As I understand it, bad government is the reason; the drought just turned it into a crisis.
The chief reasons are artificially low pricing (it's almost free, so people have no incentive to conserve power, and the utilities are starved of funds for maintenance) and poor administration (this has been a long time coming -- brown outs and black outs have been endemic for some time).
I think you hit the nail on the head. Mismanagement, driving out the professionals, lack of investment and corruption have turned a very promising South American economy into a subsistence economy.
They are simply running the country into the ground thru mismanagement and negligence.
The unfortunate part is that due to the prevailing opinion on 'running a country', they're essentially forced to assume a "control everything" position. I.e. Each subsequent failure / worsening of the conditions makes "control" or intervention more necessary in their eyes.
The option to let things happen (by removing regulation / price-controls, etc), or for scrapping and starting fresh appear to never be on the table in any meaningful respect.
Unfortunately, their politics won't allow them to consider any sensible alternative. The US is the devil, Columbia is devil junior and they certainly can't give in to capitalist cretins. Afaik even Cuba have pulled out their assistance (physicians, etc.)
It's like they try to run the country on ideals alone and that ideals will carry the day.
And there is a party that doesn't. And the country is not seeing lines for basic goods and professionals and the educated class are not being forced out of the country and we don't have a majority of officials pocketing money and you're free to express disapproval, etc. etc.
We're not a basket case economy in any stretch of the imagination. Compare and contrast.
> the utilities are starved of funds for maintenance
That's all it is, tbh, without resorting to hyperbole. This happens even in capitalist economies -- companies have little incentive for maintenance at the best of times.
IMHO, when 40% of energy for the whole country is provided by one single plant (regardless of plant type), things will go wrong at some point. To overcome a situation like that you need money and vision to build a redundant system. Clearly the Venezuelan government lacked them.
"That's all it is, tbh, without resorting to hyperbole. This happens even in capitalist economies -- companies have little incentive for maintenance at the best of times."
Have you actually looked at the maintenance budget of US utility companies?
Let's never forget what socialism is actually like. Historically speaking, running an entire economy is very hard to do. The more you nationalize, the worse it all gets.
They need to just start charging more for electricity. There will be less waste for sure. If people still use a lot and pay more, it means they need it and the money goes to building power generation. Very, very basic capitalism.
This is not about electricity. This is about giving everyone a day of the week off to distract keep the people happy(-ish) in the face of a rapidly decreasing quality of life.
This isn't about socialism. This is about what is a dictatorship in all but name.
Sweden is at best Social Democratic, and not all of its political parties subscribe to that. It certainly hasn't been through mass nationalisations of industry or utilities.
Socialism is the workers controlling the means of production, not anything deemed vaguely left wing by American standards.
Fair enough. It's hard to remember the actual definition of "socialism" when in the US it's used to slander whatever vaguely progressive policy someone don't like, even when you know they're not using the word correctly.
Free market~ish as of now. But yeah at some point the government has to either abandon all social programs or become totalitarian and increase taxes. I don't see a good future for Sweden. The brainwash goes deep.
That's the idea behind democratic socialism. Socialist programs within democracies work all over the world in Europe and Canada (those countries are albeit more towards capitalist on the spectrum than socialist).
I'd also re-examine the degree to which our representative democracies centralise power.
So we get to elect someone that disregards the law and centralizes power. This will still be inefficient and cost us many freedoms.
In most countries in Europe, for example, it's nearly impossible to start a company without lots of capital. This is because of the crippling amount of taxes and restrictions, which results in an economy comprising of near government and big corporation monopolies. You can see this in most of the nordic countries.
The problem with going the socialism route is that the system will need to take more and more income as new generations completely rely on it. At some point, you don't have enough money to fund it, and it collapses.
With the ability for any company to move to any country, there is also the real possibility that companies will just go elsewhere.
No, at least its never been done on a country level. Socialism requires group decision making and that can only be accomplished with a centralization of power. Of course the quote "The goal of socialism is communism" by Vladimir Lenin applies.
Look at the Paris Commune/Revolutionary Spain, the Ukraine Free Territory, the Zapatistas in Mexico, etc. There's lots of examples of socialism working on large enough scales to be relevant but so-called "socialist" Leninists have crushed successful, ground-up socialist movements time after time.
