Should Britain emulate Venezuela’s economic policies?

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Some of the new Opposition leadership have been inspired by Latin America. They believe Venezuela provides a shining example of economic progress. Jeremy Corbyn has previously lauded Venezuela as “an example of what social justice can achieve”. Shadow Health Minister Dianne Abbott says Venezuela provides proof that “a better way is possible.” She’s a Patron of the Venezuela Solidarity Campaign, which aims “to defend the achievements of the Bolivarian Revolution”.

Without dwelling on the politics of Chavez and Maduro, or the accusations of tyranny, how has the economy performed? Should Britain emulate these policies? The short answer is no. Venezuela is one of the world’s worst managed economies. The policies have had tragic results.

Venezuela is poorer than its neighbours despite a wealth of oil, on which it is now extremely dependent. Chile, Argentina, Uruguay, and Panama all have higher per capita income.

It is in the midst of a deep recession. Inflation rates are amongst the world’s highest at over 100%. It holds the top spot globally for the Misery Index.

Venezuela is ranked 176th for Economic Freedom, just behind Zimbabwe and second last in the region. Ease of doing business is poor, property rights are insecureand investments are risky - entrepreneurs receive the lowest rates of return despite their efforts.

The Bolivar has massively devalued despite their currency restrictions. Price controls have resulted in severe shortages, long queues, and a black market for basic goods from toilet paper to milk, flour and medical supplies. Healthcare is in disarray, with crumbling hospitals and patients forced to search for drugs on the streets – hardly a model for our NHS either.

Even just focusing on equality, the case for Venezuelan polices is weak. Its Gini Coefficient, the traditional measure of wealth distribution, is less equal than that of the UK.

Venezuela’s performance has fluctuated over the years. It has done better when the market for oil is strong, and the profits have been partly directed towards social justice causes. Yet the overall picture is damning for this socialist paradise, regardless of the measure. The policies have failed with great cost. We should be very afraid of any proposals that wish to emulate their folly.