Who will be the Steve Jobs of the CCT?


So I had a fun back-and-forth with P. Challenger in comments about what it might take to end Venezuela’s insane – I really don’t think there’s another word for it – gasoline subsidy. For Challenger, any move to dismantle this well-loved (but, again, crazy) bit of social policy would be extremely risky in the absence of a careful understanding of why people feel the way they do about their fuel subsidies. To ignore that dimension, s/he feels, is to risk a serious affective rift with the population at large.

I’ve thought about this a lot over the years, and actually I think that’s wrong. I think conditioning major reform on building majority support for it first is a recipe for inaction.

Instead, Venezuela needs to move decisively to dismantle the gasoline subsidy. We can do that without setting the country on fire by timing the end of the subsidy to coincide with the introduction of a generous Conditional Transfer program that rewards poor households for keeping their children in school with cold, hard cash. Lots of it.

The key is to make the link between the two policies explicit. As gas prices go up, I think we should print “Thank you, your gas bill pays for poor children to go to school” on every gas station receipt and “This transfer is financed with proceeds from the gas price hike” on every Conditional Cash Transfer receipt.

And I think if you did that, within six months the notion of going back from that policy to the one we have now will seem just as crazy and suicidal as abandoning the gas subsidy seems to some today.

Say that to people and you tend to hear lots about the Caracazo, lots about getting people “ready” for such a policy, about “selling it” to them first. But, actually, I don’t think that’s right. I think that, so long as you sequence it right, it won’t really help to sell it first.

The reason finally came to me reading one of those hundreds upon hundreds of Steve Jobs eulogies we’ve seen this week, one that noted the way Jobs never did any market research reasoning that “people can’t know whether they’ll like an iPhone or an iPad until we’ve actually produced one.”

I think that’s the nub of it right there.

In the same way people who’ve never seen an iPhone can’t know whether they’d want one, can’t really speak logically about how their lives would be different if they had one, and are generally about as useful as guides for how to design an iPhone as an ashtray on a motorcycle, people who’ve never been on the receiving end of a half-way decent social policy framework just don’t have the frame of reference you’d need to contribute that to a debate on it.

To poor Venezuelans, the whole idea of being enmeshed in a wave of law-based reciprocal obligations with the state, one where access to petro-resources depends not on the old clientelist basis, as a reward for political support and ideological fealty, (or on outright destructive behaviour, like driving a lot) but depends instead on fulfilling responsibilities that will make both your family and society as a whole better off, that entire way of conceiving the relationship between the state and the individual is as crazy and impossible an idea to them as the concept of a phone with just one button on it was to all of us on January 8th, 2007th.

Leadership, in a context like this, isn’t about giving people what they want. It’s about giving people something so much better than anything they’ve ever had that they can’t even picture it until you willed it into reality for them. And it takes a visionary to make it happen.

Caracas Chronicles is 100% reader-supported. Support independent Venezuelan journalism by making a donation.


    • That’s what Juan said! (Good catch – I wondered if people would pick up on the link-bomb.)

      I’m on the fence, though. As a single issue fanatic, I’m sort of bound to support whomever talks up CCTs more.

      • Yeah, with that link, Quico almost switched me from unconditional supporter for HCR to ni-ni with regards to HCR vs LL.
        Emphassis on *almost*, guess now I am on the fence too?

  1. We all know these measures have to be implemented asap.
    I think what Challenger wanted to express, Francisco, is not so much the need for understanding and writing university papers but knowing how to prevent extremists and special interests from sabotaging.

    El Caracazo, and I know you disagree here again, was much less spontaneous than what you think. There are hints about it all over the place. A lot of the extreme left were really well trained in sabotage and they were very active those days. And something you don’t know: they were doing a lot of heavy indoctrination in the previous years. They may not know how to solve a regla de tres, but they did know how to produce riots. That’s their speciality. As I mentioned earlier, they actually got quite some training before the USSR crumbled down and they kept getting that from Cuba as well. So: how can we effectively disarm them?

