How to eliminate a wealthy country?

By Boss Gu, rewritten in English by Mr. Y

Hello everyone, I'm Boss Gu.

Does having resources guarantee prosperity? If there were hundreds of tons of gold buried under my house, I could lie down and live comfortably for generations.

Are countries with abundant resources guaranteed to become developed? Of course! Look at Saudi Arabia, Brunei, Kuwait - they're incredibly wealthy simply because they have oil underground.

Today, let’s talk about a country whose ground is full of oil, and whose oil reserves have consistently ranked No.1 in the world, yet it remains a poor and chaotic nation. No need to guess, I think everyone knows - this country is Venezuela.

In 2011, Venezuela's proven oil reserves reached 295.6 billion barrels. Later, even more was discovered, bringing the figure to 303.8 billion barrels.

Let's do some math. Assuming each barrel sells for $50, that's over $15 trillion in wealth. With a population of only 30 million, that's equivalent to every Venezuelan possessing $500,000 worth of resources.

How could a country like this be poor? Why not just lie at home and wait for the oil to be extracted and sold for money without doing anything?

To uncover this secret, we must start with history.

In 1783, a descendant of a Spanish nobleman was born in Caracas, the capital of Venezuela today. This wealthy young man owned vast plantations and over a thousand slaves; his name was Bolívar, a revolutionary who spearheaded a revolution in the region.

In 1819, Bolívar defeated the Spanish and established Gran Colombia.

After Bolívar's death in 1830, Gran Colombia split into four countries: present-day Venezuela, Colombia, Ecuador, and Panama.

Soon after, oil was discovered in Venezuela.

In 1878, Venezuela built its first oil refinery. From 1880 onwards, Venezuela began using drilling technology to extract oil and transporting it via pipelines.

By 1908, Venezuela opened its doors to foreign investment in oil.

In December 1922, Venezuela's fate took a turn. A Shell exploratory well in the northern Maracaibo region of western Venezuela suddenly gushed forth, sending a massive column of oil dozens of meters into the air, visible from 40-50 kilometers away.

The oil continued to gush for nine days, producing 100,000 barrels per day - a veritable cash cow for Venezuela.

The scene was filled with the sounds of gongs and drums, the crackling of firecrackers, the waving of flags, and a sea of people - a treasure trove had been discovered!

Venezuela embarked on its path to oil wealth, 16 years earlier than Saudi Arabia!

As early as 1950, Venezuela's GDP per capita ranked eighth in the world, making it a clearly developed country. The Venezuelans at that time could never have imagined the state of their nation today!

By 1970, Venezuela had 57 oil fields, producing 10% of the world's oil. Major international oil companies had flocked to the country, with international consortia including Royal Dutch Shell (1914), Indiana Mobil Oil Company (1922) of the Rockefeller Group, Gulf Oil Company (1922) of the Mellon Group, and New Jersey Mobil Oil Company (1932) of the Rockefeller Group. After fierce competition, oil companies controlled by American consortia began to dominate the Venezuelan oil industry from the 1930s onwards.

By 1958, the American-controlled oil companies accounted for 69.78% of Venezuela's total oil production, while Royal Dutch Shell accounted for 26.53%.

Some said these foreign consortiums had controlled Venezuela, but the truth was, the Venezuelan people were doing very well at that time.

In the 1970s, Venezuela became the richest country in Latin America and one of the 20 richest countries in the world, earning the nickname "South American Paradise".

However, some people become reckless with wealth. Don't believe it? Keep reading.

The president of Venezuela at the time was named Pérez.

During his campaign, he made a series of promises that If he was elected, he would give out cash “red envelopes”, “one a day, each capped at 200” ¹*; free healthcare, free education, free housing for the poor – he would provide them all."

To do all this, you need money. How do you get money?

Pérez glanced around and saw that these foreign oil companies were essentially “landlords”. "Let's play a game of 'Fighting the Landlord', and have some fun!" ²*

Perez first raised taxes on these foreign oil companies, then demanded high dividends, but these companies still refused to leave. So Perez resorted to a drastic measure: direct "nationalization" and forced acquisition of these companies.

Venezuela first set an acquisition price, forcing Western oil companies to sell their shares at that price. In a move that was half-buying and half-grabbing, the Venezuelan government spent only $1.1 billion to forcibly acquire most of the shares of all the country's oil companies by 1976.

Perez established the state-owned Oil Company of Venezuela (PDVSA) to control the nation's oil business. The government's cut of profits from each oil company increased from 65% in 1958 to 90%.

The foreign oil company owners could only grumble and quit the "group chat" ³*.

But from then on, Venezuela and the United States forged a deep rift. How could the United States accept such treatment of American companies?

Perez thought he could do a good job after taking over someone else's company, but he was wrong.

The oil industry's production capacity hinges on extraction and refining technology, the key to profitability for Western oil companies. By driving them away, he was essentially driving away their advanced technology.

To this day, Venezuela's oil extraction technology remains stuck in the 1970s, effectively halted.

Who would dare cooperate with you? You turn on me and rob me without warning? How can you be so shameless?

Venezuela possesses the world's largest oil reserves, 300 billion barrels. Compared to Russia and Saudi Arabia's daily production of 11 million barrels, Venezuela's daily production was 3.5 million barrels in the 1960s. By the 1980s, due to Western sanctions, it had plummeted to 2 million barrels per day. And by 2019, it had dwindled to a mere 1.34 million barrels per day.

However, Perez was incredibly successful.

He was deeply loved by the entire nation. Why? They acquire foreign companies at low prices and use the profits to give out bonuses. With bonuses to be received, wouldn't the people be happy?

Perez was also particularly lucky because international oil prices were high at the time, and there was always war in the Middle East. Perez became a national hero and made the Venezuelan people plump and healthy.

