Yet, Chavez’s socialism has been a complete and utter disaster. Especially for the poor.
Chavez’s policies have undermined the country’s industrial sector. Thousands of businesses have disappeared and hundreds of thousands of jobs have been lost as a result. Labor participation has gone down from 52% to 46%. And with an average unemployment rate of 11%, the country has been suffering from mass unemployment ever since 1998. As a result of the Venezuela’s shrinking industrial base, the country is more dependent on imports than ever. In the past, the country produced other things of value besides oil. Not anymore. Now it’s virtually all the country is producing. Thus, oil constitutes almost 100% of its exports.
To pay for Chavez’s welfare programs, the government has resorted to money printing, i.e., inflation. And as a result, the cost of living has gone up by an average of 24% per year. Since 1999 “the cost of the dollar in bolívar terms has risen more than tenfold” (“The not-so-strong bolívar”, 2013/2/11, The Economist). Considering that the country is importing 70% of the food it needs, that translates into a substantial reduction of the Venezuelan standard of living. Real wages have dropped by 40% since 2000. Venezuela is actually the only country in the region with declining real wages. (“The Twisted Economics of Twenty-First-Century Socialism”, Foreign Affairs.)