The bandwagon is getting crowded

It just makes sense.

It just makes sense.

Long-time readers know extorres, our frequent (yet annoyingly anonymous) commenter who has been pushing the direct distribution of oil wealth for a loooong time.

Today, the Wall Street Journal’s Mary Anastasia O’Grady buys right into his idea. Citing a study by our friends Pedro Rodríguez, José Morales, and Francisco Monaldi (great read), she talks about the scheme as a possible cure to Venezuela’s toxic brand of petro-populism.

Just today, we learn of yet another arbitrary change in the way the government “distributes” its oil wealth – now, more will go to the BCV and less to Fonden. These decisions are always made outside of the public eye, with zero accountability. But when citizens perceive their oil income directly, and the State taxes them instead of some oil company … well, that just turns the relationship between the citizen and its petro-state on its head, and in a good way.

O’Grady’s money quote:

When the state uses oil taxation from a narrow group of producers to run the government it breaks the connection that voters normally make between what they pay in taxes and what they expect back in services—what the authors call “positive governance dividends.” Also, when the state has discretion to distribute the fruits of oil extraction without accountability, it is likely to use them to reward political allies.

Under the DDM, the direct payment from the oil income is subsequently taxed. In this way, the cost of running government programs hits the taxpayers. According to the authors, the cost of running the large off-budget development fund known as Fonden and “various social programs,” including what Mr. Chávez calls “the missions,” amounted to almost $125 billion from 2003-2011, or some $480 per person per year.

Smart lady, that Mary Anastasia.

58 thoughts on “The bandwagon is getting crowded

  1. Again i just write that i just arrived amazed and humbled from communist Vietnam. At their evolution, standard of living and growth with much less resources than we have. Imagine what the would do with oil revenues. There are as many different languages and tribes, as their rice paddies, and all under a chinese model communism. They threw out the old russian cuban model and now are on their way to evolution. Wishful thinking on our part… How on earth will we disengage crom the cuban vampires and the involution of the aptly named “slumlord” or his minions? Beats me….

    • Not sure what you mean by “they threw out the old russian cuban model and now ….” since no details nor dates are mentioned. I also think that the statement implies a level of self-determination, when the reality was more based on economics, especially that of the failed Soviet Union.

      • What do you mean details and dates are not mentioned? The vietnamese followed the old russian/cuban model of rationing coupons and the everybody is equal BS, but in the words of phan tuan, my group director, and from his lectures and slideshows, he explained that post ho chi minh’s government, the new government soon realized it was bringing the economy down as the lazy people didn’t want/need to work… They got the same coupons and rationing system -which became corrupt- que los más más fajados. Sound familiar?
        So… They threw out the russian model and embraced the chinese one. And it shows. I was in saigón And up the mekong to tonle sap, from there to cambodia and hanoi. I don’t understand why you need dates? Is that important? What’s important to me is that a country that has been oficially communist rationaly, ideologicaly, emotionaly and spiritualy- that even has ho chi minh’s mummy on display (i saw it) had the saviness and forethought of forsaking a model that was bringing the country down and creating corruption. I saw the photos, and heard the testimony of many people, and saw a country that hpas a better standard of living than ours with basically rice and fish, and no people queuing for harina pan or fighting over chickens. You should see the open markets, specially the one in sa dec. En fin…

  2. So much of the time we fall into “smart when we agree, dumb when we don’t ;)”

    and extorres’s anonymity does not bother me in the least…at least he is respectful and intelligent….I just really dislike this particular idea .

    • firepigette, thank you for the good. About your disliking the idea, what exactly do you dislike about giving people what is theirs, especially if the alternative is that the money is being selectively given to them anyway but making it seem like it’s a gift from chavez?

  3. And that will only happen when the Latino is displaced from Latin America by the Oriental.
    Cubazuelans are, unfortunately, professionals in the arena of corruption.

    Only the other day the Security Guard in the bank wanted to sell me a “queue ticket” so that I wouldn’t have to wait too long. I mentioned this to the woman in the bank who served me. A shrug of the shoulders was all I got.

