We Cannot Be Happy: The Intricate and Complicated Economic and Socal Labyrinth in which Venezuela is Trapped

Douglas Comacho

© Copyright 2020 by Douglas Comacho

Photo of an overloaded truck.

An ordinary Venezuelan citizen briefly relates the hard and difficult economic and social situation that Venezuela is going through, as well as the incoherent, confused and irrational behavior that his compatriots have adopted in trying to survive in a country with growing poverty, blocked internationally and lacking in tranquility, well-being and happiness.

The economic, political and social crisis in Venezuela is a real maze. Today there are millions of Venezuelans living in extreme poverty and millions have left the country, looking for better living conditions. It is a country with deep contradictions, it has immense mineral resources and the largest oil reserves in the world, but the lower social class is on the rise and in conditions of extreme misery and the middle class rapidly loses quality of life and is pushed into poverty. Meanwhile the upper class is enriched by numerous and billionaire corruption businesses, with the elite that governs the country. It is difficult to understand how a country can suffer from so much political and social imbalances and still has not succumbed in a civil war. But traditional economic and political analysis alone is not enough to understand the strange, irrational and absurd reality of Venezuela. All this has generated a deep emotional fracture in millions of Venezuelan families, creating an intensely sore society with growing hopelessness about the future. It is necessary to include in the equation the human aspect, that is, the behavior of the Venezuelan, since it is a fundamental element to understand the origin of all this unfortunate combination of problems, which are leading the country to the catastrophe.

Venezuela is a country of deep contradictions, has wide natural resources such as iron, bauxite, gold, coal, diamonds, nickel, copper, natural gas and also has world's largest oil reserves (310,000 million barrels). But this wealth contrasts with: a) The official inflation rate for the year 2019 was 3,654,129,640.0% (2018: 18,265,146.5%; 2017: 27,896.8%; 2016: 5,184.1%; 2015: 1,460.5% and 2014: 658,7%); b) The minimum monthly salary of 70% of workers, as well as the monthly social security pension for retirees, are equivalent to 3 dollars; c) The International Reserves of the country (7,562 million dollars at November 2019) hardly represent 5.0% of the total external debt; d) UNICEF estimates that 3.2 million children require urgent humanitarian assistance due to severe food shortages and poor access to medical assistance, food, water and education; e) The UN has estimated to require almost 300 million dollars to provide immediate humanitarian assistance to 70% of the population, who currently do not have sufficient income to cover basic food and medication needs; f) The EU will allocate 111 million Euros in 2020 to alleviate the humanitarian crisis of Venezuelans; g) The International Monetary Fund, in a July 2019 report, foresees that by the end of 2019 the country's economy will have an additional contraction of 35%, thus increasing the humanitarian crisis and its devastating impact; h) According to The Economist, 82% of venezuelan households live in critical poverty; i) Venezuela is the second country in Latin America (after Cuba) with the largest number of political prisoners (869), but is the first to censor, shut down or ban newspapers and other media, for spreading anti-government news and opinions.

This briefly describes the deep economic and social crisis in Venezuela, which represents a collapse that amply overcomes many notable disasters in recent years, including: the Zimbabwe crisis under the presidency of Robert Mugabe, the fall of the Soviet Union, and Cuba's economic catastrophe (in the 1990s). There is international consensus that the collapse of the Venezuelan economy, represents the greatest economic disaster that has occurred in a country without war in the last 50 years. The economists of the International Monetary Fund (IMF), estimate that similar levels of economic devastation as that currently shown by Venezuela, are only comparable to countries collapsed by wars, such as Libya (at the beginning of this decade), or Lebanon (in the seventies). The words of Kenneth Rogoff, professor of economics at Harvard University and former Chief Economist of the IMF, illustrate this extreme situation: "It is hard to think of a human tragedy of this magnitude that is not the product of a civil war... This may be the most outstanding example of disastrous policies in decades".
The effects of this dramatic crisis are already evident in Latin America. The UN High Commissioner for Refugees (UNHCR), considers that the migratory crisis in Venezuela is the largest and most problematic in Latin American history, estimating that since 2015 approximately 4 million Venezuelans have fled the economic and political crisis in their country, and it by the end of 2019, the number will rise to 5 million people. This "alarming" figure, according to the organization, highlights the urgent need to support countries receiving Venezuelan migrants in South America. According to this Institution, the Venezuelan crisis is one of the greatest emergencies in terms of human displacement in the world.

