A key contributing factor appears to be the capability to produce. The handout system in Venezuela had destroyed a large portion of that capability and thus whe

A key contributing factor appears to be the capability to produce. The handout system in Venezuela had destroyed a large portion of that capability and thus when its stock of wealth in the form of oil becomes less valuable, the disaster ensues. Well-managed capitalism is much more efficient than socialism in inducing people and organizations to develop and upgrade their production capabilities. One of its unfortunate side effects is much larger inequality than socialism. Still, history has shown that over the long run, capitalism tends to be better even for the poor. Most poor people in the US still live better than many average people in certain countries (Example: a small fraction of people in India own a car; many poor people in the States do). On the other hand, pure capitalism is clearly not the most efficient system because it perpetuates the status quo, suffers from negative externalities, and underdevelops certain resources, especially those that require a long lead time and mostly yield social rather than private benefits. Prime examples include public infrastructure and talents born in underprivileged families. Capitalism that works well should maintain these two components that resemble socialism: 1) Long-term public investment to develop shared infrastructure, production capabilities, and talents, and 2) Redistribution to alleviate people from poverty trap and allow people to help themselves and become a contributing member to the community