What caused Venezuela’s economic debacle?

What ultimately caused Venezuela’s economic debacle was a breed of elites that refused to think in the long term.

While thinking of a tragedy such as World War 2, we often turn the blame on Adolph Hitler and his discourse. Nevertheless, Hitler was an outcome of World War I. The Treaty of Versailles was very harsh on the German people and eventually someone took advantage of the collective conscience of profound discomfort.

Hugo Chavez and Adolph Hitler rose to power with a rather emotional and paternalist discourse, offering their masses immediate and disruptive action. In both cases, this social disturbance was caused by so called elites whose ethos had no notion of responsibility with their surroundings, and favored vanity and ambition.

History recalls that Venezuela’s establishment of democracy in 1958 emerged from the Pacto de Punto Fijo, who’s aim was to bring back the constitutional right for people to vote and was signed between: AD –socialists-, COPEI –highly catholic- and URD –positivist democrats- parties. The fierce competition threw URD under in 2 years and the new tacit coalition kept power for the next 33 years with an apparent conviction of serving others and substantial action in drilling oil and getting rich. Social crisis proceeded.

Economists use GDP to describe aggregate money spent in a country and the GINI Index for inequality since the 1980’s. Higher Gini equals higher economic disparity. Policies driven by United Nation’s labeled leaders, -those nations sharing the pricey experience of handling a social crisis that spiraled out of control- have an average historical GINI of 37,34* and those historically bonded with Venezuela, the former “Gran Colombia” display an average of 52,7; 41,1% more. It seems some lessons have been learned in developed countries.

What ultimately caused Venezuela’s economic debacle was a breed of elites that refused to think in the long term. As consequences learn from causes, Hugo Chavez began burning money for the short-term content of his people without a plan B until faith and international market prices shattered a poorly outlined macroeconomic strategy.

The Latin American Post developed an investigation with World Bank Data to stablish that the Latin American nations with the closest historic ties with Venezuela have seen a sustained decrease in Inequality in the last data collection vs their historic average by 6% while UN Security Council’s permanent members excluding Russia (for lack of information) keep a stable path close to 0,3% change, concluding that Latin America is converging to an equilibrium in terms of Inequality.

To act sustainably we must learn from history, and by identifying and comparing its trends and cycles we might do ourselves and our own a favor as we may identify the attitudes and actions taking place in our surrounding that likely lead to more unjustified suffering of other human beings. The decision about the future is entirely in our hands.

 *GINI excludes Russia due to lack of information.


Latin American Post | David Eduardo Rodríguez

Copy edited by Susana Cicchetto