Clinging to dead ideas

Here’s an interesting interview with Henrique Capriles in Portuguese, courtesy of Brazilian magazine Valor.

In it, Capriles is less vague than usual in laying out his economic vision. In doing so, he disappoints by revealing himself as a precambrian Statist, a child of the economic thinking that prevailed in the 60s and 70s throughout the region.

In the interview, Capriles says it makes sense for water, electricity, and phone companies to be owned by the State. He says these firms are “strategic” because they are “public services.” In the case of others, such as hotels, agricultural firms, or cement companies, he sees no point in having them be State-owned, but he makes no pledge to sell them off.

In this, Capriles is to the left of Dilma Rouseff, Cristina Kirchner, and pretty much every other President in the region not named Castro.

The Thatcher and Reagan revolutions, which saw the deregulation and privatization of public services, and which were copied all over Latin America, leading to massive inflows of private investment, as well as dramatic improvements in service and coverage?

Well, in Capriles’ eyes, they were a huge failure.

On the price of gasoline, he says that the change in the price must come from below. His goal is to bring the debate on the subsidies center stage, so that people understand the nature of the subsidies and practically ask the government to lift them. He pledges not to raise the price of gasoline until that happens.

He also reiterates that he will not lift price controls until the economy is ready and until production has had a chance to recover, whenever that is. He says that PDVSA must be 100% state-owned. He calls it a “strategic” issue for the country.

On Mercosur, he is against it. He says that Venezuela must return to the Andean Community, and from there apply to join Mercosur. He is indifferent toward ALBA.

He says he would love to meet Lula or other Brazilian leaders when he travels there, but that his agenda is being kept secret for fear of Chávez boycotting it.

One more thing: he says he is “Bolivarian,” something I had never heard him say before. He also says it makes no sense for him to try and change the name of the “Bolivarian Republic” if elected.

(HT: @viaSimonRomero)

109 thoughts on “Clinging to dead ideas

  1. Entonces aparentemente el cantinero tenia razon cuando dijo “Lo que queda es Ice”, aunque refiriendose a la Polar Ice…

    (Sorry for those non-spanish speakers / non Venezuelans reading this blog)

  2. Dude… these kinds of stances are the reason this guy won the primaries. To expect anything different is to expect the guy to have lied to us all. We are getting rid of Chavez! Baby steps, man, baby steps… We aren’t all savage neo liberals ;p.

  3. Thanks, Juan!

    Through Yahoo’s AltaVista translation (not always reliable) and my modest interpretation of the words produced in the interview, here’s the excerpt ..

    Rival of Chavez wants bolivarianismo with Brazilian touch

    “I am bolivariano”, Enrique Capriles, 39 years says, with all the letters (?). The phrase sounds psychedelic for a Brazilian journalist who came the Caracas to know the man who wants to place an end to the age of Hugo Chavez, president of Venezuela since 1999, leader one of the the so-called “Bolivarian” revolution. But Capriles soon explains: ” All Venezuelans are bolivarianos. Simón Bolivar is the father of our motherland”. For him, the model to be followed is not Chavez’ “Socialism of the XXI” Century, but what he calls “the Brazilian model”, with social programs of the State and the generation of jobs through private initiative. …

    • I agree we have to stick to Capriles, but I can’t hear this “All Venezuelans are Bolivarianos”. What we got at school on Bolívar was a lie. It is not Marx’s version of Bolívar but Bolivar wasn’t a big deal either, even if Herrera Toro and Martín Tovar y Tovar and even Uslar Pietri portrayed him in painting and books as some hero.
      But Venezuelans, who know so very little of history but the all-time recycled books of those close to the Bolívar caste, are not prepared to learn this yet. But please, let’s stop using the bloody figure of Bolívar.
      Let’s work on IDEAS, whatever they are, on TEAMS, on future, not on bloody military myths.

      • Agree with you, Kepler. I don’t consider myself Bolivarian, but that doesn’t make me a Bolivar-hater. I just don’t completly agree with what was his vision for the country and the region was. Also the fact that he became a dictator as a desperate attempt to keep his dream of the Great Colombia alive tells me pretty much about Bolivarialism.

        • I think to look at the figure of Bolívar the best is to look at what is around him about the period. Authors tend to fall in love with Bolívar or get a rash.

          One of the best books I have read is, alas, in German: Simón Bolívar: Die Lebensgeschichte des Mannes, der Lateinamerika befreite, Berlin: Klaus Wagenbach 2009, ISBN 978-3-8031-3630-5
          He has a nice biography, everything well-referenced.

          In English there is John Lynch, who is still very much in love with the character.
          You can learn a little bit from the ones who wrote very negatively, taking it all with a pinch of salt and asking whether what they said there is not correct, after all.
          One of them is the well-known Madariaga (who was a conservative royalist, so you can imagine)

          Another one you can find fully as a pdf on line is Ducoudrey-Holstein. I have often read his book reads as a pamphlet but no explanation why his statements would be incorrect. Some Chavistas who probably never read the book (it only recently was translated into Spanish) but know about it because Marx based his tirade on it (and they do know of that little Marx hatred-text) say Ducoudrey-Holstein wanted to criticize Bolívar because he was angry about him. I don’t find that a reason to disqualify Ducoudrey-Holstein, specially considering it was Ducoudrey-Holstein who wanted to take leave by all means…there would be more of a reason to disqualify anyone who was under Bolívar’s government or profited from Bolívar’s cult. By the way: Marx diverges from what Holstein says, but as the original Holstein document was not available in Spanish until recently I doubt many Chavistas have read it.
          Read that book with a pinch of salt or two and yet you will get a new picture.

