VENEZUELAN EXPERIMENT

 

VENEZUELAN  EXPERIMENT

FREEBIE CULTURE LEADS TO POVERTY

SARASIJ MAJUMDER

 

IMAGE SHARED AT LEFT  IS OF VENEZUELAN PRESIDENT NICOLAS MADURO - A COMMUNIST WHO RUINED HIS COUNTRY’S ECONOMY.

Venezuela, home to the world’s one of the world’s largest oil reserves, is a case study in how to ruin a petrostate.  The State’s run to Solvency started in 1920, when Oil was discovered here in large quantity. Soon it became a prosperous PETRO--STATE.

PETRO STATE:-

Petrostate is a term used to describe a country with several interrelated attributes:

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• government income is deeply reliant on the production and export of oil and natural gas,
• economic and political power are highly concentrated in an elite minority, and
• political institutions are weak and unaccountable, and corruption is widespread.

Countries often described as petrostates include Algeria, Cameroon, Chad, Ecuador, Indonesia, Iran, Kazakhstan, Libya, Mexico, Nigeria, Oman, Qatar, Russia, Saudi Arabia, the United Arab Emirates, and Venezuela, to name the most of them.

WHAT’S BEHIND THE PETROSTATE PARADIGM?

Petrostates are vulnerable to what economists call Dutch disease, a term coined during the 1970s after the Netherlands discovered natural gas in the North Sea.

In an afflicted country, a resource boom attracts large inflows of foreign capital, which leads to an appreciation of the local currency and a boost for imports that are now comparatively cheaper. This sucks labour and capital away from other sectors of the economy, such as agriculture and manufacturing, which economists say are more important for growth and competitiveness. As these labour-intensive export industries lag, unemployment  rise, and the country develop an unhealthy dependence on the export of natural resources. In extreme cases, a petrostate forgoes local oil production and instead derives most of its oil wealth through high taxes on foreign drillers. Petrostate economies are then left highly vulnerable to unpredictable swings in global energy prices and capital flight.

THE OBVIOUS HAPPENED:-

Venezuela is going through hyperinflation. In 2019, inflation hit 130000%, and although it’s now down to 190%, even that number is beyond what we can imagine. Millions of Venezuelans have moved to neighbouring countries. External debt has reached a record $150 billion, and unemployment is at 10.77%. The income of his citizens has dropped by 61%.

This is despite the fact that Venezuela has the largest oil reserves in the world—19% of the world’s proven reserves are there—but people are still starving and fleeing to nearby countries. Yet the communist leader lives like a King because communism ruins economies, people, and minds but solidifies political leadership which is often brutal to its own citizens. They mostly come to power with promise of freebies.

SIMILAR EXAMPLE IN INDIA:-

Himachal Pradesh, though not a PETRO--STATE,  voted for congress who promised many freebies and old pension scheme. Within a couple of years, the state became bankrupt. CM Sukhu and his cabinet ministers deferred their salaries by few months. Government employee salary payments were delayed. A proposed toilet tax (suggested by economist Dr. Montek Singh Ahluwalia) was withdrawn after a huge controversy erupted on that proposed tax. Now extra bus fare for extra luggage introduced and monthly allowance for women announced as election promise has been withdrawn. Also state electricity board is trimming workforce. The people who went for OPS (old pension scheme) are now losing government jobs!

THE STATE GOVERNMENT HAS FAILED!

Unless Government  motivate people to do ‘hard work’—there is no ‘ ECONOMIC PROGRESS’.

REFERENCE:-- All information are available in PUBLIC DOMAIN.

Image:- GOOGLE.