It's all your fault
This last weekend was the bloodiest of the year in Caracas' undeclared civil war: 67 people were murdered between Friday and Sunday.
The AFP account - which, by the way, makes its way to newspapers the world over - is gripping. People shot down while enjoying a beer with their friends, cab drivers shot down while resisting a robbery attempt. One of them came into the morgue with nine gunshots wounds.
What forces prompts someone to shoot another human being and conclude that one gunshot wound is not enough, that they need to be gunned down nine times?
Pollsters have been telling us recently that poorer Venezuelans are reluctant to pin this obvious, horrific failure of the government ... on the government! They tend to see the crime problem as related to poverty, not public policy.
This is bonkers on many, many levels, but it is what it is - although I've yet to see this theory tested in a more rigorous fashion.
The money quote comes from an unnamed police officer:
"This isn't the government's fault, it's the families' fault, it's a cultural problem, they don't make an effort to keep their kids in school. The government does all it can so that this stops happening..."
In other words, don't look at us, this is all your fault.
Which, if you stop to think about it, contains more than a bit of truth in it.
Kepler
Francisco Toro
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Pelase expand this comment a bit.
"Which, if you stop to think about it, contains more than a bit of truth in it."
Are you talking about the people voting in the incompetent government or are you seriously going to suggest that the girl being raped is her own fault for dressing so provocatively?
Foxtrot, please
Obviously the first.
When the policeman says "this is all your fault," it's an indictment that, as a society, not only have we failed to vote in a government that will implement policies that protects life, but that we also fail by not assigning the blame where it should be.
In that way, the policeman's crazy quote, that it's all our fault, is not baseless. It *is* our fault, *our* in a majority, rojo-rojito duped kind of way.
It is both things, Juan
Social injustice begets more crime and social injustice has increased since Hugo is in power. And as I calculated some time ago: the probability that a Venezuelan cop is a criminal is 150 times (not percent, TIMES) higher than that of the average Venezuelan. Hugo increased the salary of cops last year by more than 300%, I think, and he blamed it on the IV Republic that they were earning so little.
Most poor have never ever been outside Venezuela. Most don't have any reference whatsoever.
They don't know that the murder rate in Venezuela has increased by more than 300% since 1998 and they know even less that the murder rate in Brazil, even in colombia is lower, that it is much less in Peru, in Argentina and in chile...that even though Juarez is very lethal, Mexico as a whole is several times more secure than Venezuela.
People also tend to minimize danger when they see no exit.
And people in Venezuela are taught to be conformistas above all. If there is one thing all do want is easy money fast.
The press and the opposition should do a better work on informing about crime by educating people about how things have evolved in Venezuela and how different it is in most other countries, even such "failed" states as Mexico.
Preaching to the choir Kep
Preaching to the choir...
Although, on a not-so-side note, I don't buy that notion that "social injustice begets more crime" - that's a cop out, and there's a small leap between believing that and shrugging your soldiers and saying that crime and violence are just the way things are and nothing can be done about it.
Fact of the matter is that there are societies that are way more unjust than Venezuela, and also way safer.
There is no "small leap" at all but a flight
Social injustice has increased enormously. You don't measure it just with the GINI index, mind (it seems as if both chavistas and others like you agree now on using that index :-)
I see injustice on a broader basis:
who gets what for what in Venezuela and who gets penalized.
In Venezuela all kinds of thieves get richer and faster now and they don't get prosecuted (unless the thing becomes too evident after many years, as with Arne). Add to that the fact that most Venezuelans don't have a proper job...
There is also the message of Hugo that "criminals are not criminals but poor trying to buy medicine".
Venezuela has also a huge, huge drug consumption problem, something we did not have in the seventies, but we started to have in the early nineties, something now much worse and almost no one is doing something about it.
Build more prisons
...and run them as corrections facilities, not warehouses where the gangs rule.
Put the army in the barrios.
Take and hold specific areas in the barrios to create safe zones.
Improve infrastructure and services in those safe zones.
Educate youth in trades, not social justice. Preparing them for jobs in the real world is social justice. Cull those who show intellectual potential and give them full scholarships to a real university, not a social-agendized university.
Create an agricultural university where graduation is accompanied by land grants.
Grant full title of property to current barrio dwellers, creating instant capital.
Raze unsafe dwellings and relocate families outside of the barrio.
Do something, anything.
Build more courthouses
Install video link-ups between jails and courthouses to avoid unecessary movement of prisoners
Train and hire more prosecutors
Train and hire more public defendants
Train and hire more parole/probation officers
Install electronic tracking device infrastructure for guys on parole and probation
Install more police CCTV cameras
Train and hire more cops
Train and hire more forensic scientists
Build more police labs
Build more and better morgues
Set clear targets for reducing prosecutor backlogs
Set clear targets for reducing court backlogs
Set clear targets for reducing "retrasos procesales"
Empower public sector managers to meet those targets
Pay performance bonuses to public sector managers who meet their targets
Fire public sector managers who don't meet their targets
Ensure every jail has a working infirmary and an on-site human rights ombudsman
Do something!
