Category: Venezuelan Issues

What Led to Venezuela’s Impending Collapse?

Open says Venezuela’s collapsing economy is sure to enter the history books as one of the worst disasters to hit a nation. Many experts like Jose Velasquez Figueroa suggest that the economic horror show that is Venezuela could have been avoided. Among the avoidable problems was the desire to employ market and price controls. Governments have done this in the past. The United States instituted such policies in the early 1970’s, but the results were not what was expected. Venezuela choose to employ market and price controls and, considering the awful state of Venezuela’s fiscal health, these interventions are being blamed for horrible consequences.
The problems in Venezuela are multifold. No one would suggest price and market controls are the only factors that lead to devastation in Venezuela. Venezuela is suffering from a horrible drought, an environmental catastrophe made worse by the fact the country is reliant on hydroelectric power. A lack of electricity is not exactly going to help bolster an economy.

That said, the situation was already bad due to a host of poor decisions by the government. There is only one positive to come out of the eventual collapse of Venezuela. Economists would be able to review the fall of the nation and point out the many missteps other countries should avoid.

Sadly, the eventual case study analysis will be of no benefit to those in Venezuela suffering now. The collapse of Venezuela looks like it is on a glide path and many lives are going to be ruined as a result.