One of Venezuela's biggest problems is that it has so much oil, and its institutions weren't strong enough to deal with it. Some people refer to it as
the Resource Curse.
Opinions are mixed on the "resource curse" theory, but it makes sense intuitively to me. If you have some kind of massive resource, usually but not always oil, you tend to base your economy exclusively on that. When times are good, you give away money and provide lavish government handouts and subsidies. You don't diversify economically, because your resource is so profitable you don't think you need to. You don't have a groundswell of demands for institutions and freedoms, because everyone is generally pretty happy. I mean, what's a little totalitarianism when I have a job, health care, and a low crime rate?
...but then something happens.
Maybe it's some kind of catastrophic natural disaster. Or the commodity price drops dramatically. Or the US sanctions you. Take your pick. Whatever the cause, eventually, you run out of "free money." Then, all of those great government handouts stop. You just lost your great government job. Your parents lost their great government pension. Because you had a one-commodity economy, there's nothing out there to pick up the slack. You can't find work. Services stop. Crime goes up. Inflation gets out of control. Very soon, you're broke as shit. EVERYONE is broke as shit. Well, everyone you know is broke. But SOMEONE has all the money. And the population starts looking for someone to blame.
But the people in power, want to stay in power. And because there was never any meaningful investment in institutions and freedoms, the ruling junta completely controls the executive, the legislature, most of the country's major businesses, the military, the police, the press, and the judiciary. And because the populace allowed themselves to be disarmed back when times were good, there's not a whole lot they can do about it.
If we really want Venezuela to be successful in the long term, then yes we will need to invest in some degree of violence to get the current rulers out, but what we will really need to do is to invest in institutions that can prevent this kind of thing from happening again in the near future. Because if we don't, the next ruler is also going to turn on the oil spigots and things will be good, again. Until they aren't, again.