Bravo!
Quico for President. :)
Cute, Quico, but completely useless
I hate to agree with religious nutcases (since I'm an atheist), but unless you teach children of a very young age to understand and follow some sort of code of ethics, you're just wasting your time with everything else.
The battle for the honest citizen is won or lost at four years old. If the father tells the child that he shouldn't eat the cookie, and the child decides that he shouldn't eat it, not because he's afraid of angering the father or because he thinks that rules must be followed no matter what, but because the father has demonstrated that he knows what is best for him and even though the child doesn't understand the reasoning behind the rules, he knows that the rules are there for a good reason (to make everyone's life better) and he should at least give them the benefit of the doubt and try to understand them before he decides to break them. If the child thinks this way, then the battle is won.
But if the child thinks that the rules don't apply to him (certainly not when they stand in the way of his pleasure) or that they only apply when the father is looking and he could be punished for breaking them, then the battle is lost. And no amount of jails, prosecutors, policemen or judges will prevent him from trying to get what he wants by breaking the rules.
The problem in Venezuela, which was bad enough before Chávez but got exponentially worse thanks to him, is that everyone thinks only idiots follow the rules. Just about every venezuelan knows personally someone who "bends the rules" for his own benefit, and far from giving him a so much as a "naughty-naughty shame on you", they either let it go or ask him to get them into the action. And the people in charge of enforcing the laws are infinitely worse. Didn't the government admit at some point that more than 30% of the crime is committed by cops? And of course, Chávez himself spends 8 hours every sunday (and a dozen more on weekdays) letting everyone know that the laws in Venezuela are only there to prevent his enemies from hurting him, not to prevent him from doing whatever the hell he feels like doing.
Venezuelan society is rotten to the core. Moving corrupt people from one part of society to another is useless. The system will not fix itself, and baring some magical natural disaster that kills all but the only 3 honest venezuelans, things will only get worse.
It's the economics training: people follow incentives
Call it deformación profesional. People follow incentives. The incentive structure they face now - handsome returns, near zero chance of capture - pushes people to crime. Change the incentive structure, and there'll be less crime. Raise the expected costs of crime, and morals quickly follow.
Right now, the country's installed capacity for jail cells is roughly the same as the number of MURDERS last year. Meaning if you put all the murderers in jail (assuming one murderer per murder) you'd run out of jail space before you'd gotten around to all the rapists, drug dealers, stick-up men, bank robbers, secuestradores express and the rest of the lot.
We need investment in the criminal justice system...starting with the jails, but reaching back into the police system and forward into the probation system. Lo que falta es la voluntad, no las ideas.
Not at all...
Venezuelans are no more corrupt, biased or rotten than Colombians, the Americans or the French. Venezuelans have no incentives to do the right thing...
When in need people will do what they FEEL they need to do, if there is no punishment for crime... well, then people will turn to crime.
As Quico mentioned what you need is to build a proper judicial system & structure that punishes those who break the law.
Very well said
and that is what I meant by social justice.
I wrote a post about Libertador municipality. There are between 180000 and 300000 persons there (yeah, go figure), about 90000> voters now.
It has the highest murder rate of my region, although that of Southern Valencia, Los Guayos and other municipalities is not much lower.
There is a prison for 1000 persons (carcel de Tocuyito) but where right now there are over 3000 persons. Over 56 get killed every year (out of 3000).
The government spends about 2 dollars per prisoner, compared to more than 40 in the USA and more in Europe.
Libertador has not a single real public library. It has overcrowded, very crappy schools. Some pupils go to classes under the skies.
There is not a single general hospital. Actually, there is one single public general hospital for ALL of Valencia and most of the state. That means: one general hospital for almost 2 million people (there are two public general hospitals in the little town where I live in Europe, several times smaller than Libertador).
There is no real job in Libertador.
A lot of people live out of handouts. Others try to make a living selling things on the streets of Valencia. They see others with sudden wealth. They see they won't ever get caught if they commit a crime. They know most cops are criminals.
There has been a huge migration from other countries and from the Llanos and from Vargas to that region since 1999.
With some of the points JSB mentioned, wonders could be made compared to what we have now
Put the army in the barrios.
Right. Because that worked SO well in February 1989.
All True but you still have criminals ruling the country
As long as you have a CRIMINAL like Chavez running the country and PUSHING people to 'rob from the rich because they robbed you' there is not much you can do.
Remember that Chavez released and decorated the shooters from Puente Llaguno. I mean these blokes were obviously VIOLENT CRIMINALS AND ASSASSINS. From that they on the message was clear 'everything goes and its applauded if you are a revolutionary'.