> Let's never forget what socialism is actually like.
The term socialism has no clear meaning, and trying to group failures together is just as unhelpful as trying to group successes.
The key is to find a balance. Europe has had some success with socialising things that make moral sense (e.g. healthcare) while leaving everything else to the private industry. That's still socialism, it just isn't absolute socialism.
Even China is experimenting with the levels of socialism they want. They've been moving towards a more capitalist-style market and they've found a more workable balance.
Socialism is a dirty word in the US, but is a complex word everywhere else. Hopefully with a self-proclaimed "democratic socialist" running for your highest office we'll see people's understanding of socialism expand.
> while leaving everything else to the private industry.
That's an exaggeration. Serious countries (France, Germany, even the US) employ "socialist" industrial policies in sectors that have nothing to do with morality (aviation, defense, tech research etc). Countries that don't do it at all are extremely rare in this day and age and usually don't end up well.
Aviation has been a complete disaster. But I can see the moral argument for defence: National security.
I don't know where tech research is socialised. Government pay for it all over the world, sometimes in-house, sometimes externally, but I've never heard of a country banning tech research unless it is government ran.
Socialism doesn't require that you ban competing non-government institutions. Do (economically healthy) countries with socialized medicine bar private medical practice?
Actually it does. The prime objective of Socialism is to prohibit private property. Social democracy on the other hand seeks to exist within a standard capitalist system. Healthcare systems similarly vary along those lines with some countries prohibiting private practice (in either care or insurance) and some not.
In Europe the term 'socialist country' and to a large extend the term 'socialism' has a very clearly defined, negative meaning: only the former Eastern Bloc states called themselves socialist, and saw themselves as one step before communism. All of them ran their economy into the ground in record time. Nobody in their right mind would call (for instance) Sweden or Germany a 'socialist country', even though they have implemented a lot of socialist ideas more thoroughly (and more successfully) than the 'real deal'.
You mean like France, Denmark or Sweden, where the government accounts for half or more of the GDP, and owns many corporations? But that's not socialism, right?
Heck, in the US, the government accounts for over 40% of GDP, and a higher figure than Venezuela...
Yes, some states run socialism worse than others. And some states run capitalism worse than others. Characterizing some states as 'socialist' but not ours (which does contain some socialist elements) isn't useful, because it's not always accurate.
The fact that US and Venezuela both spend about 40% of GDP from a government level is very insightful and new information to me.
I have a hard time calling the US' spending efficient (mostly military) so I think it's more complex than that we're doing socialism 'well'. But the US hasn't fallen apart yet. If both countries are doing it so badly with such a large part of our revenue, why are they failing? Maybe it's less about waste and more about making sure you don't screw up specific critical industries? The situation with California's cheap water even as they're running out is quite a bit like Venezuela's power. Why are we not rocked by such things more often? I'll have to think about this.
My guess is that most of Venezuela's industries are non-existent, as they've focused on oil the last 50+ years. I know they import just about all their consumer goods and food.
Venezuela's economy after the revolution wasn't really a great example of a 'planned' economy. More like:
1) Nationalize oil companies
2) Give free shit to all the people who they promised free shit to
3) Profit?
There's doesn't seem to have been a real direction, no attempt at developing the economy, just Zimbabwe-style redistribution.
At least in the case of the US, the 'waste' generally finds its way into the US economy (through the military industrial complex, the prison system, subsidies to farmers, etc..)
Twenty percent time as national policy seems like a way to foster innovation. Limiting commercial energy consumption to four days a week would seem to incentivize economic investment in efficiency in terms of industrial consumption and in terms of technology adoption in white collar workplaces.
Socialism is worker's control of the means of production. I don't see democratic councils of workers making these decisions. This is Leninist style "socialism" from above, ie., state capitalism and democratic centralism intermingled. Not socialism.
I don't understand the economics of this at all. Can't the country buy power from a neighbor? Or does that infrastructure not exist? Wouldn't the productivity supplied by those days recoup the cost of electricity?
Electricity is sold to consumers at a price lower than that at which it can be bought from other countries. This of course is the source of the overuse and failing infrastructure.
The country is communist, so the government has direct control over prices, and of course set them this low because it was politically expedient, not because it was sane.