But don't forget, oil prices can also drop down; and when they do, trouble ensues. There's not enough money for welfare. What to do? Print money, of course.

On February 18, 1983, the Venezuelan government massively devalued its currency, the bolivar, sparking widespread discontent.

In 1999, the Venezuelan people welcomed their greatest source of resentment: the "invincible" Chávez.

Chavez was well aware of the power of "handouts marketing", and upon taking office, he comprehensively improved national welfare and provided 360-degree security for the people. He built 1 million free homes for the poor; subsidized gasoline, making it cheaper than bottled water; provided company employees with a whole host of miscellaneous subsidies; mandated substantial severance pay for dismissals; ensured no pay deductions for short-term leave; and even reimbursed medical expenses for sick family members of company employees.

The Chavez government used the dollars earned from oil to buy large quantities of daily necessities, which were then resold to the public at below-cost prices. Other products must also be sold according to government-set prices. If goods were privately priced or hoarded and not sold, the army would be dispatched to auction them off on the spot, indirectly suppressing prices.

These moves were brilliant, weren't they? For a time, Chavez's prestige in Venezuela soared.

So where did the money come from? Besides oil, Chavez had another major move: he nationalized vast tracts of land owned by plantation owners and then distributed them free of charge to the poor, and he also confiscated all foreign-owned companies within the country.

"As long as the people support me, that's enough. You foreign bosses, get out!"

Chavez was also a lucky president. During his period of capricious and reckless rule, international oil prices began to rise again, reaching a record high of $150 a barrel in 2008. He was ecstatic about that price.

When Chavez died of cancer in 2013, his coffin passed through the capital, Gaslas. The entire Venezuelan nation was plunged into deep grief, the people endlessly mourning this benevolent president who provided so much welfare—they practically knelt in worship.

Chavez's henchman, Maduro, took over the mess left by Chavez on April 14, 2013.

He had only been in office for a year when things fell apart.

Why? Did Maduro do something extraordinary? No, he's just a lackey; he did exactly what his boss Chavez did. He was just unlucky; international oil prices plummeted, from $150 a barrel to $50.

This was disastrous. Without money, how could he implement welfare programs? But the promised welfare had to be delivered. How? There was a way: print money.

In 2018, Venezuela's inflation rate reached one million percent! A record high in the world. If in 2015 an average person could buy a house with all their money, now they can only buy half a bar of soap. 87% of the nation's population fell into extreme poverty, eating only one meal a day, and the average weight of the people across the country dropped by 11 kilograms.

It would be unreasonable not to appoint Maduro as a world weight loss ambassador.

This proves that the best way to lose weight isn't meal replacements or diet pills, but starvation.

A Washington Post reporter interviewed a local sanitation worker whose monthly income was 5.19 million bolivars, equivalent to about $3. This amount was only enough to buy two pounds of rice; he survived only thanks to government-provided potato flour.

Moreover, even if you had money, you couldn’t buy anything. Supermarket shelves were empty, and even trucks delivering government relief food were now being looted. The police and soldiers guarding the hospital turned into robbers at night, robbing patients' families in the ward corridors.

Hospitals were running out of antibiotics, saline solutions, surgical bandages, tweezers, and gloves. Toilet paper and shampoo were only available on the black market. Desperate people were scavenging for food in garbage dumps. The country was in utter chaos.

Of the country's 30 million people, 2.8 million had fled abroad; nearly a tenth of the population had fled. How tragic is that?

Could a drop in oil prices really cause such a disaster? Why?

This brings us to the infamous "resource curse", also known as the Dutch disease.

The Dutch disease refers to the discovery of vast natural gas reserves near the Netherlands' coastline in 1959. While natural gas exports surged, this surge crowded out the manufacturing sector, stifling innovation and development in other Dutch industries, leading to their gradual decline and loss of international competitiveness.

This Dutch disease only becomes apparent when coupled with a welfare system.

When a resource is heavily exploited, and the government appropriates the profits and distributes them to the entire population, the Dutch disease arises.

If money comes for free, why should I work?

Since Venezuela has oil, why develop other industries? No development is needed; food is imported directly. The entire population essentially lives in a pigsty, each pig receiving its share of oil without working.

If oil prices fall or production costs rise, the country is doomed. The citizens scatter like birds and beasts, but having lived like pigs for so long, they're reluctant to leave the pigsty. As soon as oil prices rise, the dream of being a pig is rekindled.

What is freedom? Freedom isn't welfare; freedom isn't everything provided by the state; freedom isn't just criticizing officials. Freedom is everyone taking responsibility for themselves as much as possible.

Anyone who relies on government handouts and welfare every day will ultimately turn themselves into pigs - without exception.

* Annotate

1. Red envelopes are a cultural tradition in China that has been extended and symbolized on the internet. They are cash subsidies given by elders to younger generations, superiors to subordinates, or bosses to employees. On WeChat, the maximum amount for a red envelope is 200 yuan, so this text uses 200 to represent the most generous and substantial cash subsidy.

2. In Chinese history, there was a movement called "Fighting the Landlords and Redistributing Land", in which the government or regime nationalized all land and resources and then redistributed them to the people. There's a Chinese card game based on this movement called "Fighting the Landlord" Therefore, "Fighting the Landlord" also represents the redistribution of wealth or robbing the rich to help the poor.

3. In Chinese internet slang, group chats are now widely used in current affairs commentary and news. Group chats symbolize multi-party cooperation or trade, while leaving a group chat means leaving the market or a game.

Source & Copyright Notice

This article is adapted and translated from the original Chinese text with the author's permission.

Translation © 2025 Mr. Y. All translation rights reserved.

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