In fact the government is very keen to promote this chaotic anarchy because a huge exodus of the 'good guys' works on their favor. The only think working against that monstrous plan is that the global economy is still in shambles and people are forced to stay in the shitty country know and the Bolivarian Republic of Venezuela.
yes, but the point is that we need to tell people
THIS is what we plan to do. We need to go to Southern Valencia, to El Tuy, to Petare, to El Tocuyo (very hit now by crime) and Maturín and spread the message and say we have plans, we have thought things through. There is no point for politicos to spend 50% of their time in front of Globovision cameras.
And don't use just the leaders: get students and others spread the message throughout all communities.
Yes, but we need more than words
We can spread the gospel that all is bad in Venezuela and draw comparison with every country in the region that put us in shame, and that we have a plan for solving our many problems. BUT:
We still need to take the monkey of our collective backs, Chavez must go ASAP because with him in power the message is clear: IT PAYS TO BE A CRIMINAL.
Eliminate Poverty
If some say, poverty is the main factor in the violence, take that factor out by eliminating poverty. Any violence that's left would surely not be due to poverty, so you'll have those people now listening to you about other factors.
And, you will have eliminated poverty.
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Excuse to do nothing
Eliminating poverty is going to take 30 years. We don't have 30 years. People need to feel safe now. Handwringing over the "structural causes" is just an excuse to do nothing.
We don't need 30 years...
I'm surprised, coming from you, Quico. You even wrote a post on how it can be done. Remember? Cash distribution? Stake through the petro-state heart? You were on a fence for a long time, then you saw it as the *only* means? Ring a bell?
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Excuse not to eliminate poverty
Is claiming that eliminating poverty takes too long just an excuse continue letting people go hungry just because you won't support distributing cash?
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Chavez didn't need 30 years
He bought people's loyalty in much less time than that. How? By seeming to address the problem, even addressing it in part, though in a temporary, unsustainable way. He created a confidence that he had the answers, that he would bring solutions. You don't need 30 years for that. Not saying it's easy, but you don't need to complete the task right away in order to succeed.
I take offense
Every time people try to blame criminality and violence onpoverty. It is disrispectful towards poor people. Plus, data suggest that there's little, or even zero, correlation between poverty and criminality. Recent studies show that, ceteris paribus, criminality, theft and violence are positively correlated with inequality.
On the other hand, as Quico says, erradicating poverty is not something you can do from one day to the other. So, in the meantime people should just keep on dying or getting robbed?
Reducing crime has to be an encompassing strategy, you need both short term and long term policies. Neither "mano dura" nor blaming it exclusively on poverty or social injustice, is going to get the work done.
Don't take offense
I don't blame criminality on poverty. But I acknowledge, as you seem to also, that many people do. You're not going to change their minds on that. What you *can* do is eliminate poverty so they can no longer blame criminality on poverty.
As to what Quico said, he's wrong, it can be done, not quite "from one day to the other", but certainly in about a year.
As to how, Quico should know; he wrote it:
http://caracaschronicles.blogspot.com/2007/07/torres-in-bethlehem.html
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Inequality
By the way, inequality is reduced by eliminating poverty, greatly reduced if done the way I suggest...
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I'm sorry
Maybe I am dumb, but I really can't find your proposal for reducing poverty and inequality at the same time.
However (my economist-self can't help it), it is very important to stress that poverty and inequality are different phenomena and their relation is not straightforward. Reducing poverty won't automatically translate into a fall in income inequality.
Here in Latin America we have an excellent example: Chile. Between 1990 and 2006 the country's poverty rate went down more than 20 percentile points. According to ECLAC data Chile has the lowest poverty rate of Latin America, and has (or had, prior to the gazillion earthquakes) almost erradicated extreme poverty. Whereas the Gini coefficient remained constant up to to 2003 when it began to fall. The opposite happens in India, which has high poverty rates, but it's a relatively egalitarian country.
Poverty is an absolute measure, while Inequality is a relative one(at least that's how we measure both in LatAm).
On a positive note for the region, a recent study by Lustig and López-Calva shows that inequality has diminished in most countries of the Latin America. Only for Venezuela they find the inequality reduction non significant in statistical terms. They argue that this outcome is mainly related to a fall in the labor returns (which in turn, can be attributed to an increase in the educational level of LatAm's population).
I'm betting on your not being dumb
Quico wrote a nutshell version on my proposal for eliminating poverty:
http://caracaschronicles.blogspot.com/2007/07/torres-for-dummies.html
his own suggestion for how to do it is at
http://caracaschronicles.blogspot.com/2007/07/how-to-do-it.html
Regarding inequality, as measured by GINI, it is directly and linearly affected by average income. Eliminating poverty by way of direct cash distribution automatically and greatly improves inequality, thus my claim.
As to your Chile example, I would look, for starters, at population growth. These could affect the GINI calculations to make them seem stagnant while poverty measures improve.
