Quick, can you think of a country that has been growing at remarkably rapid rates?

Take a second, but no more.

You probably thought of China. Or India. Perhaps you thought of another more obscure country, like Ethiopia, or the United Arab Emirates.

Do you know if any of these countries are suffering from massive blackouts?

Of course not, because they aren’t.

During growth spurts, energy consumption goes up – people buy more appliances, more factories get built, and the overall use of energy increases. Satisfying growing energy demand is good business, so production goes up right alongside consumption. 

Growth engenders more growth; everybody wins.

Sure, occasionally there will be hickups. In India, for example, there were massive power generation problems in 2012 – coordination failed, and growth in production momentarily didn’t match growth in production. That’s emphatically not the kind of electricity crisis Venezuela has been facing since 2010.

This simple economic logic – that demand usually begets its own supply, unless the state steps in and screws things up – escapes the author of a recent article on Venezuela in Wired. The article, by Linda Poon, is titled “Venezuela’s Economic Success Fueled its Electricity Crisis.” In case it’s not clear from the text, the horribly flawed conclusion of the article is right there in the title.

You would think a website called “Wired” would have a sixth sense for this sort of nonsense. Sadly, it doesn’t show.

How did this train-wreck make it into print? Exhibit A is that Poon used, as her main source, an academic who lists his areas of expertise as:

  • U.S. History
  • Alcohol and Drug Studies
  • History of Sexual/Gender Minorities
  • The Cold War
  • Labor Unions
  • International Labor Movements
  • U.S. and Britain
  • San Francisco Bay Area History
  • California History, AND
  • Sustainable Development Policy

I guess Professor Victor Silverman of Pomona College – a veritable jack of all trades – can now add “Venezuela energy policy” to the list of areas he’s an expert on. After all, Wired magazine is vouching for him!

The Venezuelan electricity crisis is not that complicated to analyze: when you control prices for something and inflate the currency at the same time, demand will exceed supply, whether something is rice, diapers, dollars or kilowatt-hours. The end.

Millions of people – factories, schools, workplaces, surgery patients – are now suffering from blackouts…that is, suffering the consequences of living under a government unable to grasp this simple, first semester undergrad level economics. Throw Wired into the pile labeled “problem” rather than solution.

About the only positive thing we can say about Poon’s piece is that it’s a timely reminder that, for those of us engaged in the war of ideas regarding Venezuela, the work is never done.

26 COMMENTS

  1. I read the article not only was the conclusion wrong, she did even get some of the facts right. Gui Dam build in the 1980s? I believe that it was built starting in 1963.

  2. Glad you did this post and agree 100% of what you said Juan.
    I read that last night and got mad, not before making sure it was Wire the source I was reading this from.

    Linda Poon was trying too hard to highlight the issues of Climate Change, she didn’t care much about the reality behind the collapse of the electric service in Vzla.
    You can clearly see how she drive her point by reading the last paragraph.

    Bad irresponsible journalism, glad to see lots of comments there straighten up the facts.

  3. The commented piece suggests that the crisis was unavoidable , because no one could predict the growth in demand and that s totally false, even if the artificially low subsidized price of energy made demand increase faster than would have been the case if prices had at least tried to cover actual costs , the last ‘nino’ crisis made it clear that additional capacity needed to be added to the grid if a new crisis was to be avoided , the funds were made available to build that additional capacity , the money was spent ( as it happens using corrupt and incompetent contractors ) but now that the crisis has returned that added capacity (which woud have helped prevent it) has yet to be installed .

    Understand that as part of its policy of giving Cuban companies a chance of making money they have no other way of earning ( in a legitimate market) the regime gave incompetent Cuban companies a hand at building/ expanding that capacity , at a heavy price but without the needed results.

    This makes the regime doubly responsible for the crisis …….they should under any normal democratic system be held accountable for this failure ….and yet they manipulate their fraudulent control of official institutions to scape their responsability for this and other misdeeds…!!

  4. Next time Pomona hits me up for money, I’ll make sure to tell them I don’t have the energy to do so, because I’m too busy growing.

