On his third voyage, Christopher Columbus became the first European to reach the mainland of South America, when he landed in what is now Venezuela on August 1st, 1498. Artifacts from the area show that native peoples had previously co-existed with and hunted the megafauna that lived there. The pre-Columbian peoples seem to have been peaceful village-dwelling hunters and farmers, who made textiles and ceramics.
Alonso de Ojeda, who led the second Spanish expedition, thought the gulf resembled Venice, and gave it the name Venezuela, meaning “little Venice.” Parts of it were colonized by the Spanish from 1502, and by the Germans from 1528. A prosperous economy developed, raising livestock and later growing cacao beans, and developed trade with the nearby British and French islands as well as with Spain. The mining of gold and silver was a significant factor, though El Dorado, the legendary city of gold, was never discovered.
Independence from Spain was achieved in 1821 when the country became part of the Republic of Gran Colombia, achieving the status of an independent country in 1830. But long before then Caracas had status as a cultural centre, with a university teaching Latin, medicine, engineering and the humanities.
Oil was discovered in 1922, in vast quantities. Venezuela has the world’s largest reserves and although it was governed by a series of military dictators, the country prospered. High oil prices from the 1950s to the 1980s helped it to become the most prosperous in South America. In terms of wealth per capita, in 1950 Venezuela was the world’s 4th wealthiest nation.
I visited the place twice in the 1980s, and was impressed by its vitality, and by both the energy and courtesy of its talented peoples. Caracas seems to have a moderate climate tempered partly by its altitude, and partly by a fortunate geography that brings cooling breezes. It is very sad to see the country brought so low, largely because of incompetent and corrupt government.
Chavez and Maduro used the oil revenues to buy political support instead of investing in diversification. The oil industry was run into the ground when nationalization replaced its skilled workers with government cronies who milked it to buy private jets and lavish properties abroad. Oil output is now down to a third of what it was, and fuel is imported. By 2013 the so-called “Misery Index” ranked Venezuela top, and it came 180th out of 185 among the worst places for doing business.
Inflation has topped 1 million percent per annum, and price caps have led to shortages of milk, flour and toilet paper. There is widespread malnourishment, and hospitals cannot perform operations through lack of supplies and drugs. Whereas Venezuela was once a magnet for immigration, it is estimated that 4m have fled the country in 20 years. Socialism has ruined the country, as it has everywhere it has been tried.
One cause for optimism is the resilience of the people. Just as inept and ideological government can bankrupt a country in short order, so can market economics lift it again to prosperity. As Adam Smith said,
“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice.”
Venezuela has had none of those, but there is a high chance that when its corrupt thugs are swept to oblivion, it will rapidly regain the prosperity its people deserve.