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Originally published November 3 2015

Loony leftist rag fails economics 101: Venezuela's 'Economic Miracle' an absolute disaster for everyone

by J. D. Heyes

(NaturalNews) If you ever needed more proof that liberals and progressives are economic illiterates, this should do it for you.

As noted over at Zero Hedge, insanely liberal web site "took a quick break from criticizing a caricature of libertarianism" to allow one of its writers, David Sirota, to tap out a rather embarrassing piece that praised socialism in 2013. It turned out "to be a fantastic case study in both the dangers of socialist economics and of course, speaking too soon," Zero Hedge's Tyler Durden posted.

Titled "Hugo Chavez's Economic Miracle," Sirota's piece was not the only dream piece pertaining to the subject of how much more wonderful socialism is than evil American-style free-marketism (which we haven't really had in a hundred years, ever since progressives began regulating American industry). As Durden noted, such 20/20 hindsight vision does serve a useful purpose. When you look at Venezuela now, it is an economic basket case; past is prologue. The Chavez economic model was predictable.

In many ways, the lure of socialism is that it "appears" to produce quick results. However, such policies really just serve as a good example of what Nicolas Cachanosky calls "the bait-and-switch behind economic populism." This principle is defined as government policies focused principally on consumption but little on investment; they always give off good economic signs initially but are followed by economic collapse and disaster.

Inflation, falling revenue and tight monetary controls equals a socialist economic nightmare

Durden notes:

Sirota's article at least begins by lamenting Chavez's rather poor record on civil rights (like shutting down a TV station that was critical of him) and noting "a boom in violent crime." This may somehow be an understatement as Venezuela ranks second in the world in murders per capita at a terrifying rate of 53.7 per 100,000 citizens annually! (So much for socialism alleviating crime.) He finally does arrive at his case for this "economic miracle" that Venezuela was experiencing under Chavez (which, I should note, makes up only one paragraph of his entire article).

How much of the country's economic "success" can be attributed to its oil production is a subject of debate. However, it's also worth noting that the positive trends Sirota cited were common throughout Latin America, Durden noted, and that included Colombia, which has moved in the opposite direction economically.

The World Bank reports that between 2005 and 2013, Colombia's poverty rate fell from 45 percent to 30.6 percent, while Peru's plunged from 55.6 percent to 23.9 percent, Uruguay's dropped from 32.5 percent to 11.5 percent, and Ecuador's fell from 42.2 percent to 25.6 percent. Venezuela's rate fell about the same, making it average. Moreover, this plunge took place prior to the country's current economic woes.

Granted, the decline in oil prices has hurt Venezuela, but the country's economic problems were beginning to become apparent prior to oil's decline. In October 2014, Zero Hedge reports, the country ran a 17 percent budget deficit while dealing with significant product shortages. Indeed, every major oil exporter has been harmed economically by lower prices, but overall they are weathering the losses much better than Venezuela.

Will Salon print a follow-up?

In fact, economists say that the drop in oil prices merely exacerbated problems caused by the extremist populist/socialist policies begun by Chavez and maintained by his successor, Nicolas Maduro.

Now, the country faces an astounding 64 percent inflation rate; the South American country with the second-highest rate is Argentina with just 10.9 percent.

The Telegraph noted in February that Venezuela's economy will have contracted by 7 percent this year, mostly on declining oil revenues, but that exposes the fallacy of socialism, which requires an ever-growing (or at least a sustained) government income in order to maintain.

Durden notes that the entire experiment of socialism in Venezuela and beyond is a one-trick pony that delivers early but fades over the mid-to-long term, ending badly for the population. Look at Cuba; socialism there has never produced a viable economy.

Like him, we'll wait and see if Salon will attempt a follow-up.

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