Searching for black ink, but finding red

Ever wonder how all those chavista companies are doing? Do they make enough to even pay their bills? How much did they really cost? Are the workers there … happy?

Well, economists Richard Obuchi, Anabella Abadí and Bárbara Lira did, so they set out, Sherlock Holmes-style, to find the truth about some of those firms owned by you and me.

The end result is a book called Gestión en Rojo, which has been getting a ton of (deservedly) good press. Check out, for instance, this nice write-up from El País.

All three of them are friends of mine, so on my recent trip to Caracas, we sat down to chat. Their book’s findings are revealing yet all-too-predictable. All of the companies produce heavy losses, and the cost of the expropriations that led to them being in the State’s hands is somewhere north of $20 billion.

But what I really wanted was to pick their brain as to how they went about researching this. Given how notoriously opaque chavismo can be, where do you even begin to look for the data to answer these questions?

“It was hard,” said Bárbara. “One of the first things we realized was that we were going to have to venture out into the boonies, where people tend to be friendlier. The big chavista companies, the ones in Caracas – the Cantvs and EDCs of this world – simply hung up on us when we called. They gave us no access.”

Instead, they ventured out to places like Motatán, where the Central Azucarero Trujillo is located, or to Caicara de Maturín, to see the “gleaming” offices of the Empresa de Producción Socialista Juana la Avanzadora.

So, I ask, how did you get in?

“Well, we just knocked on the door,” says Anabella. “It’s funny, but one of the things that worked to our advantage is that these people knew nothing about Iesa. They simply saw Instituto something or other, saw our red logo, and automatically assumed we were part of the process, perhaps sent from some bigwig in Caracas. In other companies, such as Venirauto for example, we couldn’t even get in because there was a big lock on the fence, and the firm is pretty much shut down.”

“Besides,” they said, “the workers themselves were happy to help us out. As one of them told us when he opened the door, ‘I know what it’s like to be on the other side of that fence, wanting to get in’…”

One of the things that piqued my interest was how cogestión, the co-management of chavista companies, really works.

Apparently, they told me, workers in these companies feel like they are contributing, empowered almost. Even though none of the companies they researched actually sells enough to cover their costs, the workers actually work, and they believe they are calling the key shots. Every morning, they make key decisions together, everything from labor policies to which supplier to use.

“But,” says Bárbara, “their decisions then have to be transmitted to Caracas. In the end, Caracas gives them the OK. They decide. The workers operate under cogestión in paper only.”

I left our conversation wondering how these workers internalize what’s going on. They feel proud of their work, and deep down they must think that their companies are viable. But they have neither the power nor the financial resources to stand on their own two legs. A part of them has to realize the whole thing is a charade. When push comes to shove, will they vote for the status quo, or for the riskier, potentially better alternative?

Time alone will tell.

28 thoughts on “Searching for black ink, but finding red

  1. “They feel proud of their work, and deep down they must think that their companies are viable. But they have neither the power nor the financial resources to stand on their own two legs. A part of them has to realize the whole thing is a charade. When push comes to shove, will they vote for the status quo, or for the riskier, potentially better alternative?”

    I think that for some of them, they are part of something important and because of that, they are somebody. Maybe they will fear that with Chavez out, they will become nobody again.

    To convince them, that’s the tough part.

  2. “Every morning, they make key decisions together, everything from labor policies to which supplier to use.” Interestingly this is one aspect of Chavismo which shares best practice with many successful companies. But the question is do employees have sufficient training and knowledge to make qualified judgements? And in first place is the business model viable in the highly distorted Venezuelan economy?

    Given the heavy losses the answer would appear to be no, which goes to show there are arguably some worthy intentions behind the government’s actions, which are superseded by repeated failure to provide clear achievable objectives and the necessary resources to deliver.

    • Of course not! That’s why they vote and decide, but then Caracas gets the final say. Of course, nobody in Caracas has a clue either…

    • So, let me get this straight. The workers contribute, not just labor, but the key decisions made. Why aren’t they informed that that’s not getting them anywhere? Do they just not ask if they’re making a difference? I’m pretty sure no one is telling them that they’re losing money. Just how does this perpetuation of ignorance continue to happen? Why doesn’t someone tell them up front what’s going on? It’s great that they’re proud of their work. But, don’t you think that they’d like to know if their work is worth anything?

