Not afraid to wonk up the joint

leopoldo There’s a lot to like in this op-ed on oil policy by Leopoldo López, published in El Nacional.

The money quote:

“Los proyectos requieren inversión tanto nacional como foránea. Incluso si no pudiésemos participar en las inversiones de estos proyectos, a los venezolanos las leyes nos deberían garantizar la oportunidad de invertir en fondos de ahorros o compra de acciones en las empresas mixtas de la faja, con lo cual se garantizaría la transparencia de ellos, pues el gobierno se vería obligado a presentar cifras públicas. Adicional a esto se debería promover y apoyar a empresas de bienes y servicios de contenido nacional para que realicen sus actividades en la faja.”

Leopoldo basically makes the case that when people talk about bringing democracy to the oil industry, they usually limit the discourse to “democratizing the rents.” He says that we have to go beyond that, and allow Venezuelans to participate in the ownership of the oil business, whether via “mixed companies” or via ownership of private companies that participate in the oil business, be it via exploiting the resource or servicing it.

He even goes so far as to propose … gulp, listing these companies in the local stock market.

Let’s face it, our public discourse has fallen in such a deep hole, any time a local political leader can talk about oil in a thoughtful way we need to celebrate. Compare and contrast with this (rewind to 1:37:30 more or less) …

83 thoughts on “Not afraid to wonk up the joint

      • Si esto es lo que realmente hay, …. entonces Venezuela este bien jodida! I always thought this Capriles guy was a very poor leader considering the almost unsurmountable problems the country faces. Machado and Lopez are better prospects, but stupidity is in full swing … and people “like” Capriles. Oh well, come December 8th, after a sure debacle, the guy should be toast. Let’s us sincerely hope for that.

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  1. Presidenciable.
    LL has come a long way from his hurdle-jumping promo of early 2012. He’s been laying the ground with sweat equity and some intellectual rigor. This latest effort is brilliant. I love how he spells out the petroleum topic, not by dumbing it down, as though it were a great mystery, understandable only to a few experts and the government. I love how he informs about the different types of crude and the need for huge amounts of investment in the heaviest (finally someone is talking sense, instead of pie-in-the-sky). I love how he invites the public to get involved, to become better informed about what principally runs the engine of the country, and to invest as active, rather than as passive participants. Ka-boom!

    Visionary.
    If only Vzla weren’t mortgaged to the hilt, weren’t commandeered by incompetent thugs, and fracking in traditional export markets was not nipping at our toes …

    Como vemos, democratizar el petróleo va más allá del punto evidente de democratizar la renta, que ha sido el único punto de debate a lo largo de nuestra historia rentista. Se trata de que todos los venezolanos sean conocedores del petróleo, se trata también de que podamos participar del negocio invirtiendo en su producción.

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    • Doesn’t it bother you to the core that we have Capriles instead of this guy as head of the opposition? That idiot of Capriles thinks that by dumbing down the issues and competing in the populist sphere he is gonna get more votes.

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      • And do you think that going to an audience like us is going to get the votes of juan bimba…really? I know is really awful outlook. But hey the guy has been in jail…he is not from “las familias mantuanas”as leopoldo and Maria corina…so there are many oppositions, they are the incumbents and united to one waxdoll, and the money ( or the machine that prints money) to buy votes…mejor pájaro en mano que cien volando that is the motto in general

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      • Andersen: Yes, Capriles has been a let down. And yet he does still command crowds. Give him that much. Remember, too, as with all politics, there is much behind the scenes that we don’t really know. Perhaps the MUD objective is to draw in the recently disgruntled chavistas, who were spoon fed, for years, by Chávez, the playground nonsense in which Capriles now engages.

        Personally, I think LL has a good future. But he needs to a few more years of experience.
        (And I have long thought of Capriles as an interim caretaker, assuming his win, in what, 2014?)

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  2. We haven’t learned much. “Se trata de que todos los venezolanos … podamos participar del negocio invirtiendo en su producción.” How are the poor going to invest if they have little with which to invest? Meh, another rich get richer platform that won’t win elections unless the charisma of the presenter is what does it.

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    • +1, even tough Leopoldo’s idea may seem like a very exciting prospect for people in this forum, I don’t think that it may have any of appeal for the broader venezuelan masses and therefore have no practical value right now

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    • I think that the message can be refined to appeal to a broader audience. Some things that come from the top of muy head:
      1. The government may invest the Social Security (IVSS) and pension funds in the oil industry, so everyone subscribed and paying the mandatory share can reap the benefits of this.

