There was a bit of controversy in Caracas Chronicles the other day after Amanda Quintero’s decided to try her hand at sacred cow roasting with a long, anti-’sembrar el petróleo’ takedown. I read the responses with a mixture of concern and dismay —and was finally pushed over the edge when I read a smart young person I admire opine, in comments, “It’s not sow vs. not sow. We all obviously agree: sow.”

It’s kind of amazing: in Venezuela a smart young person can read a 2,500 word piece painstakingly taking apart the Sow-the-Oil thesis, turn around and write that we obviously all agree. It’s as though “sowing the oil” as an unshakable aspect of civic dogma: above good and evil, beyond rhyme and reason.

Maybe the original text was a bit too academic, maybe couching it in those terms invites misunderstanding. So let me ponértela facilita: no we do not obviously all agree. Yes there is an alternative to “sembrar el petróleo”. A radical, weird alternative we’ve never ever tried before.


Just letting markets do their thing.

Because Sembrar el Petróleo isn’t just a motherhood-and-apple pie call to invest oil rents wisely. Sembrar el Petróleo is a lot more specific than that. It’s a call to redirect oil rents out of the industry that produced them, which happens to also be by far the nation’s most profitable sector.

It is, in other words, a none-too-disguised call to take the fundamental capital allocation question in the Venezuelan economy (“what the hell are we supposed to do with the huge excedents the oil industry generates?”) out of the sphere of market exchange and put it in the hands of state bureaucrats. When we say we all agree to sow the oil, what we’re really saying is that every last one of us is born a socialist.

Or, at the very least, a dirigiste.

I wasn’t entirely sure I agreed with Amanda when I was reading her post, but seeing the furious reaction it courted finally convinced me she’s on to something.

As a political culture, we’re suicidally attached to the fantasy that some enlightened state elite ought to know how to allocate our capital better than the market does. 

Sowing the oil means an open-ended commitment to diverting capital away from our most promising industry. Sowing the oil means fighting the market; engaging it in a constant, decades-long fight against our natural endowment and our comparative advantage.

Eighty years on, how’s that workin’ out for us?

The alternative is not that mysterious: letting capital chase its most profitable use. If we did that, what we would see is a much greater share of capital flowing into the industry where all the money is in Venezuela —oil and gas— and much less money going into the likes of the Tinaco-Anaco railway, or state-owned steel mills that don’t produce any steel, or roach-infested Venetur hotels, or gallineros verticales, or any of of hundreds of other oil-sowing boondoggles and scams our governments have latched onto over the decades as vehicles for frittering away our oil rents.

Trying to pick winners out of an office in Carmelitas isn’t the way you turn oil wealth turns into development. It never was. You’d think we’d have learned that by now. We haven’t. We still don’t get it that if you allow markets to allocate capital you end up with more capital, and a bigger tax base, and that bigger tax base can then be used to provide the kinds of public services at which markets are no good but democratic states are great.

We keep trying to invert that order, to fudge the line between private and public investment, we keep getting burned again and again and again for eight decades and we still don’t see it.

The consensus around Sembrar el Petróleo is a consensus around failure. It’s an iron-clad determination to keep wasting our natural endowment in perpetuity. It’s time to emancipate our minds from this miserable mindset. Enough, verga. Enough.

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  1. Finalmente someone defends capitalism!!! People, it works: it works in Singapore, it works in Canada, it works in freaking communist China despite all the state interventions, let’s all leave paternalism behind along chavismo

  2. We’ve always been a country with oil, but never a oil country. Nos da asquito, certain revulsion. Our understanding of the issues is in the hands of Uslar, Perez Alfonzo and Romulo. An old and no longer valid vision

    Own everything, care for nothing is our motto

  3. Gotta love capitalism. It works. With some “socialism” too, though, as they have in Europe and Canada. (Free education, social services..) It’s never pure “capitalism” or “socialism”, anywhere.

    That said, the term “sembrar el petroleo” is up for multiple interpretations. My interpretation is much wider than many posters here. It would mean, above all, using the oil revenue much wisely, and start by educating people and stealing less. More police, less corruption. Better schools available for everyone. Better guardia to diminish crime.

