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But in this case, the oil industry of Venezuela is completely state-owned, and the government was relying on profits from this to fund social programmes. This i

But in this case, the oil industry of Venezuela is completely state-owned, and the government was relying on profits from this to fund social programmes. This is not an inherently bad idea in itself, but if your government spending is directly dependent on a single commodity, fluctuations in its price will affect your entire population. Compare for example with Norway, which also made its oil industry completely state-owned, but is not in any way relying on oil profits to run the country.

jestinjoy1 11y ago
Thats correct. I dont know that much about Venezuela. Do we have records to show that its entirely funded from oil profits? What if a country doesnt have any other thing to make profits than oil. Same is the case for gulf countries.
- kevin_thibedeau 11y ago
  They had other ways to make money but Chavez ran the capitalists out of town so he could bask in the glory of his socialist paradise.
- dragonwriter 11y ago
  > What if a country doesnt have any other thing to make profits than oil. Same is the case for gulf countries. Not sure if it has recovered since the 1990 war, but Kuwait was an example of a better long-range strategy if your main immediate source of income is oil -- you invest a large share of the profits from that in other things, while using some of the proceeds from both oil and the other investments on services for citizens. Its not as much short term benefit in citizen services, but its better for long-term stability (well, up until the fact that you have invested in a way that makes your returns better when oil prices are low gives you conflicting interests to your neighbor who hasn't invested in other things the way you have, forming one of the reasons they use their investment in one of the largest militaries in the region to invade, occupy, and ravage your country.)

jestinjoy1 11y ago

Thats correct. I dont know that much about Venezuela. Do we have records to show that its entirely funded from oil profits? What if a country doesnt have any other thing to make profits than oil. Same is the case for gulf countries.

kevin_thibedeau 11y ago
They had other ways to make money but Chavez ran the capitalists out of town so he could bask in the glory of his socialist paradise.
dragonwriter 11y ago
> What if a country doesnt have any other thing to make profits than oil. Same is the case for gulf countries. Not sure if it has recovered since the 1990 war, but Kuwait was an example of a better long-range strategy if your main immediate source of income is oil -- you invest a large share of the profits from that in other things, while using some of the proceeds from both oil and the other investments on services for citizens. Its not as much short term benefit in citizen services, but its better for long-term stability (well, up until the fact that you have invested in a way that makes your returns better when oil prices are low gives you conflicting interests to your neighbor who hasn't invested in other things the way you have, forming one of the reasons they use their investment in one of the largest militaries in the region to invade, occupy, and ravage your country.)