Nurses ¡Sí! Aluminum-lined Moneypits ¡No!

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Honestly, Juan, I think you’re malversando your outrage, spending-wise. If you really want to get your fiscal responsibility juices flowing, forget about the pay settlement for nurses and chew on this for a while: Alcasa is going cap-in-hand to hit up the government for Bs.23 million. To meet payroll. This month!

What a fucking surprise! Stop the presses! Clueless state takes over business it has no reason to own, runs out of money, raids everyone else’s pockets to make up the shortfall! Boy, we never saw that coming!

See, if you want to rant and rave over public spending, why not rant and rave about entirely wasteful, unambiguously useless, utterly pointless public spending? Nurses – no matter how unseemly their tactics got – are actually providing a valuable public service that, realistically, only the state will pay for. They’re generating value for society as a whole in ways only they can. Plus the state is going to keep paying nurses salaries from now until the end of time. We wouldn’t want it any other way.

What’s genuinely crazy is that when you go to a hospital the nurse who saves your life is paid a pittance because the state has decided that losing money making aluminum is a strategic priority. That the cop who pulls you over has to shake you down for a bribe if he wants to be able to afford birthday presents for his kids because Chávez thinks running a cement company into the ground is the way to save humanity.

What should really piss us off is that the oil revenue streams that ought to be going to the things only the state can do are instead plugging financial holes in state firms that lose money doing things private firms make money (and pay tax) doing!

It’s easy to forget now – which is probably why it’s so routinely forgotten – that that insight was what the original Washington Consensus was supposed to be all about way back when: the more public money you spend on things the public sector does badly and the private sector does well, the less money you have left to spend on things the public sector does well and the private sector doesn’t do at all!

You really need to grab minimum here, Juan: all public spending was not created equal, and treating it as such is not “fiscally responsible”; it’s tea-bagging silliness.

The day we’ve brought a minimum of sanity, transparency and order to public spending, the day we’ve stopped the outright waste of public resources on things that have zero (hell, less-than-zero) social rates of return, then we can have a “grown-up conversation” about wasting money on fripperies like nurses. Capisci?

1 COMMENT

  1. All fine points, but the state didn’t take over Alcasa, it built it from scratch starting in the 1960s. The aluminum industry was supposed to pay for the construction of the Guri dam and related facilities, and by some accounts that worked. But today, Alcasa is indeed a money pit. Venalum is ok, but Alcasa is obsolete and, by industry standards, tiny. It’s probably externalizing some costs, too, as when I visited its alumina mill last year, I was shocked at the amount of white dust just floating in the ambient air all around, with workers walking and driving around without lung protection. Alcasa should certainly be either closed or rebuilt, as called for in the photo in this article. With current aluminum prices, a privatization would probably work. Yes, that’s a little joke.

    • Well, considering that all the Empresas Básicas were built predicated on cheap accesible energy sources (i.e. Guri and the other dams being only meters away), I don’t know know how much money it can be raised through a privatization.

      But then again, a penny not spent is a penny saved, so if we could get rid of those money-losing proposition, good riddance.

    • I am sure you’re right about this, Setty, but in a way, the particulars are actually irrelevant. When governments get involved in things like the aluminum business, the producers face a Soft Budget Constraint. And producers that face a Soft Budget Constraint have massive incentives to be wasteful. It’s not the specifics of Alcasa’s physical plant that are wrong, it’s the principle of the government producing aluminum. It WILL be a moneypit. You can count on it.

  2. The discussion about what to privatise will be one of the hot items in the primaries and during the campaign… Surely, you cannot sell everything across the board. The transition team will need to asses all the dark places of the State once there is a new government.

    • I beg to differ, but I think that no candidate will want a piece of the toxic waste that privatization is in public opinion. Privatization will be one of the verboten words during the campaign.

      At best, they are going to talk about prioritizing public spending and cutting financial support to other countries, but nobody is going to commit political suicide talking about firing civil servants and workers of state companies.

      It’s a shame that fiscal responsibility is a taboo, but that’s how political campaigns in our petro-state works.

  3. all public spending was not created equal, and treating it as such is not “fiscally responsible”; it’s tea-bagging silliness.

    Priceless…

    • Certainly by now you realize that the original meaning of “teabagging” is the licking of male genitals, and that when Anderson Cooper, Rachel Maddow et al applied the term “teabagger” to adherents of the Tea Party (Taxed Enough Already?), they were using it in the sexual sense of the term.

  4. Little problem with your analysis, geniuses – Alcasa is asking for money, but it hasn’t gotten it yet. Therefore, it’s too early to use it as a gimmick to stir up outrage.

    • The thing that gets me about the Alcasa story is that it just encapsulates the blackmail at the center of the Soft Budget Constraint so neatly. These guys want money to meet payroll for THIS MONTH. And the story comes out on the 29th! So they’re just plain out of money, and they go to the treasury when really the only choice is to bail them out or go tell the workers to suck on an egg. So *of*course* they’re going to get bailed out. This month. And next month. And the month after that. Forever and ever. Amen.

