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Even leftists are getting concerned about Hugo Chavez The UK’s Channel 4 news channel tends, in my experience, to cover the news with a fairly obvious leftist slant, so it was quite a surprise this evening to watch the programme’s longish report about what is going on in Venezuela, focussing on the activities of President Chavez and his increasingly dictatorial leanings.
I have a very rough-and-ready theory, which holds that countries blessed with vast natural resources are, in some senses, cursed. Venezuela is one of the world’s top oil producers and at a time when crude is trading at the present high levels, it means that a demagogue like Chavez can buy favours with selected groups for quite a while. A country not so blessed — such as Hong Kong say — has to live on its free market wits. In some cases an oil-rich place — such as Dubai, which I mentioned a while ago — is led by folk with the wit to develop its economy with a mind on what will happen when the black gold runs out.
This blog does not seem to like Chavez very much. As and when his government falls, it will not be a pleasant process.
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I have a very rough-and-ready theory, which holds that countries blessed with vast natural resources are, in some senses, cursed.
The ‘‘resource curse’ is already a well established theory in academia/economics.
I agree with the resource curse theory. There’s no reason to reform when the cup runneth over. However, much like Argentina under Peron, I see Venezuela raping its own resources to buy influence — and that can only go so far. I have friends in Belize that are loving Chavez and his handouts, but ask them about the long-term prospects of a political alliance and they make it very clear it’s all about taking what’s being offered — across the caribbean — no more.
Huey Long syndrome.
It’s very strange to see that, especially when you consider that part of the reason the US was attacked at Pearl Harbor was that we had cut off oil exports to Japan. The US and UK both had abundant resources of the appropriate kind at the appropriate time (Britain with coal as the Industrial Revolution started, the US with oil as it matured). Historically, that kind of resource meant prosperity.
I think the difference this time is that the countries with the resources have little or no local use for them. The big petrochemical companies are American or European, for example. Jamaica has (or had) a great bauxite mining industry, but they didn’t make airplanes there out of the aluminum. In fact, they ship out the unrefined ore for processing elsewhere.
A corollary to the resource curse theory would be the timing of resource discovery and exploitation (not in the Marxist sense) in the institutional development of a nation. As in, resource curses flourish in particular political environments and don’t in others. In this respect, I’m thinking of a nation such as Botswana which like Hong Kong had to get by on its wits for several decades and adopted a non-interventionist, market economy coupled with a stable political system. Then came the diamond discoveries and the flush of income into state coffers. Now there are complaints and worries about “diamond babies” and corruption associated with the increase in income, but the basic institutional structure in Botswana appears to be sound and they stand a decent chance of weathering the storm. For countries like Venezuela, the resources of that nation and many other southern American nations have been brutally expropriated from the masses via non-market coercion even prior to Spanish colonialism. Chavez is just another example of a extraordinarily poor institutional structure that has perpetuated for centuries.
Switzerland is a country blessed with no natural resources.
That’s one of my favourite economics quotes.
I quite like C4 news. It might be left-wing but makes no apology for that, unlike the BBC which tries to make out it is distilling absolute truth in some moonshine parlour out the back of White City. ITV news is beyond contempt.
What has gone wrong in Latin America? They seem to have decided en bloc that the cause of all their problems is the USA and the solution is to go commie. It’s all gonna end in tears.
Chavez is an old-fashioned case of buying votes. Whereas previously much of the oil revenue left the country, and the remainder helped create a native middle class, Chavez would rather see more of the oil revenue stay in the country, where it will create a very very big army who all vote for Chavez. And he’ll hand out enough to poor farmers to keep them on side too.
Last I was there (2000), Chavez was hated by the middle class, but there was no shortage of pro-Chavez grafitti around the countryside.
Apart from oil, the other natural resource Venezuela has is hydroelectric power. They sell a fair bit of electricity to neighboring countries, and have a large alumina processing plant, I think.
Alas, Angostura bitters are now made under license in Milton Keynes or wherever, so that’s one source of income they’ve lost.
Latin america has only superficially gone commie. They are actually drug smugglers who see their trade as a means of getting back the capital that the conqistadors raped from them centuries ago. The commie schtick is the propaganda rationalization. Note the new commie prez of Bolivia is also a coca farmer. Note how FARC and Sendero Luminoso are both heavily involved in the drug trade to a controlling extent. Chavez funds training camps for commie guerillas on his borders with Columbia.
Sendero and FARC have chapters on every university campus in latin america.