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After Nicolas Madura's surprisingly narrow election victory in Venezuela, cracks are beginning to show in the once dominant United Socialist Party of Venezuela. Mr. Madura lacks the charisma of the late Hugo Chavez and his razor thin victory may foretell a bumpy ride for the country in the months and years to come.
The oil rich nation of Venezuela is at a crossroads, to say the least. The socialist policies of the late President are vastly popular among the poor in the country, who benefited greatly from Mr. Chavez's social and public works projects throughout his tenure. Mr. Chavez's tenure ushered in a massive reduction in poverty, helping reduce the rate from 54 percent to 26 percent in just five years. Not everyone in the country was on board with Mr. Chavez's policies, as Mr. Madura's razor thin margin of victory can attest. Many of the well off in the country have felt that they had to pay the heaviest burden this past decade and would be more than happy to return to the more free enterprise economic policies of the pre-Chavez era.
The problem with this line of thinking, in my opinion, is that numbers don't lie. During Mr. Chavez's tenure, GDP grew at well over twice the rate as it did under his predecessor; public vs private growth hovered around the same level, with private edging out public growth by .19 percent; inflation went from an unsustainable 100 percent to averaging under 20 percent for his entire tenure; the unemployment and poverty rates dropped by an astounding 50 percent; post secondary graduation rates quadrupled in numbers; and child malnutrition dropped from 7.7 to 2.9 percent.
Say what you will about free enterprise and capitalism, but it is hard to fight these numbers. I do understand that Venezuela's economy is mainly dependent on a finite natural resource and they have more than a few problems economically that they need to sort out, but I'm also a firm believer in helping the weakest among us not just with money, but with investments that help lift them out of deep poverty. And if it takes the government to make those investments, then so be it.
Thoughts on the Socialism vs. Capitalism debate and which one would be a better economic model for Venezuela as they move forward under Mr. Madura's leadership?