The Failed State(s)

by Kevin D. Freeman on August 1, 2018


Two nations that have threatened the United States in recent years are failing. Iran, known for “Death to America” chants is seeing its economy collapse. But Iran is not alone. Venezuela has already collapsed.

How did two oil-rich nations fail so miserably? The answer is that they were both infected by socialism. Yes, they are halfway around the world from one another. Their peoples speak different languages. One has been openly communist while the other spouts a radical Islamic ideology. Yet in many ways they are very similar. What has tied them together is their blatant anti-Americanism and support for state control of the means of production. And the two have been long-term allies dating back to Hugo Chavez. Together, these two nations are the epitome of the “Red Green Axis,” where Communism and Radical Islam come together.

Here are just a few examples of the strong historical ties between Iran and Venezuela.

From 2006:

Iran, Venezuela to deepen relations

DUBAI: Iran and Venezuela have deepened the foundation of their strategic partnership by signing a slew of agreements in the fields of energy and heavy industry.

The visiting Iranian President Mahmoud Ahmadinejad said on arrival at the airport in Caracas that Iran and Venezuela had “common thinking, common interests.” Analysts point out that both countries, buoyed by their oil resources, were emerging as leaders in opposing American unilateralism. After being greeted by the Venezuelan President, Hugo Chavez, Mr. Ahmadinejad said: “I salute all the revolutionaries who oppose world hegemony….

Mr. Chavez said the visit would strengthen the alliance between the two countries. He praised the Iran’s Islamic form of Government, adding that it was high time that Islam as a religion was not demonised.”

From 2010:

Venezuela’s Troubling Nuclear Ties

January 7, 2012  (Reuters) – “Iran’s President Mahmoud Ahmadinejad is due to visit Venezuela and other Latin American countries from Sunday, seeking to shore up support as tougher Western sanctions threaten its oil exports and economy.

Both fierce anti-U.S. ideologues, Ahmadinejad and Venezuela’s Hugo Chavez have become close political and commercial allies in recent years, to the annoyance of Washington.”

From 2017:

Sanctions on Iran and Venezuela May Empower U.S. Rivals

Since the two oil-producing giants compete for the same markets, squeezing one may end up helping the other.”

There is no doubt that the two nations have worked closely together. Now, they are failing separately. For Venezuela, the collapse has been underway for quite some time. The estimated inflation rate is approaching 1,000,000%. From The Washington Post:

Venezuela’s inflation will hit 1 million percent. Thanks, socialism.

“According to the International Monetary Fund, by the end of the year, the annual inflation rate in Venezuela will reach 1 million percent.

A number like that is hard to grasp. Simply put, a candy bar that cost $1  today would cost $10,000 at the end of a year. Anyone in that position would understandably rush to spend the money right now, on anything that might possibly hold its value. Everyone else would too. The entire economy becomes a giant game of monetary “hot potato.” Saving or planning becomes a sucker’s game.

Venezuela is not exactly a struggling undeveloped country; it has the world’s largest proven oil reserves.”

After blaming the U.S. for the past two decades for all their domestic economic woes, it seems as if Venezuela is finally ready to admit that their problems are self-inflicted. The government started as a social welfare state but quickly degenerated into a Communist dictatorship. Whole industries were nationalized. The most productive, and those who had the resources to flee, fled. There was little incentive to produce and the government promises of something for nothing collapsed in the weight of unsustainable debt. Printing money did not help.

From Forbes today:

News flash! Socialism in poor, closed-door economies is a failure. So says Nicolas Maduro, who happens to the be the president of one: the biggest failed state in the Americas, poor ol’ Venezuela. In a surprising twist on Monday, Maduro went against the Socialists United (PSUV) playbook of blaming Washington (especially the CIA) for Venezuela’s troubles. “The production models we’ve tried so far have failed, and the responsibility is ours—mine and yours,” Maduro told the PSUV party congress.

There is no doubt that Maduro is right, at least about this. The socialist policies resulted in dismal failure. Period.

Now, how in the world is it possible that socialists are gaining ground in the United States? It is mind boggling. Socialism has failed everywhere it has been tried. It only works 1) for a limited time, 2) in small groups of 3) people who like each other. Example? Families where the parents contribute selflessly through their labor to meet the needs of their children. But when the children grow up, they are expected to move on.

Many will point to the democratic socialism movements in Europe as examples of success. There are a couple of things to consider. First, that experiment is not over. Europe was teetering on financial ruin a few years ago with failure imminent in Portugal, Italy, Greece and Spain (called the “PIGS” countries at the time). But the European Central Bank (ECB) stepped in and unleashed so much monetary stimulus that there were negative interest rates (where lenders pay borrowers to borrow money). Without that bailout, we might not be touting the benefits of European Social Welfare programs. We may yet see disaster if the ECB ever falters. The second consideration is that Europe for the most part gets a free ride on American defense spending. Their national security budgets are a fraction of what is spent on protecting their nations. Thus, these “saved” funds can allow for greater social generosity. Finally, these socialist governments face competition unlike what happened in Venezuela and Iran. That’s because they have not taken so great of control that they can oust political rivals altogether. The concern, however, is that if they ever get full control they will descend into an “Animal Farm” collective just as Venezuela did.

Even with all of that, European socialism still underperforms American capitalism in terms of economic prosperity. The best performing European nations would rank #38 and below if compared on a GDP per capita basis to our 50 states. In other words, more than two-thirds of American states are more prosperous than the best nations of Europe.

The point is simple. Socialism leads to Communism and that is a path of failure and destruction. The romantic views of socialism are nothing more than fantasy. Venezuela is just the most recent case in point.

Iran is likewise a failing state. It was temporarily bailed out by the Obama nuclear deal gift of as much as $150 billion. As a result, the failure is less evident but becoming more obvious by the day. We are seeing the currency collapse at a rapid pace, losing two-thirds of its value this year and 18% in the past two days. The leadership, however, is still in denial and refuses to accept the reality that their policies are the root cause of the problem. As Venezuela had been doing (at least until today), Iran is blaming us for their woes.

The sad thing is that both Venezuela and Iran are resource-rich, storied countries with a vibrant population sadly repressed by failed ideologies. If they would come to their senses, however, and join the nations of the world in modernity, adopting free market principles, and following time-tested truths they could enjoy a lasting prosperity. We should pray for the people and leadership in both Venezuela and Iran that they would return to truth and make wise choices for their future.


Previous post:

Next post: