It’s not the actual ownership that really matters. Amtrak is a pseudo-nationalized American rail system and it works fine. It’s the fact that Chavez uses PSVSA as a cash cow and staffs it with loyal political appointees is the problem. Not to mention they simply seized something like $12 billion in assets from ExxonMobile and other multinational oil companies that do business in Venezuela.
It wouldn’t be an issue if PSVSA was run well and the money was reinvested back into the country.
If that were true, why is the per capita GDP of China so much less than the USA?
Your father is incorrect. Their “advantage” is that they don’t really have to care if they decide to displace a million villagers to build a hydroelectric dam. They can create “ghost cities” with the stroke of a pen without having to care if anyone ever moves in. They can decide to not care about environmental issues.
But really China’s main economic advantage is that it’s a big country with a lot of resources and it has a billion poor people who are willing to work cheap so they can get a Western lifestyle.
Partly because they started off way way behind, and while they’ve been gaining ground of late, they’ve not yet fully caught up.
And partly because GDP is in large part a reflection of currency exchange rates and don’t truly capture relative economic output when measuring different countries.
Could be other factors as well. My father’s theory is not that this is the only difference between China and the US. Only that this particular factor is one enormously influential one (and over time he expects it will be decisive).
It is worth noting that much of the US crude that Venezuela imports is being used to lighten the much heaver local crude. Venezuela has to buy this light oil from the US and other countries at
higher prices and then refine it on the Caribbean island of Curacao.
I can’t believe I have to explain this to you, of all people, but the problem with your father’s theory is that it ignores property rights.
People in democracies have rights that people in dictatorships do not have. One of these is property rights. In a dictatorship, you never know if the regime is going to confiscate your property. In fact, the more valuable your property is, the greater the likelihood it will be taken from you. Such a system minimizes the incentives to invest resources in creating wealth. You’re better off hiding your resources.
I don’t think prefacing your remarks with “I can’t believe I have to explain this to you …” adds anything substantive. It looks like just a cheap way to pretend that you’re saying something well known and obvious, in an effort to relieve yourself of having to actually substantiate your position.
ISTM that a lot of people in dictatorships have amassed great wealth. Some have lost it, as has also occurred in democracies. It’s possible that there’s a smidgeon of truth in what you’re saying, but it doesn’t seem to be a significant factor.
I disagree with your father (no offense to him or you).
Some dictators have gotten rich, true. The late un-lamented Castro was one of them. But one of the fundamental advantages that a capitalistic economy over a command economy is the correcting influence of the free market. The free market, which is the aggregate demand of the consumer for what he or she really wants, is not perfect. But it is better in the long run than the decisions of an oligarchy about what the consumer should want, or what is good for him, or (more commonly) what is good for the rulers.
That’s why North Korea is poor and starving and South Korea is prosperous.
The “decisions” of the free market might be wrong, but if they turn out wrong there is a greater opportunity for correction when the mass of consumers stop demanding. And then every entrepreneur in the economy starts working like a bunny to come up with a better product because he can make a buck off it. If the decision of an oligarchy is wrong, the dictator doesn’t care, as long as he continues to be rich.
If the dictator is universally wise and benevolent, a dictatorship where he can enforce the right decision is going to work well, true. But philosopher kings are rather thin on the ground nowadays.
Totally agree with this. And no one who has been paying attention in the last 3-4 years wrt China thinks they have any sort of ‘enormous fundamental economic advantage over the US’…it’s laughable, considering the fact that the CCP has gone from economic blunder to economic blunder and has put China’s entire economy on the edge of disaster several times.
ISTM that you’re conflating two things. 1) that a planned economy doesn’t work as well as a free market one. 2) that a lot of dictators are motivated by nothing more than their own self interest. Both of these are true, but they’re separate issues and need to be addressed separately.
As to 1) I’m not an expert on China, but ISTM that they have this hybrid economy, much of which seems to be pretty much free market. I imagine there’s more government control than in the US, but in media reports of various Chinese businesses and businessmen, as well as from discussions with people I know personally who do business in China, it seems that for the most part people do business for profit and based on free market principles.
For 2) China might have an edge over a lot of other dictatorships, in that while their view of communism has obviously evolved a lot over the years, it’s still an ideology that they’re officially committed to, and this could attract a lot more idealism than you might have in the case of your run-of-the-mill “it’s all about making me and my pals rich” dictator. (It’s possible that the Chinese culture is also more amenable to that.)
I’ve been paying some attention though I don’t follow this intensely. ISTM that the CCP has done poorly in recent years in that their growth rate has slowed to about 7% versus prior levels that were much higher. Compare to the US rate during those same years.