          For completeness, what a guy refuting Marx -BUT NOT THE OTHERS- wrote:

          http://www.analitica.com/bitblioteca/libros/9267728.pdf

          (very pro-Bolivar)

          Gustavus Hippisley is another author who was with Bolívar for about two years and wrote about another part of the story. Another is John Miller. You can find their full books, like Holstein’s, in Google books as pdf.

          • I forgot: the author of the German book was Norbert Rehrmann. He has a wonderful analysis of how the famous Discurso de Angostura and the Letter of Jaimaica, considered “masterpieces” in Latin America, were produced. At the end of the day one starts to wonder who really was behind calling the Alto Perú “Bolivar” (later Bolivia)
            Rehrmann was right in many things, but one of them was Bolívar’s generosity when it came to money. Sorry, but without a Páez and his llaneros and last but not least the several thousand mercenaries we got who had been unemployed since the end of the Napoleonic wars Bolívar would have had to do something else; this doesn’t mean we wouldn’t have got our independence: Mexico became independent and so did Chile and Argentina and Uruguay. Perhaps without a Bolívar, the plaza de Puerto Cabello and thus Valencia wouldn’t have been lost and Miranda would not have been given to the Spaniards to save Bolívar’s neck. Of course, that’s just speculation, but in any case: no one person is indispensable and our treatment of Bolívar as “Libertador” is just sick. The people of Venezuela were the liberators, period (with help from the mercenaries and the weapons exporters, that is)

            Ah, and two more: the old El Culto a Bolívar, by Carrera Damas (and the literature he has motivated from that) and
            not on Bolivar but on the British: Conquer or Die!: British Volunteers in Bolivar’s War of Extermination 1817-21 (Ben Hughes).
            That is an interesting book about what the British did, from a British perspective, that is.
            At the end of the day, specially if one pays attention to what Bolivar did with the economy and how he pawned the nation to the military and to foreign providers of weapons one begins to understand the mess that came afterwards.
            At the end of the day, I think he didn’t become a king because his initial star, Napoleon, had fallen by the moment Bolivar was rising (but he really liked Napoleon, not for nothing did he go to both of Napoleon’s coronations- in Italy and France-. For all practical purposes, his dictatorship and his life-presidency was the same

            Talking about presidency-for-life…
            Cheers

        • Francisco,

          I applaud your initiative to find out who the man really was. Just a caution though: All historical figures were products of their time and place. It is not fair or them or to history to judge them by the standards of our day and age. To understand Bolivar, you must understand the context of the world he lived in. I would suggest that you not only read about Bolivar, but about other historical figures from the same epoch.

          One of the most difficult things in this day and age of instant communication, is to remember that 200 years ago, leaders sent messages to places that required more than a month to arrive, and the same amount of time to receive a response. There understanding of distant events was always vague and out-of-date.

          Like most great figures from history, you will find that he was a human being endowed with both greatness and flaws. One of the harder things to learn and respect about history is that the greatness and the flaws should not detract from one an another.

          • Roy,
            I am not Francisco.
            One of the most difficult things to understand is that “Zeitgeist” does not justify what some people did. Bolívar was mediocre by any standards. He was completely dispensable. He became more of a hindrance, only that after 1817 he counted with more mercenaries than anyone in Spanish America – thanks to the end of the Napoleonic war and vague promises -, only after he had betrayed a lot more than most others of the big figures in America. One of the most difficult things to understand is that countries are never freed by one individual, specially not Venezuela.
            The greatness was by far on the shoulders of those rough Llaneros led by Páez and Piar and also by those Britons.
            Bolivar didn’t even liberate Bolivia and hardly any Peru, but that’s not what you get in the books. For that he had one of the best PR departments of his time.
            Bolivia was already basically liberated by others and so much of Peru (only Sucre did work hard for the rest of it)

            Really, don’t come with this “the most difficult is to be magnanimous and impartial”.

            First read a couple of books beyond those Venezuelans get at school and were basically the source even for a lot of well-known biographies of Bolívar.

            My heroes are the little men and women, or the guys like Carlos del Pozo y Sucre or
            the Fernández Morán…funny, they were not the jalabolas bolivarianos we have by the thousands.

            • Kepler,

              I wouldn’t disagree with you at all. As a military commander, Bolivar was mediocre, and as a statesman, he was hopelessly inconsistent and self-aggrandizing. I was trying to help set Francisco on the road to knowledge with an open mind.

              In Bolivar’s time, the world just barely started the process of making the shift from an aristocratic model to a democratic one. The new model was still not well understood, especially in Spanish culture. Bolivar, from his writing, was highly influenced by the American and French Revolutions, and the thinkers and statesmen that produced them, but he was still too much a product of his aristocratic roots and was unable to break away from them. This created a world vision that contained some of the same conflicts that still plague Latin America to this day.

      • Brother, the fact that our Independence heroes (not only Bolivar but Sucre, Miranda, Paez, etc) have been co-opted by Venezuela’s leadership (and this predates Chavez by decades) to excuse whatever new weirdness they wanted to impose on us, is no excuse to reject our roots and origins!

        Venezuela and half of South America was carved out of the Spanish Empire by those guys, they are in the history, the songs, the tales that makes us Venezuelan, just as the US is linked to Washington and France to Napoleon and England to Queen Elizabeth I. If you don’t know your history and prefer to go with the schoolbook version of it, be my guest, but the blame is on you!

        I mean, what is more Bolivarian that the OAS meeting right now in Cartagena, and quietly and regionally discussing what is best for us? What was more Bolivarian than Venezuela speaking for our Argentinian brothers during the Malvinas War? Stuff like Mercosur and the Andean Community? If Venezuela stands for regional unity, it is because we have it in our country’s genes!

