Venezuela is the 12th largest oil producer in the world, but 5th in the Americas. The 9th largest exporter. They were the 4th largest supplier of crude products to the US in 2013. It’s not a poor nation. But printing press inflation was getting out of control. Price controls were instituted, which leads to shortages; hence, the empty shelves. And now food lines.
UPDATE, January 22, 2015
Well, at least in Venezuela. It doesn’t have an economy, you see, so much as a poorly run oil exporting business that isn’t enough to subsidize everything else. And that was true even when oil was more than $100 a barrel. So now that it’s under $50 a barrel, Venezuela’s government has gone from defaulting on its own people, as former minister Ricardo Hausmann put it, in the form of rampant inflation and shortages, to reallydoing so, to the point that it might have to start defaulting on its debt, too.
It shouldn’t be this way. Venezuela, after all, has the largest oil reserves in the world. It should be rich. But it isn’t, and it’s getting even poorer now, because of economic mismanagement on a world-historical scale. The problem is simple: Venezuela’s government thinks it can have an economy by just pretending it does. That it can print as much money as it wants without stoking inflation by just saying it won’t. And that it can end shortages just by kicking people out of line. It’s a triumph of magical thinking that’s not much of one when it turns grocery-shopping into a days-long ordeal that may or may not actually turn up things like food or toilet paper.