    I ask my self if Chaves created the corrupt state we now have, well worse than before, or was he simply taking advantage of Venezuelan vulnerabilities.
    Whatever it is any refreshing changes introduced to Venezuela are doomed.
    It’s the inbuilt self destructive nature of the Venezuelan that needs to be addressed.

  4. We have one better, used to be at least you could find a man or woman to rent you their baby, to get ahead in lines. This theory is interesting because it can cut at the fake divide between left and right, you can circumvent the “people” owning the means of production, if the profits are equally and rationally distributed. But an idea whose time will come when the “left”, unfortunately, adopts it. Why? The “right” is not in a position speaking in terms of raw political power, to discuss how to dispose of the renta petrolera at this time. Further, ideologically and socioeconomically they are in a weak position, these are the people who would not really need a $5,000 check once a year, whose lives would not be changed by it. So all the rhetoric about distributing wealth, versus the mission you see and hear about every day (even if there is no actual benefit to you), is a tough sell. Same thing as electing an oppo versus Chavez or Maduro. In reality this type of radical (re)distribution fits better with a liberation-appropriation narrative, it might make more financial sense to describe it as empowering thousands of small businesses, of microempresarios, but really what needs to be pointed out is that cooperatives could be formed, each circulo bolivariano, or whatever they are called these days, could pool its money and actually get things done, not wait for the handouts from some part or other of the government, this can actually be a form of radical socialism that would work, and that’s how it can be proposed as an option to Chavismo. It might sound contradictory and I’m not saying that this is a good idea if presented by the left and a bad idea if presented by the right, but in relation to the current political context and the general situation, I think the only reason this idea has not taken off in Venezuela or other latin American countries is who is trying to sell the idea and how.

  5. The difficulties of collecting tax money rise exponentially the more spread out and small the amounts to be collected , specially in a country with the half broken institutional structure of Venezuela , tax evasion would be rife and people would fritter away their oil revenue on frivolities and petty purchases. Most people are very poor at managing their money or at using it wisely . Atomizing economic power into tiny pieces takes away from the possibility of having some competent body use it to good ends . The problem lies in finding a mechanism whereby the handling of money is professionalized and institutionalized off the hands of populist politicians , doing it in a democracy makes this dauntingly challenging but not impossible . Maybe Democracy has to be de-sacralized just as in past centuries Kings were cut down to human size!!,

    • bill bass, the money, even when spent on tiny pieces, does not disappear; it merely changes hands. It then gets spent again by the seller of good or service on another good or service, and so on. Very quickly, the money goes up the economic chain into the hands of those who are managing the larger lumps of taxable amounts. There is no need to tax the atomic sizes.

      By the way, there are other ways to tax the money, even at atomic sizes, such as via devaluation, but that’s a whole other discussion.

      I suggest you ponder where technology and science are headed. They make it possible for fewer people to provide for more people with fewer resources. In the long run, there won’t be enough jobs to go around. Whether you like it or not, you’re going to have to accept the world will necessarily be filled with jobless. Whether we keep those people in poverty or not, is the question to which I say no. Suggesting it’s their fault, or even their responsibility, is denying the reality of the future of available work.

      • The easiest way would actually be to withhold your taxes from you pay check, with a very visible ‘deduction’.

        I think that’s enough to instill in the people’s minds that you better care about hour YOUR money is spent.

        • That assumes a pay check, which we can deduce will be for a select few and fewer over time. For those without the paycheck, they first need to have income to deduce from it. cash distribution guarantees that income, which should be noted again and again, is THEIR money being handed to them, not a government handout.