        We inherited the family house, if we don’t like the color of the walls we paint it a different one, we don’t bring the house down!!!!!!!!!!!!!!!!!

        However, I agree that the laserlike focus of the current administration on a very particular interpretation of Bolivar’s politics is narrow-minded and chafes at modern perceptions of the world. So we change it, and we don’t get bogged down on the ideology or getting too “Kosher” about it. I mean, being Bolivarian – or marxist or neoliberal or scientologist, for that matter- is not an exclusive thing. Bolivar did not know about oil, and his ideas about women’s rights were simple at best, but that means we take what we can use and leave the rest!

        I am a Bolivarian because I believe in sovereignty and regional integration, a leftist because I believe in personal freedom within the framework of a strong state that taxes me according to my means and invest that money on solid public services, I favor building trains and subways over highways because I believe public transportation is more efficient; I am also to the right of the spectrum in that I believe a strong, well regulated private industry is the best way to achieve growth and employment. But I believe that mining resources belong to the State because they belong to all Venezuelans … so I believe Sidor and PDVSA should most likely be “empresas mixtas” with a presence on the stock markets -for reasons of transparency- but under majority stake of the state… Confused yet? I also believe that education and health services should be run foremostly by the State and be free in all instances.

        And I believe a guy like Henrique Capriles, who managed to get the Venezuelan opposition bag of cats into shape and behind him, is most likely way ahead of us in understanding this, and not wanting to alienate a big chunk of the country that still believes to be right… LIke with the Bolivarian thing… Dude, if you are called Ernesto Floripondo Rosas Caca, and happen not to like parts of your name, you just go ahead and introduce yourself as Floro Caca, not Ernesto Rosas, while in the meantime work within the system (i.e a referendum) to legally change it! Venezuela as a whole voted in the Constitutional Referendum and voted to get that Bolivarian “middle name” into our name… It stand to reason we do the same if we want to remove it, and it also stands to reason there are FAR MORE pressing issues waiting…

        Sorry for the rant…

        • Tom, apparently you didn’t read my first post. I said I stick to Capriles anyway and I know Venezuelans are not ready for this. So: obviously, very obviously, I know there are more pressing issues. Just don’t come and say every Venezuelan needs to be “Bolivarian”, that’s crap.
          It doesn’t have to do with Chávez. I would have said so in 1999.

          Now: I do know my origins and roots as a Venezuelan and I don’t think I know them a single atom less than you do. I know my history and because I have taken a little bit of the extra effort to go beyond the propaganda we have been getting since 1811 I just don’t accept it.
          Bolivarian is not an exclusive thing but I have never been Bolivarian, ever. You should try to read that book by Damas

          Listen: Britain or France are some of the most military-obsessed countries in Western Europe and even they don’t have any more such bloody obsession with their Nelsons and their Napoleons

          Venezuela’s identity is far more than arepa, cuatro and the false memories of what supposedly a group of people did.
          Integration? Fine for me. Mind: Bolivar didn’t come with the idea first…at all…not even second.

  4. I’m all for giving the guy the benefit of the doubt if this is what he thinks will win him the election. If two years into his government we have “Chavez without the insults” then I’ll get on him.

  5. In any event, I look forward to the time when venezuelans can have this debate without a bunch of thugs in the room.

    • Exactly, that’s the point, we are asuming that if Capriles becomes President, he is going to be able to do this without criticism or control,as Chávez does with his policies.. Precisely, the most important thing to do if we kick out Hugo its reinstalling the mechanisms of separation of powers to debate the major national decisions on public policies, and not having their made by the whim of an ignorant autocrat.

      • the most important thing for him will be to secure power in an administration that has been purposefully seeded with Government loyalists for more than a decade. I won’t put it beneath this Government, if it is removed from office which is definitely far from certain, to instill discord against the “oligarcas” … I would not expect great changes from a Capriles administration beyond repairing some of the worst damage done to our economy. I certainly hope they don’t get the idea of launching a new Constituyente… that would be a job for another government.

        • If 1999 showed something is that a Constituent Assembly only provokes more instability and shifts away attention for the most important problems. In any case, in a few years if we ever get to have some stability, we should reform the Constitution to create a parliamentary system. Presidentialism its just proven not to work anywhere but in the US (And it doesn’t even work that well). But please a rational change related to improve government.
          The endurance of a Constitution its not actually that related to the fact that it was drafted by a Constituent Assembly or things like that. The 1961 Constitution was actually an amendment of the 1953 one approved by Pérez Jimenez by a fraud. The Japanese Constitution was drafted by the US Army when they occupied the country after world war II and transformed the country into a democracy. Please no more constituyentes, look at the last countries who have done Constituent Assemblies and how they are doing. Mejor tratemos de cumplir la que ya tenemos.

    • very worthwhile journalism. I would have wanted just a few details from the last interviewee. Did she say, “desde que este presidente me dió la nacionalidad?”

      So to obtain the pensioner’s annuity, you need to show proof of voting, and I presume a vote for Chavez.

      • Well that’s the thing. She has to prove she is going to vote; and who do you think she is going to vote for?

        She didn’t say “Since I became a citizen of this country,” she said “since the president gave me my nationality.”

  6. “precambrian Statist?” You’ve been hanging out with Quico too much. Had to google this one twice to fit together the geologic and governmental context……….still struggle to see how they fit together but I get your drift and appreciate your post nonetheless..

  7. Wow, fourteen years of Chavez and your answer is to go back to Reagan and Thatcher. Can’t you understand that that is exactly what precipitated this debacle to begin with.

  8. Well, I kind of like what you rerpoted Juan, not all, but a good deal. I am one of those that think that Reagan and Thatcher policies were awful and that they were the start of the problem that led to the current global economic crisis. So if Henrique is anti-Thatcher, anti-Reagan and anti-Chávez, I totally agree with him.

