Venezuelan Economic Crisis

       On Sunday, August 26th, I attended a current events conversation with Sam Stelnick, the academic chair of IA, and other IA members. The topic of discussion was the Venezuelan economic crisis. There was much to learn and it was interesting to discuss a topic on which I knew very little. There were some students involved in the discussion that knew a lot about the Venezuelan economic crisis, but the majority had little knowledge on the issue. This dynamic made for a very interesting conversation among peers. I knew that there were issues in Venezuela, however, until this meeting, I didn’t realize how deep there were embedded in the country. To show what this discussion taught me, the following is what I knew before. I knew that a major part of Venezuela economy was based on their oil. I also knew that the U.S. has a long and complicated history with Venezuela. Recognizing the importance of U.S. relations with Venezuela, but feeling that I knew little on the subject is what inspired me to attend the talk.

       When the discussion began, one thing that stuck out to me was the extent of the collapse of the Venezuelan economy. With a large amount of the world’s oil, it seems like it would be a country of great wealth, but clearly that is not the case. One factor is that inflation has become a huge problem. Facing major debts, the Venezuelan government made the decision to print more money, however as history has taught us, that leads to more chaos. The wealthy then started investing in the U.S. which further widened the wealth gap in Venezuela. When a situation happens like this in an economy, the poor are forced to start bartering. The creation of a black market becomes inevitable.

       On a brief side note, In highschool, I was taught that when Germany faced inflation following WWI, the economic balance of the nation was completely off center. I can’t help but to make the comparison between Germany in the early 1920s, and Venezuela today.

       Anyways, another thing that I learned was how many factors of the economy have been nationalized by the Venezuelan government. What I found out was that this creates an inexperienced staff, and so these industries become less proficient.

       One thing that the government has done to try and solve the problem, specifically under President Maldura, is raise the minimum wage. At the same time, raised the price of fuel for individuals that don’t have the fatherland card. However, those seemingly on the right track, this will have little to no impact on Venezuela’s current state. It is argued that pegging Venezuelan currency to the U.S. dollar would help to stabilize the economy. Though a solution with evidence for it, it is unlikely to occur as the U.S. is blamed for starting an economic war with Venezuela.

       In conclusion, I found this discussion on the Venezuelan economic crisis to be extremely educational. I find myself even now looking for other solutions to the problem and how practical they would be if applied. I also find myself more engaged with world economics, as I have come to recognized its importance.