Altered Behavior:
The deep economic and social crisis that Venezuela is going through is intensely affecting the behavior and social interaction of a large part of the population. The extreme economic situation is generating a precarious and misery situation for a large number of Venezuelan families. Discouragement, sadness, pessimism and despair are the common feelings of Venezuelans. The population shows absolute disappointment and rejection by a government that, despite claiming to be socialist, with its disastrous economic measures has caused a deep economic collapse that mainly affects the middle and lower social classes.

This extreme economic situation is marked by an intense hyperinflationary process, which has devastated the finances of the families, has caused an intense decrease in the purchase of food, medicine and other essential products, all of which has had a catastrophic effect on the welfare of the population by the dissatisfaction of fundamental needs for human beings. This reaction or adaptation to adversity could be explained as a variant of Charles Darwin's Theory of the Evolution of Species. In the case of Venezuela, the theory could be called this way: Theory of Social Evolution in the Economic Crisis, and its fundamental postulate would be: “In societies that suffer severe economic crises, individuals who do not have large incomes will survive only if they can minimize the consumption of essential products and servicese, even if this involves risking the health and well-being of their family group”. The elements of similarity with Darwin's Theory would be: a) Condition that drives evolution or change: The economic crisis; b) Species subject to change: The families; c) Adaptation mechanism: Reduction of the consumption of essential products; d) Consequences: Extreme welfare decline. Although this is obviously irrational from a scientific point of view, it is the most accurate description of the behaviour adopted by a large part of the population due to the crisis suffered by this country.

Many think that among the lessons that can be derived from this profound economic, social and political crisis, is the opportunity or need to review, shape and adapt the behavior and structure of Venezuelan society, due to the large number of errors and improper behaviors that they have eroded the courage and morale of the instances of political power. A fundamental fact is that government management has impaired social cohesion in Venezuela, due to the inadequate, erroneous and incongruous economic policies, that in the last twenty years have dismantled material progress and reversed the mobility of the middle and lower social classes. These situations, in addition to widespread corruption, undue concentration of wealth in few hands and the limited education that reflects much of the population, have generated hopelessness and pessimism in society and the loss of appreciation for the fair value of work and the effort. The effects of hyperinflation have pulverized the capital saved and the income of families, so that the support and purchasing power of wages and pensions is almost non-existent. Faced with inaction or proven inability of the government to solve the problems, it is a huge task for any worker or pensioner to survive while maintaining a minimum of well-being and satisfaction of needs. This creates the moral dilemma of continuing to work for a ridiculous salary that does not calm hunger, or do anything to get the money needed to survive.

Another disadvantageous condition facing the country is the lack of innovation, updating or modernization of the education system, especially at the primary and secondary levels. This results in students being poorly trained, uneducated and unable to develop basic skills or aptitudes or competencies for adult life. In relation to this, the Maduro government, in order to show significant figures of literacy and schooling, has modified the evaluation system of students in schools by eliminating grade exams, demanding that teachers only assign positive appreciative grades so that all Students pass the degree automatically. This incredible, unusual, absurd and crazy procedure (unique in the world), is generating a large mass of elementary and secondary students practically illiterate, uneducated and without any training. Similarly, the recurrent and intense lack of resources to finance research in universities, negatively affects the training capacity and the development of effective and competitive educational processes at this level of professional training. Therefore, a large number of professors and professionals emigrate to other countries in search of better opportunities, which generates increasing shortages of human talent, with negative consequences in the development of any economic or social activity.

It is important to point out that the moral devaluation of many citizens has been so intense that it has caused corruption to spread to almost all of society, to the point that many unscrupulous people do not debate morally between good and evil, since they seem willing to do anything to earn money, whether licit or not.

