After the collapse of Chavism, which way will Latin America turn?
It wasn’t long ago that Venezuela, led by a fiery caudillo and dedicated to spreading its brand of populist super-socialism, boosted allies’ economies near and far with petrodollars. Hugo Chavez was spreading his Bolivarian revolution all over and times were good.
No más.
Spending lavishly to prop up like-minded allies’ hold on power, investing heavily in giveaways at home and neglecting modernization of the aging oil industry did the trick. Venezuela, possessing some of the world’s largest oil reserves, is bankrupt.
History-making inflation rates are predicted to reach 1 million percent by year’s end. Supermarket shelves are empty. Hospitals no longer can or will tend to the sick. Gangs roam the streets. Think “Babylon Berlin” — with a sense that “Mad Max” is where things are headed.
Horrified Venezuelans — at least those who can — have fled for Colombian border towns and other neighboring countries.
Already in a hole, Chavez’s successor, Nicolas Maduro, is digging deeper. Last Friday he announced new economic measures: shaving a few zeroes off the local currency, the Bolivar; sharply raising taxes; significantly upping the minimum wage.
Expect further collapse of the remaining local businesses unable to afford the new dictated-from-above wages. Inflation will likely keep rising.