[QUOTE=Fotheringay-Phipps]
I’ve been paying some attention though I don’t follow this intensely. ISTM that the CCP has done poorly in recent years in that their growth rate has slowed to about 7% versus prior levels that were much higher. Compare to the US rate during those same years.
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Two things about this. First off, no one…NO ONE…believes that 7% figure. Not even the officials of the CCP believe it. Look it up some time. Secondly, this is like comparing the growth of Bill Gates wealth with that of a poor person who is doing better. The poor person could have a 10% annual growth rate and that might mean they have gone from $12k per year for their family to $13.2k per yer…even over 10 years it’s not going to be a huge amount. Gates, on the other hand, could have ‘only’ a 1% growth rate that will be measured in hundreds of millions or even another billion added to the pile. China HAS to have huge annual growth rates over decades to bring up their overall standards of living…and it hasn’t been happening, which has caused huge issues for them and for the CCP in particular. It’s basically the unofficial promise the CCP has made…let us stay in power and we will bring up the prosperity for everyone. Let us continue to do heinous things because us doing them will help everyone in the long run. And they have been failing at this AND doing those heinous things, so folks aren’t too happy in China. And this isn’t just this last year…unrest has been growing in China since 2009 or so and continues to go up.
I’m aware of this. But no one thinks it’s anything close to the US rates. Only that it’s not really 7%, and that it’s being finessed a bit to make them meet their official targets.
You’re wrong about this. The SOL in China has improved dramatically over recent decades. As you might say, “look it up some time”.
I don’t know if this is true, but if it is it doesn’t follow that they’ve been failing at bringing up the standard of living. The opposite is very frequently the case. Civil unrest is sometimes the greatest in times of rising expectations, which are triggered by improved living conditions. (The race riots of the late 60s following civil rights laws and Great Society reforms being one of many many examples.)
[QUOTE=Fotheringay-Phipps]
I’m aware of this. But no one thinks it’s anything close to the US rates. Only that it’s not really 7%, and that it’s being finessed a bit to make them meet their official targets.
[/QUOTE]
Then you brought it up for what reason…?
You do understand that a 6% increase (if it’s even that) in China isn’t the same as a 1-2% increase in the US…right?
Try reading what I wrote. I didn’t say that the standard of living in China hasn’t risen dramatically. The standard of living of a poor person could increase quite a bit from being destitute to just being poor but with a job, food, clothing and shelter…but it’s still not the same as a middle class person let alone a rich one.
Again…you do understand that a 1-2% rise by the US or a wealthy European country is different than a 6 or 7 or even 10% rise by China or another poor nation…right? Just for reference the average GDP for China is something like that of Mexico as is the average SOL. That’s really good, considering how bad off the country used to be under Mao and his merry men, but it’s still not that wonderful (plus you have all that nasty environmental damage, poor water access, over crowding and the like).
I don’t need to ‘look it up’ since I actually do follow events in China fairly closely and my sons partner is FROM China, so it’s a topic that I’ve paid a lot of attention to in the last few years. You should try it some time.
Are you claiming this is the case in China? If so, what is your evidence for this being why unrest has been growing in China over the past 6 or so years? Did you even know it WAS growing? Again, I’m not claiming that China’s SOL hasn’t grown…but when you are talking about starting where the CCP left a ruined China in the 70’s, there really is no where to go but up (well, unless you comparing to North Korea :p). The pact that the new and improved CCP made with the people, however, was ever increasing growth, jobs and prosperity. And that isn’t happening. While it SOUNDS impressive that China has 5% or 6% or even the fantasy 7% growth, you have to actually understand where that growth has come from and what it means. Perhaps that would be a good place for you to look into if you are actually interested in this topic.
Because it’s the most well-known and convenient number, and the real number is not substantively different for purposes of this discussion.
Well, er, yes. It’s like, about 4%-5% higher. Not the same at all.
I read what you wrote. You wrote “China HAS to have huge annual growth rates over decades to bring up their overall standards of living…and it hasn’t been happening, which has caused huge issues for them and for the CCP in particular.” (emphasis added). Sure seems to me like a guy claiming the overall standard of living was not being brought up.
You are repeated what I’ve already said. Which is odd, since you’re purporting to disagree with me. It sounds like we both agree that China was way way behind the US and has been gaining ground of late to the point where they’re now only way behind. If you indeed agree with that and are trying to make some sort of point with it in context of this discussion, please let me know what that might be.
I could have sworn I said “I don’t know if this is true”, so I’m not sure why you’re asking me this. What I also said was that if it’s true, it would also be consistent with China’s SOL rising, which it has been doing.