Strange Reality:
Unfortunately in Venezuelan the economic and social condition has worsened so significantly in recent years, that a large part of the population believes that only a miracle can solve this crisis. Social behaviour reflects a metamorphosis in the appreciation of everyday events. The current reality facing Venezuelan society seems fictional, since events that were unthinkable or irregular in the past, are now accepted as normal. In contrast to this, situations that used to be normal are now non-existent or uncommon, becoming rare or strange events. In this context of crisis, alarming, irrational and unusual events are appreciated, which reflect an abnormal, contradictory, incoherent and unusual social behavior. Among these situations, the following can be highlighted:

The Origin:
Most political leaders in underdeveloped countries, as Venezuela, hide their irresponsibility, ineptitude to properly exercise their governmental functions, blaming neoliberalism for the lack of opportunities for their countries. But the real problem centers on corruption and the inappropriate economic policies adopted by these governments, which nullify the efficient, adequate and effective exploitation of the potential and natural wealth available in these countries. The limited average educational level of the population influences the belief or widespread acceptance of this lie or distorted truth of politicians. This becomes a deep-rooted belief, which generates undue and intense prejudices towards rich countries. The reality indicates that the rulers with their petty personal interests, with their petty personal interests and incoherent or absurd economic, social and educational policies, are to blame for having sunk their countries in extreme degrees of poverty, limiting the options and living conditions of millions of people.

The governments in Venezuela in the last twenty years have repeatedly argued that the poverty and misery is the fault of the rich nations. Unfortunately, this absurd statement seems to have been accepted as an indisputable truth, by a large part of the low-income and poorly educated population. But when reviewing some behaviors and attitudes of citizens, it is enough to understand that much of the blame for poverty and loss of well-being, is not due to external factors. The perverse combination of ineptitude, irresponsibility and corruption of governments, and the educational and cultural deficiencies of citizens, create ideal conditions to stimulate economic backwardness. The inadequate cultural attitude of a large part of the population is reflected in pessimistic, passive or negative behaviors that lead them to limit their educational, labor or productive behaviors and efforts. Because they are convinced that rich countries will not give them opportunities to overcome underdevelopment and poverty.

Everything seems to indicate that the erroneous behavior of a large part of the population of Venezuela has been the substantive causes of poverty and the problems that exist. The society as a whole has not effectively and timely claimed the mistakes, clumsiness and failures of governments in the proper management and redistribution of wealth. Additionally, the inefficient educational system and the weak transmission of family values to the new generations, have prevented structuring an adequate social articulation and caused the loss of competitiveness of the country and of individuals. This has limited the ability to visualize and materialize efficient, competitive, proactive and productive skills; thus hindering economic development and keeping the country in comparatively disadvantageous conditions. For this reason, it is foreseeable to consider that the inconvenient structure and interrelation of Venezuelan society, explains the great number of problems that the country is going through, despite having vast mineral, energy and natural wealth. To understand the context of the economic and social crisis in Venezuela, it is convenient to describe some situations that, although they may seem illogical, unreal or unjustifiable in other countries, fully explain the reasons for the comparative deficiencies and disadvantages suffered by Venezuelan society:

Monetary anarchy:
The thunderous failure of the government's economic policy has driven a devastating hyperinflationary process, reflecting the Venezuelan economy inflation rates of: 19,906.0% in 2019, 65,374.0% in 2018, 438.1% in 2017, 255.0 in 2016, 121.7% in 2015 and 62.2% in 2014. This has totally eroded the purchasing power of the national currency, the Bolivar, which has undergone several monetary reconversion processes eliminating eight zeros at face value . Consequently, most private companies agree their transactions in dollars, given the low value and purchasing power of the Bolivar. This has meant a great social and economic imbalance for the population, since approximately 80% of the country's workers are public employees and their salaries are not paid in dollars.

Criminal Activity:
The great economic depression that has caused hyperinflation and the extensive lack of ethics that exists in companies and government offices, law enforcement agencies and courts, has generated a substantial increase in criminal activities related to kidnapping, smuggling of products, bets Illicit, production and consumption of drugs as well as money laundering. This can be seen in the large number of criminal gangs that act with impunity in the main cities and towns of the country, the hundreds of high-end vehicles that circulate throughout the country, the purchase of numerous super-luxury mansions, as well as the construction of thousands of shopping centers and office buildings throughout the country.

The intense economic depression caused by hyperinflation, poverty, the contraction of the gross domestic product, the lack of ethics and morals that exist in many businesses, as well as the widespread corruption in ministries, state enterprises, police forces and courts; has generated a substantial increase in criminal activities of all kinds. Illegal gambling, robbery, contract killings, kidnappings, smuggling of products, drug consumption, as well as money laundering; are recurrent activities of numerous mafia gangs that act in the daddy, with absolute freedom, impunity and without effective opposition from the police. It is easy to notice in the main cities of the country hundreds of vans and high-end vehicles circulating all over the country, as well as innumerable yachts and luxury boats in private urbanizations with access to marine coasts. Similarly, there has been a notable increase in the construction of super luxury mansions and apartments, as well as shopping centers, restaurants and nightclubs. All of this is obviously a contradiction in terms in a country that has been plunged into one of the worst economic crises in its history.

Passenger Transportation Systems:
The passenger transportation service does not have the capacity to meet the increased demand of users who cannot use their own vehicles (hyperinflation has caused strong increases in the prices of spare parts, maintenance and repair of vehicles) this condition has had a strong impact not only on the owners of private vehicles, but also on the collective transport of passengers, which has affected service efficiency. This has also been exacerbated by the large number of buses that are out of service, due to lack of spare parts or maintenance.

In the case of transport systems by trains or subway, the notable increase in users has collapsed such means, which operate in a chaotic, insecure and messy way. For this situation it is common that: a) Many passengers risk their lives traveling between the trains (in the railroad junctions), b) There are frequent discussions, fights and physical confrontations between users to enter or exit trains, c) The absence of cops causes frequent theft of cell phones, briefcases, packages or backpacks at stations and trains, d) Large amounts of garbage and waste affect stations and wagons, as there are no containers or cleaning staff, e) The lack of air conditioning and ventilation in trains and stations affects the large number of users, causing frequent fainting or affliction, f) The external facilities of the stations are used informally as bathrooms, because many of the existing ones are out of service, g) It is very common that there are failures and delays in trains due to the frequent theft of cables and electrical equipment that occur at stations and railways.

Currently, freight trucks are used as means of transporting people. This results in a very high risk of safety and discomfort for the people who use them, especially children, the elderly or women. This has caused frequent fatal accidents when these transport units collide or roll over. The inefficiency of transport systems affects the mobility of many users and especially with regard to frequency and punctuality. The situation is so critical that in many government offices, workers are allowed to attend their jobs only two or three days a week. This delays processes and functions in public offices and therefore attention to citizens.

Hospitals and Medicines:
In the health sector the situation is chaos, due to the poor situation of public hospitals, the absence of social protection policies and disease prevention, the almost non-existent production of medicines and medical supplies, as well as the intense migration of doctors to other countries because of the low salaries that accrue in the country. Additionally, the inadequate or erroneous economic and educational policies applied by governments in the last twenty years have generated the increase in poverty and misery of a large part of the population, which has negatively impacted food and health, causing increase in diseases and conditions that intensely demand urgent medical attention. All this has generated a situation of social emergency, which even at the international level, is considered ahumanitarian crisis.

Additionally, the substantive increases that have reflected the costs of medical care in private clinics have had a negative impact on the well-being of the population. This has caused: a) A large part of the population cannot buy medicines or access private medical services; b) Insurance policies are insufficient or extremely expensive, to cover the value of any medical treatment; c) Hospitals have no capacity to attend to the increasing number of people who require their services. In summary, the complicated and extreme situation of public hospitals can be characterized as follows:
Traffic Chaos:
It could be said that the degree of people's respect for elementary social norms, such as traffic lights and pedestrian crossings, is an indication of the degree of culture and awareness of the citizens of any country. When people break something as simple as traffic regulations, it is foreseeable to think that individuals are educated, conditioned or used to disorder or disrespect the rights of others. When this is also accompanied by a lack of corrective action by the authorities to demand compliance with laws or regulations, the situation can be considered an anarchic, disorderly and antisocial behavior. In Venezuela it is common for citizens to violate traffic laws and regulations. Therefore, it is considered an abnormal or exceptional fact that people respect traffic signs, to the point that they are ironically considered an "endangered species". The generalized behaviors that can be observed in streets and avenues can be summarized as follows:
Electric Blackouts:
The frequent and intense blackouts in the cities and towns of the country, have generated a negative metamorphosis in the customs and behavior of the citizens, altering the normality of the rhythm of life. This deficiency in the electrical service, added to the worries and anxieties caused by the hyperinflation and the economic stagnation, limits and influences negatively in the activities of a great part of the population; adding frustration, sadness and hopelessness. Some of these annoyances and difficulties can be summarized as follows:
People feel helpless and totally hopeless from the daily occurrence of blackouts that gradually affect well-being and worsen the quality of life, and find no response from the government for their claims. When blackouts occur that frequently affect large cities and towns in the country, the government never assumes responsibility for these failures and always claims that they are caused by sabotages by political opponents or the government of the Unites States.