    We need another path.

    • When it comes to public services and the deregulation of industry, Thatcher and Reagan were exactly right. You may not like some of their other policies, but to say that they were wrong in privatizing electricity, breaking up the Bells, or de-regulating the airlines is to deny a massive success.

      • I’m not a Reagan/Thatcher fan. But for me, more than looking outside, its our experience with the state handling public service, when it does it, it sucks, as a result people end up get shitty public services and the state then has to pay massive amounts subsidizing the company that should be spending in other areas.

        • I lived in England for a bit during the Thatcher period and it rained every day, the food was terrible, people were angry, and the beer was warm. It was a horrible time and entirely her fault.

          The thing about privatization -whatever you think of it- is that what you need at the very least is robust oversight (i.e. a strong public regulator(s)). Otherwise, you just get giant privatized monsters run by the kids of corrupt government officials robbing people blind and/or providing crap and/or dangerous service. Like in China and Russia.

          So when privatization happens up here, we get all these assurances that there will be strong regulatory oversight and everything will work out fine, but of course, that never happens- from the airlines to the phone companies to the financial system. But, ok, you can debate about those things where there is a basic level of rule of law and representative and responsible government. Takes me 3 weeks for Telus (or Bell) to install a phone line, and then another 3 weeks to sort out the fuck ups, and I pay a ridiculous price which would be better spent on say a Harvard education, but arguably it is better than Cuba.

          From what I can see, the prospect of a decent, functional legal system in venezuela is a while off, much less the kind of robust regulatory oversight necessary to a process of privatization with positive results along the lines you suggest (as I say, arguably, we don’t have robust regulatory oversight in north america- yet). My brain is not big enough to argue with you on this JC, so I will respectfully leave it at that.

      • Who says that they were right Juan? Who says that privatized services are better than efficient goverment run services? Do we have better airlines today?

        Here Hydro-Quebec is run by the goverment, as a crown corporation and we are doing fine, thank you. If you compare with private deregulated industries…

        So here’s why I don’t believe in the privatization/deregulation credo: fundamental service industries are, because of their nature, monopolistic. In that case, when you privatize, the market tends toward private-own monopolies instead of state own ones. Private monopolies are viable only with very strict goverment control, like what used to be the old Bell Companies. When there is de-regulation, we end up with private monopolies without goverment control. That is WORSE for the consumer than a State company.

        So, the solution, in my view, is having well managed crown corporations, like we have here with Hydro-Québec. The problem in Venezuela is that the equivalent of crown corporations have not traditionally been well-managed.

        So I applaud Capriles in his proposal. There is no reason, if he has an efficient team of managers and engineers that his view will not succeed.

        • Who says that privatized services are better than efficient goverment run services
          “Efficient government run services” such as the Argentine government owned telephone company which had a year’s long waiting list for installing a landline- and charged $2500 in current dollars for doing so? Unfortunately for your argument, “efficient government run services” in Latin America is pretty much an oxymoron.

          I would agree with you that a private monopoly such as Carlos Slim was granted in telecom in Mexico is not any better than a government monopoly- and may be worse.

          PDVSA before 2002 would have qualified as efficient, for the most part.

          • Boludo,

            I think that the key to this debate is wether there is or there isn’t healthy competition in a
            particular sector. If the sector is such that, because of the investments required or the nature of the services, it becomes a monopoly or it is dominated by just a few actors, then it is better off in the hands of the State either as a crown corporation or a private corporation heavily regulated by the State.

            On the other hand, if the sector is such that there is strong competition, there is no reason whatsoever to regulate or step in.

            My point is that capitalism works only when there is healthy competition. That is precisely why there is an anti-trust law in the US and why, in some sectors, the government needs regulating, because, otherwise, capitalism does not work.

            Of course, I am assuming that we have a State that is able to create crown corporations that will be managed as profitable businesses or a State that is able to regulate in the best interests of the whole country, and not an ideological group or a political party. In Venezuela, we currently do not have that, but there is no reason why we shouldn’t. It happened in the past, it can happen in the future.

            The problem with Venezuela in Chávez era is that it is no longer a “State”, Venezuela has become “Chávez”. He has had so far a single objective, staying in power forever, and to pursue that objective he needed the notion of State and its independent institutions to be removed from the map.

            Therefore, there is a tendency for those that oppose Chávez to interpret “State” with “Chavez” and prone economic policies totally on the other side of the spectrum. So, once again, I am pleased that Capriles has understood the differences and made a middle of the road proposal.

            • No, Bruni, the problem is not only one of competition. Of course, in part that is the issue, but having a state-owned utility creates all sorts of incentives to use the company to pay off political favors and have “papá Estado” pick up the bill. Look at Alcasa, a bottomless pit in which taxpayer money is continually used to pay off the workers to work in a semi-operational factory, just because it’s a “strategic” sector.

              Of course, in Quebec things are different. Pero no somos canadienses.

            • But notice what just happened, you just switched directly from arguing about state-owned utilities to giving an example about Alcasa!!

              Ni es lo mismo ni es igual. The money-pits need to be privatised, no question about it. The utilities, you gotta convince me.

            • I don’t see much difference between CANTV and Alcasa. They’re both “strategic”!

            • Really? How would you mark a paper from a student who wrote the aluminum market is just like residential phone service?

        • Gee, Bruni, so we’re going to bring Quebecois workers to manage our utilities for us so that they work just like in Quebec? Are we going to import Canadian managers, with their values and their pay structure?