      • Even if told, they believe that the alternative involves loss of empowerment. I’ve heard some say, in a nutshell, I know chavez is not an efficient president, but he’s one of ours and that’s better than anyone who’s not, however badly he messes up; he’ll learn.

        Now, if you offer them cash that guarantees they will never be below the poverty line, then they buy the alternative. Now, you tell me, why wouldn’t the people of the oppposition be willing to guarantee winning the election while eliminating poverty by just accepting to run a government from taxes alone (note: taxes that would shoot up to almost double)?

  3. Unlike a lot of people, I really believe the typical Chavista has “good intentions”, but those are offset by a tremendous amount of ideology and plain economic ignorance.

    But the path to hell is paved with good intentions, and we are well down that road: How those tens of thousands workers will feel when the situation is no longer sustainable and the whole chavista industrial complex collapses?, when they realize that, despite all their work, the results amount to nothing?, when they internalize that they have been cheated by the Vth even worse than by the IVth?. In summary: What will tens of thousands of angry, hungry and disappointed young individuals will turn to in 5 years from now?.

    This whole issue reminds me the pre-revolution Iranian situation, as related by Ryszard Kapuscinski in “Shah of Shahs”. I dearly recommend you to read an excerpt (in Spanish) at http://sitedescuidasteatropellan.blogspot.com/ .

    • Dagoberto,

      Now: the thing is what do you mean by Chavista here. Millions don’t even consider themselves Chavistas but they have voted so far for Chávez, which is the person who has talked the closest about their dreams.
      And they don’t read El Universal or Tal Cual, they do not have Internet access, they have never been abroad and none of our “national” leaders care to go to their places, which are actually not that small.
      Take that Caicara. 13.517 voters in 2010. The candidate for us is an old Adeco dinosaur who has been candidate X times, he once was a major. If you check the cédula number, his is much lower than the one from the PSUV candidate, which is the norm for most AD candidates outside the main urban centres. Really dinosaurs. We think we can progress there either with such dinosaurs or with the hacendado que se cree Santos Luzardo.
      And mind: the governor of Monagas is a former Adeco and the major of Cedeno municipality is his brother. Some months ago the governor had the chuzpah to go to a school in that municipality to “inaugurate” some new toilets and a water tank and there was a speech blaming issues in that school on the 4ta República…even if that governor was the major there in the 4ta Republica and has been governor for quite some time now (and now his brother is major there for 4 years).
      But Chavistas, although often former Adecos, have been able to reinvent themselves with some patina of pseu-ideology plus – last but not least – some petro crumbles. And they have their people who keep going and going like those Duracell bateries.

      We could do better but to do that we need to send there not only “líderes innatos”, but national politicians – not just our candidate(s) for presidency but those who want to become future ministers and the like.

      Please, take a look at this:
      http://www.aporrea.org/desalambrar/n130997.html
      Hundreds of campesinos have been killed by hacendados or just mafias of which some are non Chavistas and some Chavistas, all just thugs. And the opposition has not paid attention to that kind of things.

      There are a lot of cases like that. The PSVU pretends to pay attention to those campesinos, even if it is part of the problem…but at least it pretends.

      We? The Caraquenos don’t want to move their asses from Greater Caracas, the Valencianos the same for Valencia, the Barquisimetanos the same for their barquisimeto and the Maracuchos the same for their own city. And it DOES NOT have to do with us being short of money. Yes, that makes things more difficult but not i mpossible and besides, it is possible for some of those candidates to travel to Europe or the US for tourism or else, so they could do a bit of Venezuela as well (and not just to the areas where they think everyone will welcome then).

      People in those areas are receptive. Pero tenemos que pararles BOLAS!
      Then they would consider perhaps they can play an important role on our side and with better managers.

    • There’s something awfully wrong with a person who does not realize that their good intentions involve propping up authoritarianism, robbing persons of their freedom to choose, property and life, etc.

      I hope it becomes a good lesson for them, as to what good intentions are really about. You don’t support authoritarianism because it does not make economic sense, you don’t support authoritarianism because of the implications for persons, however nice your intentions might be for all people.

  4. Fair enough.

    In this particular case, what I have in mind as “typical chavistas” are low-to-middle managers, working for the government or government industries, taking day-to-day decisions.

    My opinion (biased, of course) comes from several of my own friends who are “typical chavistas” fitting the above definition. They know my staunch anti-Chavez position (very vocal since 1998), but they feel comfortable enough with me to comment their common work troubles and issues. I watch in despair how they are drowned in the weight of their own ideological choices, waste valuable resources, and then ask themselves why things are not coming out the way they expected.