      2. More individual and private resources going into the oil industry means that more public resources are available for social programs of all kinds.

      3. Hey! realize that you don’t have to spend all to6ur money today! If you invest part of your money in the venezuelan oil industry you’ll get lots of money later (a real rate of return, unlike what you get just saving in the bank)

      4. Stock option bonuses for public workers. I know that’s just plain dirty patronage, but this works very well politically.

      5. If you take a significant amount of money out of consumption and into investment, there will be less overheating of consumption and less inflation (maduro has used that term, so im confident most people will understand of act like it).

      What do u think?

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      • Daniel Urdaneta, we can dress it up any way we want to “appeal” to more people, but the fact of the matter is that it is not designed with them on center stage.

        1. where to invest IVSS or pensions is already a decision the government does without much input from the citizens. And though it should be providing people with the benefits of wherever these monies are held, what we really see is money missing. The difference with the oil industry is that it would be a higher risk investment.

        2. again, the government has already demonstrated what it does when it has “excedentes” of money, so being able to save from investing in the oil industry is no guarantee of it being invested in social programs of any kind, lest we remember the kinds of vote buying social programs that have gone up of late.

        3. read the article in the following link, then tell me if the poor can see it the way you wish they would:
        http://www.huffingtonpost.com/linda-tirado/why-poor-peoples-bad-decisions-make-perfect-sense_b_4326233.html

        4. stocks would tend to end up in the hands of the richest, and the options and bonuses have a way of being used for unjust purposes as much as cash.

        5. True if, but unlikely if. We’ve seen how governments exemplify investing.

        To recap, we seem not to have learned what brought us chavez; it’s the thinking about the poor second. In a nutshell, if we come up with a plan to help the poor, then the rich will be fine. Money flows upwards really quickly. Any trickle down platform, or any harvest later what you sow now platform, is just ignoring the last 15 years.

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        • @extorres.
          Re your #3.
          Author is an essayist and an activist who also suffers from clinical depression, smokes, has a cell phone, wanders around San Francisco (a very expensive town), says she sleeps 3 hours every night and never gets a vacation, though her twitter feed says she slept for 12 hours at a stretch the other day, she has family from Ohio but is scared to go back (??) “been too long in the mountains” (….)

          Hmmmm.

          Yes, being poor is not easy. That’s not debatable. What is, is being naïve and getting sucked into every poor-me story that appears in the Huffington Post.

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          • syd,

            1) that she slept 12hr the other day does not exactly prove that on the average day it’s not 3hr, nor does it prove that perhaps she is living a different phase in her life now.

            2) are you suggesting that you think I am so naïve to have gotten sucked into this poor-me story, let alone “every” story? For all I know, it could be 100% made up.

            3) as opposed to your usual, judging material based on authorship and author’s background, what I do is look at the material itself. In this case, the story, whether true or not, does reflect the kind of situation and thinking that exemplifies the situations and thinking that I’ve come across, personally, and find that what it portrays is true, even if it is false for the particular author.

            4) I’m glad we agree on the “being poor is not easy”, which is the main point I was bringing up by linking to that essay, true or not, but as usual you seem to sidestep discussing the main points, and choose to try to put people down, instead.

            5) do you have any input regarding the rich getting richer platform and attempting to dress it up for the poor so that it is more appealing to them?

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            • extorres: you earlier posted a link to support your case regarding poverty, without providing a caveat as to its credibility. Ya got sucked in. Period. And now you scramble to say the article could be 100% made up? Meaning you used a source of uncertain credibility to support your poverty thesis? What a mental spin!

              The recently written/posted article had enough whiffs of manipulation by what appears to be a drama queen. “Linda Tirado” gravitates towards menial jobs in Utah, where she lives. They allow her to have the lifestyle she has CHOSEN, which includes activism and protest tourism, I assume as far away as San Francisco. That is, when she isn’t holding down 2 jobs (“I never get a day off from work unless I am fairly sick”), picking up the kids (she omits information on this), taking a full-course load of studies, looking after her husband, and cleaning the house.

              I don’t get the sense from her writing and her twitter account that she grew up poor, or is that destitute now — unless it’s in her mind. Please don’t insult us with this pap.