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Thanks
I'll read the proposals later, thanks again
Actually, conditional cash transfers programs have been very sucessful in reducing extreme poverty and poverty, as ex post evaluations of Progresa and Bolsa Escola (Mexico and Brazil, respectively) show, but they have failed in reducing inequality, because they have not modified the relative distribution of national income.
What happened in Chile is very simple: "the pie" grew bigger and bigger, however its distribution among Chileans remained unchanged up to 2003. People can stop being poor, when their income overpasses the value of the Poverty Line.
On the other hand, inequality -measured by the Gini coefficient-can only be reduced when people's share of the accumulated pie, regardless of its size, is modified. For example, if those who make up the low percentiles of income distribution gain participation in relation to those pertaining to the highest percentiles.
(I'm sorry if I'm not clear enough, I'm used to explaining this thing in Spanish)
Eliminating poverty, improving inequality, reducing crime
Conditional cash transfers leave many people out of the picture, so the GINI coefficient is not necessarily changed.
If the daily citizen stipend is at least double the per person income to meet minimal nutritional needs (the current Venezuelan definition for poverty line, which comes to about 2USD/day), then poverty is eliminated.
By increasing everyone's income by the same amount, this daily citizen stipend is mathematically increasing the poor's income by a greater *percentage*, thus improving the GINI coefficient (i.e., improving inequality).
Here's what gets me, though. The simple proposal to eliminate poverty was met with such pushback that I am becoming clearer and clearer as to why chavez still has popularity and the opposition is struggling to improve theirs. When I tell poor persons about this proposal, it doesn't take them two seconds to support it and wish it became a reality. When I ask non poor, especially economists, I get this kind of pushback. !QuE esperanza les queda a los pobres si una sencilla propuesta de eliminar la pobreza estA en manos de personas que reaccionan tan mal ante tal propuesta!
Also, most people seem to fail to realize the vastness of the anthropological ramifications to Venezuela of guaranteeing zero poverty to 100% of its population, for life. It would be huge! And those who think that eliminating poverty would in no way improve crime rates are, quite simply, wrong. It would affect family relations, work environments, city development, education, health, consumer market, industry, the media, the art, the value systems ... *everything*!
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I'm not opposed
at all. I fully support a similar proposal outlined here in Argentina by the Coalición Cívica, called "Ingreso ciudadano", which gives a monthly stipend per child (up to 18 years old) to every single Argentinean family, regardless of their economic status.
I was just trying to explain the difference between poverty and inequality.
Define what you mean by "Eliminate Poverty"
Firstly, I don't think it is possible. America and Europe, the most economically advantaged societies the world has ever seen, have not been able to accomplish this. Human beings persist in being human. Some will thrive no matter what obstacles are thrown in their way. Others, with every advantage handed to them, will fail and find themselves homeless and hungry in the street. You just can't eliminate the far left side of the bell curve (unless you really mean "eliminate", which I doubt).
More to the point, how will you define "poverty"? There is an old joke about how statistics can be abused in political speech: Some politician says, "It is completely unacceptable that half of our population is forced to survive on salaries that are under the median income level." The joke is that that, of course, is the definition of "median". Ultimately, there will always be wealthy people on one end of the bell curve and "poor" people on the other end. That is unless you are under some illusion that we can make everyone "equal", which is the fairytale that Chavez sold to the population to get elected in the first place.
If there is any real economic correlation with crime, it is with unemployment. "Idle hands are the Devil's workshop", it is said. Giving people aid and welfare doesn't reduce crime. They still have time on their hands to find and get in trouble. The guy that works all day doesn't go out looking for trouble. He just wants to eat, relax, and go to bed. I am making a generalization, but it is a fair one. The statistics support it.
So, if you want to reduce crime, you can't do it by giving people money or assistance. You CAN do it by putting people to work. How do you accomplish this? Make your public policy favorable to investment. Investment creates new jobs. New jobs create a greater demand for labor. The greater demand for labor creates competition for the best workers. This raises wage levels and ultimately benefits everyone.
However, the above only addresses economic correlations with crime. There are other more important factors, of which the most important to address is deterrence. To control crime, you must make sure that criminal activity is punished. At this point in time, the criminals are operating with near impunity. Basically, in Venezuela today, whether it is in government, business, or in the streets, crime pays. In fact, it pays damned well. So criminals of all stripes are succeeding and becoming wealthy, whereas honest people are getting poorer. How can you raise your children to be honest in such an environment? Obviously, such a system is ultimately self-defeating in the end, but what is the end?
Must we be finally be reduced to warring bands of brigands incapable of maintaining a central government, such as we see in Somalia? If we do not stop our backwards slide into barbarism, that may be exactly how we find ourselves.
Daily Cash Distribution.
It is possible. Distribute daily cash, evenly, unconditionally, to all citizens of Venezuela, from birth until death.
