If you haven’t paid much attention to the disaster that is slowly unfolding in Venezuela, here’s an indicator: the economic disruption and hyperinflation is so bad that people can’t even afford to use toothpaste to brush their teeth at night, because a single tube of toothpaste costs half a week’s wages.
It’s a classic example of the failure of a government-controlled economy. Venezuela has a socialist government, but it’s a bastardized version that has a lot of Latin American “strong man” elements thrown in, too. Dating from the days of Hugo Chavez, Venezuela’s government has so interfered with normal economic functioning that the country can’t even take advantage of having the largest proven oil reserves in the world. Chavez expropriated industries, used oil revenues to pay for many social welfare benefits, and discouraged private enterprise. After years of such mismanagement, Venezuela faces chronic shortages of food, medicine, and electricity, skyrocketing crime, and mounting social disorder — to say nothing of hyperinflation, now running at about 700 percent annually, that cuts into the buying power of workers’ wages and makes even a single tube of toothpaste a luxury item to be used sparingly.
The Washington Post story about the toothpaste tells the tale of Venezuela’s downward spiral from the standpoint of the working people of the country, and it is a sad tale, indeed. The average worker’s income is about $33 a month — which is less than a quarter of the average wage in Haiti, which is one of the most impoverished countries in the western hemisphere. People have to stand in line for hours to buy staples like pasta, rice, and flour, and the products they purchase are of poor quality — such as broken-grain rice that normally would be used as chicken feed. Since 2014, the portion of people living in poverty has increased from 48 percent to 82 percent. People are down to eating two poor meals a day, and many are starving.
The government’s only response is to dictate increases in the minimum wage, which was just raised for this third this year, this time by 20 percent, to 250,000 “strong bolivars.” (When you have to name your currency “strong,” it tells you something about how the value of that currency is perceived, doesn’t it?) Of course, the constant increases do nothing to address, and instead only promote, the hyperinflation that is ravaging the country.
We should all think about Venezuela the next time some politician starts talking about how well off we all would be if the government just took a firmer hand in managing the economy.