By Benny Sun
Venezuela is in chaos. As over four million Venezuelans have left the country, Venezuela's situation continues to worsen every day. The economic pain faced by normal civilians is characterized by widespread poverty driven by hyperinflation and chronic shortages of food, medicine, and necessities. In fact, a recent report now finds that over 9 in 10 Venezuelans live in poverty. In the context of human disaster, it is no wonder that America’s recent actions in January are controversial, as the Trump Administration has chosen to renew their sanctions policy which blocks Venezuela access to food, water, and humanitarian aid amid Venezuela’s humanitarian crisis. Even in international accounts, the U.S. government had frozen over 5.5 billion dollars in Venezuelan funds, preventing the government from attaining the necessary funds to conduct fiscal policy or enact stimulus packages to save their economy. Overall, to better understand the Venezuelan crisis, one must first under its cultural history.
The 1990s saw the rise of Hugo Chavez in Venezuela, who soon became the face of Venezuela’s government in 1998 off of his uncompromising attacks on political corruption and state incompetence. Many saw Hugo Chavez’s domestic policy as radical, as he greatly expanded social welfare programs including improving access to health, education, food, and social security to the lowest echelons of society. As Venezuela was an oil state, meaning that a vast majority of their industries relied on extracting oil and petroleum, the boom in oil prices in the early 2000s allowed Chavez to use its extra profits in providing for the people. Unfortunately, because of Venezuela’s lack of diversification, Venezuela’s extreme reliance on oil would later become the beginning of Venezuela’s economic woes. Moreover, Chavez’s successor, Nicolas Maduro, would drive his country further into financial chaos with his lack of competent management, rampant corruption, and dismantling of humanitarian services. In 2014, plummeting oil prices triggered a severe economic contraction causing simultaneous hyperinflation. However, rather than aiding his people, Maduro instead announced cuts to major social services that millions relied upon under the guise of austerity. Consequently, even before the implementation of American sanctions, from 2013 to 2016, Venezuela’s food imports had dropped 71%, medicine had dropped 68%, infant mortality had increased 44%, and inflation has risen by 1 million percent.
Under these circumstances, the Trump administration, beginning in August 2017, announced sanctions on Venezuela’s oil industries and international markets. Their main intention was simple: to drive Maduro away from power (who they deemed as the cause of the crisis) and instigate the Venezuela economy away from socialism towards free-market economics. However, the current success record of these sanctions is mixed and has come into dispute because of the views that America is only prolonging the crisis in Venezuela. For one thing, Maduro is still in power and has seen a bolster in his support. Weeks after Trump’s implementation of sanctions, Maduro’s approval ratings rose by 23%. This is because while Venezuela heavily relies on oil for revenue, many of Maduro’s allies including Iran and Russia have responded by increasing their investments to keep Maduro alive. Simply, while Maduro can continue living on, it is only the poorest of the poor who could be suffering under these sanctions. On top of that, Maduro, with his state-controlled media, can shift the blame away from his mismanagement and lack of diversification onto the United States. However, while Maduro might still be in power, there are certainly still economic shifts occurring within Venezuela. For instance, in December 2019, the Maduro government erased price controls, loosened capital controls, and even accepted dollarization into his country. The implications of these policies have been the rise of non-oil private industries including food, service, and technology sectors. Venezuelan business chamber Fedecamaras predicts that for the first time in decades, the private sector will account for 25% of GDP in 2019 and continue to rise in 2020. Consequently, the New York Times in 2020 predicts that Venezuela could potentially follow a path of economic liberalization: by loosening the control of the government, capital inflows such as foreign investment and bond investors could re-enter Venezuelan markets again. However, while this process is slow, American sanctions are also painful for the majority of normal Venezuelans.
By incapacitating revenue streams from the Venezuelan government, American sanctions also prevented Venezuela from purchasing food and medicine imports directly. For example, while Venezuela attempted to buy new water pumps, they were unable because the sanctions prevented these companies from doing business with Maduro’s regime. These reports showed that Venezuela’s clean water input fell by 30% and nearly 20% of the country was facing water shortages as a result. Not only has it been reported that water shortages have occurred, but additional blocks to medicine, food, and even humanitarian aid. Therefore, America’s solution to continue its placement of sanctions still has its varying detrimental effects. As a result, a report from Dr. Jeffrey Sachs, Professor of Economics at Columbia University, analyzed data and found that American sanctions coincided with a whopping 31% increase in mortality or 40,000 additional deaths. On the other hand, since American sanctions froze Venezuelan assets in international markets, Venezuela was unable to commit to debt-restructuring in 2017. Even during the Chavez times, external debt was a major problem that Venezuela had to deal with when arising in Latin America. However, in 2016, Venezuela was on the brink of restructuring and solving many of its debt problems under a major debt-restructuring package that would redirect billions of dollars back into the Venezuelan economy. Subsequently, American sanctions inhibited Venezuela from reaching its economic cure which further pushed Venezuela’s health down the drain.