      In return, the taxpayer gets literally nothing. Actually, less than nothing: if the plant was private and was allowed to fail and the workers had to go and get other jobs, they’d actually create something of value to society. Something worth more than the cost of the resources it takes to produce it (manifestly not the case in Alcasa.) But since the state won’t let Alcasa die, those resources can’t be redeployed to more socially beneficial ends. They just drag on and on forever, destroying wealth month after month and year after year.

      THAT offends my sense of fiscal responsibility.

    • If this is money necessary to complete payroll, I dont see how the government can refuse to send it. I don’t think you need to be a genuis to figure that out. Besides, Chavez is currently a runaway train promising millions of houses and employments as his campain is in full throtle (even though this is completely illegal…but who cares!). I can guaranty he’ll make sure the money gets there. Wanna bet?

  5. Quico,
    You can hurl baseless sexual epithets at me all you want, but you’re in the wrong here. So, spending money we don’t have is OK as long as it makes us feel good? As long as we spend it on people who are nice to us and hold our hands while we get our blood drawn? And who says nurses provide more of a public good than aluminum workers?

    That’s not how you evaluate the effectiveness of public spending – not here, not elsewhere. Empty phrases like “they’re generating value for society as a whole in ways only they can” are simply diversionary.

    • Sorry I didn’t phrase it in economicese:

      They’re generating positive externalities for society in ways only they can.

    • “So, spending money we don’t have is OK as long as it makes us feel good?”

      There’s a difference between not having money because you aren’t making enough and not having money because you keep wasting it in meaningless stuff instead of the important stuff. The case of Venezuela is definitively the latter, not the former. Do the math and tell me how much will be necessary to pay for the nurse’s raises and compare that number with what the worthless suck-ups at the TSJ get in “legal” salaries (i.e., not counting all the money they get on the side). Or how much money is spent in every Alo, Dictador. Or how much money the useless Venezuelan Military gets, and I mean in salaries, not counting all the useless toys they buy or the money they get from bribes and drug trafficking.

      “As long as we spend it on people who are nice to us and hold our hands while we get our blood drawn?”

      Remind me again, JC, which one of members of this blog recently spent a sizable amount of time watching first hand what nurses actually do with their time and which one didn’t?

    • Juan,
      Stop buying airplanes and submarines and tanks for a while and you have already enough dosh for the nurses and similar employees. I definitely cannot think they should be the first any government needs to start with in the quest for financial reason.

  6. In Montana, Alcoa had a few (2?) aluminum smelters set up for the same reason as Venezuela’s: Access to cheap electricity from dams. The plants have been shut down.

  7. As I understand it, all aluminum smelters in Venezuela, which require a huge amount of electricity to run, were shut down during the electrical crisis a year ago, and have not been restarted. So, what are these state industries actually producing, nowadays? Besides, red ink, that is….

  8. I think Moraima said it best in a past post. Si obligamos al Gobierno a gastar el dinero en las cosas necesarias (cuando digo obligar quiero decir huelgas de hambre con desangramiento incluido y una que otra flagelación pública) entonces no va a tener dinero para gastar en vainas inútiles… Si tiene dinero comprometido en dar buenos sueldos por ejemplo, no le quedaría tanto para comprar tanques de Rusia. ¿Me equivoco?

  9. First time commenting, usually love your stuff, but let’s not cross lines and talk about things you have no knowledge of:

    “You really need to grab minimum here, Juan: all public spending was not created equal, and treating it as such is not “fiscally responsible”; it’s tea-bagging silliness.”

    This is just juvenile. You don’t even know any members of the tea party and yet we have to deal with sexual epithets directed at people you’ve only heard about from left wing media outlets. If it was a racial construct, it’d be called racist. You can’t even in good faith debate such a thing has merit. Don’t try to pass off the pretense of knowledge as knowledge.

  10. Mr. T Party thinks that generalizations about political belief are improper, when discussing people who have personally decided to join a specific party or sect of a party?

    No sirrah, not analogous to racism, because race is a GENETIC construct, which is not chosen by the bearer. If I am black, it’s not because I decided one day to join the B. Party!

    If you don’t even understand what is objectionable about racism, don’t post about it. Please.

    • Nice obfuscation/misdirection

      So is it ok to disparage a group of people you have no personal knowledge and to come by such opinions from 2nd hand sources that are diametrically opposed to their values and issues?

      He can say and write what he wants, but when he crosses a line he needs to be called on it.

  11. Hugo spends like mad on “new” useless things, and then goes into the realm of the surreal. He spends on “traditionally” useless stuff. Or that he reversed the few inroads of sanity in the mind of the now-opposition. Hugo is set on destroying private enterprise and property. Or hobbling it in ways that should be familiar to anyone who did his homework on life before Chavez in Venezuela. So? He is a fanatic, right?

    What worries me sick is that huge chunks of so-called opposition and huge segments of the Venezuelan voters agree at least partially, with some of these actions. Or at least pretend to, so as to not be labeled “neo-liberal”.

    But conditions created by such moderate petro-etatists gave us crazy Hugo, when Venezuelan voters tried the petrostate calculator that does not work but tells you that your sum should add up and they elected Carlos Andres II, Caldera II and Hugo The Unique rapid-fire fashion.

    An idea can be wrong no matter how moderately you seem to advocate it. Ask all the more moderate antisemites, nationalists, authoritarians and xenophobes pre-1930…

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