Caracas Chronicles

There was a bit of controversy in Caracas Chronicles the other day after Amanda Quintero’s decided to try her hand at sacred cow roasting with a long, anti-’sembrar el petróleo’ takedown. I read the responses with a mixture of concern and dismay —and was finally pushed over the edge when I read a smart young person I admire opine, in comments, “It’s not sow vs. not sow. We all obviously agree: sow.”

It’s kind of amazing: in Venezuela a smart young person can read a 2,500 word piece painstakingly taking apart the Sow-the-Oil thesis, turn around and write that we obviously all agree. It’s as though “sowing the oil” as an unshakable aspect of civic dogma: above good and evil, beyond rhyme and reason.

Maybe the original text was a bit too academic, maybe couching it in those terms invites misunderstanding. So let me ponértela facilita: no we do not obviously all agree. Yes there is an alternative to “sembrar el petróleo”. A radical, weird alternative we’ve never ever tried before.

Capitalism.

Just letting markets do their thing.

Because Sembrar el Petróleo isn’t just a motherhood-and-apple pie call to invest oil rents wisely. Sembrar el Petróleo is a lot more specific than that. It’s a call to redirect oil rents out of the industry that produced them, which happens to also be by far the nation’s most profitable sector.

It is, in other words, a none-too-disguised call to take the fundamental capital allocation question in the Venezuelan economy (“what the hell are we supposed to do with the huge excedents the oil industry generates?”) out of the sphere of market exchange and put it in the hands of state bureaucrats. When we say we all agree to sow the oil, what we’re really saying is that every last one of us is born a socialist.

Or, at the very least, a dirigiste.

I wasn’t entirely sure I agreed with Amanda when I was reading her post, but seeing the furious reaction it courted finally convinced me she’s on to something.

As a political culture, we’re suicidally attached to the fantasy that some enlightened state elite ought to know how to allocate our capital better than the market does. 

Sowing the oil means an open-ended commitment to diverting capital away from our most promising industry. Sowing the oil means fighting the market; engaging it in a constant, decades-long fight against our natural endowment and our comparative advantage.

Eighty years on, how’s that workin’ out for us?

The alternative is not that mysterious: letting capital chase its most profitable use. If we did that, what we would see is a much greater share of capital flowing into the industry where all the money is in Venezuela —oil and gas— and much less money going into the likes of the Tinaco-Anaco railway, or state-owned steel mills that don’t produce any steel, or roach-infested Venetur hotels, or gallineros verticales, or any of of hundreds of other oil-sowing boondoggles and scams our governments have latched onto over the decades as vehicles for frittering away our oil rents.

Trying to pick winners out of an office in Carmelitas isn’t the way you turn oil wealth turns into development. It never was. You’d think we’d have learned that by now. We haven’t. We still don’t get it that if you allow markets to allocate capital you end up with more capital, and a bigger tax base, and that bigger tax base can then be used to provide the kinds of public services at which markets are no good but democratic states are great.

We keep trying to invert that order, to fudge the line between private and public investment, we keep getting burned again and again and again for eight decades and we still don’t see it.

The consensus around Sembrar el Petróleo is a consensus around failure. It’s an iron-clad determination to keep wasting our natural endowment in perpetuity. It’s time to emancipate our minds from this miserable mindset. Enough, verga. Enough.