    What they did in Norway, for instance. Sure, you encourage free capitalistic markets, but you also take care of everyone. You don’t steal single every barrel of oil, and then some, as they do in Vzla. You educate people, with real, top-notch education, and put them to work. Which they’ve never done in Vzla.

    That’s “sembrar el petroleo”. And yes, diversify the economy and develop other areas never hurt any country. The “oil curse” is real, unless there is justice, rules, punishment for crimes, and education. A country blessed with resources better have some discipline. Say Chile with all that copper.. They were able to prosper because they had a tough government for 17 years, were educated, and they got to work. They did diversify the economy, and produced other things. “Sembraron el cobre”.

    Uslar Pietra had a point, if you know how interpret his words.

    • Uslar Pietri had a point, if you ignore his context, what he meant, his world view, and the impact of his ideas…

    • Canada and Norway tax the heck out of everyone. Education and health is not necessarily free, it is paid through taxes and managed by each Province/State under Federal guidelines.

      Depending on your tax bracket (allocation) you may end up paying 50% or more if you include property tax, IVA (GST) and income.

      The thing in those countries is the sense of society and the work require to achieve the level of services they enjoy. Unfortunately, we have been given a lot without asking anything meaningful in return, just votes I guess.

    • is not about understanding or not what Arturo said, he wrote it 100 years ago and obviously things have changed over the time, so we would be all incorrect if we try to interpret the same way he did. Back on the day, if we would have distributed the oil rent across the population at the time, people would have had enough money to do something, try to do that today and you will end up with a couple of dollars.

      What we can do though, is to take his initial work, learn from past mistakes and move forward.

      So yeah, the past 18 years have shown us that if we try to Sembrar all of it and steal the rest, it will not work, who would have thought? but what if, just if, PDVSA had a budget that includes a re-investment and maintenance in the same industry by law (exploiting our gas reserves and mix it with out super dense oil, like an article from past week suggested), and then, only then, PDVSA could claim dividends for the extra income, and this would be repatriated to the state and used for Education, Health Care, Infrastructure.

      I agree with Juan that is not about choosing Capitalism or Socialism, or to sembrar or not sembrar, its all about of creating a plan that works, a plan that strictly specifies what the money is going to be used for, so people/parties can be held responsible for it and avoid corruption.

  4. Arturo Uslar Pietri, sorry for the typo.

    The problem with oil, and its “curse” is that it’s very easy to steal, and entices everyone for corruption. Unlike other commodities that create wealth for many countries, that are tougher to steal. If you produce in the agriculture or automotive industries, it’s not that easy to steal the profits. But with oil, all you have to have is one corrupt company (PDVSA) and redirect all the revenue to the corrupt leaders, officials, bolichicos, etc. Easy as pie.

    If a country relies only on oil, has no other productions, and has no justice system to put crooks in jail, it’s doomed. Look at Nigeria, Algeria, and Vzla and others. Doomed by oil.

    • The problem with oil is is not that the revenue is particularly easy to steal. Any lucrative mineral resource is about the same. The problem is that a resource jackpot becomes an easy, “painless” way to pay for everything anybody wants – including corruption, of course, but also things that seem like public goods. Which may be public goods, but not worth the cost. Or may not be genuinely useful.

      But the itch to spend this money in “useful” ways is intense. It leads to money being poured into anything that has a pretense of social value, and ultimately to waste and distortion. And this is true even if the government is staffed by angels.

      Which is Quico’s point. Many angelically virtuous men have some particular project or goal they want to spend money on. When the country believes in “sowing the oil”, many of these “angels” will get their funding, producing either waste or distortion or both, and ultimately consuming both the jackpot money and the national economy, even if no one ever steals a penny.

      But also the process of deciding how to “sow the oil” is intensely corrupting to the political process, so eventually there will be stealing.

  5. Canada went some way along the sow the oil route with Trudeau the Elder back in the 80’s with his National Energy Program and all of the disaster that created. Fortunately that experiment with the government knows best mentality was trashed by the 90’s and the market was allowed to proceed. Set a proper royalty environment and use the tax system to get the benefits of an oil economy.

