The current minimum wage in Venezuela is not even enough to buy part of a basic food basket. And this kind of thing serves to show, clearly and precisely, the harm that a socialist government can do to a country.
The economic situation in Venezuela is getting worse and worse, and the news coming from our neighboring country never ceases to surprise us. And with the constant devaluation of their currency, the bolivar, Venezuelans have seen their purchasing power plummet brutally. In just the last 12 months, the country's official minimum wage has dropped 82% against the dollar, now worth the equivalent of $5.31. That is, less than $30. This amount, obviously, is not enough to supply even the basics for a family. The situation becomes even worse when we remember that the Venezuelan minimum wage has already been readjusted by its government countless times. And as always happens in such cases, this measure turned out to be completely useless.
In May 2021, the government of Nicolas Maduro increased the country's minimum wage by 300%, to 7 million bolivars. The value, at that time, was not even enough to buy 1 kg of meat. Already in March 2022, the government of Venezuela made another readjustment in the minimum wage - this time, increasing its value by no less than 1,200%! Even so, the amount in question was insufficient to cover basic expenses - in fact, the salary did not even buy a basic food basket. At that time, the minimum wage in the country was equivalent to US$39. But, as the Venezuelan currency continues to lose value, the real value of the minimum wage has completely collapsed since then.
In a way, it can be said that Venezuelans are millionaires - after all, their salaries revolve around millions of bolivars.
This mountain of colored paper, however, is not enough to support even a very modest Venezuelan family. Studies carried out in the country state that a family formed by 5 individuals would need at least US$ 482 to cover only food expenses. This amount is 90 times lower than the minimum wage in force in the country; and the tendency is for things to only get worse, in the short and medium terms. In the end, state money is exactly that: a bunch of colored paper, which is worth absolutely nothing. And its use often leads the population to see their wealth and assets reduced to dust.
Of course, as libertarians, we believe that the existence of a mandatory minimum wage is state violence, committed against peaceful individuals. If an employee freely decides to accept work for a certain amount, no one can forbid him to make that decision. Even if this value is meager! After all, he will always have the option of not accepting this job and looking for a better option. Minimum wages only serve to drive out of the labor market individuals who are not productive enough to justify that wage. And, in the end, the real minimum wage will always be zero - which is what a person who is unemployed earns. From a libertarian point of view, therefore, the government of Venezuela is wrong simply to stipulate a mandatory minimum wage for all workers.
However, the example of the Venezuelan minimum wage also serves to demonstrate that the state is always incapable of guaranteeing anything. Remember that the Constitution of Venezuela determines that every “worker has the right to a salary sufficient to allow him to live and meet all his basic material, social and intellectual needs and that of his family”. It is obvious that none of this exists in practice, and Venezuelans experience frightening levels of poverty. Currently, more than 80% of Venezuelans are in poverty, with half of the country's population living in extreme poverty. And this situation would be much worse if a large part of the population had not informally adopted the use of the dollar as currency.
Venezuela is a clear example of the social and economic disaster that populist governments bring to their population.
It all starts with empty promises of social equality, the promotion of social rights, the fight against poverty and the like. Oil belongs to the Venezuelan people! - they say. Let's fight the capitalists! - they claim. In the end, and several years after the beginning of this populist government, what remains is a population thrown into the deepest misery, and an economy that does not show any sign of improvement. And it's not US imperialism's fault!
There are several causes that led Venezuela to this current state of affairs - and they all go through the same causative agent: the Venezuelan state. The populist and tyrannical government, initiated by the late Hugo Chavez, took a series of measures that would take their toll in the following years. Successive nationalization policies for private companies have even led to a shortage of gasoline in the country with the largest oil reserves in the world. Wrong exchange rate policies, in the sequence, helped to worsen the scenario.
With the arrival of Nicolas Maduro to power, the crisis only deepened. Venezuela entered an inflationary spiral, and the bolivar has lost almost all its value since then. Several zeros were cut from the coin, but the situation was not resolved. And, as always happens in situations like this, the country's population was heavily penalized. After all, there is nothing more efficient in terms of destroying wealth than a devalued currency. In addition, the country's public debt reached 250% of GDP. As things get worse in the country, the more difficult it is for the government to roll over this debt, which in practice is impossible to pay.
The sum of all these factors led the country to a crisis that is not only economic, but also humanitarian.
The image of millions of Venezuelans leaving the country in recent years is emblematic, at the same time that it is the best representation of the harm that socialism can do to a country. The authoritarianism of the Venezuelan government also contributes to the flight of Venezuelans. Overall, what we have in Venezuela is growing poverty, an economy that is only withering away, and a tyrannical government that is becoming increasingly oppressive.
The only solution to Venezuela's problem, therefore, is the free market. When the Venezuelan people are again free to undertake, to invest money and become rich, things will begin to change. Foreign investment will once again enter the country, and overall productivity will tend to increase. Companies will be opened, infrastructure works will be carried out and jobs with attractive wages will be created. All the potential of the Venezuelan people, which today is crushed by the state's boot, will finally be able to be used to its fullest. The result will be wealth and prosperity at levels the current Venezuelan generation has never witnessed.
Venezuela needs less state and more market.
As long as the agent causing the tragedy that affects the country is not eliminated, the problems will only get worse. On the other hand, if the state decreases in size, stops interfering in the economy and gives freedom to its citizens, then things can improve for Venezuelans. However, it is unlikely that Nicolas Maduro - who, by the way, is a good friend of Lula - will do anything in that direction. Left-wing dictatorial governments, like his, only know how to act in a tyrannical, cruel and centralizing way. And the result is always the same, wherever that kind of government is installed.
Thanks to the disastrous economic policies of Hugo Chavez and Nicolas Maduro, it can be safely said that Venezuelans really do receive a “starvation wage”. And things will stay that way as long as these socialist criminals remain in power. Only market freedom is capable of providing Venezuelans with better living conditions. Only the free market is capable of returning to Venezuela the wealth and prosperity that were violently stolen by the populist government that has punished that country for so long.
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