Through the Venezuelan looking glass

When we hear of a catastrophe that has befallen a friend, we feel both empathy and a sense of vertigo. We wonder whether it could happen to us: Is this catastrophe the result of some peculiar characteristic that we fortunately do not share? Or are we also vulnerable? If so, can we avoid a similar fate?

The same logic applies to countries. On the weekend of July 16-17, Venezuelans were given the opportunity to cross the border into Colombia for up to 12 hours. It was an event reminiscent of the fall of the Berlin Wall. More than 135,000 people used this respite to go to Colombia to buy basic necessities. They travelled hundreds of miles and converted their cash for just 1% of the foreign exchange they would have received had they been allowed to exchange it at the official rate applicable for food and medicines. And yet they found it worthwhile, given the hunger, shortages, and desperation at home.

The international press has reported the collapse of Venezuela’s economy, of its health system, of personal security, and of constitutional rule and human rights. All of this is happening in the country with the world’s largest oil reserves, just two years after the end of the longest oil-price boom in history. Why? Could it happen elsewhere?

The particulars of any situation are always, well, particular, and hence do not travel well. But that can provide us with a false sense of security; properly viewed, Venezuela’s experience holds important lessons for other countries.

Venezuela’s crisis is not the result of bad luck. On the contrary, good luck provided the rope with which the country ended up hanging itself. Instead, the crisis is the inevitable consequence of government policies.