Welcome to the Grand Hotel Abyss

The day after that dreadful night of the failed coup in Turkey, tens of thousands of Venezuelans were crossing the Colombian border. The weekend of July 16-17 witnessed around 135,000 Venezuelans making the trip. They walked there, and they walked back. Why you may wonder? 

They went to shop for supplies. Things like toilet paper, sugar and salt. Some were carrying car tires on their backs. They walked hundreds of kilometers over the weekend, exchanged their bolivars at 1 percent of the official exchange rate and bought supplies. They had to do this because Venezuela is in shambles. Two years after the collapse of oil prices, the economy is run down, nothing works as it's supposed to, and hunger grips the nation.

Why did all this happen? Is it just bad luck that brought Venezuela to its knees? No, says Ricardo Hausmann, a Harvard economist and a Venezuelan, "the crisis is the inevitable consequence of government policies." Then he poses the critical question: "Why would a government adopt harmful policies, and why would society go along?" Public policy is based on public beliefs. Politics is the representation of alternative belief systems. If you shut your eyes to inconvenient parts of that picture, if you fight the facts, chaos becomes inevitable. 

But Hausmann doesn't answer the second part of his question. "Why would society go along?" Largely, that is because Venezuela had oil, and high prices helped Chavez to redistribute toward the poor, making a majority of voters go along with the harmful policies for a time. Note that Chavistas lost the elections so big in last December that the opposition gained a two-thirds majority in Congress. With the collapse of the oil prices, economic chaos came to Venezuela together with a constitutional...