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Oil represents 95%[1] of Venezuela's export earnings. When 95% comes from a single source and that source loses 1/3rd of it's value in a short amount of time th

by TheBiv 11y ago

Oil represents 95%[1] of Venezuela's export earnings. When 95% comes from a single source and that source loses 1/3rd of it's value in a short amount of time then its straightforward to understand why Venezuela is in this situation. >>People in US clamoring for leftist populism should take deep look at Venezuela. I don't see a reason to bring your political leanings into a discussion of straightforward economic cause and effects. [1] http://www.opec.org/opec_web/en/about_us/171.htm http://www.opec.org/opec_web/en/about_us/171.htm

Quinner 11y ago
The troubles in Venezuela started while the oil price was still high. https://en.wikipedia.org/wiki/Shortages_in_Venezuela https://en.wikipedia.org/wiki/Shortages_in_Venezuela
tmptmp 11y ago
>>I don't see a reason to bring your political leanings into a discussion of straightforward economic cause and effects. That means, when they were going well, they shouldn't be boasting the "Leftist" government and so, right? But what did we see? they and their leftist supporters kept on chanting "Chavez, Chavez" and "Left, Left". Did they ever consider the so "straightforward" economics then??
tptacek 11y ago
I think it's you who are oversimplifying here. Venezuela has two big problems: the first is that collapsing oil prices knocked the support out from under their economy, and the second is that the government is trying to pretend that hasn't happened by enacting capital controls and printing huge amounts of money, based on a (let's be clear) distinctively populist/leftist economic theory that there is no such thing as inflation, but rather only predatory pricing. I think it's easier to metabolize the political dimension to the story when you think of "populist/leftism" as something outside of simple "populism" or "leftism". There are plenty of left-leaning thinkers who do not believe you can print money to solve any economic crisis.
- krisdol 11y ago
  "based on a (let's be clear) distinctively populist/leftist economic theory that there is no such thing as inflation, but rather only predatory pricing." Can you source any of this without linking to an "Objectivism"-associated organization?
  - rm_-rf_slash 11y ago
    I can, because it was explicitly detailed in the article this thread is based on. Did you read it?
    - krisdol 11y ago
      Nothing about that is inherently leftist or populist or leftist/populist
      - rm_-rf_slash 11y ago
        The poster you replied to originally made it quite clear that it was a distinctive branch of populism/leftism, not a part of any mainstream ideology. Besides, if you twist policies and ideologies enough, you can get anything to justify anything. You can find justifications for guaranteed income from socialist and libertarian perspectives, for example.
        krisdol 11y ago
        Exactly, and that's why I asked for a source about the claim not believing in inflation was in any way a tenet of left-wing populism, or leftist ideologies in general. I shouldn't have mentioned Objectivism unless someone had cited a reason.com/cato/etc article. I'm not sure why you think I misunderstood the poster, because I don't disagree with you.
        rm_-rf_slash 11y ago
        At this point, whether you see ignorant and destructive government policies being rooted in ideology or mismanagement is a matter of opinion.
fiatjaf 11y ago
"I don't see a reason to bring your political leanings into a discussion of straightforward economic cause and effects." Really? Can't you really step out a little and try to think why oil represents 95% of Venezuela's export earnings? Are you really sure that pointing the cause of Venezuela's collapse on leftist policies is just a fruit of "policial leanings"? Is there anything you would you consider as reasonable argument against "leftist populism"?
- dragonwriter 11y ago
  > Can't you really step out a little and try to think why oil represents 95% of Venezuela's export earnings? Yes, and it has nothing to do with leftist populism (just as the dominance of oil among Saudi Arabia's exports has nothing to do with leftist populism, and the dominance of copper among Chile's exports -- which is true now, and was under both the Allende and Pinochet regimes in the past -- has nothing to do with leftist populism.) There have been whole shelves of books written on how the dominant international trade regime locks countries whose existing comparative advantage is in extractive industries to those sources of income in international trade and makes it difficult for most of them to successfully diversify; this problem is independent of whether the local government is left- or right-leaning, and whether it is populist or not. > Are you really sure that pointing the cause of Venezuela's collapse on leftist policies is just a fruit of "policial leanings"? Pointing with significant evidence to specific effects of specific policies might not be, blaming it generically on leftism or leftist populism is, OTOH, a different story.
- nitrogen 11y ago
  What's going to run this whole conversation off the rails is that "leftist", "populist", "socialist", etc. are emotionally loaded strawmen. Politics and economics have many more interesting dimensions to discuss than just "left vs. right". So asking for an argument against "leftist populism" is a waste of everyone's time because nobody will agree on what those words mean, they'll all talk past each other, and it's missing 99% of the interesting things to discuss about Venezuela as compared to other countries.
- crdoconnor 11y ago
  Saudi Arabia, despite being not in any way leftist, is in pretty much the same boat. They've just got more money in the bank at the moment. Similarly, Ecuador is pretty leftist. It just has a substantially better run economy.
jeffdavis 11y ago
From the article it sounded like they were already well on their way to disaster even with high oil prices. For instance, not even maintaining their oil infrastructure, and installing incompetent loyalists to run it.
xlm1717 11y ago
>>I don't see a reason to bring your political leanings into a discussion of straightforward economic cause and effects. Because political leanings are leading to economic policy decisions.
pmelendez 11y ago
> When 95% comes from a single source and that source loses 1/3rd of it's value in a short amount of time then its straightforward to understand why Venezuela is in this situation. There is more than that. In 90's when the Venezuelan crude was as low as $11 per barrel, the business was still profitable. Now with a price $20 per barrel it is dangerously close to the price of production (when you include refinement which is not an option for Venezuelan oil), so it is not just because the market bump, but also for being inefficient in the business. >I don't see a reason to bring your political leanings into a discussion of straightforward economic cause and effects. Because it is relevant, it is not only because economic causes but also because the government policies made this situation particularly terrible. Should Venezuela had better economical policies this would has been just a mere crisis and not a bankrupt scenario.
protomyth 11y ago
Its a bit worse than that as the oil produced in Venezuela (Heavy crude oil) needs more processing than say oil out of North Dakota or Texas (West Texas Intermediate). They actually had to import oil to blend to bring up the quality. Since they haven't invested in their industry, they really don't have ability to produce oil as cheaply as other countries and need a much higher price.
legulere 11y ago
Exactly, other oil-export-based economies are also struggling. For instance Saudi-Arabia, which is a strong ally of the USA is also currently burning through their foreign reserves: http://www.ft.com/intl/cms/s/2/01948d2c-ef49-11e4-a6d2-00144feab7de.html http://www.ft.com/intl/cms/s/2/01948d2c-ef49-11e4-a6d2-00144...
forgetsusername 11y ago
In recent history, Venezuela defaulted in 1982, 1990, had a banking collapse in 1994, 100% inflation in 1996, defaulted again in 1998 and 2004...all bad luck of course.

