Sunday, May 15, 2016
The last thing Venezuela needs is to believe its problems are all fixable by choosing alternative redistributionists
Moisés Naím and Francisco Toro write “What our country [Venezuela] is going through is monstrously unique: It’s nothing less than the collapse of a large, wealthy, seemingly modern, seemingly democratic nation just a few hours’ flight from the United States” “Venezuela is falling apart” The Atlantic, May 12.
And the authors ask: “But why? It’s not that the country lacked money… the government led first by Chavez and, since 2013, by Maduro, received over a trillion dollars in oil revenues over the last 17 years. It faced virtually no institutional constraints on how to spend that unprecedented bonanza.”
And the authors answer: “The real culprit is chavismo, the ruling philosophy named for Chavez and carried forward by Maduro, and its truly breathtaking propensity for mismanagement (the government plowed state money arbitrarily into foolish investments); institutional destruction (as Chavez and then Maduro became more authoritarian and crippled the country’s democratic institutions); nonsense policy-making (like price and currency controls); and plain thievery (as corruption has proliferated among unaccountable officials and their friends and families).”
But that answer, no matter how true it can seem, is very dangerous and not what Venezuela needs, in order to have a chance to a better future. Because that answer implies that if only those in the government were better, real smart well-intentioned technocrats, then everything would be nice and dandy… and that is not so!
The real explanation of Venezuela’s tragedy has two main components:
First, there is no way a Chavez/Maduro tragedy will not happen, sooner or later, to a country that hands over to its government the power of over 95 percent or more of all the nations exports, without “virtually no institutional constraints on how to spend” it.
Second there is no way of achieving a functional society and economy with a dysfunctional elite that says nothing about, for instance, the immorality present in giving away the whole value of gasoline just to those buying it. In fact most of “the elite” felt that, since so much of the value of oil was otherwise given away to other countries, free gas was an adequate quid-pro-quo.
Fact is, the poor of Venezuela probably received less than 15 percent of their per capita share of oil revenues. Fact is that few or even no one had an interest in doing that calculation, as everyone was too busy making sure they got more than their fair share of such revenues.
So, for a country like Venezuela to have a chance of finding good governments in a sustainable way, it has to sap the central powers by means of a Universal Basic Income scheme, funded with the net revenues derived from the exploitation of non-renewable natural resources… and of course with such a correct alignment of the incentives, you can bet gasoline would never ever be given away for free again.