The Economist published an important article highlighting the similarities between Venezuela’s current economic crisis and what Zimbabwe’s went through 15 years ago. In fact, the similarity can be displayed in one picture:
Fortunately, the anonymous reporter was in Zimbabwe during its hyperinflationary period in the 2000s. He cuts through their cultural differences between the two countries and gets to the root of the problem:
Might Venezuela go the way of Zimbabwe? They are culturally very different, but the political parallels are ominous. Both countries have suffered under charismatic revolutionary leaders. Robert Mugabe has ruled Zimbabwe since 1980. Hugo Chávez ran Venezuela from 1998 until his death in 2013. His handpicked successor, Nicolás Maduro, continues his policies, though with none of Chávez’s—or Mr Mugabe’s—political adroitness.
Mr Mugabe seized big commercial farms without compensation, wrecking Zimbabwe’s largest industry. Chávez expropriated businesses on a whim, sometimes on live television. He sacked 20,000 workers from the state oil firm, PDVSA, and replaced them with 100,000 often incompetent loyalists, some of whom were set to work stitching revolutionary T-shirts.
…Yet the key similarity between the two regimes is not their thuggishness but their economic ineptitude. Both believe that market forces can be bossed around like soldiers on parade. In both cases, the results are similar: shortages, inflation and tumbling living standards.
Mr Mugabe, who like the chavistas professes great concern for the poor, fixed the prices of several staple goods in the early 2000s to make them “affordable”. They promptly vanished from the shelves. The subsidies that are supposed to make price controls work have often been stolen in both countries. Suppliers, rather than giving goods away at the official price, prefer to sell them on the black market.
He also provides illuminating stories of the effects of Maduro’s insane policies on the lives of ordinary Venezuelans.
To learn more about the pernicious effects of inflationary monetary policies on display in Zimbabwe and Venezuela, I strongly recommend When Money Destroys Nations by Philip Haslam.