          You ask who says that public utilities don’t work in Venezuela. My answer: any customer of CANTV who was around in the 70s and 80s and had to wait two hours for a dial tone, had to bribe someone to get a line connected, had to deal with “llamadas ligadas”? Did we learn nothing from that experience? Everything the Venezuelan state touches, it turns into doo-doo.

          • But you know what the answer to that is, Juan:

            so we’re going to bring Quebecois regulators to oversee our utilities for us so that they work just like in Quebec? Are we going to import Canadian technocrats, with their values and their pay structure?

            You can’t just privatize a natural monopoly without regulation. You need to make the case that we’d be better placed to run a modern, effective regulatory structure.

            • I think that’s pretty obvious. The free market will not bring electricity to your house, that’s for sure.

          • Juan, I am old enough to remember the massive firing of telecommunication engineers in CANTV. I don’t recall exactly the year, but I was either a senior engineering student or a young EE at that time. I remember experienced telecommunication engineers having to struggle with power system concepts because there was just not work for them in their sector. That was the beginning of the slide of CANTV into a company that was unable to provide the basic service. That happened because the goverment of that time politicized CANTV. So they violated rule number one: do not politicize a crown corporation.

            The second problem with telecommunications at the time was that the equipment was just too expensive as the system had been let go. Someone had to pay to renew the system. There you have two options: either you pay yourself or you ask someone else to pay. Venezuela did not have the money, so it asked GTE to pay. Of course this was wonderful for the Venezuelan consumer who, all of a sudden got some service, I wonder, however, if GTE got its money’s worth.

            What saved the day in Venezuela was the explosion of wireless: wireless infrastructure is way cheaper than the old fixed-line telecom infrastructure, allowing several players into the business. So in the end, the deregulation was a good move, but only because of wireless., which is precisely the part of telecommunications that, because of its nature, is more prone to competition.

            So you always end up in the question of competition.

        • “Who says that they were right Juan? Who says that privatized services are better than efficient goverment run services?”

          Paul Joskow, MIT professor, that’s who.

          http://icc.oxfordjournals.org/content/5/2/341.short

          Money quote:
          The institution of regulated monopoly creates its own cost, however. There is a trade-off between the costs associated with regulated or government-owned monopolies and the benefits of operational and investment coordination within vertically and horizontally integrated industrial hierarchies. Around the world countries have come to view the costs of these historical governance structures as exceeding their benefits and are implementing structural and regulatory reforms to promote competition in the supply of generation services while creating new governance structures to maintain efficient short-term coordination relationships between generators and the network, to manage network constraints, and to internalize network externalities.

          • I’m ready to believe that. I’m also ready to believe that the work of “implementing structural and regulatory reforms to promote competition in the supply of generation services while creating new governance structures to maintain efficient short-term coordination relationships between generators and the network, to manage network constraints, and to internalize network externalities” is tricky, institutionally demanding, impossible to do quickly, and something not to be undertaken lightly.

            • It’s not that difficult to implement. The world has learned a lot about what works in regulation in the last twenty years.

          • JC from previous comment:
            I think that’s pretty obvious. The free market will not bring electricity to your house, that’s for sure.

            Depends what you mean by “free.” My understanding is that a substantial proportion of Venezuelan households do not pay for their consumption of electricity, which is one definition of “free.” :) [in humor]

  9. Henrique has insisted on Brazil as his possible model for governing: Social programs which help the underprivileged while allowing private enterprise and investment with no harrasment and clear rules. If that’s his model, I’m for it. The end of “Father State does it all” policies must come at a steady pace so the country can assume it better, given the circunstances. The less we need right now is some kind of a shock therapy.

    I think that Thatcherism and Reaganomics have brought more harm than good and they’re a big part of the reason the world is stuck in this global economical nad financial crisis, IMHO.

    • One of the saddest effect of this 13 years is that instead of debating the big political, cultural and economical issues that are discussed everywhere, we are still arguing about the need of having just a basic separation of powers, free speech, rule of law, that are taken as a given in many parts of the world.

      • On the other hand, it’s an opportunity to start fresh and not repeat some of the mistakes that the more established democracies have made.

        • Thanks Canucklehead,
          I’m living in the US and whenever someone asks me what’s the debate in Venezuela regarding educational reform, environmental law, gay rights, abortion or something similar, I never have anything to say. And its really sad the level of the debate we are having.
          I really don’t know much about economics, but what need to be brought back to economic policies is rationality. We cannot keep nationalizing companies because of “national sovereignty” and end up with these disasters. But neither can we deregulate everything because its bad having the state intervening as a principle. We need to look at experience and practices around and determine when its better for a service or company to be private or not.
          BTW did anyone read this? http://www.eluniversal.com/sucesos/120415/gran-despliegue-policial-por-hurto-a-carro-de-hijo-del-canciller-madur ,

    • I agree. The Thatcher-Reagan ‘revolution’ has led to a spiraling of state debt in both the U.K. and the U.S. and has had virtually universally disastrous consequences throughout the world where ideology, pitched as political and economic ‘reason’ or expediency has led to easy profits for big capital and the declining capacity of governments to provide essential services. For instance, here in Australia the national telco was privatized because the dominant neo-lib ideology had it that the state should stay out of industries better run privately. The reality was that the corporation was already run as a private corporation when the shares floated it had turned in a 9B$ profit.

      Relative incomes have stagnated or declined in the West (western Europe, Oceania, North America) since the mid seventies, while productivity has doubled, i.e. inequality and exploitation have increased, and this process is in no small part a product of the ideological turn initiated by Reagan and Thatcher in the early 80s, and from which there have been few major deviations globally.

