How can a modern, industrialized, technologically sophisticated nation in possession of the world's largest oil reserves end up collapsing its economy so badly that there are no medicines in hospitals, sanitary essentials like diapers and toilet paper are unavailable, gasoline has to be rationed, electricity and water run only intermittently, and food is so scarce that its citizens lost an average of 24 pounds of body weight in 2017? The answer is that 90 percent of Venezuelans now live in poverty because the government of Venezuela has blunderingly enacted an incompetent series of economic policies that have bankrupted or destroyed businesses throughout the country. The problems began with the election of President Hugo Chavez in 1998. He was elected on a promise to alleviate poverty and ensure that everyone in Venezuela had a chance to participate in the country's prosperity, which included supersonic Concord flights to Paris, South America's best arts and entertainment scene, and a highly profitable oil industry that brought massive tax revenues to the government. Several of Chavez's initial policy efforts were beneficial, including mass literacy programs, the construction of rural health clinics, and an attempt to build tens of thousands of new housing units for the poor. Unfortunately, Chavez's early anti-poverty programs were just the start of a comprehensive campaign to totally transform Venezuela's economy and society. As you know from this chapter, most economies are mixed economies in which the government sets broad rules but in which businesses have substantial autonomy over what and how to produce, and what to charge for it. That autonomy was slowly eroded by Chavez and his successor, Nicolas Maduro. Industries were nationalized, friends were put in charge of industries they knew nothing about, oil production was greatly reduced leading to a fall in government revenue, sky rocketing inflation with the government's deficit situation grew worse. Maduro's solution? Print even faster! The result? Inflation accelerated to 1.3 million percent per year in 2018. Maduro could not admit that his government's money printing was responsible for the hyperinflation. He blamed foreigners and rebels intent on overthrowing his government. To "fight" them, he imposed price controls on consumer goods. Price controls are legal limits on how much sellers can charge for a product. For example, the government might make it illegal to charge more than $5 for a haircut. That price ceiling will be attractive to consumers, but it will quickly bankrupt producers because the prices that they have to pay for inputs like labor will keep increasing due to the hyperinflation. The cost of production soon blows past the legal selling price. The only avenues of escape are selling illegally at higher prices or going out of business. With Maduro's troops imprisoning anybody who dared to sell at higher prices, many firms decided to go out of business. As they did, shortages of every imaginable good and service arose. People began to starve and over 3 million Venezuelans fled to other countries. So as you consider the pluses and minuses of the mixed economy and its limited level of government intervention, be sure to remember what has become of a once shining country brought low by an incompetent, unresponsive, and corrupt government that controls every aspect of economic life. Chavez and Maduro claimed to be saviors. But their economic policies have wrought nearly as much damage as the genocidal robots of the Terminator movies. Hasta la vista, Venezuela. Create your own individualized response to this prompt. In addition, you might consider these questions. -What are your instinctive "first reflections" on this piece? -What have you learned from Module 1 that establishes the principles that should be taken into account in choosing an economic system? -Does the Venezuelan case prove the point that Socialist systems are inferior to Market systems