Venezuela and the Paradox of Plenty: A Cautionary Tale About Oil and Envy

[ammodotcom]

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As Venezuela falls into the abyss of economic collapse – the economy has halved in five years, a contraction worse than the Great Depression or the Spanish Civil War – a simplistic narrative in the American press has formed, which starts with the Chavez regime seizing control of the country in 1998. 

(The charismatic populist Hugo Chavez is, after all, the leader most Americans are familiar with when talking about Venezuela, as he made worldwide headlines with his 2006 UN speech where he called U.S. President Bush "a devil" while celebrities like Sean Penn and Michael Moore cheered him on.)

In the 1950s, Venezuela enjoyed its place among the top 10 richest countries on a per-capita basis. How has it turned into a country where more than 2.3 million of its 30 million citizens have fled since 2015 due to starvation? A toxic mix of creeping interventionism, institutional decay, private property seizures, irresponsible fiat monetary policy, and wide-ranging corruption are the main culprits. But Chavez wasn’t the instigator of this mess; the story goes back much further and should serve as a cautionary tale about one country’s faithful adherence to the tenets of socialism to the bitter end.

The Early Venezuela Economy: From Backwater to Boom Country

Gaining its independence from Spain in 1811, Venezuela started out as one of Latin America’s most politically unstable countries, remaining that way until the early 20th century. During this period, Venezuela was primarily a coffee exporter, but the game changed when its first oil field was completed in 1914. From that point forward, Venezuela went from a regional backwater to Latin America’s richest country in a matter of decades.

Oil reserves weren’t the only factor behind Venezuela’s economic success. Property rights were respected, regulations were low, sound money was the norm (Venezuela did not have a central bank unitil 1939) and the country was able to attract skilled immigrants from Italy, Portugal, and Spain. These factors helped catapult Venezuela to one of the richest countries in the world by the 1950s. Some estimates had Venezuela in the top 10 richest countries on a per capita GDP basis.

Venezuela Transitions into Military Rule

Interestingly, Venezuela was governed by numerous military dictatorships during this time period. Juan Vicente Gómez, who helped consolidate the modern-day Venezuelan state, ruled from 1908 until his death in 1935. Although Gómez had a tyrannical reputation for his suppression of free speech and other basic civil liberties, he did not tamper with the Venezuelan economy. After Gómez’s death, democracy advocates struggled to reform the government for nearly 15 years. Despite the democratic activists’ efforts, Venezuela reverted back to military rule in 1948, under the tutelage of Marcos Peréz Jiminéz.

Under the regime of Peréz Jiminéz, Venezuela received international praise for its economic performance. That being said, the Peréz Jiminéz regime did experiment with certain interventionist policies such as the creation of the state-owned steel company SIDOR and the government’s encroachment into the hospitality industry. But these interventionist policies would pale in comparison to the welfare statism pursued in the following decades.

Continue reading Venezuela and the Paradox of Plenty: A Cautionary Tale About Oil, Envy, and Demagogues at Ammo.com.

[Poker Player]

I would say it has more to do with envy than with the oil itself. Norway knew how to manage its gold deposits very well. It goes like this:

The natural is unequal: we are all not as handsome or as tall or as rich.

1) You start with a garbage speech against the rich.
2) You come to power.
3) You expel the rich, either by expropriating them, if not killing them directly, and in the best of cases, simply discouraging them from creating wealth: if I know that the result of what I produce will be confiscated to "redistribute" it, and on top of that I am going to be blamed for being an exploitative capitalist, I simply do not produce.
4) When you have already expelled from the country or killed those most capable of creating wealth, you start to redistribute what is left. At first, since there is still wealth produced, you can distribute some of it.
5) As there is less and less wealth left and on top of that you produce less and less, what you do is to distribute misery and starve the population. Faced with complex problems, you adopt simple solutions, like raising minimum wage several times or cutting several zeros from your currency.
6) As a result, you end up making the problems you said you were going to solve even worse. You start with a speech against the rich and end up making everyone poorer. Another example would be Castro complaining that Cuba during Bautista's dictatorship was the US brothel and today you go to Cuba and for $10 you can fuck practically any woman.
7)When the population starves, has to resort to prostitution for pennies and there is a massive exodus you blame capitalism.
8)Rise rinse repeat.

[Hispo]

7)When the population starves, has to resort to prostitution for pennies and there is a massive exodus you blame capitalism.

To be fair, an hour with a woman here won't be that cheap. But your made your point.

I'd say people farming games like World of Warcraft, Runescape, League of Legends and now Axie Infinity is a better example of the new professions brought by the crisis.

[ammodotcom]

I would say it has more to do with envy than with the oil itself. Norway knew how to manage its gold deposits very well.

The nature of the natural resource is moot. So long as a country has wealth to rob, any crook who makes a convincing enough argument socialism can rob it. We're seeing it start to happen in America.

[Poker Player]

To be fair, an hour with a woman here won't be that cheap. But your made your point.

To be also fair, I said it a bit at random and I have to say that I have never been to Cuba (yet?) but I do have several friends who have been. But I was not so misguided: "Prostitution in Cuba is a lucrative business. Most prostitutes charge $25-$40 a night. In the fancier clubs, such as the Palacio de la Salsa or El Comodoro, they charge $80-$100."

Source: https://kuba-buba.com/havana/havana-cuba-prostitution.html (the first link I found by googling).

If we think that professional prostitutes charge that much for a whole night, it is not at all unreasonable for them to charge you $10 for an hour.

Another thing would be the ones that are not dedicated exclusively to that. For a foreigner it is very easy to "pick up" (rather to rent for money/gifts/the opportunity to leave the country) basically because they see you as an ATM with legs, and even if they don't ask you for money directly, they will be with you if you invite them all the time.

So I think the spirit of the message was right. Castro was complaining that Cuba was the brothel of the US and now it has become the brothel of the world, both male and female, since it is also a typical destination for female sex tourism where mature women "pick up" strapping mulattos in their early 20s.

[Hispo]

To be fair, an hour with a woman here won't be that cheap. But your made your point.


If we think that professional prostitutes charge that much for a whole night, it is not at all unreasonable for them to charge you $10 for an hour.

I'd say the big difference between us and Cuba in this matter is that our economy is going through a de facto dollarization process. So the sexual workers do not count on the exchange rate advantage anymore (noone does actually), the charge in USD and now they have to spend in USD, that has increased the perceived value of their services. I don't think one could find a 10$/hour here, that is barely fastfood meal.