Monopolies are rotten with corruption. Nationalized industries are monopolies, and often headed by non-industry people so the nature of the corruption tends to be more catastrophic, and correction is much, much harder than in the case of a corporation with a monopoly.
the vast majority of their reserves are "heavy" crude. Which is much more expensive to refine. The oil slump certainly didn't help, but Chavez nationalizing the oil company and replacing competent engineers with cronies is what really fucked them. That and the general socialization of most of private industry.
"competent engineers with cronies is what really fucked them"
That' cannot be emphasized enough. This isn't the type of oil coming out of Texas or ND. It requires more money, infrastructure, and expertise to refine properly. Canada has this problem with the oil sands, but they have all three to deal with it.
Also if they would've sold the development rights to private companies those contracts would usually have a flat fee that is independent of production viability that the companies have to pay to maintain the rights, this alone would've been enough to keep them afloat.
They also have all of the professionals that left Venezuela.
When I consulted up there, most of the reliability engineering organizations were Venezuelans. Canada should send Venezuela a big thank you card for the amazing people they got due to Chavez driving out professionals.
Instead of working to make VZ better for everyone they took the course of vilifying one group at a time and confiscating the wealth which was then concentrated to those in power. They even did this to foreign companies which had made investments there.
Eventually they ran out of other people's money. While not the fault of socialist policies no government ever really executes them because those in power still see themselves above the people and refuse to live under the same conditions.
This is not a socialism issue, any government run by the corrupt can end up here. It is more a failed form of fascism which also occurs in the US
If the price of oil extraction in Venezuela for a barrel is 60 dollars and the market price is 40(the price in Saudi Arabia is very low), you have a serious problem.
You will even have to LOOSE money in order to sustain a regular extraction, hoping the price returns to higher levels.
If you stop production, sometimes it is very expensive to restart it again, as geological forces over time close the things that you open, so you need to maintain some activity.
What I don't understand is why they are so dependent on hydroelectric power. Venezuela sits on a shitload of oil and have a history of practically giving it away to their citizens.
That's pretty much exactly the problem. The usage of oil (gasoline) has been subsidized to ridiculous levels, which has squandered the country's natural resource wealth.
We all need to view our natural resources as a fixed and limited asset, to be used to boost ourselves up to sustainable energy production methods. But that is not politically expedient.
69 comments
[ 3.4 ms ] story [ 164 ms ] threadAt least it states the reason why in the first paragraph: hydro-generation is at risk because of a prolonged drought.
The chief reasons are artificially low pricing (it's almost free, so people have no incentive to conserve power, and the utilities are starved of funds for maintenance) and poor administration (this has been a long time coming -- brown outs and black outs have been endemic for some time).
They are simply running the country into the ground thru mismanagement and negligence.
The option to let things happen (by removing regulation / price-controls, etc), or for scrapping and starting fresh appear to never be on the table in any meaningful respect.
It's like they try to run the country on ideals alone and that ideals will carry the day.
We're not a basket case economy in any stretch of the imagination. Compare and contrast.
That's all it is, tbh, without resorting to hyperbole. This happens even in capitalist economies -- companies have little incentive for maintenance at the best of times.
IMHO, when 40% of energy for the whole country is provided by one single plant (regardless of plant type), things will go wrong at some point. To overcome a situation like that you need money and vision to build a redundant system. Clearly the Venezuelan government lacked them.
Have you actually looked at the maintenance budget of US utility companies?
They need to just start charging more for electricity. There will be less waste for sure. If people still use a lot and pay more, it means they need it and the money goes to building power generation. Very, very basic capitalism.
This isn't about socialism. This is about what is a dictatorship in all but name.
Socialism is the workers controlling the means of production, not anything deemed vaguely left wing by American standards.
I'd also re-examine the degree to which our representative democracies centralise power.
In most countries in Europe, for example, it's nearly impossible to start a company without lots of capital. This is because of the crippling amount of taxes and restrictions, which results in an economy comprising of near government and big corporation monopolies. You can see this in most of the nordic countries.
The problem with going the socialism route is that the system will need to take more and more income as new generations completely rely on it. At some point, you don't have enough money to fund it, and it collapses.
With the ability for any company to move to any country, there is also the real possibility that companies will just go elsewhere.
http://www.amazon.com/Why-Not-Capitalism-Jason-Brennan/dp/04...
http://www.amazon.com/Why-Not-Socialism-G-Cohen/dp/069114361...
