In the 1950s, Venezuela was one of the five wealthiest countries in the world. Buoyed by large oil reserves, it remained among the most prosperous countries in South America for decades after.
Today, 90% of the population is in poverty, with average earnings of about $6 per month. The currency is almost worthless, subjected to hyperinflation since 2015. And 4 million citizens have fled.
How did this happen? Could similar events happen in the United States? Those questions were the subject of recent Mackinac Center events featuring Jorge Galicia, a Venezuelan expatriate and activist.
When Galicia was born in the 1990s, Venezuela was still doing well, though its economic foundation was shaky. The oil industry had been partly nationalized, and the country saw spurts of inflation. On measures of economic freedom, it was in the middle of the pack for the continent.
And then in the late 1990s, Hugo Chavez seized power.
“Chavez got into office by demonizing the rich and promising to seize their assets and give it to the poor to make their lives better,” said Galicia. “This is a [short-term] solution with bad [long-term] results.” He added that he has seen attempts to do the same here in the United States.
Chavez increased the government’s grip on the oil industry and nationalized other industries and major corporations. For a few years, this allowed him to MICHIGAN VOTES increase government spending and aid to the poor. But foreign investment fled. Trade tumbled and people had less incentive to work. Jobs dried up.
“Still, Chavez tried to keep spending money,” Galicia said. This led to runaway inflation, which continued even after Chavez’s death in 2013.
Galicia, once involved in protests against the regime, fled to the United States, where he is seeking asylum.
He’s pessimistic that things will turn around anytime soon in Venezuela. “People are very reliant on the government,” Galicia said. But he hopes it isn’t too late for America. Unlike Venezuela, the U.S. has strong private property rights, gun rights and resistance to government spending.
Galicia did a speaking tour around Michigan – at Northwood University in Midland, Spring Arbor University and in Birmingham.
The crowd in Midland was very receptive to the message. Several local residents who are immigrants from socialist countries attended the lecture in person or online and got a chance to ask questions. They came from Venezuela, Colombia, China and Bulgaria. If you didn’t get a chance to tune in and want to watch the talk, you can do so by clicking on that event here.