A recent article in Wired magazine shows the epidemic of straight-up nonsense on the Venezuelan economy, while receding, is far from over.
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.
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