  6. Sow the oil simply means that public resources produced by oil should go towards creating the conditions for developing an economy which can sustainably maximize the well being of the maximum of Venezuelans, to the extent that money goes to the execution of public projects or the provision of services which by themselves dont attract private capital (education, roads , dams, etc) then there is no avoiding their execution by public organizations , if on the other hand they are capable of attracting private capital (handled by competent organizations) then it can be used to help them develop their activities thru loans and other contributions .

    Before oil transformed our country Venezuela had no national road system , very poor educational system , limited electrical coverage etc. If we had only allowed private investment to carry out these activities then there would be no guri , no siderurgical industry whatsoever , no UCV or Simon Bolivar Universities instead we might have bigger Santa Maria universities, dirt roads , a large part of the country without running water or electricity………the important thing is to foster the development of well run entrepeneural big business conglomerates , like they did in Japan with the Zaibasus and in korea with the Cabols (all heavily dependent on an initial govt funding support) ….

    Where are our Mitsubishis , or Sumitomos, or Mitsuis , our Hyundais ……where are the big well run business organizations that can spearhead our economic development on their own ??

    • That was the theory of Romulo Betancourt and the doctrine that was propelled by the generation of the ’28. The hegemony of the state that is in every aspect of the society.

      We took the worst of communism with the super-state and the worst of democracy with super-representation allowing little parties to exist and ultimately develop into a client state.

      The neo-liberal agenda of the late ’80s and ’90s could have worked with a better execution and better participants at the helm. We were just beginning to see the results of decentralization and privatization (more or less what Quico is saying) when the whole political and military instability brought us where we are now. Yes, there was a lot of corruption then but the big tits of the state that feed corruption were cut in many places (CANTV for example), and could have been cut in others but we are still judicially very weak (PDVSA became a state within the state).

      I agree the government needs to promote development and put money on the stuff that in general does not generate revenue but certainly supports country development (i.e. Universities). That being said, the government cannot be in every aspect of the economy because is an awfully bad administrator ever, check and balances are not in place, and exemplary punishment is laughed at.

      Even in legal, clean and completely benign transactions, we got plenty of distortions that go beyond a liter of gasoline at 7 cents US$ and the vast amount of corruption that we got quite a lot of information there. For example, I went through my entire career at the UCV paying Bs. 5 for a semester for an engineering degree. I know professors retiring with full pension as early as mid-forties (my mom retired at 46 just because she was a secretary at 16 years old at the university thus 30 years of service). And if that is the university, the light of the country academically speaking, what would you expect for the rest.

      So, I am in support of Quico’s neo-liberal agenda which is what it is. It has been tested and it works. Caldera would not have managed the bank crisis of the mid 90’s if it would have been for the economic policies CAP and moreover the IESA boys established to move us out of the “sow the oil” or better say “waste the oil”. The sine qua non requirement is to clean the judiciary, weak law enforcement (and bending) is hands down the biggest issue we have and the one no one tackles seriously being the 4th or the 5th republic, being that you sow the oil, put the money in a bank (a la Norway) or just burn it so the population can enjoy carnival and semana santa at the beach with lots of cases of beer and bbq included.

    • Bill, your assumption that dams and roads don’t attract private capital is grossly mistaken. In fact, investments in these types of assets are now more relevant than ever to private investors for a number of reasons: 1) lack of capacity from the highly indebted governments of developed economies that have very little capacity to finance long-term projects 2) Persisting low yields in pretty much all the highly rated bonds in the developed markets due to the various government-led quantitative easing programs has pushed out private capital from highly liquid and public markets towards illiquid markets (infrastructure equity/debt, real estate, private equity, etc.). Insurance companies and pension funds can’t simply do what they did for many years in the past: buy highly rated bonds from corporates and governments, collect a coupon and pay liabilities 3) Lack of correlation to public markets

      And the list grows. I am pretty much in favour of Amanda’s argument wiith the only exception that some people have this perfect scenario of no intervention/let the “market” do its job which I have to say enrages me. What happened when we let the “market” do it’s job in the 2000’s leading up to the financial crisis? If markets do their “job”, why do bubbles take place? Why did the U.S. Govt. bail out so many banks? Is too big to fail a real argument? How come the markets let these entities become so big? But weren’t they doing their “job”? This markets rule everything approach is not correct either. There needs to be a balance. At least in markets, monitoring, regulation etc. needs to happen and even so, this is no guarantee of anything.