Along with the usual social programs they use a very decentralized goverment and are or were thinking of a guaranteed basic income.
The term socialism has no clear meaning, and trying to group failures together is just as unhelpful as trying to group successes.
The key is to find a balance. Europe has had some success with socialising things that make moral sense (e.g. healthcare) while leaving everything else to the private industry. That's still socialism, it just isn't absolute socialism.
Even China is experimenting with the levels of socialism they want. They've been moving towards a more capitalist-style market and they've found a more workable balance.
Socialism is a dirty word in the US, but is a complex word everywhere else. Hopefully with a self-proclaimed "democratic socialist" running for your highest office we'll see people's understanding of socialism expand.
That's an exaggeration. Serious countries (France, Germany, even the US) employ "socialist" industrial policies in sectors that have nothing to do with morality (aviation, defense, tech research etc). Countries that don't do it at all are extremely rare in this day and age and usually don't end up well.
I agree with your overall point though.
I don't know where tech research is socialised. Government pay for it all over the world, sometimes in-house, sometimes externally, but I've never heard of a country banning tech research unless it is government ran.
http://www.thefiscaltimes.com/Columns/2016/01/26/Bernie-Sand...
Heck, in the US, the government accounts for over 40% of GDP, and a higher figure than Venezuela...
https://en.m.wikipedia.org/wiki/Government_spending
Yes, some states run socialism worse than others. And some states run capitalism worse than others. Characterizing some states as 'socialist' but not ours (which does contain some socialist elements) isn't useful, because it's not always accurate.
I have a hard time calling the US' spending efficient (mostly military) so I think it's more complex than that we're doing socialism 'well'. But the US hasn't fallen apart yet. If both countries are doing it so badly with such a large part of our revenue, why are they failing? Maybe it's less about waste and more about making sure you don't screw up specific critical industries? The situation with California's cheap water even as they're running out is quite a bit like Venezuela's power. Why are we not rocked by such things more often? I'll have to think about this.
Venezuela's economy after the revolution wasn't really a great example of a 'planned' economy. More like:
1) Nationalize oil companies
2) Give free shit to all the people who they promised free shit to
3) Profit?
There's doesn't seem to have been a real direction, no attempt at developing the economy, just Zimbabwe-style redistribution.
At least in the case of the US, the 'waste' generally finds its way into the US economy (through the military industrial complex, the prison system, subsidies to farmers, etc..)
Here's Noam Chomsky talking about this: https://www.youtube.com/watch?v=gfdnbMd9BiE https://www.youtube.com/watch?v=WsC0q3CO6lM
Many socialists are critical of Leninist style socialism because it's not representative of socialism and it tarnishes the name.
This the economics equivalent of a spherical cow [1].
[1] https://en.wikipedia.org/wiki/Spherical_cow
I'm not naive enough to assert that socialism is a big bad evil straight out of the cold war.
If they have good credit, which Venezuela doesn't.
The country is communist, so the government has direct control over prices, and of course set them this low because it was politically expedient, not because it was sane.
That' cannot be emphasized enough. This isn't the type of oil coming out of Texas or ND. It requires more money, infrastructure, and expertise to refine properly. Canada has this problem with the oil sands, but they have all three to deal with it.
When I consulted up there, most of the reliability engineering organizations were Venezuelans. Canada should send Venezuela a big thank you card for the amazing people they got due to Chavez driving out professionals.
Eventually they ran out of other people's money. While not the fault of socialist policies no government ever really executes them because those in power still see themselves above the people and refuse to live under the same conditions.
This is not a socialism issue, any government run by the corrupt can end up here. It is more a failed form of fascism which also occurs in the US
If the price of oil extraction in Venezuela for a barrel is 60 dollars and the market price is 40(the price in Saudi Arabia is very low), you have a serious problem.
You will even have to LOOSE money in order to sustain a regular extraction, hoping the price returns to higher levels.
If you stop production, sometimes it is very expensive to restart it again, as geological forces over time close the things that you open, so you need to maintain some activity.
We all need to view our natural resources as a fixed and limited asset, to be used to boost ourselves up to sustainable energy production methods. But that is not politically expedient.