      Clearly, the nationalization of Venezuela’s steel industry has not worked, as have other nationalizations, precisely because Venezuela finds itself beholden to international markets and cannot cordon certain industries off from global competitivity. But a line can be drawn between certain industries or domains which provide basic infrastructure (i.e. electricity, water, communications, roads) which, by state-private partnerships in service delivery can be both competitive and allow for good-value down-stream benefits (i.e. collective benefits enabling further productivity and intangibles). This is more or less the model employed here in Australia.

      The global neo-liberal hegemony, reaching every country on earth, appears to be reaching a zero point, and Venezuela, optimistically, could be seen at the vanguard of places that have already been thinking in terms of ‘post-neoliberal’ permutations, which is an exciting space to be in. I find evidence of this in Capriles thought, and in the conflicts/discussions between grass-roots substantive democracy proponents in Venezuela and neo-liberal bureaucrats (nonetheless talking anti-neoliberal) within the Venezuelan government.

      ..

      • I guess this proves my point: the only people applauding Capriles’ position are hard-core lefties who still have romantic visions of the State being able to produce things and who are disdainful of the free market and entrepeneurship.

        Thank you, Henrique.

  10. Don’t worry, Capriles is only pretending to be left wing and support public services cos he’s trying to win votes. He’s got two chances: slim and none, and slim is having a check up at a Barrio Adentro – hence the dishonest pitch.

    On the other hand, you SHOULD worry, cos people aren’t that easily fooled by fork-tongued oligarchs. Public ownership, misiones, price controls, Mercals, minimum wage etc are all popular because they make the lives of ordinary people demonstrably better. Forcing the opposition leader into a de-facto admission of that fact is a testament to the popularity of Chavez’s socialist program and its practical delivery.

    • Yeah… jus tlike we all know that the USA is the land of the free and Nazi Germany was a country of superior humans.

    • Calvin (Arturo, etc.) obviously does not live in Venezuela.

      “Public ownership, misiones, price controls, Mercals, minimum wage etc are all popular…”

      Really?? Public ownership has been such a great success. PDVSA, the electric companies, the aluminum companies, the ceramic companies, the cement companies, the agricultural companies, the iron companies, etc., etc. What a tremendous example of 21st century socialism & Hugo Chavez’ reign.

      Price controls have been such a super success in all the other countries that have tried it – not! We have 30%+ inflation every year – that worked out well!

      Mercal where the people have to line up for hours to buy a chicken or bag of Arena Pan – great success.

      Minimum wages that amount to approx. US$200 per month & that 60% of the workers receive – great success.

      An official exchange rate of Bs.4,3 that is limited to a very few & makes the price of a Toyota Corolla around US$75,000.

      You really need to get a grip on reality Calvin. Your world of fantasies does not exist.

      • …apart from the inconvenient fact that your candidate implicitly acknowledges that it does. The fantasy world you actually live in is the one where you imagine that Chavez is an unpopular dictator or authoritarian who delivers nothing and steals elections.

        You see, that’s your problem, isn’t it? Chavez champions all these terrible things like health care and the minimum wage which you say are all crap, but somehow they are so popular that people keep voting for them in internationally audited free and fair elections. Now, your millionaire candidate is smart enough to realise that his only chance of getting elected is to pose as an even better left winger than Chavez by comparing himself to Lula; a claim the Brazilian Workers Party dismisses as “funny”.

        • I guess you don’t want to separate concept from implementation, but all HCR is offering is cleaning up after chavez simply because of chavez’s lousy administration. The number one cleanup, though, is a 180 turn on the divisionism which seems to fuel chavez’s whole vision. Reuniting the chavez supporters and the non chavez supporters back to a common vision of Venezuela supporters is what fuels HCR’s, and most of the opposition’s vision. If that means there’s a give and take with chavez programs, so be it. At least they can be done properly, under rule of law, with oversight, and efficiently.

          • The divisionism is the only thing they have. The contributor can’t just accept that Capriles wishes to institutionalize and modernize one of Chavez’s programmes for the poor. Instead, it’s insults 24-7. Capriles’ position recognizes that, in a modern country, access to social programmes should be based on objective criteria such as income, not on support for a given ruler or party. Discrimination against the poor on the basis of eir political opinions should not be tolerated, and Capriles recognizes that.

        • Chavez champions all these terrible things like health care and the minimum wage which you say are all crap,
          Chavez invented the idea of minimum wage? wow, that man is prodigious, Did he invented
          penicillin too?
          One advise, perhaps read about Venezuela before 1999 and you will find out that it was not the hell that the sell you. Success in PDVSA? It has 171% more employees and it produces a million less barrels of oil h
          ttp://www.ultimasnoticias.com.ve/noticias/actualidad/a-98-mil-petroleros-subira-nomina-pdvsa.aspx
          The price controls and disastrous economic policies produces one the highest inflation rates in theworld and the highest in the continent http://en.wikipedia.org/wiki/Economic_policy_of_the_Hugo_Ch%C3%A1vez_government
          Minimum wage doenst only exist in Venezuela, did you know that?
          Mercal existed before 1999 it was called CASA.

          • the market cannot be alone in setting things like wages and health care… You can make a point for having private doctors and private medical services handle elective stuff like the ever present boob jobs, and elective surgery in general… but I remember running with a very good friend in tow, who had cracked his head on a nasty fall, to a private clinic near La Castellana, a few years ago, and having a pile of private sector bureaucrats not admitting a bleeding person into emergency care while they waited for someone to show a credit card… That soured private health care for me

  11. You lot can click ‘thumbs down’ to reality as often as you wish, but reality stubbornly refuses to disappear. Have you learned nothing from 13 years of failure?

    • Calvin: “Have you learned nothing from 13 years of failure?”

      And you support chavez?

