Watching Venezuela disintegrate, I remember a man who many years ago predicted the demise of his country. Ivan Maldonado, who as a high school student in the late 1920s was charged with plotting to overthrow Venezuela’s dictator, sentenced to a chain gang, and later sent into exile – put aboard a freighter and dumped ashore in Bremerhaven. He ultimately made his way to Czechoslovakia, where he earned a veterinary degree, and was allowed to return home when his father died. He took over his family’s ranch deep in the wilderness and eventually built the largest cattle operation in the country.
Oil, he told me 30 years ago, would be the ruination of his country. This was surprising since Venezuela has the world’s largest proven oil reserves, and as a founding member of OPEC, the country reaped huge profits, particularly after it nationalized the oil industry in 1976. But to Maldonado the vast and easy wealth sapped the nation of economic discipline. “We used to be the world’s 4th largest beef exporter, but now we import it,” he said, and then ticked off several other areas where the country had stopped producing goods, relying instead on petrodollars to pay for imports and, in his opinion, gutting both the productive capacity and the work ethic of the nation.
It’s a far more complicated story, of course, but it got me thinking about the U.S., and how the twin strengths of our economy and our currency unleashed an import and spending spree, which has produced government and consumer debt exceeding $44 trillion with no end in sight – and about which, if you’re interested, I will write more next time.