Unfair Tax System:
The country's tax system is socially unjust towards employees and pensioners, since tax payments made by companies are considered expenses for the purpose of determining the prices of goods and services sold to consumers. Therefore, the weight of tax contributions in the country is unbalanced, since workers and pensioners pay their own taxes and indirectly assume those corresponding to companies. This causes entrepreneurs to never really care about tax rate increases, because they pass them on to product prices so their profits are not affected. The tax regulator, due to ignorance or corruption, never reviews the composition of the operational costs of the companies, so that the transfer of these expenses to the consumers is a recurrent, safe and generalized practice in the entrepreneurs.

Citizen Behavior:
The behaviors observed in citizens (apathy, resignation, neglect and disobedience to laws and regulations) seem to be generated by pessimism and despair in the face of the difficult economic situation facing Venezuela. In addition, the lack of interest and inability of government authorities to improve the situation or solve problems of efficiency of public services, generate incentives to reinforce negative behaviors of citizens. This is incorrect and morally unacceptable, especially when people complain about governments that fail to keep their promises or solve problems. This behavior is a simple demonstration of ignorance, devaluation and little moral conscience, since people tend to criticize or complain about what affects them, but refuse to comply with the laws and contribute to the social order.

Venezuelan society is deeply disarticulated and unbalanced. The middle class is being minimized by the effect of the economic crisis that is moving millions of households into poverty. In contrast, the upper class is gradually concentrating greater wealth, power and privileges. This social disarticulation is exacerbated by the enormous population mass in a situation of misery and devoid of knowledge and technical skills required, to take on the complicated challenges of global competitiveness. All this implies a great absence of positive social mobility, since the extremes (especially the lower class) are concentrating the largest proportion of the population, with the negative implication that this entails in relation to the fair distribution of wealth and well-being.

As venezuelans we are to blame for not requiring governments to solve the problems and conditions that keep us in poverty. Our behavior has shown indifference and negligence in the performance of our duties, as well as irresponsibility and disregard for compliance with norms for ordering social behavior. Personally, I believe that the fault of all this is ours and it makes no sense to try to justify ourselves by blaming other countries for our own incapacity and lack of will. We simply have not been able to change a series of paradigms and defects in our education and attitudes, which unfortunately negatively condition our thinking and behavior. In fact, it can be affirmed that our actions and thoughts, consciously or not, indicate the following:
All this seems to indicate that citizens are primarily responsible for the economic underdevelopment and poverty that our country suffers. Unfortunately, an intense, recurring and absurd nationalist pride has prevented us from facing or accepting this reality and adopting the necessary solutions to improve our situation. This can be summarized as the perverse combination of a series of negative attitudes:
Remarkable weaknesses:
The actions of recent governments have been disastrous because instead of regulating the economy, effectively managing the nation's assets and promoting the fair distribution of income, they have engaged in clumsily intervening in almost all economic activities. They have been transformed from a ruler to a useless, inefficient and incapable businessman. Government enterprises have become the most powerful in the country's economic system (in terms of the magnitude and scope of their activity), but they are also the most disastrous, inefficient, corrupt and disjointed, in relation to the central objective of promoting welfare from the country. With this governmental vision, it is difficult to overcome poverty, because the government with its overwhelming power has decoupled itself from its regulatory role of the economy, becoming an entity that incompetently affects, disrupts and monopolizes most of the country's economic activities. It could be said that the government has stubbornly insisted on doing what it should not do, and on not doing what it should.