    • Have you learned nothing from 13 years of failure?
      It depends on who is “you.” What success has the Chavez regime had, other than staying in power and increasing its power? From looking at issues such as murder rate, housing construction, and availibility of electricity- basic stewardship issues- it would appear that a strong case can be made that “13 years of failure” succinctly describes the 13 years of the Chavez regime.

    • We have learned to read things that people like you read, and laugh.

      Now go find Hobbes and play with him.

  12. I dunno, I think hanging on to loss making firms in competitive markets (here’s looking atcha, Sidor!) is clinging on to a dead idea for sure. But in public service natural monopolies, where privatized firms would need to come under very close regulatory scrutiny, the case is much less clear cut.

    I think if Juan had used British trains over the last ten years, he’d be a lot less sanguine about privatization. The train companies are private, but since most city-to-city connections only have one service provider, fares remain regulated. Political pressure to keep fares cheap has slowed investment in new trains badly, leaving to horrible, congested, crowded, old decrepit trains on most lines. Now, industry pressure to let fares catch up to cover investment needs is leading to way-over-inflation fare raises, and huge public anger.

    It may have been the same or worse if British Rail had retained a public monopoly, but it may also have been better. Certainly, privatization was no panacea.

    • My experience with British Rail is limited to various points in London, its suburbs, Surrey, and connections to three airports. In the process, I’ve noticed three things that give me pause about the quasi-privatized nature of British Rail. One deals with the train stations. In the majority, try finding a public phone to use, if you don’t have a cell phone, or your batteries have died. Impossible! Two, Handicap access is not great, either, save for the larger, more modernized stations. I like climibing stairs, but holy cow, some of them feel like they’re straight out of Charles Dickens, and/or a very long way from the “bowels of the earth” to the surface. Three, the privatisation-government tussle over price controls does not explain why British Rail opposes opening its market to Eurail. You’d think this would be a welcomed and added market, which, in turn, would produce greater cash influx. But oh no, of all the train systems in Western Europe, British Rail closes the door to a substantial market. Among the Britisih Islands and Ireland, only the latter rail system is included in Eurail.

      • I like climibing stairs, but holy cow, some of them feel like they’re straight out of Charles Dickens, and/or a very long way from the “bowels of the earth” to the surface.

        And when you get to the top it’s rainy and the beer is still warm.

    • “I think if Juan had used British trains over the last ten years, he’d be a lot less sanguine about privatization. The train companies are private, but since most city-to-city connections only have one service provider, fares remain regulated. Political pressure to keep fares cheap has slowed investment in new trains badly, leaving to horrible, congested, crowded, old decrepit trains on most lines. Now, industry pressure to let fares catch up to cover investment needs is leading to way-over-inflation fare raises, and huge public anger.”

      A privatization that results in a single service provider is no privatization, it’s just government outsourcing. At least that’s what it looks like to me.

  13. The point, which Juan surely gets since I guess he teaches this stuff, is that without competitive dynamics, the determining factor in the performance of public service providers is down to the strategic interaction between provider and regulator.

    It’s not self-evidently true that whether the public service provider is in public or private ownership is a key determinant of performance – and there are plenty of counterexamples where misregulated private provision of public services has gone spectacularly wrong.

    In any event, it’s not at all analogous to the situation in more competitive markets, where private ownership is obviously and demonstrably a more efficient governance structure.

    • The California example doesn’t just apply to private sector mismangament of public services, but present one of the most damaging cases of dog-eat-dog capitalism, impulsed by Thatcherism and Reaganomics: Enron.

      • Great minds…

        Though really, I’m a fence-sitter in this debate. There are certainly circumstances where well regulated privately owned public service providers can do a good job. Then there are also the HydroQuebecs, which are publicly owned and do fine.

        The issue, in Venezuela, is that for a privately owned public service provider to work well, you need a sophisticated regulatory structure, well designed and expertly run by well-trained technocrats. It’s not altogether obvious to me that the skills needed to design and staff such a regulatory agency are any easier to obtain in Venezuela than the skills needed to run an efficient publicly owned public service provider.

        It’s easy to imagine a situation in Venezuela where you privatize an industry, but can’t attract good enough talent to the regulator because you can’t pay salaries competitive with industry salaries. It’s one step from that to a situation of outright bureaucratic capture, where the regulators come to rely on the industry for know-how, analysis and, down the road, kickbacks and bribes, and where the industry ends up basically writing its own regulation. That is, in any case, at least as likely to be the outcome as the is intended outcome of privatization.

        And I write all this as an outright zealot on privatising things like Sidor, the Cement makers, and other non-natural monopoly state industries.

        • Quit looking for examples in other parts of the world, people. How much does it cost to maintain Sidor? How was CANTV before privatization, and how was it after privatization? Compare Banco Mercantil with the Banco Industrial de Venezuela. How was Electricidad de Caracas before being taken over, and how is it now? How is Cemex (or whatever the hell it’s called now) now compared to a few years ago? I could go on and on.

          I’m not saying private companies are great and are the panacea, but the evidence is overwhelming: when the Veneuelan State deems a sector “strategic” and takes it over, it makes things worse, and consumers (and taxpayers) suffer.

          • You keep lumping in firms that never had any imaginable business being public or being particularly strenuously regulated (Cemex, BIV) with utilities that will need to fall under close regulatory scrutiny until the end of time.

            • I’m confused. Was not CANTV successfully privatized in the 90’s? The “apertura” created a competetive market where today you have three major telecoms. Do you think CANTV should be state owned?

            • Celular telephony is a competitive market. Home phone service isn’t. Cantv’s privatisation made sense in the specific circumstances of the early 1990s, and the regulator that oversaw the transition (the old Conatel) seems to have done it well. To support its re-privatisation in 2013 you have to make the specific case about how the specific circumstances in the telecom market in 2013, and in Cantv’s balance sheet, merit the policy. You can’t just generically say that it should be privatised as a matter of principle.

