Like a slow-motion car crash, the unraveling of Venezuela’s economy and political system is a fascinating, as well as sickening, spectacle. Last month we noted the attempt of Nicolas Maduro, the would-be caudillo who succeeded Hugo Chavez as president, to distract public attention from world-beating inflation, shortages, power outages and crime by expelling several U.S. diplomats who he claimed were engaged in nefarious sabotage. Now, with prices still rising as fast as his popularity is dropping, Mr. Maduro has adopted a drastic tactic: state-sponsored looting.
This month, Maduro, a former bus driver whose ignorance of economics is shockingly obvious, ordered the national guard to invade electronics stores and drastically lower the prices of goods. Mobs soon besieged the outlets, carrying away televisions and other appliances, sometimes without paying; even some of the soldiers helped themselves. More than 100 shop owners and other small businessmen were rounded up and jailed.
On Tuesday, Maduro won a vote in the national assembly, giving him the power to rule by a decree for a year; the ruling party gained the decisive ballot by impeaching a member of the opposition. The president says he will use his autocratic authority to dictate the prices of goods and limit the profits of businesses. In the next few weeks, Venezuelans can expect more state-sponsored giveaways of goodies ranging from auto parts to sneakers.
In the short run, the stripping of store shelves may allow Maduro to get through a round of local elections scheduled for early December. In the not-much-longer run, the result will be to compound shortages that have made toilet paper, milk and other basic food items nearly impossible to find. Thanks to the regime’s war on the private sector, Venezuela now imports 70 percent of its food, and even its vast oil revenues are not enough to compensate for the loss of local production.
The growing stress on the economy can be glimpsed in statistics: The inflation rate has risen above 50 percent, putting Venezuela at the top of world inflation figures, ahead of Syria. The central bank’s reserves have dropped from $29 billion to $20 billion so far this year. The black market exchange rate for the dollar has risen from seven to 10 times the official rate since October, allowing officials and well-connected businessmen to enrich themselves on the difference. Venezuelan bond prices are plummeting as even risk-loving investors run for the exits.
Where does all this end? Perhaps Maduro envisions Venezuela following the path of Cuba, which, in the early years of Fidel Castro’s leadership, systematically eliminated the private sector with tactics such as raids on stores. (Never mind that Cuba has belatedly begun to reverse that disastrous Sovietization of its economy.). Sadly, the more likely outcome will not be so neat: When the stores are empty, still more radical action will be needed to prevent the mobs from turning on Mr. Maduro. It would be well if Venezuela’s neighbors, including Brazil, were able to use their influence to restrain the regime’s self-destruction. Sadly, they, too, appear unable to do more than watch.