    One of the issues will be that most Venezuelans actually do not tank. They have never done it. Even if you see roads full of cars all the time: most Venezuelans use buses.

    So: you have to produce a good plan to react before the people in charge of sabotage start to rally bus travelers because “van a aumentar los pasajes de los autobuses”.

    Have you given a thought about profit levels for buses and taxis now? Fares are cheap compared to the rest of South America, but petrol is almost for free. How will profit change for the bus companies? For the mafias that manage bus associations?

    Also: what are you going to do with the hundreds of thousands who will start losing their job as the smuggling between Venezuela and Colombia, Venezuela and Brazil and Venezuela and the Carib islands becomes less profitable?

    As I said: there is no question about the need to change, but you are trying to visualize the main target of your sale as your neighbour, José Alberto Rodríguez Sanguinetti and not Jonny García. Vladimir Pérez will be approaching Jonny and Yulimar with some message before they ever see one of those tickets, as they do not own cars.

    And the transportation mafias will also react.

    • In a word: exactly.

      Not because this was my point, there’s a lot of information here I had not considered. But my point is made because the hidden factors that would make the proposed policy have unintended effects are being dismissed. Social order too easily attributed to ineptitude or masochism.

      Social policies more often that not dont have their intended effects but they do have effects. To not try to think about what those effects might be is what I deem irresponsible.

      To use Jobs as an example of how to run a Country is also questionable, the guy debilitated the institution of the board and made the fate of his company so tied to his own success that in the occasions prior to his death when he took a leave of absence apple shares dropped as much as 17%. He is being rightfully celebrated today because mostly his ideas succeeded but for every Jobs or Lee Kwan Yew out there there’s a ton of Pol Pots and Qaddafis the former are exceptions the latter the rule.

      Kiko, I respect and mostly agree with your opinions but on this one I am not sold. I would rather bet the future of my country on a clear methodology of government that produces results than on an innovative messiah.

    • I’m with you Kepler. I already said it.
      The public transportation system has to be actually public and efficient before the gas subsidy is implemented.
      And then we go also to goods transportation and freight costs: a national network of, guess what? a railroad! (duh)
      The railroad is another mafia issue as far as I remember. Too many interests in the transportation system prevented it for yard in the past.
      To fight the mafias would be relate lively simple if the actual public system is more effective and cheaper than the camioneticas. People would prefer to pay less for a better service, I suppose.
      The only thing I don’t fully agree with is that the Caracazo wasn’t as spontaneous. Maybe the development of what happened after was, but the trigger were the people in La Guaira and Guarenas, angry because they were unable to go to work, after finding out that same morning that the fares doubled up.
      In one words, it has to be a joint plan: build a railroad, create an effective network of buses, pay the $600 to the low income families, and then, eliminate the subsidy.

      • Carolina,

        Anger was real, very real. Still: some within the extreme left were very aware of the possible repercusions and they were ready to act on anything the government provided.
        This is not the first time. They have always done it, from Russia 1905 and Germany 1918-19 onwards.

        In Venezuela in 1989 they could not be sure it would develop as it did, but they did know the potential.
        See…I was at that time a teenager who would often go to the Soviet embassy and the Casa de la Amistad (commies’ house) and stuff like that, not for ideological reasons, as I always rejected communism, but for nerdy interests (Russian). I had started at the UCV, and I could see some blokes who also went to the other places (for ideological reasons) and how they would react every opportunity to create violence: when there was a price increase at the cafeteria (even if food was ridiculously cheap), during the 1988’s national march of professors and students to Caracas’ centre (the extremists infiltrated at the level of Roca Tarpella, but some were already next to us, they ended up throwing molotovs etc and the real students and professors were attacked by the police while the trouble makers dispersed).