  7. Of course it’s an option, but is it really?

    I must say you caught me by surprise with your weird ideas, but i don’t see anyone (besides maduro) campaigning to de-satanize capitalism…

    • Only MCM dared to name capitalism in her offer during the primary elections years ago, bringing the burning hatred of chavismo and all the moronic parasites who called her all sorts of insults for having the audacity of wanting to do something different from the vicious paternal rentist state which enslaves the people and brought Venezuela to what is today.

      And even the, she had to coat her offer with some populism, calling her offer “social capitalism”, because like 80% of the Venezuelan people apparently still keep the idiotic buhonero mentality when it comes to make business.

  8. Coño por fin!

    Glad to see someone finally say it!

    Whenever someone is making a lot of money, someone is always out there looking to see how they can take it away from them! The market usually takes care of that in due time.

    What they should instead be doing is seeing how they can actually Create something themselves!

    • In the US some of its public resources are spent in infrastructure and education and in public works and services which are not only of direct benefit to the population but which grant businesses a platform to foster their maximum growth and development …… , the latter use in turn translate into a better quality of life for all ……., both uses of public funds are legitimate ,

      What is not legitimate is to have the govt use public resources to invest in activities which competent private business organizations can create run and maintain with optimum efficiency …….or generally pursue better than average government organizations !! This latter has too often been the case in Venezuela!!

  9. Not sure if I agree. There may be too many of us to become Kuwait, and we need some way to encourage competitive non-oil industries to show up. On the other hand, we’re in such a pit that just getting government out of the way may be a good incentive to start with, and the Venezuelan state hasn’t been good at industrial policy to begin with.

  10. I think capitalism is a loaded word. Absolute capitalism and absolute free markets doesn’t really exist anywhere in the world. Regulated capitalism grows economies but as we see in even the most developed countries the accumulation of wealth gives individuals enough power to start influencing policy, both distorting the rules to favor the established elites (non free markets) and loosening regulations to protect the environment and labor rights. And capitalism and free markets are not free of their own crisis – 2008 meltdown – which always affect those at the bottom first. I agree putting oil revenues at the discretion of a central govt is disastrous. But that’s policy not ideology. We need to have broad discussion on how to go forward and correct Venezuelas extremely disfunctional systems, and i really hope those conversations aren’t tainted with divisive ideologies.

    -My only one coffee in 2 cents

  11. The points raised in both this and Amanda’s article are, in my opinion, more nuanced than one imagines at first blush. An economist friend in Valencia explained it to me this way: The problem with most Latin American governments is that have an inverted, or ass-backwards sense of priorities toward the two crucial things at play in all governments: The liquid (real dough) resources of the country, and the constitutional governing system that supposedly manages those resources (as well as managing foreign affairs, social and civic programs, and so forth). In prosperous countries from Singapore to Stockholm, a new government comes into power with the mindset that they have been appointed to be stewards or THE GOVERNMENT SYSTEM (basically the institutions), and that prosperity and stability – especially over the long haul – is more a result of a dynamic and enlightened system than the initial size of the nest egg. The new government, in countries that work, puts their energy into managing and updating the system, because that is basically what they have been entrusted to run. the system, so long as they are in office, is “theirs” to lesser or greater extents.

    When a tin-horn government takes office, they think that the liquid resources (and power) are “theirs” to manage, that the wealth of the country is in effect “theirs” to do as they please. The system and the institutions are in place only to put checks and balances on how they deal with the national dough. If the system hinders their freedom in doing exactly what they want with the money or the power, they simply alter the system. There’s more involved of course, which is over my head (I’m not great with finances) but that’s the basic idea.

