Evo Morales new president of Bolivia

[techumseh]

Originally posted by Oerdin
Where do you think Chavez is getting the money for social programs? Do you think he is pulling it out of thin air? The state oil company is bankrolling them since he's diverting funds to those uses.

You haven't demonstrated that the increased expenditures on social programs have come at the expense of reinvestment. Venezuela's oil revenues have risen in the last couple of years because of the increase in world oil prices and because higher royalty rates have been imposed, especially on the heavy oil projects.

In fact, the amount spent on social programs by PDSVA lthis year was much less than the increase in it's total revenues:

"(Oil Minister) Ramírez also announced PDVSA has had increased sales revenue due to high oil prices. Global sales, which include the company's fully owned Citgo refining network in the U.S., reached $83.1 billion in 2005, up from $64.7 billion last year. Total sales from domestic operations reached $44.9 billion this year, up from $31.9 billion in 2004. PdVSA spent $4.8 billion on social outreach programs in 2005, such as adult-literacy classes and agricultural training."

http://www.miami.com/mld/miamiherald/business/international/latin_america/13460778.htm

Great since it is helping help, however, the question was why was production falling. The anwser is because the funds needed to invest in the latest technology and develop new fields (or squeeze more production out of old fields) is being spent else where. It's simple economics.

All you've got is a former oil minister's word for it. Conventional oil production has been falling in Alberta for some years and this is not due to a lack of investment or exploration. The oil is simply running out. You can always find more, but all the big and easy fields have been found and depleted. It becomes a matter of the law of diminishing returns.

The question was how to keep the national petroluem company producing the maximium amount of money and why do nationalized companies need to constantly get technology transfers from the first world companies. Venezuela illistrates the reason well. The politicians have different goals and in the long run their control over the company is bad for the company's future. A better way to develop, a more sustainable way to develop is to do exactly what all of the developed nations have done. Create the rule of law, protect private property, and encourage private investment through good policies. Want to see good leftist leaders who do that and still expand social programs (mostly by concentrating on the fundimentals of education, infastructure, and living with in their means) then look at Brazil or Uraguay. Want to see bad leftist leaders who break those rules and end up making their people worse off in the long run? Look at Venezuela and Cuba.

You have a Polyannish view of the development of the petroleum industry in the US and Europe. These corporations do not sit back and passively accept wahtever energy policies their governments care to develop. They actively and aggressively pursue domestic and foreign policies which suit their interests. It wasn't George W Bush that sent you to Iraq, Oerdin. It was Exxon.

[techumseh]

Originally posted by Oerdin

http://www.sptimes.com/2005/05/08/Worldandnation/Venezuela_s_oil_wealt.shtml

It is nice to help the poor and the government should fund social services (with in its ability to pay for said services), however, Chavez has now removed most of the professional managers and packed the company with political cronies. He's now squeezing most of the profits, even after tax profits (and the corporate tax rate in Venezula is EXTREMELY high in the oil sector; topping 50% of GROSS REVENUE not profits), out of the company in order to pay for his small scale worker co-operatives and increased social programs.

The problem with small scale worker co-operatives is most of them are to small to compete without state help, produce low quality goods, and don't have knowledgable managers who know how to run a business. More then likely the majority of these are going to only survive as long as there are government handouts to keep them afloat. Mao tried these small worker co-operatives during his great leap forward and he declared that every peasant should have an iron forge near his home in order to increase national iron production. The problem was it was extremely ineffienct and most of the iron produced was of such poor quality that it had to either be thrown away or reworked a half dozen times before it became useful. These majority rule co-ops haven't worked well in China, Yugoslavia, or Albania and they aren't likely to lead to long term growth as high as encouraging private companies is likely to produce.

the next problem with these nationalizations and collectivizations is that it leads to capital flight and virtually stops business investment (foreign or otherwise). Chavez's main targets for nationalization have been either foreigners (who don't get a vote) or his political rivals (who he wants to destroy). Chavez nationalized most of the media since it was critical of him (the newly nationalized state media daily sing praises to him; big surprise ) or cowed the few remaining nonstate controlled media outlets into following his censorship guidelines. Land nationalization and redistribution has been another dismal failure. He's targeted foreign owned cattle ranches and the properities owned by his rivals for nationalization claiming that it wasn't used. That claim is totally bunk since no one deliberately keeps land unused since they must continue to pay property taxes on it no matter if it is used or not. Instead the government has targeted things like cattle ranches claiming there weren't enough heads of cattle on them and saying he was robbing from the rich to give to the poor. Of course only the poor who happen to support Chavez ever get land and (as typically happens in such nationalizations) agricultural production has fallen while exports have fallen sharpest of all. That has literally kicked the legs out of one of the largest nonoil parts of Venezuela's economy and now the nation is more dependent upon oil revenue then ever before. That's a pity because oil production just keeps on falling.

Just one note here, since you've reverted to form and issued a diatribe with no basis in fact. Your source (an 8 month old newspaper article) indicates, contrary to your claim that Chavez has presided over an economic disaster, that the Venezuelan economy is booming:

Venezuela's economy has grown dramatically as oil prices have skyrocketed, but about 14 percent of adults still are listed as unemployed, and many others eke out a living as day laborers or street vendors

Of course this has more to do with oil prices than Chavez's policies. Just like Alberta's boom has more to do with oil prices than the Conservative government's policies. The point is Chavez has NOT wrecked the economy as you try to suggest.