While US sanctions on Venezuela’s oil sector and international markets have failed to oust Maduro, there are still some benefits such as their slow economic liberation phase, with increases in diversification and privatization. Unfortunately, Venezuela’s progress is still slow and COVID-19 is only continuing to enact punishment on Venezuela. Thus, millions of civilians are still suffering, unable to access the necessities to live a normal and healthy life. As economic conditions worsen across the globe due to COVID-19, it is crucial for Venezuela to create productive policies to recover its economy soon.
By Daniel Zhang
The world watched in horror as New York City’s Covid-19 infections exponentially skyrocketed. Within the epicenter itself, a different story was emerging — one now echoed across every urban area in the United States. Geographically, in a classic tale of haves and have-nots, Upper East Siders vanished while East Harlemers endured. Rich, predominantly white neighborhoods, such as Greenwich Village and Brooklyn Heights, emptied out by nearly 50%. While those New Yorkers laid low in the Hamptons, nearly 95% of their compatriots, residents earning household incomes lower than $80,000, remained in what they, now ironically, saw as ‘the greatest city in the world’. As a result, 30% of New York’s Covid-19 hospitalizations consist of African Amercians, who represent 18% of the state’s population. In New Mexico, 20% of Covid-19 cases consist of Navajo tribe members, who represent 5% of the state’s population. In Louisiana, 70% of Covid-19 deaths consist of Black residents, who represent 1/3 of the state’s population. The Brookings Institute reports that “Hurricanes hit the poor the hardest” and the Economic Policy institutes finds that the top 1% captured 85% of post-recession growth between 2009-2013. At seemingly every crisis — natural, social, or medical — low-income minorities lack the resources to avoid the effects. Analyzing this familiar trend through the microcosm of Covid-19 reveals the decades-long buildup to these circumstances: the astonishingly high cost of health prior to Covid and less insulation from the effects of this during Covid.
Before the first case of Covid-19 was discovered in Wuhan last year, low-income minorities were already disenfranchised in terms of health. As writer Eric Schlosser notes in his book, Fast Food Nation, never before has there been a time where a fit and healthy rich preside over an unfit and unhealthy poor. Being plump was once an indicator of financial prosperity, but it has now become a predictor of poverty. While lifestyle brands, such as the ever-popular Sweetgreen, charge upwards of $8.00 for a single salad, McDonalds and KFC provide affordable alternatives with dollar menus and value meals. It’s understandable why a low-income minority family would rather make a trip to a fast food outlet instead of forking over a week’s pay for a bowl of leafy greens. The high cost of fresh fruits and vegetables has created a dangerous plight: to meet the USDA dietary standards, low-income minorities would have to spend 70% of their food budget on fruits and vegetables alone. These findings, in combination with the low cost of fast food, reveal that a bowl of salad can be as indicative of wealth as a brand new Mercedes.
While eating healthy is unaffordable, access to quality healthcare is oftentimes unattainable. In addition to problems arising from affordability, low-income minorities face difficulties accessing the same quality of care as their white counterparts. The American Bar Association reports that even when controlling for factors such as class and eating habits, low-income minorities are less likely to receive effective treatments. They are less likely to be offered kidney transplants and less likely to receive innovative heart attack, stroke, and AIDS treatments. When examining medical professionals administering this care, the reason for these disparities emerges: only 5.8% of them are Hispanic and a mere 5% identify as Black. In fact, when Black doctors took care of Black men, a Harvard Business Review analysis found that the men were more likely to receive effective care. In essence, a lack of diversity within medicine means that low-income minorities are less likely to have been effectively treated or diagnosed prior to Covid, leading to a deteriorated state of health before the pandemic struck.