    A paternal government simply gives the money away or steals it, instead of investing it in a system (institutions, education, etc.) that CREATES wealth. In a capitalist economy, it’s survival of the fittest so monies go into the most profitable enterprises. Taxes are not given as handouts to the underclass, rather they are poured into a system that can make those people part of a profitable society.

    There is some fancy investment angles involved here that I would flub if I tried to explain, but the Chavistas practice the inverse of what creates wealth and stability (investing in a viable system of government) are are in effect going for the immediate gratification of going for the “short bolo” or the short dollar. Systemic change and transformation takes more time than paternal governments want to wait, and a lot more work with none of the perks of when you basically have the cash in hand and can do just as you please with it – with no transparency and no accountability. Such a strategy, said the economist, is never sustainable because the foundation is volatile (the oil market).

  12. We are still discussing this in 2016? The right versus left discussion from 1973?
    Tiring, seriously.
    A little bit of economic history would help.

    There is no such a thing as pure capitalism or socialism.

    What have developed countries done to become developed since at least Sumerian times? What did Japan do during the Meiji era? What South Korea in the XX century? What did actually “capitalist” model England do in times of

    You should know. It was not neither socialist crap nor “pure” capitalism. What England’s State invested in education one way or the other? What did the US do to protect, expand, become rich?
    Steel, iron, cotton, shipping protections?

    Es la misma vaina de siempre: venezolanos privilegiados que se educaron en Gringolandia no ven un esquema más complicado de la vida que los que recibieron una beca para estudiar en la Patricio Lumumba en tiempos soviéticos.

    You want capitalism? And we will have instead what Congo has.

  13. “Trying to pick winners out of an office in Carmelitas isn’t the way you turn oil wealth turns into development. It never was. You’d think we’d have learned that by now.”

    People still pray to the all-mighty to take care of their needs! I don’t believe the all-mighty has a great track record of customer service, yet it seems remain popular for centuries. How should we expect the public to learn from experience? It takes leaders to make things happen!

  14. Can someone explain to me what “not sowing the oil” looks like? Is it selling oil rights to private enterprises or taxing private enterprise when they extract and sell the oil, instead of going into business with the state oil company? Doesn’t that create income to be sowed? Or is it straight giving up the reserves to whoever buys the pieces of land that are above it? Which again will create income to be sowed.

    I get that bureaucrats should not be deciding what to do with Oil revenues, but if oil revenue exist, whether that is by actual revenues or taxes, how are you able to take the decision making away from the state?

    • Distribute the oil revenue to the public. No decision-making to be corrupted. No favoritism.

      For instance, supporting the universities sounds good – but it leads to fat salaries, minimal workloads, and early retirement for the faculty, perpetual stipends for all self-declared students, luxurious facilities, and bloated administration (see the US for a host of bad examples).

      People can buy or invest in what suits them. Let everything the state does be paid out of taxes, which they have to collect. Roy gets it (below).

    • I mean, the US government has no national oil company. There are hundreds of oil companies that are all privately owned. About half of oil production happens of government land and half on private land. In public land (where the money goes to the government) the companies bid on the right to lease blocks of land and then they also pay royalties and regular taxes on profits to the government.

      Having a national oil company is fine, but they don’t innovate. If there was just one state owned oil company then we wouldn’t have developed fracking (which was perfected by a Texas private businessman named George Mitchell).

      That fracking represents about 5 million barrels/day which would not exist if there was a government oil company.

  15. Well, Norway did Sow its oil: Some of the Petro States in the middle east have done that as well by turning their profits into finance industries.

    I am baffled by the narrow reading of Uslar’s essay using a perspective that was not available to Uslar 80 years ago. Again, it’s not Uslar’s essay that is the problem, but our own failure of imagination. There was nothing in the essay, in my view, that advocated to have a centralized government dictate how the proceeds of the oil industry should be spent, To the extent that contemporary Venezuela never had its own private industry that would manage oil production and its proceeds, I am at a loss as to how free markets would have taken care of the problem, and I wonder if that could be achieved even today. I guess that like Norway, Venezuela could simply take the oil proceeds and put in in a sovereign market fund that is based on international markets. However, that does still leave the country subject to the whims of markets, and with no local means of production.

