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This. Failure to diversify leads to economic failure.
The same thing happens in parts of the US. All one has to do is take a look at Appalachia and see how refusing to diversify beyond coal has worked out.
Appalachia is really a poor example of "refusing to diversity" IMO. It's unfair to compare a sovereign country with a region with no autonomy that's divided among several state governments. The Appalachian areas of most states have been either ignored or exploited, and usually both, by their state leaders for a couple of hundred years, going back to the early 1800s ... and the US government has largely aided and abetted that exploitation.
Appalachia is really a poor example of "refusing to diversity" IMO. It's unfair to compare a sovereign country with a region with no autonomy that's divided among several state governments. The Appalachian areas of most states have been either ignored or exploited, and usually both, by their state leaders for a couple of hundred years, going back to the early 1800s ... and the US government has largely aided and abetted that exploitation.
Someone comparing Appalachia to Venezuela is an idiot, and while I agree the region has been exploited and ignored, the locals are also contributing to the problems.
I grew up in small town east Tennessee and I'm 30 - many of my peers who remained there have legal issues, substance abuse issues, some are dead from those issues, etc. The people who wanted to do something with their lives generally got out and moved on - this leaves a disproportionate amount of underclass remaining. These people are largely struggling, and when they have kids, that generation will struggle more than mine did.
You also have completely inept local governance in many jurisdictions. Mt. Carmel, TN got on some list as one of the most boring small towns in America, but the local government meetings are full of shouting, accusations, and other aggressive behaviors. Local leaders are focused completely on the past (reviving coal, heavy manufacturing), don't focus on the future, and incentivize low wage junk jobs like call centers and big box retail. You'll see lots of property tax abatements, free land, moratorium on local sales taxes, etc., then the businesses end up walking after a few years, leaving local taxpayers holding the bag. There are a few bright spots, but they're few and far between.
TN north and east of the Smokies is virtually ignored by Nashville.
The lack of cooperation from state governments is disheartening, but it's not like we've not screwed up our bed.
What country can survive or mitigate the effects of a situation similar to Venezuela?
1. Don't be a petro state.
2. Don't believe that everyone should have most everything for free.
3. Don't elect leaders who become dictators.
4. Don't get in bed with the Castro brothers.
Venezuela, an oil-rich country, has been in the news a lot lately. Interestingly, they're not making the connection between Socialism and the conditions they're lamenting.
They might, but long into the future since they have SO MUCH money stashed.
Not nearly enough given how much they give to their citizens. They are desperately trying to diversify, and have been for a bit. But to be honest they do not appear to be that good at it. I think they are in trouble, its just going to be slow. And they've made a lot of enemies along the way.
Not nearly enough given how much they give to their citizens. They are desperately trying to diversify, and have been for a bit. But to be honest they do not appear to be that good at it. I think they are in trouble, its just going to be slow. And they've made a lot of enemies along the way.
Venezuela main problem is not that they haven't diversified. Their problems already started when oil prices were at $100. A normal leader would just have a normal recession, like Russia.
Venezuela main problem is that Maduro think his socialist agenda is above economic laws. Most rational people would realize that money printing lead to inflation, but in his view inflation is a result of economic war waged against him.
Like most socialists, when Maduros policies fails, his response is always more socialism.
What country can survive or mitigate the effects of a situation similar to Venezuela?
Would you say that Greece, Italy, Spain and Portugal are kind of like Venezuela, and the only thing keeping them afloat is being a part of the EU?
From what I understand, Chavez comes in, nationalizes a few industries. The foreign investors get pissed off, and now they cannot do business internationally. Maduro just continued his policies.
The problem is simple. You can't spend more money than you take in. You can't restrict people's ability to make wealth and expect to have a GDP that will generate the revenues to support an entitlement net. And also, the economy of a nation can't be centrally managed. The very idea is ludicrous.
The world is in a very, very bad place right now philosophically, as it pertains to work ethic and market entrepreneurship. We've become a world that subsists on envy and anti-competitiveness. We need to reorient our focus toward the idea that people can create their own jobs, rather than needing to rely on government to magically provide jobs.
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