The current definition of critical poverty in Venezuela is based on sufficient income to cover the cesta alimentaria. The current definition of non critical poverty is twice that. It comes to about 2USD/day per person, and it coincidentally matches the definition of poverty most commonly used wordwide.
You can go try to endlessly debate the multitude of people that believe that crime is related to poverty, while people continue to go to bed hungry, or you can eliminate poverty through cash distribution, and prove to that multitude that they were wrong.
My choice is to simply eliminate poverty.
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Money Give
You have got to be kidding...You think that by just "handing out cash" you can eliminate the problem that is going on in Venezuela? Geez, you are part of the problem. Givaway programs NEVER work! We've tried them here in the USA and they are always ALWAYS a dismal failure.
In order to get people to feel good and change their ways, you have to provide good, decent work and let them EARN their money with a honest day's work. Tell your Government to create jobs, make opportunities for people to lift THEMSELVES out of their poverty. It's really not that hard. Venezuela has a ton of infrastructure opportunites that if the RIGHT person was in charge and overseen correctly, you would have more work and money flowing than you know what to do with.
This is the ONLY way to change Venezuela for the better, but it has to start from within.
Money give works
Your example is wrong, and your suggestion is regressive, to boot.
What USA tried is not what is being proposed, at all. USA has tried conditional distributions. They condition who they give it to, how much, how long, and for what. I agree that that won't work. By giving cash, daily, unconditionally, to all, equally, will raise the bottom which people can possibly hit when at their lowest. It guarantees no one will ever fall below that bottom. Zero poverty. Whether you like it or not, it's math, it works. It eliminates poverty.
As to the regressiveness of your proposal, let's pretend we take oil money and invest it "properly". Let's say one such proper investment of the government is a new prison, given the topic of the post. It provides jobs and creates a whole service infrastructure around it. It helps reduce crime, on top of it all. What's regressive? Well, pretend it took the equivalent in dollars of 30million barrels of oil to pay the project costs. Where did the government get the money? It took one barrel away from each Venezuelan, sold it, and used the money for the prison. That means that the richest folk ended up pitching in the exact same amount as the poorest folk, exactly one barrel of oil each. To the richest, it's a cheap night out. To the poorest, it's 3months of food. Regressive.
To make matters worse, the prison gets mostly used to put poorer folk in it.
In a Petro-state, cash distribution isn't only a good way to go; it's the only way to go.
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Mo' Money
Your reasoning is wrong on so many levels....you propose to just give away money with nothing in return to eliminate poverty.
Let's say for the sake of argument that you suceed. You give away the money every month and the people sit around with their hand out waiting for the "gov'ment check". They don't want or need to work because why should they? They are going to get a check regardless of their productivity. No incentive to invent anything, no incentive to make a difference, no incentive to study, no incentive but to wait for the check and spend it however you want.
Let's say your society is ok with this and everything is chugging along fine when one day someone invents a product that reduces the need for petroleum dramatically or perhaps eliminates it altogether or perhaps the oil wells go dry.
The people have gotten so used to depending on the government that they are completely unprepared to do anything productive and have lost all desire to "learn" anything. Guess what? There will be such a HUGE problem when the Government oil well dries up that no one will be prepared to address the issue.
What then genius? Oh let me guess...we'll just call on the USA to bail us out. No thanks. Remember the story of the ant and the grasshopper.
Sigh...
I'll just note that the proposal - at least as I understand it - is conceptually identical to a Negative Income Tax, the idea first put forward by that raging communist rabble rouser Milton Friedman. In fact, Friedman championed it because it distorts incentives to work less than other poverty alleviation measures: recipients face no steep jump in effective marginal income tax anywhere along the line, just a steady percentage as their income rises.
The idea that people in receipt of tax credits have zero incentive to work has zero basis in research...and there's been a lot of research on this.
More Money
Let me point out where you might be missing the vision:
Firstly, the proposal gives the money every day, not every month. This is important because the spending behavior of someone who gets a 2-8 dollars a day is very different than that of someone who gets 60-240 dollars per month.
Secondly, they don't just sit around waiting for *their* money (not the government's money), they *spend* it. This is important because the money is going to someone else. And that someone else is providing a good or a service that they need or want. And to provide that good or service, that person has to spend it. And the cycle continues, spurring a market economy into turbo power, given 22-88 billion dollars a year. Taxable income.
(BTW, it seems you have little faith in human beings. I see many artists who currently are forced away from their artistic inclinations out of necessity. With the proposed system we would surely have a surge in art. Also, many fewer marriages out of economic need, or children abandoned at church doorsteps, etc.)
Thirdly, if people choose not to work, because of lack of incentive, then there will be a short supply of workers, so those who need workers will have to --you guessed it-- provide incentives! (See how that works?)
(BTW, assuming an oil alternative is developed, then all the more reason to pump it dry as fast as possible and convert it to capital before it becomes worthless, no?)
Fourthly, knowing that wells will run dry, government should wisely use its progressive taxation money (not the regressive people's money) to invest in infrastructure to prevent exactly those things you're warning about.