        Here you have an article from 1983 about Venezuela’s barrios
        You can use google tools to get a glimpse of it. The guys were organizing themselves in the barrios and secondary cities around Caracas. They were preparing their cells that would act when their small groups would give the go-ahead. What you read there is the “kosher”, purely doctrinal part. They had armed training etc.

        They were the same who had been infiltrating the military for decades. In a similar way as some terrorist organisations nowadays, they were rather independent, in part for security reasons and in part because it is the nature of extremist group to splinter according to each of their wee caudillos.

        They were using every opportunity to create chaos.
        Some future Chavistas got involved in the Caracazo…paradoxically on both sides of the violence.

        • Kepler – I see your point now.
          As you, I also went to the UCV – even though I was already an adult and out of there when the caracazo happened – I even got involved a little with the student center, but I didn’t stay too long, once I saw how many of those were just a bunch of guarimberos, always ready to piggyback any protest happening for any reason at the “Tres Gracias” plaza. I even remember one particular guy – they used to call him the “Anarchist” saying he would bring the molotovs the next for a protest and fair enough, he showed up with a whole bunch. That day I left quickly and stayed out of trouble for the remainder of my university years.
          That makes your point quite valid. Lets say that the ignition was spontaneous, and then the “always ready” agitators jumped in quickly.

    • Ah Luis, you beat me to it.

      I wonder if there was the same public mourning for Henry Ford when he died as there was for Jobs this week. Doubt it, even though Ford was arguably much more influential than Jobs was.

      • But in 1947 when Ford died, not as many people could afford cars, as those who have bought ipods and the like, today.

        Also, Ford had a reputation for controversy during and after WW2..

  2. I think Kepler makes a very good point.

    The transport sector is key here and it will take a lot of negotiations with the roscas. Perhaps increasing gasoline at a higher rate than diesel and maybe natural gas? and giving loans under very convenient conditions to bus operators to renew their fleets with diesel/NG units?

    Most of the bus fleet is in such a bad shape it endangers the users’ lives anyway and an increase in gasoline price will increase the demand for public transport too. A safe and reliable public transportation system is essential for the success of this policy.

    I suppose the communication campaign for such policy needs to be flawless. Simple and straight to the point, a la ‘I’m a Mac, I’m a Pc’ commercials. Focusing on how people’s lives are going improve instead of making them feel they need to make sacrifices.

    I think the dumbest thing CAP did when he was trying to sell his ‘paquete’ was saying that people needed to tighten their belts. You can’t say that to people who are poor and can’t afford to provide food for their family.

    • That would not work. Not all buses work with diesel, many busetas, the little ones that we have in places like Mérida or Valera work with gasoline. I am 100% for ending the subsidy, I do not drive at all (I cannot drive!), and obviously I do not own a car, but you need to plan ahead, as Kepler very wisely says.

      • How about an escalated elimination of the subsidy? Eliminate it for private transportation, and keep it for public transit?
        Just a thought.

      • Not that I’m an expert in this topic, but I find it hard to believe that nobody in this world manufactures smaller buses with diesel or NG engines.

        The same with the ‘yises’ the ‘yiseros’ use to take people up in the barrios. I’ve personally driven diesel-powered ‘troopy’ landcruisers, as they’re called in the land of Ostrayah.

    • If Chavez would allow it-could import large numbers of busses from USA-and solve
      this problem within months.Large and small ones.
      I especially like the ones that run on CNG.

  3. I think one of the biggest flaws in the way CAP went about things is that his team, to this day, thinks this was some sort of flawed PR campaign, that if people actually *understood* what they were trying to accomplish, they would have been on board.

    But people understood alright, with their wallets. And it’s really hard for people to buy into the notion that “yes, right now we’re taking away all your subsidies, but you’ll be much more better off in five years.” Why? Because humans aren’t wired that way. El Paquete, and the non-existent PR effort behind it, was policy made for aliens.