    To me the metaphor is simple: If you win the lottery, make sure your money is well invested so that once the proceeds of the lottery run out, you are still OK.

    Is the Venezuelan model of a centralized government the best way to decide how to invest that money, or do we simply trust the markets? Could there be a mix in there, assuming that the government will actually be run by capable people?

  16. We often look at taxes as a necessary evil, but taxation does have some positive aspects. Specifically, I am thinking of the property tax. Today in Venezuela, property taxes are so negligible that I am curious as to whether the income from property taxes is sufficient to even cover the costs of collecting it. The annual property tax on my apartment for 2016 was about Bs. 600 (currently slightly more than the cost of large coffee).

    (This is not a non-sequitar. Bear with me.)

    In normal countries, cost of providing municipal services, such as streets and other public infrastructure, police, courts, dog catchers, etc., derive from property taxes. By funding these services through property taxes, two things are accomplished. Firstly, there is local accountability for the politicians and bureaucrats who administrate the spending of these funds. The feedback loop is a short one, and when the services provided begin to fail, the people in charge hear about it in short order. If they don’t do a better job, they get booted out office. Secondly, if a property owner has to pay a normal amount of property tax (~1% of assessed value), they normally cannot allow the property to lie dormant. That abandoned lot or building is costing them money every year! This provides the owners with a strong incentive to put the property to work or sell it to someone who will. This is also “capitalism”.

    In Venezuela, the money to operate the municipalities and states comes from the Federal Treasury, and thus, the local officials are not accountable to the local voters, but to distant politicians and bureaucrats in Caracas. So, is this “sembrando el petroleo”? We took the money from the oil and distributed it, but in the process, we short-circuited the local processes of political accountability, AND we created the conditions which allow vacant and boarded-up buildings and lots to be a blight on our communities.

    The property tax is only one example. I would argue that every time oil revenue is used by the government to “do good” or “invest” or “sembrar el petroleo”, they are sabotaging the market system and suborning the political system that supports it. And that is without even touching on the corruption created by the government having so much control of that much money. I am convinced that the best way to manage the petroleum income is to simply pay every citizen a dividend and let them use it to pay their taxes, invest, pay for the children’s education, or just use it to get drunk if they want to.

  17. I would like some of the oil revenue re-invested (by law) in basic areas such as health, education and pension fund. That doesn’t make me a socialist, does it?

  18. I love how, over the years, Quico has turned more towards laissez-faire (viz. this post) while Nagel has turned towards state intervention (viz. his infatuation with certain East Asian countries)


    • I was thinking the same thing. I was sorely tempted to ask, “Who are you and what have you done with Francisco Toro?”

      • And how do you decide what evolve is? By the way: evolution is rather adaptation to a specific environment for survival…in this case probably the Anglo sphere in North America…id est since he moved there (well, English speaking group of Montreal).

        Still I do not see here any discussion about state intervention in the US and in England precisely in the periods where capitalism was most vibrant in both countries.

        Still, Francisco’s new proposals for magic “free markets” are as vague as Marxist utopian views. What exactly needs to be done and which single country can be used as example?

        Again: not the US, not England.

  19. This is ridiculous. Of course you can sow the oil *and* have capitalism. Just look at China, South Korea, Singapore – all of them try their hand at dirigisme, all of them are capitalist.

    • But, none of those are petro-states. It is not about including dirigisme in the social-political model. It is about how it is done. If it is done with tax money, there are natural limits and controls.

    • China doesn’t have successful Dirigisme, It’s State Owned Enterprises are a drag on its economy. Look at it’s horribly inefficient steel sector that overproduces left and right, loses money, but employs lots of people. All of China’s real growth was in the private sector factory export business. You think FoxConn is a government outfit?

      I don’t know much about South Korea, but its big industrial firms are tightly held family corporations. There is a difference between creating a setting that promotes industry, vs actively investing in industry.

