Venezuela has unfortunately become the example of a first-world, wealthy democracy failing, and I'd like to make sure I understand why.
My understanding comes down to a few major steps, namely:
- Venezuela has incredible stores of oil
- In the late 90's and early 2000's, Hugo Chavez's government invested heavily in building up the oil sector, and redistributed most of the profits to the people in the form of social programs, and state-owned corporations filling most roles in the economy
- The oil industry caused three major strains on private industry in other sectors of Venezuela's economy, causing private industry to begin to fail:
- Spike in Venezuela's currency caused by oil exports ("Dutch disease")
- Competition from state-owned competitors
- Borrowing by the government to reinvest in the oil industry at high leverage
- The drop of oil prices in 2007 to 2008 caused a gradual collapse of the one-product economy
- Excess printing of money to try to combat the effects of the oil price drop caused hyperinflation and a loss in confidence in the currency
- Hugo Chavez and Nicholás Maduro consolidated power in an attempt to more directly target economic issues and administer social programs (assuming good intentions, which may not be a good assumption)
- Another drop in oil prices in 2014 caused additional damage to the economy
- Protests against the drop in quality of life, and lack of popular support for Nicholás Maduro caused functional collapse of the government, as a government that people don't believe in is no government at all
Where are the holes in the above description, and where do I need to understand better?