      • ex torres, money flows at different tempos and with a different multiplier effect depending on how its spent , and who spends it , some forms of money flows are more beneficial than others , Central government expenditures for instance have a smaller multiplier effect that those of well run government corporations or private corporations . I dont have the numbers for the multiplier effect of giving every one a tiny piece of our oil revenues , I do know that collecting taxes can be an extremely difficult and onerous endevour made more difficult the more colllections the State must make . Even if money flows it takes time before it gets collected in fhe amount that an efficient run state operation might need ( which can change a lot) . Venezuelans are among the most spendrift people in the world ( remember the old tag of miami visiting Venezuelans ” dame dos” ) . I hate as much as your do the corrupting consequence of having all oil revenue go to the government, but Im skeptical of solving that problem by giving all Venezuelans a tiny piece of the oil revenue . About ur second point I suspect that there is some truth to your fear , the japanese have a way of facing it , they try to selectively deoptimize the use of human resources to keep people employed even if that hurts their profits somewhat and make up for it by being more efficient in other aspects of their business that dont involve doing away with people !!

        • bill bass, I realize you seem to be making a great effort in being respectful and taking your time to reply to me, despite what you seem to think of my knowledge in these matters. Allow me to first thank you for this, but also give you hope that what I lack in knowledge of terms, I make way up in understanding.

          Given your focus on taxation, let me fork my reply into two paths.

          1) Assume that the taxation problem is solved. That is, assume that there is a magical means of taking the exact percentage we wish from everyone’s money. Do you still see a problem with the atomization of oil money spending? I am well aware that money flows at different rates and has different effects depending on spending. Of course, I am advocating an extreme consumer market. That is a polar opposite to the centralized megaprojects models that most people propose with such huge amounts of oil money. The key is that both models, in theory, work well when implemented correctly. The problem is that the latter model does not implement easily, whereas the former does, my reason for my advocacy. Also, I have been the first to point out that in the consumer market model, the money guarantees that everyone stays in the game. No one falls below the minimum required to make the minimum necessary purchases. That, in itself, in my view, trumps the alternative, which simply hopes this won’t happen. Your argument, then, to counter the atomized distribution of oil money to all equally in favor is about it *possibly* not working, when the alternative is one that we *know* is not working.

          2) Regarding taxation, consider the government making it illegal for anyone to create money. These laws already exist for physical money, but not digitally created money. Then, being the sole creator of money, the government by printing money would in fact be devaluing everyone’s currency by an equal percentage. So, by giving everyone an equal amount of cash, and devaluing everyone’s cash by an equal percentage, you get a sustainable redistribution system with zero poor, no taxation system, yet the required money for government spending. More on this at: http://www.neweconomics.org/publications/creating-new-money

          Anyway, my insistence on this proposal is based not on having worked out all the implementation details but rather on having worked out that any other ends is justifying unacceptible means. The alternative to not distributing the oil money is support for continued government graft. That should be having all economists lifting their fists with fury in the air. Instead, the economists are the ones to push back the most when the simple suggestion is to give everyone what belongs to them. So, the reply from those who know their stuff should be: let’s see if and how this can be accomplished, not we’re going to keep supporting graft just because we have no knowledge that that can be done, nor how.

          So, please, I’m not asking for credit, or involvement. I’m asking for it to get done, because getting and keeping people out of poverty is the right thing to do, especially in a country where every single citizen below the poverty line is there only because for so many decades the government has been taking their money and wasting it worse than what any of they would have wasted it, if it’s true that they would waste it. I challenge that notion. Poor people know how to make their coins go much further than for what most people give them credit, most cash distribution programs are supporting this in their findings. In fact, one such study’s main purpose was to determine specifically if conditioning the distribution was helpful. The result was that it was certainly not beneficial, and some of the results suggested it was even detrimental.

          Let’s not forget that if you find a way to implement this, then we become electable…

        • By the way, regarding the Japanese, they once refused a trade with USA of some tractors because “what would our farmers do, then?” I disagree with governments deoptimizing. That’s crazy. I believe making it a matter of survival to have a job a paradigm that’s got to end. It’s got to become ok to be to live getting by without working at all. Science and technology is taking us there. In Venezuela’s case, we could be there ahead of the game.

    • Bill, actually, studies around the use of cash incentives prove the opposite, people are very rational with their money, of course we might not consider it from our perspective but they do with the money what is best from them. And even if they spend it in things we would consider superfluous, it still comes back into the economy and fuels growth.