  5. During the Guri basin drought in the early part of 2010, there was ample documentation in Caracas Chronicles, Devil’s Excrement, and Venezuela News and Views that Chavismo had not followed the plans for electrical power supply expansion that were in place in when Chavismo was elected in 1998.

    Recall that in 2010, the government response to the Guri problem was that “Of course we have a supply problem. Demand has increased,” which totally ignores the plans for expansion of electrical power supply that Chavismo ignored.
    Same old , same old.

  6. I have one tab on my browser set to articles about Venezuela in the last 24 hours. As a consequence, I see nearly everything that get published, including the pernicious (Telesur, RT, etc.), and the casual nonsense. This particular one is clearly in the latter category. My principal reaction to it was a snort of derision.

    WIRED Magazine should stick to reporting on emerging tech and leave the politics and economics to someone who knows what they are talking about.

  7. Would agree with 90% of the post -the state steps in and screws things up- is like reading an article about men from a battered wife (she will assume that all men are violent). It seems to me that anyone that grew up in Latam will conclude that all States are a force for screwing things up (and the private sector can do no wrong by the way). I thought we could have moved on from that….when it comes to strategic infrastructure some planning, State intervention can be a force for good (believe it or not). Time to leave dogma aside and be a bit more pragmatic. Wan’t it the State that built Guri by the way?

  8. And then I’m here, chuckling at how chavismo has made correctly just ONE thing: Brainwash some poor misguided people all over the world after burning millions of dollars.

  9. Abraham Lincoln said:
    a) You can fool all the people some of the time
    b) and some of the people all the time
    c) but you cannot fool all the people all the time.

    At this point the publishing of that article should be assigned to b)

    Over the years I went to allways quite sparcely visited leftist talks about your country. The highly distortive narrative of that destructive Government as a liberation force against US and global enterprise is kind of attractive to some people.

    At least some of the activists here kind of present things in a much more realistic way now than 3 years ago. In the last of the events I visited the lecturer argumented almost like Caracas Chronicles. I told him so after the event. He didn’t take it as compliment, I think.

    I still find it hard to not constantly interrupt people blatantly lying in public.
    After the last event I asked the guy in private, if he has no objections to the propaganda especially from the Consulate people. He answered, that he is used to it. Otherwise they would loose their job. But he gave them room. A room filled with around 10 Venezuelan and 20 from other countries.

  10. In regards to Silverman, he has suckled at the teat of Big Government and their acolytes since his college days. I doubt, from his extensive “resume” that he has worked a moment in a private sector situation where actual productivity was required, and labor had a real value.
    .
    Examples of his antics are found all over the Internet, including his “scholarly” research into all that is vile about Capitalism.

  11. The problem of the electrical supply reminds me of the collapse of the CCS- La Guaira Viaducto. For years the experts had warned that there were major and serious structural problems with the Viaducto, which unless steps were taken it would eventually collapse. Those who traveled to the beach or the airport actually experienced the fractures on the roadway. It was said that nothing could be done to repair it. How about building a new one? Naw, could’t be done. Well the bridge finally came tumbling down and then and only then did they (the gov’t.) begin to build a new bridge. The bridge was built at a huge expense, thousands of users had major problems traveling to and from, not to speak of the loss of income from tourism and transportation. One of those “misterios del universo” : As military men, who are trained to think strategically, plan ahead and foresee all potential alternatives, would it not have made sense to have started building the new Viaducto before the old one collapsed?

  12. I worked in VA from 2010 to late 2014 installing several power plants to generate electricity after Chavez announced the electrical crisis in 2009. They spent billions to curve the demand from the Guri lake… so… why are they having issues now just a few years later, no maintenance! I was once told by a senior Corpolec individual that maintenance won’t get votes, new power plants do. Did you know VZ has over 40,000 megawatts of installed power, but only able to produce less than 19, leaving the country in the dark. The power plants have no tools, spare parts nor the desire to maintain the equipment. The government burned the bridges with the likes of GE, Rolls-Royce and Pratt Whitney due to not paying for equipment or services.

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