Case: Venezuela after Chavez: The Case for Economic Freedom
- President Chavez held office for 14 years, despite all the shortages in Venezuela’s economy. How do you explain this?
- Many Venezuelans proclaim themselves to be “Chavistas,” despite the country’s problems. How do you explain this?
- Can Venezuela afford to maintain its Petrocaribe program of subsidized oil exports?
The Venezuela president Chavez from his election in 1998 to his death in March 2013, he proposed and acted out socialistic economic policies which are known as the Bolivarian revolution or the food shortages in Venezuela. Venezuela economic collapsed in the 1980s, Chavez government, became “semi- authoritarian and hyper – populist “and cover its authority over the economy so as to increase control of resources. The Chavez is creating “Bolivarian Mission” and offering public services to increase economic, social, and culture situations. These policies include land reform. The democratization of economy and redistribution of wealth. Chavez government focused on oil production to increase independence from U.S. and European rules and employed oil funds to encourage financial and political combination with other Latin American countries. The shortage in Venezuela economy mainly occurs in regulated products such as milk, oil, meat, coffee, chicken, rice, precooked flour, and some necessities such as personal hygiene products, toilet paper, and medicine. Consequently, Venezuelans must search for food- eat garbage or wild fruits, wait in queues for a long time and often resolve without getting particular products.
The UN (United Nations) and other members have presented aid to Venezuela. The government of Venezuela refused their aid. Venezuela confronted shortages because of high inflation and economic incompetence of the government. According to a survey conducted by International Consulting Services, almost 57 percentage of Venezuelans have assured that the Venezuelan administration under President Nicolas Maduro would progress the economy. The survey also highlighted numerous results that propose that Chavismo remains to be the favored political preference for the nation’s people. Moreover, the survey stated that the inflation rate is 70%, just 1 out of 10 Venezuelans reflect inflation as the country’s foremost issue. Despite, insecurity, a continuing issue in Venezuela, leftovers the major problem for half of the nation’s people. In Venezuela, 43.6% of Venezuelans believed that they would choose the United Socialist Party of Venezuela (PSUV) and its associated parties if elections would be there. This number implies that acute economic problems, the PSUV take a solid lead than opposition party that was the choice of not more than 32% of survey participants. On the second death anniversary of the of Hugo Rafael Chávez Frías, about 62% Venezuelans reflect themselves as Chavistas, of the late Venezuelan leader. This result shows that the majority of the Bolivarian project popularity originated by Chávez, despite his physical nonexistence. (Venezuela Solidarity Campaign, 2013)
The survey also found that the 80% of Venezuelans think that value of human rights is assured in the Bolivarian Republic. The newly selected Venezuelan National Assembly elects to terminate country’s program of subsidized oil sales to the Central American and Caribbean nations, the U.S. would not be capable of substitute oil from U.S. for oil from Venezuelan. The U.S. could offer some assets to the 17 nations which will be influenced by the program, referred to as Petrocaribe that started under the rule of late President Hugo Chavez. However giving oil will be improbable, compelling the nations which obtain the subsidized oil from Venezuela, now to search their purchases at global prices. The nations considerably advanced from Petrocaribe “We’re not going to be able to substitute American oil for Venezuelan oil easily.” (Venezuela Solidarity Campaign, 2013)
The European Commission bailed out banks in Ireland and Greece because euro is the hard currency and it is hard to keep with EU existing. The banks of Ireland and Greece couldn’t pay their debts, and it will affect the other banks in other countries. So it would lead to a worse condition of EU economy. In the cases of Ireland, the bailouts brought a quick return to growing. The bailout of Greece has been an utter failure, because the Greek government instead of lowering taxes and liberalizing the market, it increased the taxes and destroying the economy, cut pensions, i.e., causing social unrest and poverty. Since at the end of 2009, the Greece economy came down, and the EU encounter the biggest challenge: choosing whether it must bail out member nations or not. Most of the E.U. ministers thought to bail out member nations to crippling the liability to protect the economy of E.U., whereas other E.U. members thought that every member nation must be accountable for its own liability and not appeal other member nations into more financial concern. Bailouts do not appear to be functioning. The country gets a bailout; the markets begin to looking for the next candidate creating a line of dominoes. (The Guardian, 2011)
Sócrates said before the election that he would resign if the procedures to spending’s cut and increase taxes intended to accompany a bailout comparable to those initiated by Ireland and Greece were rejected. Portugal’s in 10-year had risen to 7.77%, whereas in 5-year, bonds smash a euro lifespan rise of 8.2%. Economists comprehend borrowing costs over 7% as unmanageable and perceive Portugal would have to choose to the rescue fund. (The Guardian, 2011)
The interruption in combining the euro zone rescue fund of €440bn, together with worry about Portugal, can result in another instability on bond markets.”I fear about Black markets,” one EU financial source told Reuters, emphasizing that EU policymakers yet had a distant route to go to draw every required document. (The Guardian, 2011)
The National debt of Portugal is 83% of GDP, and in 2009, the budget deficit is above 9.3% of GDP, however, was declined by 7.3% in 2010. Sócrates wanted it to stay at 4.6% until the end of this year. In the UK, it’s because the burden of these ‘austerity measures’ falls disproportionally on the most vulnerable in society. The burden of these austerity measures is not those who caused the economic crisis for which these measures are the counterfeit justification. (The Guardian, 2011)
The effect of austerity has been to move wealth from the poorest in society to the wealthiest, widening the wealth gap. The only change to finances the debts would continue to increase – as the UK’s debt, and At the same time, the savings made by austerity are overshadowed by the taxes which we continue to allow large corporations to opt out of paying, and the huge bonuses that we still allow the bankers to caused the initial problems to pay themselves, the economy of banks go down. The government has set targets for welfare savings based on elimination fraud. See the benefit fraud, that one can know what proportion of benefits claims are fraudulent in advance of investigating individual claims. Individuals who have their benefits withdrawn for failure to attend appointments on time as a result of on-going mental health problems. The claimants who have stopped their benefits and reduced to eating because they had no money for food incontinence.
The Guardian. (2011). Portuguese prime minister resigns over austerity measures | Business. Retrieved from https://www.theguardian.com/business/2011/mar/23/portugal-government-collapses-eu-bailout-looms
Venezuela Solidarity Campaign. (2013). Venezuela Continues to be Chavista, According to New Poll – Venezuela Solidarity Campaign. Retrieved from http://www.venezuelasolidarity.co.uk/venezuela-continues-to-be-chavista-according-to-new-poll/