  6. As much as I respect the autors, as well as Ms. O’Grady, the problem I have with that kind of DDM is that it does not solve the rent-seeking issue. What hapens if oil prices fall? People used to getting their checks every ¿month?, will suddenly find themselves with a deficit in their personal budgets. What will they do? Probably knock on the government’s door asking for more. Which incentive will they have to find a way to become productive and generate wealth? I don’t see any, if all you need to do to earn a living is getting in line at your nearest bank branch. Certainly, a DDM will make rent-seeking much more efficient than it is today, in the sense that it will limit corruption, waste, and all the usual lacras of a petroestate. However it will also perpetuate the pathology. Social programs are necessary to level the playing field, but at the end what will truly decimate poverty is wealth creation, not wealth redistribution. Unless your main purpuse is to win elections.

    • Jorge: “rent-seeking issue”

      1) Note that distribution of oil revenues, is not a handout from the government. It’s the citizens’ rightful monies from oil that constitutionally belongs to them. When you take money out of your ATM checking account, is the bank giving you a handout, or handing your money back to you? When you buy stock and get a check for dividends, is it a handout or is it your return on investment?

      2) If the price of oil goes down they will do what you if your job pays less: tighten your budget and find another income.

      3) The incentive will be to get the biggest bang for the buck, in the terms of each person’s idea of bang. Some will buy food, others clothing for work, others books, others medicine, others booze, others lottery, in sum, some will invest, others will waste; it’s their money.

      4) What’s the alternative, continuing to let a handful of corrupt politicians to keep pretending that they are giving people money in exchange for votes, when in fact it’s money they stole regressively out of the people’s own pockets and then they waste it worse that what the people would?

      5) It surely does win elections. Have you heard others claiming we’re unelectable? We are electable. It kills the petrostate; it kills communism; and it empowers people to learn how to start spending money wisely, without risk of falling below the poverty line.

      6) It ends people below the poverty line.

  7. For some reason, I am still not convinced by the idea of handing people money for something they do not actually own. I mean… sure, the Constitution says that oil belongs to the Venezuelan state, but what is actually my relation with that? Do I own a 1/28946101 fraction of the reserves/earnings/shares/whatever just by virtue of my Partida de Nacimiento? Why should I?

    I see some of the advantages of DDM, particularly the part about reducing discretionary spending and improving taxation, but I agree with bill bass’s point above about atomizing the oil revenue. Should we really forgo the possibility of using oil revenue for the common good (as cliched as that might sound) so that people can go and buy themselves, say, a plasma TV?

    What instead of directly redistributing revenue, you redistributed PDVSA ownership? Have the Ministerio de Energía y Minas own, say, 50%+1 of PDVSA shares. Allow the rest to be owned by regional governments. Hell, if you want to be extreme, even allow some shares to be publicly traded. Having more people than just Rafael Ramírez pagándose y dándose el vuelto in the shareholders’ meeting would sure do wonders for transparency.

    • “Why should I?” See it as an inheritance.

      “Should we really forgo the possibility of using oil revenue for the common good…” The problem it’s the not so common deciding the use of the common good. In other words, the Lords of the Rings decides how to wield the oil’s revenue. That leads to what I’ve been calling the Ring of Power syndrome, everyone thinking the either know the way to spend the oil revenue, or that someone does. That’s the same thinking that kept people thinking that distributed power PCs would never outperform centralized power mainframes. Why would they think that when brains are made of neurons?

      As to plasma TV’s, firstly, if the distribution is also atomized into daily amounts, they would have to learn saving before having enough for a plasma TV, which would be a very good thing. Secondly, the money would go to providers of plasma TVs and servicing of them. Those business would improve and expand. Also a good thing. Those businesses pay taxes, which are then used for the very same “common goods” to which you refer.

      The money does not disappear, it flows. What cash distribution guarantees is that it flows through the hands of everyone, rather than merely hoping everyone is strong, lucky, and educated enough to get some via a job and that all jobs are guaranteed, which we know are not.

