Venezuela has bigger oil reserves than Saudi Arabia — yet there's no toilet paper in stores

Venezuela is holding legislative elections this Sunday. The stakes are high, particularly given the dire state of the economy — a point that this quote, from a stunning feature by the Financial Times's Andres Schipani, illustrates:

Three decades ago, Venezuela boasted some of Latin America’s highest living standards. Today, after 17 years of revolution, most people cannot find toilet paper in shops — even though the country has larger oil reserves than Saudi Arabia.

Of course, being able to find toilet paper and other goods in stores isn't a full measure of quality of life. But the problems in Venezuela go far beyond shortages:

• A 2014 UN report found that Venezuela had the second-highest murder rate in the world. According to the UN, it's "the only country in South America that has had a consistently increasing homicide rate since 1995."
• According to International Monetary Fund projections, GDP is likely to shrink by 10 percent in 2015, the most severe contraction anywhere on the planet (except maybe Syria).
• Venezuela ranks very last on the World Justice Project's rule of law index — below, as Schipani points out archly, Afghanistan.
• The IMF estimates inflation at 159 percent. That's hard to know for sure, because of how the government sets official exchange rate to the dollar. But this chart by Johns Hopkins's Steven Hanke — which shows the official exchange rate to the dollar and an estimated black market rate — tells a pretty stunning story:

(Steven Hanke)

• Despite its massive reserves, Venezuela's oil production has barely increased since 2004. The oil sector makes up 25 percent of Venezuela's GDP and is the linchpin of its economy.

Why all of these problems at once? There's a confluence of reasons: a global fall in the price of oil, President Nicolás Maduro's stubborn refusal to reform Venezuela's ridiculous currency pricing system, corruption in the criminal justice system, and incompetence in the public sector economy. These deep, fundamental problems are doing tremendous damage to Venezuelan society.

As Venezuelan writer Francisco Toro put it in the New Republic last year: "The shit is hitting the fan, and there's no toilet paper."

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