Bloomberg subtly mangles its takedown of a big, failing chavista Co-Op


iz_9x3LKhn0wAs Juan noted earlier, over on Bloomberg, Anatoly Kurmanaev takes the grand tour of the oversized, underused William Lara Agricultural Commune near Calabozo, in Guarico State,

The harvesters imported to overcome food shortages are gathering cobwebs near a burnt corn field in central Venezuela. A short distance away is the shell of a fertilizer plant and rows of empty red-roofed bungalows.

As I finish stories like this one – and by now, this kind of take-down of a hulking, grandiose, misplanned, maladministered chavista project is something of a journalistic genre in Venezuela – I often find myself struggling to put my finger a certain dissatisfaction. It’s hard to begrudge a guy like Anatoly the gumption it takes to haul on out there and report from the middle of the llanos, but I just think the analysis behind it is subtly but seriously garbled.

The blame for the failure of these initiatives is typically laid at the feet of some obvious planning blunder. In the case of the William Lara Commune the problem, we’re told, was with water: nobody had thought through that a massive agricultural concern like this one would use tons of water, and there isn’t enough on site to keep production going.

The tendency is to look for technical explanations like that. The economics of it all, if they’re mentioned at all, are treated as supporting characters and shunted to the end of the piece, as they are here. Just three grafs before signing out, Anatoly lets us know that “A decade of price controls on basic goods has exacerbated the situation.”

But treating price controls like this, as just one factor among many “exacerbating” the situation, is sort of like describing the death of Kurt Cobain by talking about his drug use, his sporadic homelessness, his bad nutrition, and then towards the end noting the way that gunshot wound to the head “exacerbated the situation.”

Giant chavista projects fail not because chavistas are hopeless at project planning. They fail because the prices are wrong, and when prices are wrong project managers are left without any good reason to fix the planning mistakes that are inevitable in any large-scale project, public or private.

Look at it this way: say the Venezuelan government had created an environment for high farm profitability. Say food imports were blocked with high tariffs, seed and fertilizer were subsidized and farmers were allowed to charge what they wanted for their produce. Say price signals were used to turn farming into a high-return activity in Venezuela. Are you seriously trying to tell me the 2 or 3 caciques in charge of William Lara Commune wouldn’t have figured out a way to solve the water problem then?

Of course they would have, whether that involved ponying up a few thousand dollars for some portable Honda diesel pumps  or digging a groundwater well or even a rainwater harvesting pond themselves. If water availability was the thing standing between them and a whole lot of money farming, they would’ve found a way.

Water availability is a red herring. It’s not that water is unavailable. It’s that producers respond to price signals, and what controlled prices tell them is “don’t bother fixing the water problem here.”

The commune structure itself is another red-herring. Sure, real socialist communes zap work incentives by creating hard-to-deal-with free rider problems, but this is Venezuela, where co-ops and communes are usually run by a handful (or even just one) well connected regime figures with the other comuneros working as all-but-acknowledged farm-hands. Where prices send a clear signal that says “do-this-activity-now”, even socialist state employees react like coked-up capitalist workaholics: is there anyone in Venezuela today who puts in longer work hours than a National Guardsman stationed in San Antonio del Táchira?

So let’s get is straight: William Lara didn’t fail because it was a commune. And it didn’t fail due to bad planning. The planning failed because the prices are wrong.

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