Submitted by Tho Bishop via The Mises Institute,
Venezuela is in a state of complete crisis. The country has been forced to face the horrors of hyperinflation, food shortages, and devastating depression. In spite of having the world’s largest oil reserves, the country has had to resort to rationing electricity. A horrifying article by the New York Times depicts the state of Venezuelan hospitals, with children dying by the day due to a lack of medicine and basic supplies.
This is the terrifying reality of socialism, the inevitable consequence of the economic policies of the late Hugo Chavez and his successor, Nicolás Maduro. Since 1999, the two socialist administrations championed price controls, nationalization of industries, and wealth redistribution.
While it is not surprising to see these policies supported by Marxist politicians, what is deeply troubling is the amount of support the Venezuelan model has received from prominent economists over the years. During a visit in 2007, Joseph Stiglitz, who received the 2001 Nobel Prize in economics, praised what he called “positive policies” of the Chavez administration:
Venezuelan President Hugo Chavez appears to have had success in bringing health and education to the people in the poor neighborhoods of Caracas. ... It is not only important to have sustainable growth, but to ensure the best distribution of economic growth, for the benefit of all citizens.
What should alarm Americans is that Stiglitz, who has been described as an “influential advisor to Hillary Clinton,” appears determined to bring similar policies here.
Last year, as chief economist for the Roosevelt Institute, Stiglitz called for “rewriting the rules of the American economy” in a crusade against income inequality. His policy recommendations include higher taxes, more “smarter” regulation, and having the Federal Reserve focus more on unemployment than keeping inflation low — a call for an even more activist Fed than we’ve had since 2008.
It is ironic that Stiglitz has chosen to brand his policy recommendations as some new innovative concept for the country, when it is simply doubling down on the interventionist policies that the nation has suffered from for over 100 years.
Unfortunately, hearing such drivel come from a Nobel Prize winner isn’t surprising. Karl-Friedrich Israel has recently noted how the Nobel Prize has a history of being used as an endorsement of central planning. Socialist governments have long been able to count on American economists to serve as apologists for their schemes. In the 1960s, Paul Samuelson’s widely read economics textbook infamously described the socialist economy of the Soviet Union as growing faster than America’s.
This explains how Bernie Sanders has been able to receive the endorsement of 170 self-proclaimed “economists and financial experts” during his campaign.
Ludwig von Mises once wrote, "No one can escape the influence of a prevailing ideology.” The images coming from Venezuela should serve as a potent reminder of how dangerous the ideas of men like Joseph Stiglitz are.
Statism and economic interventionism must be rejected, in order for humanity to thrive.