Finally, and again, you seem to keep sidestepping the issue, it's not the government's money! It's the money of the Venezuelans. The government is stealing it or wasting it. You are proposing that it continue stealing and wasting it.
Now let me point out where your reasoning is wrong:
Firstly, what you propose would work if we had a better government. Frankly, we don't have a better government. This is it. We need a system that will work with what we have, not what we would wish for. So your proposal, simply does not work with the government we have.
Secondly, what you propose implies that letting people go hungry is a valid means to teach them the lesson of social productiveness. That's just wrong, dude. Stop it with that.
Thirdly, what you propose doesn't seem to take into account that, as technology develops, fewer and fewer people are necessary to produce more and more. Soon enough (and it's sooner than you think; just consider that over 90% of all scientists and engineers who ever lived are alive today) there will be more people than it takes to provide for all of them, so it won't be people's lack of incentive to work or study or do anything productive that is a fault for their not working. There simply will be a smaller market for workers.
As that creeps up on us, what then, genius? Will USA be prepared? I don't think so. USA will have to come up with a paradigm shift to either take care of those at the bottom, or, as you seem to suggest, let them go hungry while people like you rant against them. If Venezuela accepts what is being proposed, here, Venezuela will actually be ahead of USA in this matter.
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You seem to have a weak grasp of property rights...
Venezuelans OWN the oil under their feet. It is their PROPERTY. Giving them direct access to the revenue stream it creates isn't a "handout" - it's putting an end to 90 years of state graft over public resources.
Bad Public Policy
I agree that you can make that claim on both a moral and legal basis. However, it is still bad public policy. Socially, you will end up with a population with an arrogant sense of entitlement. Think trust fund children. Come to think of it, Venezuela already has many of these symptoms. It is far better to use this money to fund federal government and infrastructure, including education and health, then to dole it out as cash.
Secondly, it would be a mistake to make such promises now, because they can't be kept anytime in the near future. PDVSA will have to plow every bit of profit made for the next 10 years into maintenance and reconstruction just to bring it back to where it was 11 years ago. So, you would be promising people money that doesn't even exist yet.
Is it "bad public policy" to pay shareholders their dividends?
I think this is insane, Roy. Property rights are property rights. In Venezuela, people own the oil. They have a right to the earnings stream. The rest is theft.
Oil Dividend Policy
Quico,
I see I am getting serious resistance on this issue. First, let me note that I have no moral or legal objections to what you propose. It is an attractive idea that is certain to gain traction amongst the voters.
I do maintain my previously stated reservation that the current state of PDVSA cannot support a significant dividend distribution. PDVSA's current debt burden and the state of the organization and physical plant make it a loser for the short term. However, I will also concede that by selling off assets and reducing PDVSA to a core organization which limits itself to simply selling off the rights to exploration and extraction at the best terms possible, it could become a profitable entity again, fairly quickly, though not nearly as large and profitable as it was in times past.
I will even posit that you are able to sell this plan to the public and in return get them to give up on the gasoline subsidy and accept that they will need expand the tax base to lower income levels then before. It is a stretch, but lets say that you get everyone to buy into it.
Given all that, I will grant you that the system could work, at least in the short term. But even so, it is still bad public policy. You can read in the following link a study of the long-term effects of the Alaskan Permanent Fund. This Fund produces a dividend from oil rents (similar to what you are talking about) that is handed out to all citizens of the U.S. State of Alaska. The article is a long one, but worth reading completely if you want to pursue this course. It outlines the long-term pitfalls of such a policy.
http://www.swarthmore.edu/x11892.xml
Such pitfalls include:
1) This program would foster a sense of entitlement with no responsibility connected to it. That is already a social problem in Venezuela. This plan would make it worse.
2) All political activity would focus on maintaining, or increasing the dividend, to the detriment of long-term investment in infrastructure and education. Note the following quote from the article above,
"Today this sense of entitlement has reached the point where it's actually working against the original goals of the Permanent Fund program. Instead of voting for politicians who promise to reduce state spending, the people vote for whichever candidate seems most likely to protect their dividend "rights." In fact, "any politician who even suggests considering a policy that might adversely impact the size of the annual distribution had best look for another career". Because it has a direct impact on almost everyone in the state, the dividend has become one of the most important issues in Alaskan politics. It is "political suicide" to even consider reducing (let alone eliminating!) the dividend".
3) This plan would make Venezuelans dependent on a dividend derived from an industry that is cyclical. Instead of being dependent on petroleum, Venezuela needs desperately to diversify its economy so it is not dependent on one industry.
4) Finally, lest we all forget, one day, the oil wells will run dry. And even if they don't, technology will advance and produce some way to produce energy that makes the burning of petroleum obsolete. It has been claimed that the oil belongs to the Venezuelans, but which ones? Today's generation? The next? Do you really want to let all the petroleum rents of today be spent on flat-screen televisions instead of the infrastructure and education that will benefit Venezuelans for generations hence? That would be short-sighted and tragic.
