Socialism's Dismal Harvest: Venezuela Edition

One of the points I like to stress in my introductory economics course, as well in my course on Economic Expansion and Development is that socialism, when implemented, results in poverty, starvation, death, and cultural ossification. The more hard core socialist the system is, the worse its problems. Mary Anastasia O’Grady documents this in a short essay in the Wall Street Journal. It is an excellent primer in the problems of socialism in which she uses Leonard Read's "I, Pencil" to illustrate what any economic system must do if society is to survive. As O'Grady notes:

In his craving for power, the late Hugo Chávez pledged to redistribute Venezuela’s wealth to the poor masses. The god-father of “21st-century socialism” seems to have been unaware that the resources he promised to shower on his people had to first be produced. . .

. . . Among the many stupidities that socialism promotes is the idea that by imposing price controls and forbidding profits, government can make food both cheap and widely available.

The opposite is true, and Venezuela proves the rule. An August-September 2015 survey by the multi-university, Caracas-based social and economic research project Encovi found that 87% of those polled reported that they did not have sufficient income for food. Their privation is a result of artificially holding down prices, which creates shortages. Consumers are forced to scurry about black markets looking for what they need and then pay dearly for it—if they can. They face killer inflation which, according to the central bank, was 180.9% on an annual basis in the fourth quarter of 2015, up from 82.4% in the first quarter of last year.

Once again history demonstrates what economic theory has told us for over a century: socialism is no laughing matter, unless we are prepared to chuckle at state-created poverty, starvation, and death.