.”
Listening to this, I had an initial chuckle. Scully’s got that right, socialism fails every time, but then something else crept into my mind. We are becoming Venezuela! Just like the USA, Venezuela is a country that loves baseball, beer and oil. Now they can’t even brew their own beer, the country can no longer afford to import barley and has created a massive shortage that has shut down half of the nation’s bars and breweries.
Both presidential candidates from the two major parties support socialism in some form or another, and Bernie Sanders, the Democrats’ runner-up openly calling himself a democratic-socialist, recently refused to comment on the collapse of Venezuela.
There is often an image that socialism leads to an equal distribution of wealth, where everyone enjoys an upper middle class style of life, with a 4-bedroom 3-bathroom house and smiling, playful puppy dogs. No one gets sick, and we all live together in a wonderful socialist utopia, where government tends to everyone’s needs. The reality is that socialism leads to the exact opposite, leading to shortages, rationing and the smiling puppy dog may become lunch, because of food shortages and 7-hour long lines at the grocery store.
The similarities between Venezuela and the US are becoming striking, although the US decline is much slower because we have accepted more of a socialism-light style of government as oppose to the hard line socialism adopted in Venezuela, but the similarities are striking none the less. The most striking and alarming should be Joseph Stiglitz, who has been described as an “influential economic adviser to Hillary Clinton,” appears determined to bring similar policies here, the economic adviser of the front runner for president thinks Hugo Chavez and Venezuela got it right. In 2007, he went on to say there are “positive policies” of the Chavez administration “He said Venezuelan President Hugo Chavez appears to have had success in bringing health and education to the people in the poor neighborhoods of Caracas. … It is not only important to have sustainable growth, but to ensure the best distribution of economic growth, for the benefit of all citizens.”
But, how did a country that was the wealthiest in all of Latin America just a decade ago fall so far, so quickly? And of course, that couldn’t happen in the good ol’ US of A, right? It happened for a few reasons, deterioration of the dollar, a precious metal crisis and runaway debt. The International Monetary Fund has estimated Venezuela is going to have 720% inflation this year. The Venezuela Bolivar has lost 99.1 % of its value since the election of Hugo Chavez.
Despite having the largest oil reserves in the world and triple digit oil prices, Venezuela couldn’t balance their checkbooks, so they ran to the only place they could: the printing press to make more money out of thin air. Does this sound familiar?
This problem is compounded by the fact Venezuela doesn’t have its own printing presses, they can no longer afford them, rather they pay foreign companies to print their money. That means it needs dollars just to be able to create Bolivars. Similarly, the US loves printing money as well.
The Federal Reserve has reduced the value of our dollar by only a mere 96% since the start of the Federal Reserve System and the abandoning of the gold standard. And when the Federal Reserve System failed in 1933, President FDR simply signed gold confiscation into law by executive order.
When they could no longer print money or pay for government services or employees, according to a CNN report, President Nicolas Maduro decided to shorten the work week to two days in an effort to save energy and electricity. Similarly, Oklahoma is considering shutting down schools to 4 days a week, cutting $47 million, because they can’t afford to keep their schools open. This is due to falling oil prices and an inability to balance their checkbook.
Fiscal policy is a disaster, too. Venezuela has been running enormous unmanageable GDP deficits for years, even back when oil prices were high. Needless to say, it didn’t bother to save when oil was over $100 a barrel, and things were good, so it now finds itself facing economic disaster. Similarly, US debt has passed $19 trillion, or over $58,000 per person, meaning the government debt to GDP is 104.17%. So, our debt is greater than our entire economy.
When finances collapse, a crime wave is usually not far behind. In Venezuela, 27,875 killings occurred this year in addition kidnapping, home invasion, and armed robberies are through the roof. Baseball fans will remember Wilson Ramos catcher for the Washington Nationals was kidnapped. Similarly, in the US, homicides increased 9% in the largest 63 cities in the first quarter of 2016; nonfatal shootings were up 21%, according to a Major Cities Chiefs Association survey.
FBI Director James Comey said, “I don’t know what the answer is, but holy cow, do we have a problem” at a special press briefing in May. Already the first quarter of this year has shown across-the-board increases in homicides, rape, robbery, aggravated assaults and non-fatal shootings, compared to 2015, according to The Major Cities Chiefs Association, a nonprofit that works with police chiefs in the 50 largest cities.
Due to all of the shortages in Venezuela, black markets are being created for the most common, everyday products, including toilet paper. These black markets and odd regulations requiring factories to supply enough toilet paper for all the workers actually led to the arrest of a factory owner, because he didn’t provide toilet paper for his employees. The bigger problem was there wasn’t any toilet paper to be found, and whatever toilet paper can be found is normally stolen for home use.
But who are we to judge, we have our own bathroom issues in the US.
No, the Unites States has not yet hit the rock bottom levels that Venezuela has, but either nominee Trump or Clinton will certainly continue us down that road.