              As for your nos. 4 and 5, they are convoluted. And no, I’m not going to play diplomacy, nor semantic games with a spinner.

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              • syd, you stated that “Yes, being poor is not easy.” as a reply to the article. That demonstrates that you agree with the message of the article whether made up or not.

                So, your gripe with me is simply that I brought up the article without the caveat that you may have provided had you ever provided that link…

                But then, spinning reasons for not discussing the main arguments, you decide that you don’t play semantics with spinners! Ironic.

                No. 4 is not convoluted. Let me spell it out: YOU DID NOT DISCUSS THE MAIN POINTS.

                No. 5 is not convoluted. DO YOU AGREE WITH DANIEL URDANETA REGARDING THE PLATFORM “that the message can be refined to appeal to a broader audience” OR WITH ME THAT, INSTEAD OF DRESSING IT UP TO SEEM BETTER FOR THE POOR, WE SHOULD PRESENT ONE THAT IS ACTUALLY GOOD FOR THE POOR?

                While you’re at it, do you support a stock model option? Do you support a stock dividend model option (i.e., handout model)? Did you now see the difference between the handout model and the UCT model (if not, do you have any questions that may help you see the difference)?

                In other words, syd, do you have anything to bring to the thread other than your name-calling opinions and book cover judging of those who comment, rather than on what we comment?

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              • Clearly you have a certain difficulty accepting reality, extorres, as you spin your position and try to gain as many converts to your theory, even bending comments from others in the process.

                The reason I don’t engage in the hyper-defensive minutiae of your theory, which HAS CHANGED OVER THE YEARS, from unconditional to less unconditional, is this: You use these comment boards to refine that pet theory of yours and to promote your crusade, through changeable, confusing, and convoluted thought processes that are tinged with juvenalia.

                I have absolutely no interest in parsing that hyper-defensive mode. So let me repeat what I and others have told you, before: Have the courage to spit out your theory in an economic peer-review journal. Y cuando seas grande y puedas reportar tus ideas, YA BIEN FORMADAS, de forma adulta, EN LOS ESPACIOS APROPIADOS…. don’t for God’s sake use a flimsy article from the Huffington Post that you may not even believe to be 100% true (…) to support your view on poverty. The reaction from mature readers, better educated than I, will be far more severe. And the editor will not allow the luxury you’ve enjoyed on these boards to sophomorically spin away, as though aiming to build a thesis, at our expense. #Tiresome.

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              • syd,

                Your projection is funny sometimes. Here you are telling me that I have difficulty accepting reality, but you’re the one to refuse to accept a platform that appeals to the poor hoping to beat chavismo without one.

                Also funny is how you engage me first to put me down, then accuse me of hyper-defensiveness, then try to claim that you don’t engage with me because of my reaction to your attacks. To top it off, you project onto me your “juvenalia”.

                But this wins the cake:

                I currently claim that 100% of all non taxation money (i.e., all natural resource income, and anything else not from taxes) should be distributed equally to 100% of all citizens. But you claim that, this has changed over the years…

                “from unconditional to less unconditional” LOL

                Pray tell, what is less unconditional than 100% of the money to 100% of the citizens?

                As to your recommendations for the path I should take in developing my ideas, you’ve expressed them before, I’ve noted them and thanked you in the past for them, and I thank you again, but I reiterate that after consideration I have decided to continue along this path.

                But I’m curious. That you dislike the proposal I support is clear. Please, though, answer the following question:

                Which do you dislike less, the that a chavismo government continue to receive 100% of all oil income, or that the citizens, including the +50% of the opposition citizens, begin receiving the oil income?

                #crossingfingersforananswer #not

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          • try telling to lots of immigrants or young people in the US to buy health insurance even at 10 dollars…they won’t , why pay money if i could do with that X?, if i never get sick why to pay health insurance every month? … A lot of people in here, just like in Venezuela lives day to day…and well the idea sounds good . I give you this money and explain to you that is how you are going to do it? ok an example What do you think the winners of big lotteries in the States choose, getting annuities for the prize of the cash value? (is like 30% less) are they going to invest it..no..they want to have their sure thing in their hand…Of course now the difference is now in venezuela anyone that could affors any health insurance would do, there is no point to go to a hospital

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    • If the government writes you a check every quarter amounting to your slice of the oil profits (that is, total profit divided equally across the whole population – and allowed to be no more than 15% according to maduro, mind you!), you are in some sense receiving a dividend. If you are instead a stockholder, you get that same amount as a dividend, plus some additional flexibility in that you can readily sell (or buy) the asset. One argument against stock is that people may sell it at an inopportune time (make poor financial decisions with severe cost down the road). That is probably true. However, it is also likely that people would dream up all sorts of mortgaging schemes in the case of a seemingly inoccuous simple transfer mechanism, such that in the end balance it would not be that different from selling stock. It’s worth looking into what happened when companies were privatized in russia following dessimation of ussr. That clearly is not a good model to follow. We already have boligarchs….