    • People are ignorant, not idiots. Wallet? What wallets?
      The ratio between petrol prices in Venezuela and Colombia do not correspond to the ratio between bus fares. Why? Why would fares need to rise as much as petrol prices then? (30% both)
      How many days passed between the announcement and the increases and riots?
      1 day…more precisely: about half a day.

      Sorry, man, but one of the problems we have in Venezuela is that politicos and their surrounding fauna treat everybody like absolute idiots.
      I repeat: ignorance is large in Venezuela. People can understand if you talk plain talk and foresee what extremists will argue.

      • People can understand if you talk plain talk and foresee what extremists will argue.

        Substitute ‘competitive forces’ for ‘extremists’ and you have your analogy to Steve Jobs. Though I’ve used Macs, I don’t own one, nor am I an early adopter. But I do recognize the genius of a well conceived, well executed product, presented with brilliance and flair, in simple language, with clear visuals and with irrefutable claims. It’s the irrefutable claims part that involves careful thinking of all the contingencies beyond the roll-out of a product or program. In the most simplistic terms: If we roll out A at X price, what will happen to B and C, tomorrow, in six months, and in a year? And what about the peripheral D and E?

        It’s that type of thinking that has been largely lacking in government echelons. But then, that opens up another and far more fundamental can of worms, close to kepler’s heart: the need for educational reform across the board.

  4. As is usually the case Kep is the voice of reason and caution. Let´s get something clear: 99.99% of your readers agree on CCTs and also agree on bumping upwards the price of fuel and gas. But some of us are wary of your nonchalant approach to this. Thinking it´s easy does not make it so. The path you want to embark upon is fraught with danger everywhere. political foes from chavismo and from within will be ready to take advantage of this in the worst most opportunistic way possible. I am not for procrastination but for caution and readiness. I would make CCTs available and afterwards, once people see the first transfer in their bank account we may be able to adjust gas prices accordingly. But be ready for the storm that surely ensue. No matter how well you have thought it out, no matter how well you try to sell it, how appropriate it might be, be sure that you will encounter trouble, and your fair share of tear gas and rubber bullets in the best case scenario.

    • You’re not seeing it – the risk is all on the other side: we’ll need tear gas and rubber bullets to keep the barrio moms from dismembering the bus drivers who are messing with their CCTs!

  5. I love cash transfers, especially unconditional ones, UCTs. The analogy of CCTs with iPhones, however, bothers me. The biggest difference between Steven Job’s Apple, and your Venezuela is … guess which one is not a democracy.

    The key in a democracy is buy-in with the majority, while respecting individuals’ rights.

    Here’s an analogy from the opposite end. You’d be giving me pushback if I were suggesting imposing UCTs instead of CCTs the same way many readers are giving you pushback to suggesting imposing CCTs instead of current gas subsidies. Yet, even the biggest opposers of UCTs agree that UCTs would obtain full support from the majority of the population (i.e., the poorest) and having no disrespect to individuals’ rights, which is democracy, right? So what’s stopping UCTs from getting implemented? It’s certainly not the poorest stopping it. It’s the non poor! It’s political “representatives” of the poor. And the argument is usually about defending the best long term interests of the poor, or, worse, protecting the nation from the reaction by the poor.

    Of course the poor would prefer cash to gas. You’re right about that. CAP’s mistake was not lack of PR; it was not countering rising prices with cash. Oh, there was also that dozen-dollar-a-barrel thing… But you do need buy-in, though not from the poor.

  6. This post is based on a very false analogy. Sure, Jobs built the phone “without market research” but that’s very much en comillas. He had used existing phones and talked to people and knew that the machines were hard to use and that nobody used their internet functions for lack of screen, crummy interface, etc. That is — people were already frustrated with the status quo. They just hadn’t articulated it well. And he gave them a solution that didn’t add a whole bunch of new problems.

