Waste born of corruption, amplified by mismanagement and entrenched by lack of accountability and ideological rigidity.

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Allegory of the Chavista Public Sector Management Approach

Over on FP.com, pivoting off of that Reuters’ report on Fonden, I try to explain the way your morning paper will lie to you about Venezuela this week.

More and more, I get the sense that the big unreported story of the Chávez era is about waste. Corruption is comparatively easy enough to explain: it has clear motives, clear bad guys, a built in moral narrative – and so, it gets a fair bit of ink.

What’s much harder to get across is sheer waste – resources that simply go up in smoke because nobody is competent enough to spend them semi-rationally. That’s where a huge proportion of the oil windfall has ended up. And not through venality, simply through cluelessness.

1 COMMENT

    • The single reason? I can accept top of the list (it’s highly important to me – I’ve written about it, though certainly not on the level of McLeod and Lustig), and it’s definitely on the top of my list for reasons why Hugo (and many of his most devoted supporters, especially the overseas variety, are too) is a hypocrite, but if your list ends there…I’m speechless.

      • It ends there for me because, simply put, Chavizmo is equivalent to crony capitalism or cronyism in general. Of course, if you extrapolate it further it is not just that, but the overall academic analysis follows. They would not have observed what they did without the Aban Perl, the Fonden slush fund, the Maturin pollution, etc. I admit it is simplified but to me, the analysis that Darryl McLeod and others propose is simple and all that matters to me as a leftist. I mean, objectively speaking. I could go on and on about the shit that is Chavismo, but really, all I have to do is look at how pitiful “the revolution” has been in the end. I can accept that there are further problems with the revolution, but imo it alll follows from the inadequate management of overwhelming oil funds. So I have no desire or need to criticize the “revolution” for failing to use the resources efficiently. The studies do that for me. Basically, for me, it’s obvious they fucked shit up, who cares about the details too much, right? Capriles should usher in solutions, I mean, who could be worse?

  1. This is exactly what you’d expect of an under-developed country which changes rapidly from a hands-off government with no oil revenue, to a hands-on government with lots & lots of it.

    There was no precedent for mass investment in any social area. New bureaucracies had to spring up almost overnight to deal with the mounting weight of plans. People assumed positions based on self-interest and careerism.

    There was practically no way of avoiding this. Thankfully, there are many ways of controlling and reducing it.

    • Yoyo, that’s simply not true. There is precedent: The “El Barroso” discovery in Cabimas put Venezuela on the oil map in the 1920’s. The Perez Jimenez government undertook great public works projects in the 1950’s. The Carlos Andres Perez administration oversaw the quadrupling of oil income in the 1970’s. Oil revenue has been a major part of the economic landscape the vast majority of Venezuelans during their entire lives. Venezuela has seen this before, many times, and usually handled it better than Chavez has.

  2. Well something I can agree with but as the last writer said it was worst before and would be again under Capriles and his lot.

    There is a way to get rid of it, complete the revolution, clean house of the corruption in the bureaucracy, empower the councils, create a proleltarian democracy and internationalism and move forward with workers control. You can make half a revolution and Venezuela is still capitalist.

    As Alan Woods points out…

    The key to the success of the Revolution is that control of the movement must be in the hands of the rank and file, not the bureaucrats and careerists who have done so much harm to the Bolivarian cause. It is the workers and peasants who have been the real motor force of the Revolution. They and they alone, must be in control. The only people who can lead the Revolution to victory are the workers and peasants themselves.

    •Defeat the counterrevolution!
    •Expropriate the oligarchy!
    •Power to the workers and peasants!
    •Carry out the Revolution to the end!

    • You are so silly… Sorry, but your so-called revolution is not gonna happen. Not under Chavez. Chavez is soooo busy building his own personality cult, that he has no time to fight corruption or incompetence among his ranks.
      Chavez knows perfectly well who are the corrupts and the incompentent, but he’s doing nothing to stop them. He even goes out of his way to endorse them! Chavez is not a revolutionary, but an accomplice of thieves such as Diosdado, Albarran, Ramirez, and many others, and you’re well aware of that. A vote for Chavez is a vote for guys – like Diosdado – that steal money from the social programs to buy appartments for their lovers.
      Revolution? More like Rob-o-lution…

    • The workers and peasants screwed up the revolution too. They weren’t able to deal with what they did receive. There are many MANY true life cases of peasants receiving funds to build chicken houses but the money was misused. In Uverito Pereno Guarico the govt spent almost 400000 bsf. Several years later there is not even 1 chicken house. The peasants are still poor and living on a little mission money. It isn’t/wasn’t just the bureaucrats and careerists! You are living for a fantasy world. By the way where is the justice in switching from control by 1 group to the control by another group? Your so called revolution is not about justice fairness utopia…it’s about stealing what doesn’t belong to them.,. expropriation of the oligarchy as you say and domination of society by a group of workers and peasants. What about the concepts of freedom and liberty with opportunity and justice for all?

  3. I believe that waste is unavoidable as long as a government team, like Chavez’s, is made up of kidnappers (Lanz), street robbers (Bernal), bus drivers (Maduro), terrorists (Ali Rodriguez and Soto Rojas) and kleptocrats (too many to mention) . In spite of the immense amount of money received (possibly because of this) the Chavez’s government has been unable to get the country going and has misused billions in buying weapons, financing elections in the hemisphere, lending money to dictatorial friends, building houses that crumble down and engaging in grandiose project that get nowhere (Orinoco-Apure, are-spacial centers, you name it).
    Waste, yes. I believe waste is, sensu latu, a variety of corruption

  4. Excellent post! I would add only that a previous post you did on the gini coefficient, which basically showed that inequality has been the same or slightly worse under Chavez, might properly illustrated how minimal the help to the poor has really been.

  5. Apart from the Gini coefficient aforementioned, we could highly benefit, when talking to foreigners, from a comparative with oil-producing countries only. What I mean is, amongst other oil-dependent countries, how has Venezuela fared during the boom?
    I vaguely remember you guys quoting Iran in a previous post; I’m thinking something down those lines. We need to keep in mind that to a foreigner Venezuela is “rich” (which is highly arguable), so talking about better development and management sometimes misses the mark, because as soon as he hears, “they’ve built a hospital” they just switch off and say, “hospital, better than no hospital”. Hence a comparative with (dunno), Nigeria, let’s say, light help illustrate how “bad” we’ve done during the boom years.

  6. I agree that Waste gets less ink than Corruption; how about a follow-up with the couple of things that get even less ink than Waste?

  7. I think “waste born of corruption” is really mainly corruption itself: e. g.,, the use of sub-standard materials in construction while budgeting/paying for high-quality materials; the importing of foodstuffs already expired/near expiration dates at higher than market prices, and through import agents for commissions instead of directly from suppliers, and off-loaded in Cuba to Cuban vessels for shipment to Venezuela, and then spending weeks/months on the docks to pay high port fees and allow time to rot; the assigning of funds to Cort’s “Peasant” Consejos Comunales for road building, for example, with at least 50% ripped off by bureaucrats before reaching the Consejos, another 25% ripped off by the family members running the Consejo, and maybe 25% going to the actual building, with difficulty in buying cement and reinforcing rods from Government cartels controlling supply and inflating prices: the purchasing of expensive unneeded military hardware mainly for the commissions for the very top on down, even more so than to appease military egos; and ad infinitum….

  8. It is kind of morbid, all of these reporters showing up in Venezuela, basically to file a couple of stories on the murder rate in Caracas while they wait to see if the country will blow itself up. We North Americans really have a woefully limited understanding of our neighbours.

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