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      • gro,

        I agree, stocks or stock dividends are a terrible system to implement. I insist: Let the oil industry be 100% private. Let the government dedicate itself to ensure a free, and competitive environment, while receiving a globally competitive royalty for the extracted oil. Let the same be done for all natural resources. Let all the income from all natural resources be distributed in deposits directly to all citizens, unconditionally, and daily, via a damping mechanism. Let the government’s only spending come from what it gets back from the success of the market. If the distributed amount is not enough to meet the poverty line, then let the first spending of the government be topping off the distributed amount until the poverty line is met for each citizen.

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        • extorres: you are so fixated against the marketplace that you haven’t understood gro’s one caveat to his generally positive comments on owning stock vs. receiving a hand-out from the government. Suggest you lose the blinders.

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          • syd,

            With regard to your comment, lol, me against the marketplace? Everything I endorse supports a free and competitive marketplace! In fact, UCT is all about making of the nation a consumer market economy.

            Regarding gro’s comment, lucky, neither one of us is recommending a handout model. We agree that a handout model is bad. Perhaps I assumed that you already knew my position against the handout model.

            let’s break his statements down:
            1) government checks from oil profits = “in some sense” a dividend
            2) versus stock = same dividend, + asset.
            3) stock problem: sell = loss of asset & dividend.
            4) statement 3 = probably true
            5) possibility of mortgaging schemes not that different from selling stock.
            6) case studies: companies privatized in Russia, post USSR.
            7) “That clearly is not a good model to follow.”
            8) We already have boligarchs….

            My reply looked at his set of statements one by one:
            1) his description of government checks as *from oil profits*. This lends itself to minimize payouts, as many companies do with their stock dividends. That makes those checks, as you call them, “hand-outs”, as well as dividend-like. Bad for the handout model, and bad for the stock model.
            2) though gro seems to think stocks would be better because one would have the same dividend, but also an asset, I think he is wrong because, the dividend is conditional on the ownership of the asset. In (1), the lack of conditional guarantees the dividend; there is no guarantee in (2). Another bad for the stock model.
            3) gro demonstrates he’s heard of the argument against loss of the asset and therefore the dividends. Bad for the stock model.
            4) acknowledges the loss of asset and therefore dividends. Bad for the stock model.
            5) the mortgaging schemes potential shows gro’s faith in people coming up with an equivalent to selling stock without selling the stock, though he doesn’t explain, if it’s not that different from selling stock, how it won’t be as bad. Bad for the stock model.
            6) the privatization period in Russia was rougher on the poor than the rich. Bad for the stock model.
            7) agreed, good for the stock model, but only if we’re talking just those two options. Against UCT, bad for the stock model.
            8) boligarch mentality increases the probability of (2). Bad for the stock model.

            In conclusion, while gro’s first statement implies that a handout model would be bad to implement, every single statement of gro’s, implies that

            “STOCKS or STOCK DIVIDENDS ARE A TERRIBLE SYSTEM TO IMPLEMENT”.

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            • You and syd put aserious effort into decoding and fleshing out my briefly layed out points. It’s a difficult subject and i don’t purport to be an expert in it. I more or less agree that the argument for stocks as a method of wealth redistribution is not entirely convincing. I am also in principle against cash transfers, it does not strike me as good policy as it does not provide an incentive for those receiving the transfers or for the company to maximize or generally make optimal use of profits. In fact i am for government using taxation to finance infrastructure, education, regulation, and social welfare benefits. Pretty bland. Cash transfers strikes me as a poltically appealing compromise during a move away from the current system of handouts but not necessarily an optimal use of resources.