      As to the alternative you propose, ownership of PDVSA, Venezuelans should not own by birth PDVSA, just the oil. It’s PDVSA who is paying Venezuelans for their oil. The government should not own or manage any companies that can be better owned or managed by the private sector. The benefits of the owners of the company would be contingent again on a handful of managers. Again, Ring of Power syndrome, and multiple points of failure. Having PDVSA paying Venezuelans for the oil at market price would do even more wonders for transparency if the shareholders are composed of only true oil industry investors and having to compete with efficiency against other oil companies offering more for the same oil.

  8. Sorry to be repetitive (I posted something similar before), but nobody has never ever die from a word of caution:
    There are a lot, and I mean a LOT, of issues worthy to be investigated further to assert distributing the oil rent in unequivocally superior to the status quo (or to the pre-Chavez status). Again, I´m not a priory contrary to the proposal, and in general I Do believe this proposal is set to be truly transformative -for good- of the basic relationship State-Citizens. But policy design and implementation can’t be based on broad untested presumptions. Examples of issues: What are the tax, tax rate and collection strategy that makes this proposal fiscally neutral to avoid a fiscal crisis? (And I do know something: a fiscal collapse IS very damaging). Is it socially optimal to transfer the intrinsic volatility of oil revenues to households severely credit constrained? (And I do know something: It´s not a matter of financial savvy-ness, poor people do not have access to instruments to smooth their consumption and consumption volatility IS very damaging). What are the external equilibrium implications of transfer the oil revenue to households that might have a much higher propensity to imported consumption? (And I do know something: A BoP crises IS very damaging)
    BTW, exTorres, I´m sorry about leaving a long response of yours without a proper response the other day, but I probably did not have the time, except that the real reason –not take this in a bad way- your response was the class of untested generalizations that I was trying to avoid to begin with

    • Omar, I beg to differ. The reason chavez has so many supporters is because many were dying from so many words of caution. Critical poverty line is defined by not having enough to EAT.

      To the rest of your response I will not respond, given that I got the hint, but please don’t just leave it at, needs to be investigated, then not looking into it. If you agree with the citizen relationship benefit, get investing, because if you and knowledged people like you don’t, chavez wins.

      • Thanks exTorres, again, I do not oppose the Torres’ UTC propossal. The topic is fascinating and is certainly worthy of further research. Furtunately for us, Pedro, Moncho y Francisco has begun the road to fully introduce the discussion to the public with such a good paper. Eventually, I will try to invest myself in that journey too. Best regards

    • Omar, thinking further on your comment, I see it as a problem that you cannot bring yourself to speak in laymen’s terms with laymen. (Of all the possible laymen, you couldn’t have a better one than me.) After all, before you knew your jargon, someone had to explain it to you in laymen terms. You need to dig down into your memory, and start talking with others in those non professional terms. Or chavez wins by simply calling you elitist. Because, frankly, there is nothing you said above that went over my head, yet you treat me as if it’s not worth even discussing with me. Que le queda a alguien de barrio? There’s something I know: chavez.

  9. Debating this topic with Torres would be like debating the existence of God with the Pope. A complete waste of time. It has become a religion for him, and he’s shown time and again that he’s utterly incapable of even fathoming the idea that he could be wrong.

    • I’m happy, not only to admit where the proposal fails, but to correct it so that it no longer fails. Please, point out where it fails.

      • I’ve pointed out the failings numerous times, and had long discussions with you about it. This is why I know it is a waste of time, because you have shown in the past that you are simply incapable of accepting any arguments against it. Its the same reason you don’t try to convince the Pope that there is no God.

        • What you are now claiming are failings were simply your arguments, to which I countered and you never replied to the counters. So, your arguments were never taken to the end of a proper discussion. If this is wrong, please, provide the link to any one of the supposed failings to which you’ve pointed numerous times.

          • If I never replied to the counters then I wonder how we had several long discussions… I’m not going to go back searching through CC’s old posts looking for it. But I think most people have recognized your inability to acknowledge its failings. No need for me to waste my time proving it.

  10. It’s great to read Extorres making the case in such a comprehensive and passionate manner! We need that sort of determination.

    I would like to underscore that our proposal is not oblivious to the many implementation issues raised in this debate, especially the fiscal, macroeconomic, governance/”populism-on-crack” and industry related concerns.