Alaska Fund
1) What is being proposed for Venezuela is only citizens. On a daily basis. Total, not the net income. Before any expenses.
2) ' The principal of the Fund cannot be touched, except to be used for the "income-producing investments" mentioned in the constitutional amendment. ' What is being proposed in Venezuela would not even have that exception.
3) "the state government finances its expenditures primarily with the oil revenues it doesn't put into the Permanent Fund. (Recall that only 25% of oil revenue is put into the Permanent Fund)." What is being proposed in Venezuela would have zero of the government expenditures financed by oil revenues or any other natural resources or riches revenues.
4) "the people do not realize the true cost of government because they are not asked to help finance it" Exactly the reason for 3, above.
5) "It is "political suicide" to even consider reducing (let alone eliminating!) the dividend (Stauffer 27)." Exactly why I think this proposal trumps chavez's con. Great!
6) "Others simply do not trust the legislature to spend the money wisely." I hear them.
7) "The only solution to Alaska's current and impending monetary problems is for the people to help pay for their government. This can only mean a tax." Exactly why the proposal for Venezuela is that taxation (or equivalent) be the only form of income for government spending.
8) "Reducing the dividend would be a form of a tax, but this would be very unpopular" Not just unpopular, it would be REGRESSIVE, as I explained in an earlier comment.
9) ' "...has fostered a sense of entitlement with no responsibility connected to it" (Peg Tileston qtd. in Gorsuch 35), and that "[t]he Permanent Fund Dividend is a colossal policy blunder and should never have been done ' One does not follow from the other. It just needed to be done differently.
10) "The only way to save the situation now is some kind of tax on the Alaskan people, but at this point their unwillingness to adopt one is dooming the economy." That's not the issue with Venezuela, which confirms my position the Alaskan example is a bad example, and supports what is being proposed for Venezuela: total cash distribution together with taxation.
11) You seem to want to ignore what started the whole thing: it was WORSE without the divident, as it is in Venezuela without the cash distribution.
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"Arrogant Sense of Entitlement"
What has been demonstrated is that it is NOT better to use this money to fund federal government and infrastructure than to give citizens their money. It's WORSE! For starters, there would be ZERO POVERTY.
Secondly, your point about PDVSA supports my position that the government should have nothing to do with running PDVSA. The government should be limited to providing oil extraction concessions to expert companies in exchange for cash, then it should fork the cash over to the citizens, because *it belongs to the citizens*.
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Inverted values =crime,Chavez augments lawlessness
Most important: In the end with increasing lawlessness people will get so fed up and fearful that Chavez will seem justified by many to enforce a rigid repression.Repression is not the same as tough on crime.
Inverted Values are the principle causes of crime.It is obvious that many poor people do not commit crimes and many rich do.The more a society propagates the myth that poor people have a 'right' to commit crimes because of poverty( as does the Chavez government), the more these people will develop this tendency.People who are taught from youth the value of personal dignity and self respect have less tendency to crimes.True of the rich and true of the poor.
"The 1960s themselves offered a challenge to the poverty-causes-crime thesis. Homicides rose 43%, despite an expanding economy and a surge in government jobs for inner-city residents. The Great Depression also contradicted the idea that need breeds predation, since crime rates dropped during that prolonged crisis. … In 2009, the city of L.A. saw a 17% drop in homicides, an 8% drop in property crimes, and a 10% drop in violent crimes. In New York, homicides fell 19%, to their lowest level since reliable records were first kept in 1963."
"Despite such problematic reality, capitalism-haters will persist in spreading tall tales to bolster their belief that socioeconomic injustice causes crime."
http://online.wsj.com/article/SB1000142405274870358090457463802405573559...
firepigette
It is about the mentality
There are poorer places in the world, with hunger too, and little violent crime to speak of.
Sorry if I cannot relate to the "plight" of an armed robber (malandro in Venezuela). This has nothing to do with inequality, at least with lack of access to the means to eat. The young malandro is as far away from being a needy family head "forced" to steal. The malandro robs and kills, and buys fancy shoes, a fancy motorcycle and bling. Such a person deserves at the very least to go to Devil's Island for life.
The problem here is a toxic mentality developed with the Petrostate and made bloom horribly by Chavez. That somehow you are entitled to a piece of the luxury pie of this "rich country", and you can steal, corrupt yourself or take by force if it does not fall right into your hands about now. And that you will get away with it. Warped incentives.
No need to study, save, work and invest. No need to respect others' property (or limb). In fact, it is the mentality and the environment where the people who save and work are disadvantaged.
It goes hand to hand with the fact that in Venezuela (and at times, where Venezuelans went en masse) you cannot turn your back on a marginally valuable item that somebody, almost anybody might try to swipe it from behind you. Sadly enough, at times by people who can very well afford to buy a brand-new one, or ten. Again, warped incentives, and no sense of community.
exactly
I think we agree on all this here.
