The failure of socialism in Venezuela just got worse
People in Washington, DC, thought they had problems when the city's Metrorail closed for 24 hours on Wednesday for repairs.Socialists are always quick to blame outside forces for the failure of their command economies. In Cuba, they blame the US embargo, despite the fact that other countries freely trade with them. In Venezuela, there has been no embargo so it is harder to hide the inefficiencies of socialism. Despite having the world's largest petroleum reserves the country has to import oil and can't come up with an alternative electrical system based on fossil fuels. They wasted all the windfall from high oil prices on social programs that actually made the country poorer. Now they are virtually bankrupt and on the breach of defaulting on foreign loans.
But that's nothing compared with what's happening in Venezuela, where the entire country is shutting down for a whole week to cope with yet another crippling electricity shortage.
On Wednesday, according to Bloomberg, President Nicolás Maduro announced all workers will need to take an extended five-day Easter holiday to conserve power. The country had already been rationing electricity due to reduced output from its hydropower dams. Stores have had to cut their hours. Residents have been left in the dark for days at a time. It's a disaster for a country already reeling from a recession, high inflation, and food shortages. (The crash in global crude oil prices has hit oil-rich Venezuelaparticularly hard.)
Partly this is a story about drought. Nearly 65 percent of Venezuela's electricity comes from hydropower, and a lack of rainfall this winter has led to critically low water levels at its crucial Guri Dam. The massive El Niño in the Pacific deserves some blame here.
But the much bigger story here is that Venezuela's socialist government has badly mismanaged the electric grid for years. Since 2000, the country has failed to add enough electric capacity to satisfy soaring demand, making it incredibly vulnerable to disruptions at its existing dams. Venezuela has been enduring periodic blackouts and rationing ever since 2009 — and there's no sign things will improve anytime soon.