              On the subject of the eastern european experience, it is an interesting subject which i admittedly have only looked into only passingly. This is just one example:
              http://cog.kent.edu/lib/Ellerman5.htm

              I don’t think the arguments of most posting here refer to wealth redistribution, that politically crucial question which has determined how the oil sector is managed. Rather they agree that the private sector is an essential player in promoting development and by extension stock ownership is one way to get an increasing number of stakeholders to supply needed financing and rescue flailing pdvsa.

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              • gro, Before I came up with the UCT proposal, I bounced around several stock model ideas, so I understand very well from where you’re coming.

                Don’t let my exchanges with syd distract possible exchanges between you and me; she is fixated on putting what I propose in the same bucket of handouts despite my repeated explanations that I am against handouts, then trashing me as a person rather than ever discussing the topic.

                Please note that we’re discussing three different things here. You mentioned model A versus model B and made the argumentation for B. I replied pointing out why I thought B was worse for the poor than A, then pointed to the C model, which is the one I support. To give them names:

                A is the checks as dividend, or handout, model.
                B is the stock model, with corresponding dividends.
                C is the UCT model.

                We already discussed the drawbacks of B and you seem to realize them, so no need deepening discussion in that. I also put forth why A still beats B, namely in protecting the poor.

                Let me discuss why C beats both. Imagine first a Venezuela with no natural resources. The government would have to spend from taxation income, for all the things you list: to finance infrastructure, education, regulation, and social welfare benefits, and then some. We agree on that. The incentive for such a government is to maximize taxation income, which indirectly is an incentive to maximize market success so that taxation income be high.

                Adding natural resources and the huge income from it to the mix gives us two options: 1) we give that income to the government so that it now has huge amounts of extra spending money (i.e., taxation plus natural resource income), or 2) we give that income to the citizens so that it is they who have extra spending money, above poverty line, guaranteed.

                In option (1) the incentive for the government is to maximize income from natural resources, which reduces its incentive to maximize income from taxation (i.e., reduces incentive to help market succeed). In fact, it reduces the incentive to care what citizens want, since the government stops depending on them as a source of income. You can read the long version, by Quico, at
                http://caracaschronicles.blogspot.ca/2007/07/torres-in-bethlehem.html

                In option (2) the incentive for the citizens is to maximize income from natural resources, too, which reduces their incentive to maximize income from work. In fact, it reduces the incentive to want to work, since they stop depending on work as a source of income for survival.

                The question is, which is less bad? I think we know from experience what option (1) has brought us.

                Let’s look closer at option (2). Firstly, let’s note that when option (1) fails, it fails completely. When option (2) fails, only a percentage of the citizenry will opt for the no work scenario, not the whole citizenry.

                Note that when citizens spend their money, even if they belong to the percentage that don’t work, they are helping the economy by voting with their money on the best goods and services to cover their consumer preferences. In other words, even without wanting, these persons are helping the economy develop correctly. The percentage of people who *do* work will benefit from the spending of those who don’t. And these working citizens will want to grow, which can only come if they offer attractive work opportunities so that people will want to work in the expanding businesses. Their growth will lead them to pay more taxes to a government whose incentive is to help the working citizens as much as possible to succeed, so that the government gets more taxation income.

                In short, the model of option (2) is a very healthy economy with very healthy incentives *even if* a percentage of citizens decide not to work. This is opposed to the current model with people wanting to work and not being able to, and other people wishing not to work, having to.

                So you can see that UCT is a very, very different model than a handout model, even if the two models share the concept of giving cash to the needy. The key is the word “unconditional”. Having a guaranteed minimum income that does away with the necessity to work for survival is the next step in civilization that will become necessary globally as science and technology keep advancing.

                Aside from all of the above, note that a key criteria for choosing options now is *winning elections*. Handout option is out because the government can out promise the opposition with handouts, at least more believably. Besides it is terrible for the economy. The stock option is out because it is worse for the poor than the handout option and it is difficult to explain, so we won’t win with it, and though it is an economically healthy option there is a better one so there is no reason to choose it. The UCT option is the ticket because it is easy to sell (being better for the poor than the current model and being easy to explain) AND it is a healthy economic model.

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              • As to the rescuing of a flailing pdvsa, I addressed that in my first reply to you: let pdvsa be 100% private, as should be any other natural resource related business…

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              • “despite my repeated explanations that I am against handouts”

                Oh, I forget, extorres. You were forced to change your obsession over your theory of unconditional cash transfer / handouts, after repeated explanations from multiple people on these boards. (Funny, how you omit that history while charging ahead in your new crusade! LOL)

                Frankly, your explanations are so hyper defensive that, for the most part, I just skip over them. May you find in gro an avid fan.