by TheBiv 11y ago

Quinner 11y ago

The troubles in Venezuela started while the oil price was still high. https://en.wikipedia.org/wiki/Shortages_in_Venezuela https://en.wikipedia.org/wiki/Shortages_in_Venezuela

tmptmp 11y ago

>>I don't see a reason to bring your political leanings into a discussion of straightforward economic cause and effects. That means, when they were going well, they shouldn't be boasting the "Leftist" government and so, right? But what did we see? they and their leftist supporters kept on chanting "Chavez, Chavez" and "Left, Left". Did they ever consider the so "straightforward" economics then??

tptacek 11y ago

I think it's you who are oversimplifying here. Venezuela has two big problems: the first is that collapsing oil prices knocked the support out from under their economy, and the second is that the government is trying to pretend that hasn't happened by enacting capital controls and printing huge amounts of money, based on a (let's be clear) distinctively populist/leftist economic theory that there is no such thing as inflation, but rather only predatory pricing. I think it's easier to metabolize the political dimension to the story when you think of "populist/leftism" as something outside of simple "populism" or "leftism". There are plenty of left-leaning thinkers who do not believe you can print money to solve any economic crisis.

krisdol 11y ago
"based on a (let's be clear) distinctively populist/leftist economic theory that there is no such thing as inflation, but rather only predatory pricing." Can you source any of this without linking to an "Objectivism"-associated organization?
- rm_-rf_slash 11y ago
  I can, because it was explicitly detailed in the article this thread is based on. Did you read it?
  - krisdol 11y ago
    Nothing about that is inherently leftist or populist or leftist/populist
    - rm_-rf_slash 11y ago
      The poster you replied to originally made it quite clear that it was a distinctive branch of populism/leftism, not a part of any mainstream ideology. Besides, if you twist policies and ideologies enough, you can get anything to justify anything. You can find justifications for guaranteed income from socialist and libertarian perspectives, for example.
      - krisdol 11y ago
        Exactly, and that's why I asked for a source about the claim not believing in inflation was in any way a tenet of left-wing populism, or leftist ideologies in general. I shouldn't have mentioned Objectivism unless someone had cited a reason.com/cato/etc article. I'm not sure why you think I misunderstood the poster, because I don't disagree with you.
        rm_-rf_slash 11y ago
        At this point, whether you see ignorant and destructive government policies being rooted in ideology or mismanagement is a matter of opinion.

