Venezuela’s economic crisis began in earnest about five years ago, when the price of oil began falling from more than $100 a barrel, down to a low of about $26 a barrel in 2016. But the underlying cause of the crisis is the government’s socialist economic policies, and the crisis has intensified as the government doubles down on those policies.
The economic crisis has, in turn, produced a political crisis. Widespread discontent with economic conditions prompted protests against President Nicolas Maduro’s government. In January of this year, the National Assembly declared Juan Guiadó interim president, as allowed by the Venezuelan constitution. The United States and more than 50 other countries quickly recognized Guaidó as the legitimate head of state. But with the support of the military, Maduro has continued to cling to power.
Three years ago, the two of us traveled to the Venezuelan border to better understand the causes of the country’s economic strife. We traveled to the bridges near Cúcuta, Colombia, where—unlike in Venezuela, just across the river—there were no government-enforced wholesaler monopolies, no arbitrary price controls, no limits on profits. What a difference a river and a border made: On the Colombia side, freer markets were providing what the Venezuelan government could not.