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Why Venezuela Fails

By Michael Rowan | El Universal

23.07.05 | In the last twenty years, China has rescued 200 million people from poverty; the historic land of famines and migration, Ireland, has become the second-richest country in Europe; Singapore has duplicated Japan's dramatic entrance into the First World; Costa Rica and Chile have reduced poverty by more than half; and Mexico and Brazil are becoming world-class economic engines of growth. All these success cases share the same strategy: opening to the world economy, education of populations, using national competitive advantages, and an encouragement of private enterprise.

None of the success cases has done what Venezuela started to do in 1976 and is finalizing with a vengeance today: nationalization of industry, suppression of independent economic actors, stringent regulation of economic transactions and rights, and strident attacks on the way the world economy works. In China, economic improvements have come to those Chinese in the trading regions open to the world, but not the rural Chinese still stuck in feudalism, misery and communist suppression. Cuba is stuck in that place as well, while Venezuela is headed there as if it is utopia.

Many Venezuelans have long recognized the fact that nationalization was nonsensical, but the traditional political parties refused to face reality. The titanic of Venezuela was slashed open two decades ago and ever since it has been steadily sinking. National leadership was content to take its turn at the wheel of power and enjoy the music and champagne, as the ship steadily sank. Venezuela has wasted funds equal to twelve Marshall Plans while poverty and corruption tore new holes in the hull of the ship of state. And still there is no alternative presented to the poor, who now comprise almost 80% of the population, and rising.

The alternative is obvious: strip the state of its power and money and invest in the population. Pass ownership of national patrimony and state enterprises to the 28 million citizens, with equal shares that cannot be sold. Provide incentives for the population to invest their wealth in competitive enterprises that they own and manage without interference from the state. Eliminate the military spending in favor of education, as Costa Rica did. In other words, sew the oil, as Arturo Uslar Pietri counseled sixty years ago, and which still makes sense today.

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