    We invite you to read the whole piece as a working paper intended to trigger a debate in the country. For those in Caracas, We’ll have a Brown Bag Lunch in IESA next Tuesday to go over some of these issues. It would be great to see some of you there and debate the issue in further depth.

    Best,

    JR

    • Moncho,
      I enjoyed the paper very much, it is comprenhensive and I think makes a good case for the UTC. The topic itself is a complete research agenda that will be demanding in terms of resources and people. Of course, Im sure if you – we- ever get to implement such a revolutionary scheme is because we overcame truly difficult obstacles, not silly policy/design concerns like the ones I rised above

  11. And, of course, we obviate the greatest advantage of them all:

    Now that we are agreed that the oil industry won’t be privatized, and even then, if it were privatized it would have to pay royalties and taxes to you know who (not the person you might think of right now, the Power of the State, which now has decayed beyond recognition).

    Short of shutting down all oil wells forever…

    It’s probably the best way of keeping oil revenue from being directly controlled by the Executive Branch in Venezuela that I have ever heard of. Not just near-dead Hugo or his acolytes (they are just the most corrupt and irrational we have ever seen yet), but all and every future Administration. And that, dear Sirs, trumps all other advantages. Burn the money, just don’t give it to them.

    • I meant to the Executive and to the President, burn the money if there were no better alternative, just don’t give it to them. The Distribution Scheme is in fact on of the best alternatives, and it might even be realistic.

  12. It seems to me that just because the latest windfall of oil revenues has been so spectacularly mismanaged by to Chavez and his cronies, people think this is the smoking gun that proves that the “traditional” structure is inherently wrong. As Omar mentioned, it’s going to take much more work to definitely prove that.

    This whole DDM idea is just basically resigning ourselves to the fact that we are condemned to have corrupt and incompetent governments who would never use the revenue from the country’s natural resources for the common benefit and a population glad to pick up whatever breadcrumbs the State is willing to throw at them. While this has been the case in the past 14 years, I’m still a bit hopeful that this will not be the case forever.

    It’s a bit like saying “well, since we can’t really get our stuff straight and figure out what or how to administer this money, here, have 2000 dollars per year so you can buy yourself some mercaditos instead of it being invested in infrastructure and schools and stuff that will still be useful after oil is long gone”. How bleak.

    I’m not proposing that every Venezuelan should own PDVSA shares by birthright, I’m just saying that you could avoid the problem of centralized control of the oil revenues by the Executive by splitting the ownership of PDVSA among several institutions of the Venezuelan State, both at the federal and the state level. This would not only encourage transparency in the management of oil revenues but also overall decentralization and hopefully better governance.

    Something like this, that goes around the Situado Constitucional, is the only way in which we could possibly have a decent federal system someday and not this parapeto we have right now. Otherwise we should be sincere and have a fully unitary state and that’s it.

    • Rather, it’s the other way around. For me, that’s the principal advantage of the DDM. Actually getting to have a government that’s not hopelessly incompetent and corrupt.

      Venezuela did have governments far more competent and honest which would use the revenue from the country’s natural resources for the common benefit and a population that did not pick up breadcrumbs for a living but worked. Before 1976. Before all that revenue became (solely) the goverment’s to use. There’s your historical fact. Things degenerated rather quickly on all fronts after nationalization. Only it took 7 years for the ill effects to begin to show, so strong was the economy pre-1976-7.

      Only we did not yet have an autocratic form of government, which was the cherry to this sh*t pie. Political parties with a democratic vision and no willingness to suffer dictatorship were still strong, and could rein in their more autocratic and/or demagogic figures. Fast-forward to 1988- 1998. CAP, Caldera and Chavez.

      One way or another, to insure that the Constitution and the most basic principles of accounting and accountability are to be followed by government, that money has to be taken from the direct control of the Executive in Venezuela. The DDM’s are above all SAFE, in that they would prevent a painful repeat of the sorry events that led us to the instauration of autocracy in the 2000s.