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              • syd, I have never been in favor of handouts. I have always been *against* them. I have, from the beginning, been behind the UCT of 100% of oil revenue and other natural resource revenue income. In fact, of 100% of all non tax income.

                Is it possible that after all these years, not only do you not see the difference, that you still won’t ask the necessary questions to understand the difference? Ironic for someone who believes in education to refuse being educated.

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            • Extorres,

              Your cash transfer idea is politically attractive but amounts to populism. Mind you, venezuela is not a “normal” country, it is like a bastardization of an arab emirate and the congo. As such your suggestion might actually fly there and may for all i know be a reasonable choice given all known constraints. But as a rule giving away money for free is not a good idea. At the very least why not make people perform community service for it. Or why not provide cheap loans or food or water or electricity for the poor instead? In a country where most are poor wouln’t this have a better effect? But then we are back to chavismo’s roots all over….

              As for this idea that we are headed for an utopian future where we will not need to work, dream on.

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              • gro, you’re missing the main point. Note the irony in your own suggestion: the cash that you suggest people work for is being doled out by people who did not work for it! The main point is that the oil money is unearned money, which someone has to get, so we must choose who gets it. My argument then is that, not only is it better that all the citizens get it instead of just a few in the government (and a some enchufados), but that it’s actually a good thing that all the citizens get it if it’s unconditionally.

                You seem to think that it’s possible to spend the oil money in a better way, if only they did it your way. That argument is the one used by all who would wield the Ring of Power, rather than destroy it. My point precisely is that UCT diffuses the evil potential of such power.

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              • gro, I forgot:

                Just because something is “appealing to the interests or prejudices of ordinary people” does not necessarily make it a bad thing. Given the hold on power that chavismo has, we won’t win an election without a platform that meets that criteria. We *must* get that through our heads. Luckily, we have a platform that not only meets the winnable criteria, but is also economically sound: UCT.

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              • Good luck dealing with UCT / handout loonie. She hasn’t change her position over the past several years, despite multiple people explaining to her that it is a very stupid idea, more so in the case of Venezuela. People should be afforded every opportunity to learnhow to fish, not be given the fish whenever they wanted. Daka would be a very good example of what would happen if oil prices were to plumet in the context of the UCT / handout scheme. Having said that, you can count on the looney to defend her scheme ad nauseam. My advice: treat her as the one who belongs in the funny house.

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              • happyexpat, thanks for even reading. I agree people should learn to fish instead of being given fish. These latter would be handouts, and I am against those.

                UCT is not a handout.
                Is it a handout if the bank gives you money from your checking account to you?
                Is it a handout if a bank deposits into your account money from an inheritance of yours?
                Is it a handout if the central bank deposits into your account the same amount it deposits into everyone else’s account from a resource that belongs to everyone?

                I’ll tell you what is a handout: giving all that oil money to the government. They are receiving the handout. Then it uses their handout to give handouts to others to remain in power. Are you suggesting we keep that handout model?

                I’m against the handout model. The only way to stop the handout model is to kill it at the root and stop giving the big handout to the government.

                Like I asked syd, I ask you: what would you choose 100% of the oil money to chavismo (then they decide what they keep and who they give it to), 100% going to the citizens (guaranteeing that the percentage of opposers receive that same percentage of the oil money)?

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  3. Strange that Leopoldo Lopez ideas bring together those of two people siting on two totally opossite sides of the fence. The notion of bringing popular participation direct into the stockholdings of some oil joint ventures was one of Luis Giusti’s pet ideas , it even became one of the platforms of the Ganancias Compartidas project back in the 90’s. The idea that the development of heavy crude production was a different business from light medium crude production and should allow for the bringing in of offshore capital was one of Ali Rodriguez notions from the old days ( before he became a Chavez minister) . Then the political establishment was uninterested in discussing these ideas ( as was the press ) , evidently after 20 years things havent changed .