Unfortunately we are a sick society, characterized by the absence of adequate regulatory structures and by living in a permanent state of need and urgency. We are a country with no capacity to compete with any other nation, despite having vast and valuable natural resources. A large part of the population reflects little respect for laws and authorities. There are social groups with increasing economic and political privileges that only seek to maximize their power, influence and profits, taking advantage of the weaknesses and needs of a large part of the population. The government's regulatory inability is evident as well as its notable lack of will and efficiency to implement effective and coherent policies that generate the desired social and economic order. All this has caused great despair and concern in the population and has generated intense economic inequality, which in practice has nullified almost all the social and economic rights of the citizens who make up the middle and lower social classes.

The country's economy is structurally disadvantageous, inefficient and implicitly recessive. It depends mainly on the export of oil and the importation of all kinds of products that are not produced internally. This situation is inadequate and harmful, since the export earnings of raw materials (such as oil) are always lower than the import costs of finished products. This generates financial deficits and recurring depressions, which must be covered by external indebtedness that entails high financial costs. These conditions have damaged the country's economic growth potential, have affected national savings, cyclically stimulating the increase in poverty, technological backwardness and economic and financial dependence on international markets.

The economic crisis suffered by Venezuela for years has increased the level of poverty of the population and the gap between rich and poor. The selfishness of the social class that concentrates the greatest power and economic wealth, seems to suggest that it is indifferent to the growing needs and misery of the growing population in a state of poverty. Their help is limited to making some subsistence contributions, which generally do not produce substantial changes in the welfare or improvement of the situation of those who are excluded from the aid and opportunities. On the other hand, large private companies have reflected hypocritical positions with regard to social assistance. Although they make aid contributions, these expenses generate economic benefits by being deductible from the tax. It is painful to think that reality seems to indicate that compassion and solidarity towards the needy are not important moral values for those who have managed to accumulate great economic wealth in the country. It seems that for the high social class of our country, solidarity, mercy, altruism and generosity towards the poor are irrelevant human values.

Governments in the last 20 years have been responsible for much of the serious economic problems suffered on a recurring basis. Its inability and incompetence to take appropriate measures to improve the economy has generated a series of inadequate conditions that have stimulated poverty, backwardness and loss of the population's quality of life. Additionally, the intense corruption has generated intense concentration and accumulation of wealth in few hands, creating a growing and extreme difference between rich and poor. The disastrous consequences of these situations, including the growing social tension, have not yet been adequately assessed by governments, as they continue to express their irresponsibility for these problems. Their clumsiness prevents them from appreciating that their political management model is exhausted, and that the middle and lower social classes are tired of their excuses, being the segments of the population that have lost the greatest well-being due to the country's recurring economic problems.

The huge fiscal deficit, the decrease in international reserves, the exorbitant external debt, the increase in unemployment and hyperinflation, are destroying the fundamentals of the country's economic system, so it is practically turning it into a war economy. All this drastically reduces the chances of achieving economic development and improving the well-being of the population. It seems that only an extraordinary event could reverse this critical economic condition. However, it is essential that at some point there is a positive and intense change in the attitude of citizens. We must be aware of our failures and inefficiencies and accept the obligation to develop or materialize a profound effort to achieve the improvement of the country. A first step is to assume our duty to comply with laws and regulations, to have the moral authority to complain to the rulers their failures, deficiencies and irregularities.
Perhaps the most surprising aspect of the crisis facing the country is the remarkable and inexplicable passive and indifferent attitude adopted by the majority of the population. This could be called learned or adopted hopelessness, as it is believed that the situation cannot improve and, therefore, it is not worth trying or taking any action to try to improve. It seems that people's thinking is identified with the belief that the effort is not worth it, because nothing will change or improve. This complacency or negativism of the population represents an advantage for the rulers, who maintain their comfortable position of not assuming responsibility for the economic disaster and continue to blame the rich countries for all our problems.

The economic and social conditions of our country are very difficult and limit the opportunities and well-being of people. Among these conditions, which due to their recurrence can be considered structural and not temporary, the following can be mentioned:

Douglas Camacho is a venezuelan economist with more than thirty years of professional practice in the areas of hydrocarbon regulation, financial institution analysis and money laundering forensics. He has also been a university professor.

Contact Douglas

(Unless you type the author's name
in the subject line of the message
we won't know where to send it.)

Book Case

Home Page

The Preservation Foundation, Inc., A Nonprofit Book Publisher