NO! We want to whine about the allocation of healthcare spending to research and development, feud over the true state of the Chinese economy, and bicker about the exact definition of Socialism! Anything but Venezuela!
All jokes aside, to some degree it’s why Venezuela got to be as bad as it has. Basically, nobody in power really cared to do anything about it in any country. President Obama more or less pretended it didn’t exist, and other Latin American countries were happy to overlook the brewing crisis since Chavez wanted to make friends with looted wealth.
When the party finally did run out, suddenly all those friends started to sour, particularly as Maduro and crew made some rather boneheaded diplomatic blunders. One concrete thing the quasi-opening of Cuba to the United States did accomplish was to isolate Venezuela diplomatically.
Really, a petrostate fell apart once the Saudis decided to dump petroleum at cheap prices and beggar all the other petrostates? You don’t say!
I don’t think “socialism” has that much to do with this one. It was an economy somewhat poorly managed, reliant on an extractive industry. I suspect the Saudis decided to bottom out the price of oil to hurt Iran, and Venezuela was collateral damage.
Venezuela was a mess long before the decline in oil prices; that just accelerated the decline. Other countries like Ecuador that were also oil dependent have had problems, but not nearly to the extent of Venezuela.
“Socialism” is making the oil collapse far worse than it might be otherwise. If you’re selling oil at $50 per barrel instead of $100, you can only buy half as much of the stuff you want and need. If you scare off your suppliers with government-sanctioned robbery, you can’t buy anything at all.
But even capitalist petrostates can be economic disasters. Look at Equatorial Guinea.
Again, blaming it on “socialism” is silly. France is so social-democratic their center-left party is just called the Socialists, and they’re doing all right. The differences seem to be that they are a diversified economy, they still have some advantages inherited from being on the winning side of colonial exploitation, they still do a little economic imperialism of their own in fact–and they’re not run by boneheaded strongmen and/or leaders driven by sheer desperation.
No. We don’t.
Indeed very odd that in no other case is there any kind of collapse like in the Venezuela, which is unique in this.
This is the pure excuse making.
The phrase “somewhat poorly managed” is so extraordinary an understatement it causes laughter. Trying to pretend the Venezuela collapse is some kind of thing principally from the extractive industry problem is laughable as in no other case do we see this.
It is the Chavista system that has caused this, a system celebrated on this board and among the Left journalists as a kind of socialism.
Guinea Equatorial? ! Capitalist?
That is funny.
The Guinea Equatorial micro state (not in a state of collapse from oil prices), is the world’s most corrupt personal autocracy since it has obtained it’s independence from the Spanish. It might be called a feudal state, but capitalist? No, there is no domestic capital accumulated, it’s the pure feudalism of the autocratic family extracting the rents (from the foreign companies).
This is 100 per cent irrelevant to this subject of the Venezuela except as a bad and uninformed attempt to excuse the Chavista.
No it is not.
The Chavista popularism socialism and the ideological hostility to the market has driven the Venezuela crisis. A pragmatic non socialiste rooted régime would not have followed the Chavista destructive path of seizures and the suppression of market trading.
It can be readily said as done by others above that the particular stupidity and the particular incompetence of the Chavistes has made the impact much worse, but their rhetoric and their plans of action are those fundamentally rooted in an old 1970s style anti market socialism rhetoric and intellectual framing.
In the France we are not celebrating the recent economic performance nor the decades of elevated unemployment. Indeed Hollande has such shameful standing that he is not even daring to present himself for the elections, those who may take the standard are the reformers taking the market reforms, although they almost certainly lose in the wider elections to the Right. Although of course to use the mere name of the party as a supposed excuse for the Chavista socialism failure is almost wonderful in its audaciousness in attempting excusing.
The France? You compare the French economy with the Venezuela?
Before Chavez, Venezuela had its issues but was a functioning economy - including before the huge oil run-up. Traditionally, the government ran up expenses during flush times and then regretted it later, so it wasn’t that shocking that Chavez did so as well (even if it wasn’t a good idea). What was a bad idea is that he used the growing oil market to buy votes with no long-term investment, turned workplaces into revolutionary cells that didn’t actually produce anything, and outright closed or expropriated any business that didn’t meet his political goals. The result is that Venezuela, despite having a domestic economy with a major focus on agriculture, can no longer even feed itself, let alone provide basic consumer goods.
This isn’t just an oil-price problem. This is what happens when you take a modern and growing nation and impose a mix of Cuban and Zimbabwean socialism. The level of disaster here takes real work to achieve.