fiatjaf 11y ago

"I don't see a reason to bring your political leanings into a discussion of straightforward economic cause and effects." Really? Can't you really step out a little and try to think why oil represents 95% of Venezuela's export earnings? Are you really sure that pointing the cause of Venezuela's collapse on leftist policies is just a fruit of "policial leanings"? Is there anything you would you consider as reasonable argument against "leftist populism"?

dragonwriter 11y ago
> Can't you really step out a little and try to think why oil represents 95% of Venezuela's export earnings? Yes, and it has nothing to do with leftist populism (just as the dominance of oil among Saudi Arabia's exports has nothing to do with leftist populism, and the dominance of copper among Chile's exports -- which is true now, and was under both the Allende and Pinochet regimes in the past -- has nothing to do with leftist populism.) There have been whole shelves of books written on how the dominant international trade regime locks countries whose existing comparative advantage is in extractive industries to those sources of income in international trade and makes it difficult for most of them to successfully diversify; this problem is independent of whether the local government is left- or right-leaning, and whether it is populist or not. > Are you really sure that pointing the cause of Venezuela's collapse on leftist policies is just a fruit of "policial leanings"? Pointing with significant evidence to specific effects of specific policies might not be, blaming it generically on leftism or leftist populism is, OTOH, a different story.
nitrogen 11y ago
What's going to run this whole conversation off the rails is that "leftist", "populist", "socialist", etc. are emotionally loaded strawmen. Politics and economics have many more interesting dimensions to discuss than just "left vs. right". So asking for an argument against "leftist populism" is a waste of everyone's time because nobody will agree on what those words mean, they'll all talk past each other, and it's missing 99% of the interesting things to discuss about Venezuela as compared to other countries.
crdoconnor 11y ago
Saudi Arabia, despite being not in any way leftist, is in pretty much the same boat. They've just got more money in the bank at the moment. Similarly, Ecuador is pretty leftist. It just has a substantially better run economy.

jeffdavis 11y ago

From the article it sounded like they were already well on their way to disaster even with high oil prices. For instance, not even maintaining their oil infrastructure, and installing incompetent loyalists to run it.

xlm1717 11y ago

>>I don't see a reason to bring your political leanings into a discussion of straightforward economic cause and effects. Because political leanings are leading to economic policy decisions.

pmelendez 11y ago

> When 95% comes from a single source and that source loses 1/3rd of it's value in a short amount of time then its straightforward to understand why Venezuela is in this situation. There is more than that. In 90's when the Venezuelan crude was as low as $11 per barrel, the business was still profitable. Now with a price $20 per barrel it is dangerously close to the price of production (when you include refinement which is not an option for Venezuelan oil), so it is not just because the market bump, but also for being inefficient in the business. >I don't see a reason to bring your political leanings into a discussion of straightforward economic cause and effects. Because it is relevant, it is not only because economic causes but also because the government policies made this situation particularly terrible. Should Venezuela had better economical policies this would has been just a mere crisis and not a bankrupt scenario.

protomyth 11y ago

Its a bit worse than that as the oil produced in Venezuela (Heavy crude oil) needs more processing than say oil out of North Dakota or Texas (West Texas Intermediate). They actually had to import oil to blend to bring up the quality. Since they haven't invested in their industry, they really don't have ability to produce oil as cheaply as other countries and need a much higher price.

legulere 11y ago

Exactly, other oil-export-based economies are also struggling. For instance Saudi-Arabia, which is a strong ally of the USA is also currently burning through their foreign reserves: http://www.ft.com/intl/cms/s/2/01948d2c-ef49-11e4-a6d2-00144feab7de.html http://www.ft.com/intl/cms/s/2/01948d2c-ef49-11e4-a6d2-00144...

forgetsusername 11y ago

In recent history, Venezuela defaulted in 1982, 1990, had a banking collapse in 1994, 100% inflation in 1996, defaulted again in 1998 and 2004...all bad luck of course.