      Anyway, Latin America will never have a competitive advantage in manufacturing like South Korea or Singapore, or Japan had. Who is to say that the best use of capital is to build a steel plant as opposed to investing in Agriculture, natural resources, and letting the service sector pick up slack?

      In Norway, which is a good example, the government actively does not invest in domestic industries because they know that there are diminishing returns to capital in such a small country and that it would distort the exchange rate and kill their manufacturing.

      At the end of the day, the government should not be in the business of picking winners and losers. That’s what capital markets are for. The only productive use of government capital is to invest in the environment which breeds development, (education, security, clean air, infrastructure, research).

    • Nobody in China, South Korea or Singapore took the enormously perverse decision to identify *the* most profitable sector in the economy and single it out to be starved of capital. I mean c’mon!

  20. “The consensus around Sembrar el Petróleo is a consensus around failure. It’s an iron-clad determination to keep wasting our natural endowment in perpetuity. It’s time to emancipate our minds from this miserable mindset. Enough, verga. Enough.”

    Its been great reading CcsChron for the last… 8 years? but THAT has got to be the single best paragraph Ive ever read on this site (and God, its hard to say that, cuz this site is A++++)

    *standing ovation*

    • 🙂 I was sort of into the alliteration in “emancipate our minds from miserable mindset” —toyed with making it “miserable managerialist mondongo” but that would be overkill…

  21. I vote for a mixed economy. State investments, like US military contracts which created the internet and information technology, show that sometimes directing investment towards new technologies does work. Norway’s Statoil has been exceptionally successful at making investment decisions, and their parameters include market as well as ethical concerns.

    Whether Venezuelan bureaucrats are better at picking winners than are Venezuelan capitalists is an empirical question, but one or the other will make the decisions that direct the economy. It’s not whether the economy is directed; it’s who gets to make the decisions. So we know that Maduro sucks at it, but do we think Ricardo Hausmann couldn’t?

    • Governments change. You get Hausmann one year and socialists the next and there is nothing you can do about it. It’s a cycle.

      At the end of the day you are going to get a Chavez type character at the till. The best thing you can do is to take the till away from him and commit the state to just investing in infrastructure, education, etc..

      Get it out of the business of business

  22. It all boils down to what do you think is the role of Government.
    Even in the USA, the State have had a huge role in developing industries.
    The Apollo Program that put a Human on the Moon, was all publicly funded.
    The effort spurred the development of other industries.
    If you trace the origins of Silicon Valley Tech sector, it comes mostly from projects funded by the government for the Defense industry.
    Projects like the Transcontinental Roadways, Panama Canal, Inter State Highway, The aviation Industry, all funded by the government.
    Private Money can also go wrong, hence Bankruptcies.
    At the end all comes down how competent are the people behind it all.
    So I don’t agree on your simplistic statement. It should be a combination of State and free Capital on a case by case basis.

  23. That sounds amazing until you realize that Venezuelan oil industry takes away it’s profit offshore and would not consider investing it’s capital in Venezuela.
    This nation must build the guidelines to make capitalism viable for its own, failing to do so would leave us no better than India or Bangladesh

  24. Hey listen. I even agree. But this is a mindset I consider healthy:

    “Let’s sow the oil.”

    “Cool! How?”

    “Give it to the markets!”

    But even then, and even though it is by far the best option I have heard yet, I am not convinced no other exists.

    Take China as a perverse example. I don’t mean we should become a heartless machine like they are, but they did prove that, if you look hard enough, you can find ways to make decisions about the market. Limited ones, yes, but powerful ones. What can we, as a country, come up with on our side? Truthfully, I’d be happy enough with straight laissez faire.

    The problem with dirigisme, I think, has more to do with what you ostensibly want to achieve (is it world domination? Is it charity? Is it straight up cold hard cash?) than how. As I see it: charity: horrible, world domination: short lived, cash: fair enough. I have anotherone hidden in my pocket, but there is room to play. No need to throw out the baby of state power with the bathwater of Romanticism/Idealism.


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