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2009 February 15 Sunday
Food Shortages In Venezuela

Socialism only works when high oil prices can subsidize its many failings.

If you want beans, pasta or milk, you're out of luck at the El Barquero Supermarket in Caracas, Venezuela.

"Lentils, grains — you almost can't get them," purchaser Jose Rodriguez said by telephone. "We're always having shortages of one thing or another … and you can't import them because the government controls it all."

Price controls and currency controls lead to shortages. Is Venezuelan President Hugo Chavez surprised by this? Or does he see this as more evidence that Spanish-blooded middle and upper class capitalists are evil?

Inflation runs above 30%. Chávez has implemented price controls, but many producers have reacted by choosing not to sell their goods below what they consider fair cost — resulting in shortages of staple foods. The government has put strict controls on the buying and selling of dollars in an effort to prop up its currency, the Bolivar.

If the price of oil remains very low the rest of this year will the lower classes turn on Chavez? Oil prices will eventually recover. But the Venezuelan government is not investing enough in its nationalized oil industry and Venezuela is on a long decline in oil production anyway.

After nationalizing the holdings of ConocoPhilips (COP) and other oil companies Chávez is now trying to get Western oil companies to invest again now that he's in financial straits. Will any companies go for this?

Embracing the Western companies may be the only way to shore up Petróleos de Venezuela and the raft of social welfare programs, like health care and higher education for the poor, that have been made possible by oil proceeds and have helped bolster his popular support.

"If re-engaging with foreign oil companies is necessary to his political survival, then Chávez will do it," said Roger Tissot, an authority on Venezuela's oil industry at Gas Energy, a Brazilian consulting company focusing on Latin America. "He is a military man who understands losing a battle to win the war."

His nationalizations have left him heavily dependent on oil revenue to keep his regime in power.

Nationalizations in other sectors, like agriculture and steel manufacturing, are fueling capital flight, leaving Venezuela reliant on oil for about 93 percent of its export revenue in 2008, up from 69 percent in 1998 when Chávez was first elected.

Chavez was trumpeting his agricultural policies not that long ago.

One of the objectives of the Chavez government has been to promote the production and consumption of corn in place of wheat consumption which is largely imported. Chavez pointed out that wheat is of European origin and was first brought to the Americas by the Spanish. Corn, on the other hand, originated from the Americas and is produced locally. Chavez pointed out that Venezuela is now self-sufficient in corn production thanks to the agricultural policies of his government that have doubled production in the last 8 years. Currently Venezuelan production supplies 98 percent of national consumption of yellow corn and 100 percent of white corn.

I'm reminded of Atlas Shrugged and an obsession with soy production.

Share |      By Randall Parker at 2009 February 15 06:23 PM  Socialism, Capitalism


Comments
HellKaiserRyo said at February 16, 2009 12:53 AM:

Well regarding "Atlas Shrugged" here is a nice book review from Amazon:

http://www.amazon.com/review/R1J47YBXIOSH08


"You can derive some value from reading Rand's novel despite its flaws and absurdities, because Rand addressed a number of fundamental issues in a wrong-headed and idiosyncratic way.

For example, Atlas portrays an America undergoing a plausible Jared-Diamondian "collapse" scenario really brought about by an energy crisis, despite all the rhetoric about the men of the mind going on strike as the cause. Rand understood intuitively that energy from nonhuman sources like fossil fuels does the real work in the industrial age economy, while we just hang along for a luxurious ride despite our delusions about our material "productivity" and control over the economic process. For example, consider how long it would take to push your car 20 miles compared with how quickly and easily a gallon of gasoline does the job. Even Warren Buffett or Bill Gates would rely on the gallon of gasoline instead of their individual "productivity."

She shows Galt's Gulch as a livable place, like many a real mountain town gentrified by the rich, because Galt's free-energy invention supplies plenty of electricity without having to depend on fossil fuels. Without Galt's motor and without some energy-dense sort of fuel, the strikers would have wound up living like the Amish or the people on the reality TV series "Frontier House," no matter how much gold they had piled up or how hard they worked. Galt explicitly says he withheld his invention from the rest of the world because he knew it would sustain the economy indefinitely despite the parasitic load of humanity he despised and wanted to eliminate. Apparently he didn't want to entertain the thought (denial works like that) that maybe his motor, more so than his "mind," kept him and his friends in the valley alive, otherwise they could have experienced a Donner Party survival emergency over an especially harsh winter. The motor, like all the other inventions from the past, would continue to sustain life even if Galt had died at the hands of the evil government thugs, showing that the world could manage without him after all.

Indeed, according to the Peak Oil Cassandras, an Atlas-like economic implosion could start any time now, without all the so-called "productive" people getting raptured, because oil has carried us as a burden for several generations. Oil will shrug us off as the supply begins its permanent decline and we discover to our horror where our "productivity" really came from. For example, the "productive" people who run the American chemical industry have reluctantly had to give up because they can't stay in business at the current prices for oil and natural gas. "

Well, without petroleum, the "productive" in the world are really nothing. And on another note, if Chavez also promoted population control, I would love him. But I do not have positive or negative opinion on Chavez.

Kudzu Bob said at February 16, 2009 3:31 AM:

HellKaiserRyo, I assume that you are at least dimly aware that oil doesn't jump out of the ground and refine itself.

Wolf-Dog said at February 16, 2009 8:48 AM:

If the price of oil remains very low the rest of this year will the lower classes turn on Chavez?

Excellent question... My answer is: "Later for sure, BUT NOT YET!". At this early stage of communism, their relatively new administration can still use the fear that without government protection, the feudal south American right wing will make the lower and middle classes starve even more than what is happening in the current situation. After the country stagnates for a long time like in the case of the Soviet Union, the Venezuelans would think that it is time for a change.

The Undiscovered Jew said at February 16, 2009 6:19 PM:

Chavez was trumpeting his agricultural policies not that long ago.

What on earth is it with Communist dictators like Chavez, Pol Pot, Mugabe, Mao, Stalin, etc, that they feel it necessary to meddle in farming and the food supply? I can understand why communist leaders want to seize the manufacturing and banking industries because those are the most profitable economic sectors.

But why care so much about seizing mere farmland?

Kudzu Bob said at February 16, 2009 8:59 PM:

Re "But why care so much about seizing mere farmland?"

Because the Peter Principle applies to dictators, too.


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