Searching for black ink, but finding red

Ever wonder how all those chavista companies are doing? Do they make enough to even pay their bills? How much did they really cost? Are the workers there … happy?

Well, economists Richard Obuchi, Anabella Abadí and Bárbara Lira did, so they set out, Sherlock Holmes-style, to find the truth about some of those firms owned by you and me.

The end result is a book called Gestión en Rojo, which has been getting a ton of (deservedly) good press. Check out, for instance, this nice write-up from El País.

All three of them are friends of mine, so on my recent trip to Caracas, we sat down to chat. Their book’s findings are revealing yet all-too-predictable. All of the companies produce heavy losses, and the cost of the expropriations that led to them being in the State’s hands is somewhere north of $20 billion.

But what I really wanted was to pick their brain as to how they went about researching this. Given how notoriously opaque chavismo can be, where do you even begin to look for the data to answer these questions?

“It was hard,” said Bárbara. “One of the first things we realized was that we were going to have to venture out into the boonies, where people tend to be friendlier. The big chavista companies, the ones in Caracas – the Cantvs and EDCs of this world – simply hung up on us when we called. They gave us no access.”

Instead, they ventured out to places like Motatán, where the Central Azucarero Trujillo is located, or to Caicara de Maturín, to see the “gleaming” offices of the Empresa de Producción Socialista Juana la Avanzadora.

So, I ask, how did you get in?

“Well, we just knocked on the door,” says Anabella. “It’s funny, but one of the things that worked to our advantage is that these people knew nothing about Iesa. They simply saw Instituto something or other, saw our red logo, and automatically assumed we were part of the process, perhaps sent from some bigwig in Caracas. In other companies, such as Venirauto for example, we couldn’t even get in because there was a big lock on the fence, and the firm is pretty much shut down.”

“Besides,” they said, “the workers themselves were happy to help us out. As one of them told us when he opened the door, ‘I know what it’s like to be on the other side of that fence, wanting to get in’…”

One of the things that piqued my interest was how cogestión, the co-management of chavista companies, really works.

Apparently, they told me, workers in these companies feel like they are contributing, empowered almost. Even though none of the companies they researched actually sells enough to cover their costs, the workers actually work, and they believe they are calling the key shots. Every morning, they make key decisions together, everything from labor policies to which supplier to use.

“But,” says Bárbara, “their decisions then have to be transmitted to Caracas. In the end, Caracas gives them the OK. They decide. The workers operate under cogestión in paper only.”

I left our conversation wondering how these workers internalize what’s going on. They feel proud of their work, and deep down they must think that their companies are viable. But they have neither the power nor the financial resources to stand on their own two legs. A part of them has to realize the whole thing is a charade. When push comes to shove, will they vote for the status quo, or for the riskier, potentially better alternative?

Time alone will tell.