EDITORIAL: Socialist Venezuela runs out of money

The nation reaps the consequences of profligate Chavez legacy

Venezuela once exported more oil than almost any other country. Now it can’t even keep the lights on. A nation rich in natural resources scrambles to find enough toilet paper.

This is intolerable even in a nation where socialism teaches the people not to expect much. President Nicolas Maduro dispatched his security cops to crack down hard on students protesting the miserable life.

Demands for an end to shortages of goods, freedom of speech and increased safety were answered Tuesday at the price of six lives.

Turmoil in the Bolivarian Republic is a reminder of Margaret Thatcher’s axiom that socialist governments “eventually run out of other people’s money.”

It’s not yet clear whether the protests will succeed, but it is increasingly apparent that Venezuela is reaping the consequences of Chavismo, the disastrous economic policies put into place by Mr. Maduro’s predecessor and mentor, Hugo Chavez.

Venezuela endured 14 years of rule under Chavez, a man with considerably more charisma, bombast and political savvy than the dun and dull Mr. Maduro.

Mr. Chavez skillfully exploited deep-seated class resentment, tapping the proceeds of Venezuela’s vast oil wealth to buy the support of the poor who had been ignored and exploited by earlier regimes. The subsidies kept the price of gasoline absurdly low, and kept cheap staples such as rice and beans.

The scheme couldn’t last forever, and now the Venezuelan piggy bank is empty. Venezuela can’t even borrow cash, as the U.S. government does with abandon, because the interest rate on the country’s public debt is an astronomical 15 percent.

The foreign exchange rate is a way to judge just how much trouble the regime is in: Going to the bank would get you only 6.3 nearly worthless bolivars for a U.S. dollar. In the dark alleys where the black market flourishes, a dollar can get 87 bolivars.

The bureaucrat’s first instinct to generate revenue is to squeeze the business sector, but long-suffering Venezuelan enterprises have run dry. They’re saddled with price controls and acute shortages of spare parts, with nothing left to give.

The government sends inspectors to bully businessmen about prices, once even stationing the national guard in certain retail stores. Stores struggle to stay open, and many have given up.

The economy, which grew at 1 percent last year, will contract in the months ahead. The official inflation rate is 56 percent, but the Cato Institute’s Troubled Currencies Project estimates that the unofficial inflation rate is nearer to 330 percent.

The strength and scope of the protest in the streets is no surprise. The fact that protests are peaceful, but for the police violence, is a surprise.

Mr. Maduro’s response is erratic. In a recent speech stretching over several hours, he accused the opposition, led by Chacao Mayor Leopoldo Lopez of the Voluntad Popular party, of “breastfeeding crows that will now peck out your eyes for your cowardice.”

The next day, he said Mr. Lopez, who has since turned himself in to the Venezuelan authorities, is a tool of the United States. He blames the Americans, as so many despots do, for his insoluble troubles.

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