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Venezuela had a budget surplus in 1999, by 2013 it had a deficit of 14% of GDP- Nationalisation is associated with collapsing productivity in key industries in Venezuela
- It is deeply troubling that Jeremy Corbyn calls Venezuela "a better way of doing things"
- Over President Chavez’s term (1998 to 2013), Venezuela’s economic freedom score went from average to one of the most repressive.
- President Chavez apologists – including Jeremy Corbyn – argue that the reforms were a success as poverty fell from 1998 to 2013.
- But that was cosmetic. It only occurred as there was a 600% increase in oil export revenue, which arose from oil price increases, not gains in output or productivity.
- Price controls were already causing food shortages in 2006, by disincentivising domestic food production. Oil revenues had to be used to pay for a fourfold increase in imports to fill the gap.
- President Chavez’s unrestrained spending was astonishing. The country went from a budget surplus in 1999 to a deficit of over 14% of GDP when Chavez left office – despite booming oil export revenue.
- Widespread nationalisation was associated with collapsing productivity in industries including oil, steel and sugar, as well as widespread corruption.
- Regional competitor Chile, which has implemented free market reforms, is now the wealthiest country in the region, seeing absolute poverty plummet in the last decade.
- Price controls, mass nationalisation, profligate fiscal policy, and ever-growing corruption have sown the seeds of the current economic and political calamity in Venezuela. It is not simply about oil prices.
- It is therefore deeply troubling that the leader of the UK’s official opposition described President Chavez’s reforms as “a better way of doing things”.