              • “To support its re-privatisation in 2013 you have to make the specific case about how the specific circumstances in the telecom market in 2013, and in Cantv’s balance sheet, merit the policy. You can’t just generically say that it should be privatised as a matter of principle.”

                Between what you’re saying and forcing companies to reveal their costs so that the State can set their prices there is but a tiny, baby step.

                As I said, the only ones cheering Henrique’s position are reformed Maoists who still believe that free enterprise is evil, evil, evil.

            • True, but Home Phone service is going the way of the Dodo, I barely know anyone who communicates regularly through a land-line, it’s all internet, BBM, VoIP, Facetime, etc. Sure institutions and business still require land-lines but they make up a small fraction of the balance sheet.

              I think the problem was that CANTV should never have been nationalized in the first place. And the competitive market is still there, evolving but more or less following the same trends. I do not think re-privatizing CANTV in 2013 would be that terrible an endeavor since it seems it was already successfullly accomplished once. What’s your real position here? Now that CANTV has been nationalized it will be IM-po-SI-ble to privatize anew? Mind you I’m not saying privatization is the be-all and end-all of solutions. But for CANTV it seemed to work well. What’s changed that would make it a bad idea now?

  14. Do you know what a dead idea is? To be puzzled by state/private ownership.

    AD/COPEI presidents were more prepared to deal with political and ideological dilemmas than to be selecting efficient managers of complex modern businesses lodged within a complex modern state. That’s the source of all the drama about state-owned companies in Venezuela.

    But there is the remarkable exception. PDVSA was the only uncorrupted, successful state-owned company during the AD/COPEI years because its main purpose was congruent with the main purpose of any business in the world: To be self-sustainable and make a profit. Was there ever the same vision for other state-owned companies during the same period? Absolutely not, IMHO.

    I invite all of you to think this over.

    P.S.Talking about the current government needs no further comments.

    • Very good, Gabriel.

      Not trying to be a smart-arse, because I agree. You nailed the point-political appoints corrupt the state-controlled companies(esp. under Chavez..)but the problem is
      the “is/was” example of PDVSA – PDVSA WAS a success but is no more.(This is
      so critical to the future of Venezuela)
      I end where you said not to -talking about the current government.

      • PDVSA was a success and still is a success, because its profitability does not depend on the efficiency of its managers but on the fact that it sells something the world really, really, desperately needs a lot of. Even a basket case like PEMEX is profitable.

        • Not debating, Mr. Cristobal. In a sense yes-a success- PDVSA -will always be a succeess
          as long as it sells oil- but I think you are wrong. Taken as a whole- PDVSA is doomed
          by obligations it can in no way ever fullfill – you know this…
          The future is ruined.

  15. One of the most disappointing aspects of Henrique’s position is that it goes directly against the ideology of his own party.

    When we were working on the PJ platform, one of the things I was asked to emphasize the most was “subsidiariedad“: basically, the idea that there should be as much market as possible, and as much State as needed.

    When you say that certain sectors are “strategic”, subsidiariedad goes down the toilet. Basically, you’re saying “this is for me, just because.” After all, what defines “strategic”? Who says that telephone services are strategic and not, say, housing construction? What about food distribution? Sounds pretty “strategic” to me. What about public transportation? Why not make all airlines state-owned? It’s the same type of thinking that permeates chavismo, where they think the State should control everything it feels like controlling.

    It would have been so easy for him to say “I believe in competition and efficiency, and if State-owned utilities can be profitable and provide a good service, I{m fine with that. I have no plans of privatizing state-owned utilities just yet.” But he went all-out ideological on us.

    • Well, I don’t have access to the full piece due to that damn paywall, so it’s hard to say.

      Did he rule out privatising CVG?

      • Oh yeah. The only things he mentioned as the State not really needing to be involved in are hotels, agricultural firms, and cement companies, but he wouldn’t pledge to privatize any of those.

        • Sounds to me like he’s clearly setting apart utilities from firms that never ought to have been public at all, but trying not to box himself into specific policy positions in the process.

          • He specifically said utilities had to be State-owned, which is what gave me a conniption.

    • But remember, Juan .. (Hopefully) if Capriles is voted in, he will oversee an abbreviated transition period. During this time, he will hopefully roll out the critical issues without applying shock therapy to a good chunk of the population that is employed by, or uses the services of the State, currently existing within the imperfect dream of chavismo.

      Put another way, assuming a Capriles win:
      1. What do you believe are the most critical changes that need to be put in place, during his years 1, 2 and 3?

      2. In that timeline, where do you figure that the changeover, from inefficient bureaucracies to models of improved efficiency, lies?

      • I am not Juan and not meaning to intrude-but
        my list would be: cancel as many military contracts as possible-day one.
        And,top of list rework Faja del Orinoco.Cancel most all contracts that
        are worthless anyway… This will include
        reorganizing PDVSA of course.
        And-of course, (you know me) fire every Cuban in sight. Send them back.
        And retire most of the generals,,by now I am sure plenty of people will
        think I am nuts, so I’ll stop.
        The list is practically endless..

        • Since I am dreaming, cut the military by 50%-turn 50% into an internal Peace Corps.
          And, next year cut the military again by 50%..
          Require 2 years of community service -until the country gets back on it’s feet
          Oh- here’s my favorite- invade Cuba- liberate them, take the guns Chavez gave them
          away from them-as a way of saying Thank you -for mucking with Venezuela and
          to show the world including the US that Venezuelans stand for freedom, truth,
          and democracy -then invite Cuba to the next OAS meeting…

  16. JC, I think I now understand your economic position.

    How could that translate to a viable political reality?

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