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  4. Mercy demands that we refrain from taking potshots at the smouldering wreck that is that Capriles press conference – though I do seem to remember when I wrote a while back that maybe just maybe we should demand some clarity on when exactly the guy’s mandate as undisputed oppo leader runs out – http://caracaschronicles.com/2013/08/24/were-not-going-to-sully-ourselves-in-the-cesspool-of-the-government-camp-says-capriles-as-he-hands-out-free-appliances-to-his-supporters/ – I was good as tarred and feathered.

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      • That’s going to be a tough one. Because dethroning him requires a primary that delegitimizes him and legitimizes the next guy. But MUD has been historically reluctant to decide by primaries, because it doesn’t represent the people, but the Opposition parties. And NO those parties don’t “represent” the people indirectly, because several parties have all kinds of clauses that restrict base members from challenging the higher ups and because there’s more unaffiliated oppo people than Oppo party members.

        Recent primaries stand out as an abnormality, and even then backroom deals kept Carabobo, Zulia, Nueva Esparta from having a candidate chosen through primaries.

        MUD should do like Voluntad Popular and hold and election for every office from national spokesperson to regional spokepeople, including some form of board of directors or council. They should also do this periodically, by setting a fixed length for terms and also term limits (since we are FOR alternability, right?). That way we could have a MUD that represents Oppo people rather than the interests of Ramos Allup, Rosales, Ismael García, the Salas family, etc.

        I’m tired of us not doing as we preach.

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  5. LL should go all the way and call for the Petrobras model: they need to man up and do an IPO for 10% of PDVSA shares in a stock exchange.

    I mean, just *imagine* these last 15 years if once a quarter PDVSA had to come clean on the detail of its financial situation.

    If it had to explain to minority shareholders in what way it made business sense to keep giving away 700,000+ b/d in gasoline free every day.

    If it had to actually account for its (dis)investment decisions, its debt run-up, its unpaid back-bills, its CEO’s perenially far-off-target forecasts, its monstruous IOU with the Central Bank, its murderous industrial safety record, its catastrophic environmental mismanagement, its enormously bloated bureaucracy, its unexplained and unaccountable transfers to all manner of government spending funds…

    No sane private investor would stand for the incredibly wreckless management PDVSA has seen in the last 15 years. But since the only investor is the Venezuelan governent, there’s really no need to worry about the sanity of the investor!

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    • Francisco . Afraid 10% private stockholding will not do the trick , The regime holding 90% of the stock and controlling all the resources of govt gives them total control over the business . Currently many joint ventures include 40% of non govt participation and the regime pretty much abuses every shareholder right you can think of , The joint ventures dont even get paid for the oil they produce and sell to Pdvsa except ocassionally , as needed to cover operating expenses .!! the rot goes deeper and demands a deeper remedy !! It is the State itself that has to be reformed !!

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  6. Wow this guy is worse than I feared. Are there any recent polls on how the mud characters are doing compared to one another?

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  7. You can clearly see that someone explained to Capriles the law of supply and demand. He doesn’t quite get it yet, but gets the gist of it. Now we need Omar to start explaining monetary policy, inflation and international reserves to Capriles so by the time he is president he gets it, kind of.

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  8. He has a group of advisors on every field of expertise , I know one of them , a young guy but top knotch , really good in his area , a real expert !! Dont know who advises him on financial matters , but the supporting team of experts is very well organized . !! Professional pols have to speak to the gallery and be cautious about saying things that can set his supporters off or that his enemies can use to misrepresent his views !!.

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  9. I’m just happy that LL -or whomever adivses him- tries to tone down his manners and go into full-wonk mode, so that we can easily scrutinize and compare his views. As for HCR, I’ve been told he’s a good listener, and so far his Miranda experience has been mostly positive.

    I’m sure there will be new primaries come the next presidential election (even if they happen before LL is re-enfranchised). But I’m unsure whether HCR or LL will ever be candidates again.

    How quickly does this journal jump from wagon to wagon, hoping for a band.

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  10. “Leopoldo basically makes the case that when people talk about bringing democracy to the oil industry, they usually limit the discourse to “democratizing the rents.””

    When have you heard our aspiring oil revenue managing politicians really discussed “democratizing the rents”?

    “allow Venezuelans to participate in the ownership of the oil business”

    Yes, if oil was a normal business… but it is not! It represents 97 percent of all exports. Can you imagine how much easier a Chavez could reach power if 20.000 Venezuelans were raking in oil revenues because they had the money to buy shares? Even a Maduro could win if presented with such a juice opportunity for populism.

