These days, the headlines from Venezuela are all about starvation, riots and political persecution. How did such a fate befall a promising, once prosperous country? In this artfully written dispatch, former journalist Raúl Gallegos examines Venezuela’s dysfunctional economic past and present. He describes today’s deranged economy – where oil flows, but milk, toilet paper and tampons are scarce – and explores the flawed roots of Venezuela’s oil-based system. Gallegos conducted the bulk of his reporting in early 2015, when the situation was bad but not yet the calamity it later became. Gallegos delves into various bizarre realities, such as Venezuela’s shortages of basic consumer goods. His reporting is sharp, his writing crisp and his characters well drawn. Gallegos laments in a foreword that government officials refused to cooperate with his reporting. But it’s doubtful they would have revealed any useful insight. Gallegos focuses on topics readers will find intriguing – such as, how do human beings respond when buying something as rudimentary as toilet paper requires standing in line for hours? In Venezuela, people make do with paper towels, steal a roll from a restaurant or search for a black-market vendor. Gallegos has no sympathy for the Chávez-Maduro regime, so readers looking for a silver lining to Venezuela’s experiment with socialism must search elsewhere.


A Bizarre Economy

Venezuela is one of Earth’s major producers of petrol. Every tank of gas a consumer buys in the United States contains a bit of Venezuelan petrol. The first asphalt on many US highways came from the South American oil capital. The state-owned Citgo Petroleum Corporation is a famous brand name, but try finding a carton of milk, a roll of toilet paper or a box of tampons in the nation’s capital, Caracas. Basic consumer staples are in such short supply that Venezuelans stand in long lines, turn to the black market or steal them. Such are the vagaries of “the world’s craziest economy.” Venezuela long has been an upside-down place that’s too rich in oil wealth but absolutely bereft of economic common sense. The result has been catastrophic. Venezuela’s currency controls and import restrictions create bizarre financial markets. The nation is a petrostate where new cars are rare and used cars more costly than in the United States. Yet buying an old car can be a savvy move. Raúl Gallegos picked up a used Ford Fiesta in 2005, and he resold it for the same price four years later – proving that in Venezuela, secondhand cars are a “savings account...

About the Author

Raúl Gallegos, senior analyst for the consulting firm Control Risks, was a featured columnist for Bloomberg View and an oil correspondent for Dow Jones and The Wall Street Journal.

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