    The single biggest problem with changing the status quo in Venezuela is that any new program WILL add a bunch of new problems. If you puts money in one place, such as in the CCT administration, you create a magnet for corruption. And people know it. They would rather keep the money in their pockets, as with the fuel subsidy, than hand it over to a bunch of thieves and liars. So no, you don’t necessarily need to start out with the Brunei idea of posting the real cost of gas along with the subsidized price at every pump, nor speaking frequently about the real size of the fuel subsidy — even though that would be great. What you need is to make a government that punishes corruption, from the president and ministers on down. Without that, the resistance will quite reasonably be overwhelming.

    • This is more or less what I wanted to say with my metro example in one of the comments Francisco linked to above. Social change needs to be the aim. Cash transfers or elimination of subsidies should not be goals, they should be tools and in my opinion other changes should come before them.

    • Right, that would explain why CCTs have only ever been implemented successfully in Switzerland, Norway and inside Punky Brewster’s conscience.

      oh wait! http://dengmengwei.files.wordpress.com/2010/11/map.png

      Peru, Nigeria, Bangladesh, India, Nicaragua…the list of countries where CCTs have been implemented successfully reads like the itinerary on a World Tour of corruption hothouses. But part of the reason they can work even in places like that – and quickly establish themselves as political third-rails that nobody dares to touch – is precisely that they’re so easy and cheap to administer they’re not really that interesting from the point of view of corruption entrepreneurs.

    • Setty said-and I am grabbing one sentence here-“The single biggest problem with changing the status quo in Venezuela is that any new program WILL add a bunch of new problems”
      Let;s say- we double-or triple the number of busses in Venezuela, and the number of delivery trucks- and the number of tractors, construction equipment,-
      yes, we will have problems- but -can get much more people moved and many more packages delivered, and many more roads built, etc.
      More jobs, more repairs- I believe importing large numbers of trucks and busses,
      is a great beginning to fix things.
      Not sitting around and going backwards like Cuba …

  7. Transparency is the key for the implementation. Put the numbers online on a daily basis. This can be automated. How much petrol is being consumed in every single parroquia? How much money is coming in day in, day out?

  8. Im on the fence on this topic. As an economist I agree… but this topic reminds me of a discussion I had with a good friend of mine whose position was:

    “Estas meando fuera del perol”.

    Oil subsidy needs to be removed, at some point. But not now, the Venezuelan government is too corrupt and too inefficient. It has always been corrupt and inefficient, there is no accountability, no checks and balances and money from the public arcs always ends up in the wrong place. Even with the subsidy we have quite a rich budget, yet nothing gets done. Will having an even richer budget do anything for the country? No guarantee.

    Venezuelans feel entitled to their oil subsidy because well, at-least they get that. If you are going to take that away then first go ahead and show that you can be efficient with the resources you have before you ask for more.

  9. One thing about the endorsement being linked to CCTs: we need to remember that whoever wins the primary will have a “Programa de Gobierno de la Unidad,” a program people have been working on for months now, one which has drawn on some of our country’s best minds. So the fact that Leopoldo is playing cheeky with support for CCTs while others have not yet come down on the issue is not really all that relevant, if you think about it. Not at this stage, and probably not at any stage.

    • Oh I don’t know about *that* Juan. I want a candidate to signal a personal commitment to CCTs, because I want some assurance that when the going gets tough this one be one of the ideas tossed into the pyre of “compromise”.

      It’s early days. I’m temperamentally much more given to the other guy. But the other guy better start talking up CCTs soon…

      • Anyone committing to the most cash and the most transfer and with the least conditions will most likely get my vote, but, most importantly, my prediction of winning. Cash transfers win elections. Psssst: chavismo knows this.

          • The campaign for Mi Negra started too late and they kept changing it, seemingly out of lack of conviction. But if you look at the poll numbers, they were on the rise thanks to Mi Negra, which I think could have produced the win given a couple more months.

            It is that simple: people vote with their pockets, especially poor people.

