Venezuela: Socialism in Action

By Lyman Stone

Saturday, September 28, 2018

Venezuela is in crisis. This has been true for a number of years. The socialist government has chronically mismanaged the country’s resources and strangled the life out of its economy, such that Venezuela has essentially not had any real economic growth since 2009 or 2010. This nearly decade-long recession, triggered first by oil-price volatility, but prolonged and deepened by the economic authoritarianism of the Nicolás Maduro government, has created a political backlash. Anyone who wishes Venezuela well may rightly hope that the Venezuelan opposition will eventually win and restore some semblance of order to a desperate country — though, of course, as Argentina’s experience has shown, in dysfunctional governments, sometimes the opposition isn’t much better.

But beyond its political effects, the crisis in Venezuela has done something else: It has rewritten Venezuela’s entire demographic structure.

I estimate that, since 2015, somewhere between 1.4 million and 2.2 million Venezuelans have left their country. Most intend to return, or may even have returned and then left again, thanks to fairly fluid migration rules and enforcement in many parts of Latin America. Coming up with an exact estimate of emigrants can be hard, but at a minimum, the U.N. High Commission on Refugees identifies 1.1 million formal asylum seekers or other crisis migrants. Add in reported legal inflows in farther-afield countries, and make an estimate of unreported, unauthorized, or illegal immigrants from Venezuela around the world, and you arrive at the figure of 1.4 million to 2.2 million.

For reference, Venezuela had only 31 million people in 2015. This scale of the decline is like the entire state of Pennsylvania or Florida emigrating from the United States. It is a mind-bogglingly vast outflow. Normally, the only things that can cause such huge crisis migrations are civil wars, such as Syria’s.

Beyond increasing outflows, Venezuela’s fundamental demographic balance sheet is worsening too. Once-eradicated diseases, including diphtheria and malaria, are returning with a vengeance because of the collapse of Venezuela’s health-care system alongside the flight of many people away from urban areas into ad hoc rural squatter communities. Other diseases may crop up as well. Partly as a result of this degraded health situation, the death rate appears to be rising. Official data from 2017 reported 181,000 deaths, up from 170,000 two years earlier. Since there were fewer people in the country in 2017, this means the death rate rose by even more.

While deaths are rising, births are falling. In 2015 about 600,000 babies were born in Venezuela. In 2017 it was just 561,000. The decline has almost certainly continued into 2018. Outmigration of fit young people probably explains part of this decline, but terrible health conditions and pessimism about the future are probably another major factor. While births still remain much higher than deaths thanks to Venezuela’s high fertility rate and young population, the steady narrowing of the gap between them does not bode well for Venezuela’s future.

As a result of all these factors, Venezuela’s population is almost certainly declining. The chart below shows Venezuela’s population for as far back as I could find plausible estimates.

Venezuela’s population growth has basically turned on a dime. This kind of sharp turn in population is, again, essentially unheard of in demographics, except in cases of war. Even a massive natural disaster, such as Hurricane Maria in Puerto Rico, a topic I have studied extensively, did not produce so sudden a reversal. It takes war or famine to cause this scale of change in population. And yet Venezuela has not had a famine or a war. Agricultural production is down, but not by a catastrophic amount. There has been some street violence, but nothing like what we’ve seen in Syria, Iraq, or Yemen, countries with comparably vast recent diasporas.

What can possibly explain Venezuela’s decline, then?

Put simply, Venezuelans are “voting with their feet.” It’s not just shortages, it’s not just crime, it’s not just the economy, it’s not just the health-care system: lots of countries have crime or bad health care but don’t have this kind of population collapse. Rather, Venezuelans are simply rejecting the governance model on offer from the Maduro government. Venezuela has vast natural resources, and to this date it has higher per capita economic output than any of its neighbors, including Brazil.

But people are leaving because central planning does not work. Regardless of how much money is in the system, no matter what the GDP per capita may be, central planners simply are not as good at making sure people have what they need as more diffuse markets are. Markets are highly imperfect and often fail, but government economic czars are even worse. And when central authorities control social resources, the temptation to corruption and tyranny is great. In some societies, such as the Nordic democracies, constitutional and democratic norms are sufficiently strong that this temptation has mostly been restrained thus far. But in countries where constitutional norms are more contested or partisan tribes have less empathy for one another, as in the United States and many developing countries, the expansion of the state gives rise to authoritarianism.

If people do indeed vote with their feet, then it is possible that few governments have ever faced so vast a tide of negative votes as that of Maduro. However, at least one country has experienced a similar exodus: Venezuela’s tiny neighbor Guyana. About 40 percent of all Guyanese people live outside Guyana today. The reason is an object lesson for Venezuela watchers.

In 1968, strongman Forbes Burnham became the leader of Guyana. Eventually he forced through a referendum giving himself enormous power and used it to implement his version of socialism. He attacked imports and pushed for Guyanese-made manufacturing. Guyana’s population growth plummeted during the 1970s, and its population hasn’t risen since 1980, even as growth has continued in neighboring Suriname. Guyana’s demographics never recovered from the Burnham government’s mismanagement and authoritarianism. The country has stagnated for nearly 40 years, with serious growth returning only recently.