What I see is that we would need to take a two-path approach once we get rid of Hugo: 1) prisons, much better police, intelligent prevention, control, etc and 2) real jobs and some real investment in poor areas, investment in such a thing as very good schools in very poor areas, very good libraries, hospitals THERE, courses to train people set up their own businesses there and learn to be creative and generate wealth within their own communities, not that the only work they can have is to go to the posh areas to iron or build villas or to the city centre to sell chinese or US or European toys.
Quico proposes here only the prison approach. That is not enough and that is not completely viable. The things I mention under 2) would take the same amount of time and would have an equally important influence in reducing crime.
We need also to build a government that is not malandro
The Corrupt/Petrostate/malandro mentality must be stamped out.
Mainly by building institutions and with them a government that will have a behavior limited and inspired by respect for citizens.
It's no use at all putting more police on the streets if you allow the police to resort to matraca (extortion). It's no use building a prison if it will become a bloody, corrupt hell in a year. You cannot educate anyone to be a good citizen if the first one to break the rules is the government.
Yes, laws that guarantee life, liberty and property should be enforced. But they should be enforced also, towards the government.
Yes indeed - rule of law starts with the government
loroferoz: "You cannot educate anyone to be a good citizen if the first one to break the rules is the government."
I just replied to you on another blog with a comment about why the rule of law is so limited in Venezuela (and in Latin America). This is another reason. Impunity cannot exist. You don't need to root out 100% of corruption (you likely can't), but you need to create controls to prevent and/or discover it, and make sure that when it's discovered it's punished. Impossible to do all at once, when corruption is endemic, otherwise you can completely disable the legitimate functions. But you can always take out the worst offenders, and continue to do so, even as the worst offenses become generally smaller. That might mean some impunity for the small fish, but if they do clean up their act, then it's not the worst thing that can happen.
AIO
In reality it is simpler... and about simplification
"You don't need to root out 100% of corruption (you likely can't), but you need to create controls to prevent and/or discover it, and make sure that when it's discovered it's punished. Impossible to do all at once, when corruption is endemic, otherwise you can completely disable the legitimate functions."
First, a review should be done on the legitimacy of such functions, and if they pass, whether their execution does not infringe on the rights of citizens. Then make these functions as simple and transparent as they can be.
Take for instance registering official documents, drafting a contract or signing an authorization empowering someone.
How about a decentralized office with one or two persons who do check signatures, photocopy and register documents and put on the necessary seals, all in one, in two hours and charge in tax stamps. Ask only for signatures and for a certain unambiguous language in an authorization. Such a system is less susceptible to corruption... Most European countries work this way.
Take on the other hand the bureaucracy spanning at least two ministries and a registering office here in Venezuela. Take the notaries. Take the fact that every document empowering another person must be signed by a lawyer. Take the "gestores" and the 6 AM lines in downtown Caracas.
You might say that it reduces fraud. But it reduces nothing, much less fraud. It ensures corruption, and that people who do add nothing of value get a part of your money for blocking the doors on the walls they themselves build. It makes being honest an heroic effort, rewarded by the epithet "pendejo".
Make the courts simple and transparent then, to quickly deal with fraud when it occurs.
This is but a simple example of what went to hell in Venezuela long before Chavez. And what should be done to it if we want our country to be livable by honest persons.
I'm all for simplification
What I meant by "legitimate functions" are the acts such as the registration of official documents, with no regard to the actual process to accomplish them. I agree on what you say there - I've been frustrated by the LatAm system of layers on many, many occasions, and certainly not just in Venezuela. The only point I was trying to make is that, if you remove every single corrupt official from a given office, it may suddenly become impossible to get that task done - because there won't be anyone left to do it (regardless of how reasonable the process is).
Simple processes...
...will be that much less likely to give corruption a place to develop. Also, it needs to pass through the hands of less people, so less expense, less mistakes, and less possibility for corruption.
If a commonplace activity can do without a particular bureaucratic procedure, it is SURE that no corruption will attach to that activity because of the aforementioned procedure.
Corruption springs in Europe because somebody wants something extraordinary: a government contract, exemption from some law, etc. They pay to have advantages.
Corruption springs in LatinAmerica because there are too many obstacles to do what is commonplace, needed and normal. It's much worse here. We pay to simply be.
If we take away the opportunities and the incentives for corruption, maybe we will not need to tear our robes every now and then because corruption is prevalent. Maybe we will not call, theatrically, for the corrupt to be purged. Maybe people who would be corrupted would begin looking for more honest ways to advance in the world, those other ways being no longer attractive. Maybe, we could then remove the corrupt and the system would work faster and better because it was designed to work without the need for expedients whatsoever, corruption included. Maybe you will get the right people to be civil servants for a change.