  10. The gasoline price, where price is what something costs the end-user, was a lie from the outset: you have to reveal that “gasoline costs 97 old cents/lt” is NOT part of how the Universe is put together; that shoud not be difficult to get across. Thereafter, the only feasible route is that of escalated increases over an announced period of say, a year, at X cents a month. That way, everone knows what is coming down the pike; there are no sudden increases in camioneta fares and “we’re all in this together”, with moans&groans at gas stations and barber shops and peluquerías etc but it becomes a ‘topic of the day’ as opposed to a casus belli, even binding joint ‘moaners&groaners’ from all levels of society. I cut my hair in the Pirámide.

  11. I don’t have faith that people would make the connection between rising gas prices and money transfers. Rather, they’d say ‘I want both.’ Raising prices for gasoline (and anything else) can produce social unrest. But many nations have done it, including Colombia (where I live) and Venezuelan ally Iran. Chavez’s fear of doing so demonstrates his insecurity and maybe his weakness. It’s also like a time bomb set and waiting for any future gov’t, which will be forced to raise prices and suffer the consequences.

  12. I’m a LL supporter and I’m working on his campaign (by the way, please endorse us :)). But after reading all your posts, the first thing that comes to my mind is that we keep thinking about what should a MUD gov’t do just with the CURRENT oil prices, which may not be the same by the time we are in power.
    I mean, these are proposals for a vacas gordas period of time, but I’m not sure they would work out if we were in the same situation CAP had to face as president. I’m not aware of the oil prices forecasts for the next years, but what I know is that it is a cycle and these years of bonanza petrolera may be getting to an end anytime soon.
    That’s why I ask you: if the oil prices were lower, should the new government still implement those policies, even though it might trigger a new Caracazo?
    PS: I’ve been wanting to post here for a long time, I’m a fan.

    • Thanks JCB,

      This site is top-heavy with Caprilistas, so we need people to put the case for your guy robustly as well. As you can see, I’m a fundamentalist CCTista, so things like that Op-Ed are total catnip to me.

    • Juan Carlos Badaoui, even at CAP oil prices cash distribution systems, conditioned or not, still make sense. In fact, I was already pushing for them when CAP was president.

      The key is that cash transfer systems are so efficient, and so well received, and so simple to implement, compared to all alternatives, that not implementing them is what needs justification.

      • When I was talking about those policies I meant basically to eliminate the gas subsidy. What I assume of you reply is that even if oil prices are low a conditional cash transfer system is viable, isn’t it? So the reason to get rid of gas subsidy, if you want to replace it with a CCT, it’s not to save money, right?

        • When it comes to cash transfers, I am at an end of a cash transfer spectrum that proposes giving every citizen, unconditionally, an equal amount of cash, daily, for life. So, in my book, the cash transfer should be set up regardless of a tie-in with gas subsidies.

          Quico is at a point on the spectrum that proposes that cash transfers be conditioned, mainly to education and healthcare. It’s my understanding that, in his book, the conditioned cash transfers are also a good thing regardless of gas subsidies.

          Quico’s inegenious tie-in to gas subsidies, however, seems to be not so much about the proposing of cash transfers as it is about eliminating the excuses for avoiding eliminating the gas subsidy, which we all agree is pernicious to the point of unforgiveably regressive.

          I support the tie-in, for campaign purposes, but I would prefer that natural resources revenues be destributed for what they are, the rightful monies of each citizen, not taxed money for the government to decide what to do with, such as subsidizing things like gas, education, healthcare, or anything else.

          To answer your questions directly:

          1) Yes, even with low oil prices, cash transfer systems are viable, and more efficient than alternatives.

          2) No, the point is not to save money, though replacing gas subsidies with a cash transfer system would translate to considerable savings.

  13. I think that for Chavez the gasoline subsidy isnt simply a matter of economics or even just short-term politics, but of ideology. The Caracazo is part of his revolution’s origin myth, and so repeating those ‘neoliberal’ policies (by requiring the wealthy to pay for things) would almost undermine his legitimacy.


Please enter your comment!
Please enter your name here