      Rather it’s the other way around. DDMs or other scheme where the Executive does not get control of the revenue (and I’m sure many here would not agree to private parties extracting oil and not paying royalties and taxes) are a requisite. To having a government that’s not hopelessly corrupt and incompetent, that uses it’s revenue for the public good and to have a populace that does not beg for living… to such a government.

    • Gaston, no. I was pushing for UCT way before chavez was in the picture. Let me put it to you this opposite way. If Venezuela’s government were managing the oil money beautifully, I’d be insisting it’s GRAFT, a regressive one at that.

      To get to that conclusion, I started by imagining a Venezuela without oil. The government would have to live off of taxation. All budgeted research, development, and maintainance would have to come from taxation. To that nation add oil that the constitution says belongs to all, and suddenly the government says “Dibs”. That’s graft.

      If you think further into this, you’ll see that this graft is equivalent to having taken a barrel of oil away from every Venezuelan for every 30MM barrels of oil. So the poorest Venezuelan is pithing in to that graft the same amount as the richest Venezuelan. That’s equivalent to a 100% tax for the poorest and almost 0% tax for the richest. Regressive much?

      Given the above regressive graft, how can you support keeping it? It’s not about chavez. It’s about Venezuelan’s being poor because government is illegally taking their money away, regressively.

      Then there’s more. If you think about what would happen if oil money were distributed as the honest inheritance it is, it turns out that it all points to good things, socially, economically, fiscally, culturally, politically, artistically, etc.. So, no reason for making it honest.

      Finally, pragmatist that I am, it also wins elections. What’s your alternative? Does your better alternative involve losing? What good is that?

  13. I am not convinced of the long term benefits of handing out oil revenues directly to citizens either. For decades now we have been showering the populace with money, the result of subsidies stemming from an ill-conceived philosophy of our petroleum wealth – one reading that, since we have oil, then oil-related products should be made cheap for the national consumer. A thorough look at these subsidies would likely reveal that we have been in fact handing out money to the people since the very beginning of democracy – and all the way through its collapse. I have yet to understand how this DDM idea would be different from what has been in place since the time the guns of October were still hot and smokey.

    “Esta rebaja de precios en todos los derivados del petróleo repercutió de inmediato en beneficio de la economía del consumidor. En un solo año – el de 1946 – el público pagó 31,5 millones de bolívares menos en este renglón de gastos, de primera importancia en la vida moderna (fuente: Memoria del Ministerio de Fomento al Congreso Nacional)” (Betancourt, 1956)

    • Yuruan, there’s a distinction. If the government hands its money to the citizens, it’s a handout. The oil money does not fall in that category. The government has made it seem that way by first taking it as its own, then handing out to the select citizens as handouts, or subsidies. Wasteful, I agree. What is being proposed is that the government stop stealing it and pretending its a charitable government. What is being proposed is that the money that belongs to the citizens be given to them, because it’s theirs, not as a subsidy or handout. The government would be left having to do the things it wants to do with tax collections. Fortunately, almost all the social programs bent on poveryt alleviation could disappear, because people would have sufficient income only with their inheritance to be out of poverty. So the government should finally have the incentive to try to help the market to develop so that it can collect more and more taxes. The people would already be helping the market develop by voting with their money which goods and services are best for them. It’s free market capitalism with zero poverty. That’s long term benefits.

  14. chavismo on the twisted caboose of the bandwagon:

    http://globovision.com/articulo/gobierno-aprobo-tarjeta-de-alimentacion-de-la-banca-publica

    “Queremos informar que el Presidente Chávez autorizó y aprobó la creación de un producto financiero de la tarjeta de alimentación y ticket a través de la Banca Pública (…) es un punto de cuenta con el que se podrá ofrecer a toda la administración pública y central el servicio de bono de alimentación a través de una tarjeta de débito”, precisó Torres en el canal del Estado.

    El titular de la Banca Pública agregó que este servicio “se podrá utilizar en todo el sistema financiero público y ofrecerlo tanto a la administración central como a la administración descentralizada”.

    Destacó Torres que la creación de este producto se logra “gracias a la fortaleza que tiene el Gobierno Bolivariano a través de su sistema financiero”.

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