Consequently, as Covid-19 infected our nation, low-income minorities' plight became further pronounced. A lack of sufficient national data on Covid-19’s impact separated by race and income level has led many states to conduct their own research. The results are overwhelmingly similar: poor minority-filled areas have the highest positive-test rates while wealthy communities possess the lowest. This stems from a number of reasons, ranging from employment to living conditions. While higher-income white collar workers could work from home or rely upon savings, low-income minorities often have to continue working contact-heavy jobs, leading to a higher chance of infection. Low-income minorities are overwhelmingly the ones who must deliver InstaCart orders to homes, drive Ubers in cities, and work fast food drive throughs. This is compounded by their higher rates of public transit, where infections are more likely when compared with personal cars. These findings, in addition to compact living conditions, mean low-income families are more likely to receive infections as well as affect each other. Disastrous results have emerged from these structural problems, indicating that an already worse state of health, in combination with less desirable employment and living conditions, have led to higher infection rates amongst low-income minorities.
When analyzing the government’s medical and financial response's effects on low-income minorities, several successes emerge, as well as several failures. For starters, the United States has achieved a ventilator surplus, a product of Trump’s evocation of the Defense Production Act and lower-use states shipping ventilators to places like New York and California, states with large amounts of Covid-19 cases as well as low-income minorities. Additionally, government aid has allowed Pharmaceutical companies to focus on developing Covid-19 vaccines and treatments. Notably, the Federal Drug Administration has already approved Remdisever, a treatment developed by American company, Gilead Sciences, which shortens the average hospital stay of a Covid-19 patient by four days. While the price of the treatment is around $3,120 for those with commercial insurance, it may prove to benefit the wallets of low-income minorities overall, as early intervention with Remdisever may help them avoid hospitalization altogether, a process which costs around $12,000. Despite these overall successes, the main criticism of Covid-19 response for low-income minorities has not necessarily been the absence of mask mandates or the abundance of harmful online ‘cures’. Rather it is the lack of focused resources. The federal government has failed to adequately direct a higher portion of resources towards low-income communities, often distributing an excess of resources to wealthier communities that do not require them. While this has not yet led to drastic consequences, the continued daily increase of Covid cases, especially in low-income neighborhoods, may require concentrated resource distribution.
Another pillar of government Covid-19 response has been financial stimulus packages, which deliver $1,200 to individuals earning less than $75,000. While these checks undoubtedly aid individuals financially, a larger issue remains: the most disadvantaged are often the ones still waiting to receive payment. Employed people, regularly filing taxes with the government, are easily pinpointed to receive proper aid. However, those earning too little to file taxes often did not receive the extra $500 families were promised for each child under sixteen years of age. This is because tax filers state dependents when doing so, while those who do not file are not able directly inform the government of their dependents. These financial oversights, in combination with the design of the stimulus package bill, provide aggrandized benefits to wealthy Americans. While the package could have provided an expanded set of benefits, common in other developed countries, wealthy corporations and Wall Street have been gifted a rescue fund that could be valued at 6 trillion dollars. These concerns indicate another criticism of the stimulus bill. Similar to medical resources, financial resources have been distributed in an untargeted manner. More specifically, it provides funds to those not requiring them while failing to provide enough for those requiring them the most. White-collar workers, who often already earn higher wages, are able to telecommute, not having to spend additional resources on arsenals of personal protective equipment. Blue-collar works, who are often low-income minorities, must continue to interact with others on production lines and delivery gates, having to allocate more resources to masks, gloves, and cleansing products. There are markedly different pandemic experiences for white-collared and blue-collared workers. Amongst those who received stimulus checks, individuals with less than $500 in bank accounts spent half of their payments within ten days, indicating the same check for white-collar families earning $100,000 and blue-collar families earning $1,000 annually creates difficulties for the latter.
As winds howl and storms rage, disasters should, in theory, affect the rich and low-income minorities equally; both rich homes and poor homes are destroyed while rich families and poor families are both forced to evacuate. Despite this seemingly logical rationale, from Katrina in New Orleans, to Sandy in New Jersey, to even the 2008 financial crisis, low-income minorities often bear the brunt of the effects of every storm. Covid-19 appears no different; as a disaster that impacts mental and physical health, in addition to creating financial burdens, this pandemic disproportionately affects low-income minorities. Consequently, Covid-19 continues a familiar trend, where after natural and financial crises, disenfranchised minorities disproportionately suffer.