    Very sad. And we are all paying for those errors: Not only the Caraqueños and Valencianos, but also the Caicareños, who are the ones who could benefit the most from the resources being wasted.

    • And mind: as Scott Adams wisely found out before starting Dilbert: there are USUALLY more non-managers than managers, even in the most fucked-up organisation.

      We should not spend more time talking to the managers of the four main urban centres but to the workers of the secondary cities and big towns. It’s not new but we ain’t doing it yet (I don’t count San Diego or Southern Zulia where most people want to eat Chavista frito but outside our choir)

      Going back to the book proper: I wonder if Owens Illinois is in there.

  5. A very interesting article ! I think I can see the appeal of attending production meetings as a worker, discussing options, and making decisions based on those discussions. Even if the final decision is taken by management in Caracas, the resolutions passed become, in effect, recommendations. Ans perhaps sometimes Caracas agrees with the recommendation?

    This system of worker participation is compatible with capitalism, and may well feel very inclusive to the participants.

    It is the overall government policy, its need to control the entire economy, and its willingness to subordinate the economy to ideological ideas, which dooms these companies.

  6. I found this sentence priceless:

    “In other companies, such as Venirauto for example, we couldn’t even get in because there was a big lock on the fence, and the firm is pretty much shut down.”

    Any Venezuelan with two neurons could have predicted that, culture clash, difficult business, run not by one, but two dysfunctional Governments, but the PSF’s had a field day predicting glorious days ahead.

    Yeah, sure!

  7. A few questions:

    What did they base their calculations on? Did they get actual copies of the financial statements of these companies? Do they reproduce them in the end notes of the book or are they available on-line? I am assuming (hoping) they didn’t base their numbers on what some person that they ran into around the factories told them.

    Also, it sounds like they only were able to visit/speak to people in a few smaller factories outside of Caracas? But they apparently draw the conclusion that the nationalized industries as a whole are losing money (certainly a very believable conclusion). How did they reach that conclusion? Did they just extrapolate based on what they found at the sites they did get some information at?

    Sounds like a very interesting and important topic to research. But I am wondering if what they really found was simply that they couldn’t get definitive information and rather than simply reporting that these industries are unacceptably opaque they decided to draw bigger conclusions based on guestimates.

    • It wasn´t a random sample, obviously. And I believe they did get financial statements, or data that the managers gave them at least. But if you’d like more details you’re going to have to read the book.

  8. “A part of them has to realize the whole thing is a charade. When push comes to shove, will they vote for the status quo, or for the riskier, potentially better alternative?”
    “Rojo por la plata”-as Alek Boyd said- something like “if IF they had any real character-they would not be a part of Chavez programs” -because YES -eveyone knows –
    Can you mention how Venzeulan workers feel having bosses from Iran/Cuba, for example.

  9. People everywhere ALWAYS vote for the status quo if they know what the status quo is.Think about it for a minute.Sometimes in in certain moments it IS the status quo to break away from the traditional, and sometimes it is not.

  10. Socialism, as in the State calling the shots and probably owning enterprise, that is being a monopolist in one incarnation or a cartel head in another, does not work. However…

    “One of the things that peaked my interest was how cogestión, the co-management of chavista companies, really works…”

    My interest was piqued too. Cooperative enterprise and employee co-ownership (or at least employees owning a stake in the company) in my humble opinion, might just actually work and beget original and productive contributions to economic activity and thus society, taking nothing from other people’s freedom.

    But Socialism does not work, in Venezuela as elsewhere, and ideological horseplay does not mix with sound management and they are doomed by it:

    “But,” says Bárbara, “their decisions then have to be transmitted to Caracas. In the end, Caracas gives them the OK. They decide. The workers operate under cogestión in paper only.””

  11. “…el monto pagado o comprometido solo en la compra de grandes empresas, como la Siderúrgica del Orinoco (Sidor) o la Compañía Nacional de Teléfonos (CANTV), fue de 23.377 millones de dólares. Más dinero, incluso, que la suma de todo el gasto social que acumuló la estatal PDVSA entre 2001 y 2009. ” Good God. Someone somewhere should put this in an ad.

  12. This isn’t nitpicking, it’s in genuine defense of the English language: “… that peaked my interest …” should really be written as “… that piqued my interest …”. Thanks for an excellent blog, as usual.

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