    So no! Let us share out that oil income directly with all citizens… and get rid of oil power concentration once and for all… and that way we might build a nation.

    http://www.eluniversal.com/opinion/131128/periodistas-todos-ayudennos-a-preguntar

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    • You cant democratize the running of an oil business same way you cant democratize the conduct of an army or a school or a hospital History shows that If an institution is to be succesfull authority must be given to those who by dint of their past experience , training and performance have shown themselves best capable of doing the job ., The soviets in the beginning tried having the troops choose their officers with disastrous consequences. Authority and control must rest in those who are best equiped professionally to do a competent job.EVEN IF THEY DONT OWN THE BUSINESS. In modern corporations you have a team of professional managers running it and reporting their results to a group of stockholders ,most of which by themselves can not judge their job performance except by some very limited criteria. Democracy is so romantic that it befuddles people into believing that it can work magic and make dunces into geniuses !! Even smart people fall for this tender and futile superstition.!! .

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      • We are talking here about democratizing the financial results of oil extraction… not the management… for instance we can outsource it… and by the way what happened to the “meritocracia”?

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        • Per : ownership of a business entails three things , the control of the business activity , the receipt of the fruits it yields and the right to dispose of what you own . Youre referring only to the second attribute of ownership , not to the rest , other commentators seemed to refer to the other attributes of ownership which led me to assumme you were on the same track , sorry for my mistake .. As to Meritocracy , my belief in its importance is written all over the description I make about how a business should be run , it is one of my hangups that people who are besotted with democracy dont care enough about the technocratic basis of good governance and dont give much thought about how you must institutionally protect technocracy against the encrouchements of populism and clientelism ( the natural offspring of democracy).. Just because something is popular doenst mean that it represents the best alternative , usually the opposite. How you can best make a country profit from its commonly held wealth is a big issue , but Im not sure you can figure that out thru referendums . Again maybe you have to think how the experts might view it , and in our syrupy democracies thats very seldom the case. The People are all wise and know every thing ….Hogwash !! .

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        • Maybe you should first consider the costs of the oil extraction process, Money, infrastructure and trained personel should be readily available to ensure minimal enviromental harm, via expendature on spill containment, planning for decommissioning of wells and regenerating the sites, Industrial safety…. To focused on the money and how / where to throw it around.

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  11. OMG really? TRULY INNOVATIVE. Never mind that MCM proposed during her 2012 primary campaign that that Venezuelans should be able to invest in oil production and that privately owned national companies should be able to compete with PDVSA:

    EL UNIVERSAL Oct. 30, 2011
    Si un gobierno de la presidenta Machado privatiza empresas del Estado, ¿incluiría a Pdvsa?

    -Pdvsa debe competir como empresa pública en el mercado local, así como lo hace internacionalmente. Pero hay que abrir la inversión petrolera a los privados. Hoy en día los únicos que no pueden invertir en esa actividad son los venezolanos. A las empresas internacionales se les permite. Venezuela produce 0.5% de sus reservas, que representan 92% de las de América Latina, una quinta parte del petróleo del mundo. Tenemos crudo para 200 años, pero mucho antes puede encontrarse un sustituto y esa riqueza se quedaría en el subsuelo. Aumentemos, entonces, la producción y eliminemos la volatilidad de los precios. Nosotros proponemos tres instancias: un ministerio que fije las políticas energéticas, un ente regulador de la actividad, y un Consejo Nacional de Energía que alimente las decisiones.

    -¿Podrían los venezolanos, adquirir acciones en la estatal Pdvsa?

    -Pueden adquirir acciones en muchas otras empresas del sector petrolero. Pdvsa debe convertirse, primero, en una empresa eficiente y productiva. Eso tomará tiempo por el proceso de destrucción y desmoralización al cual ha sido sometida. Pero el mercado de valores es un espacio maravilloso para la inversión en petróleo.

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    • The oil extraction business is not for amateurs or mickey mouse outfits , Im not very sanguine about allowing just any group of people to participate in the exploitation of our oil wealth (whatever their nationality) , you need big big capital , lots of concentrated expertise , a proven track record , Its a big boys game !! If participation takes the form of purely owning shares in an institution which knows about the business then maybe its Ok. In the past national private participation was simply a way of collymodling a lot of inexpert interests into thinking they were big boys and could share in the business which they ran to their sole personal benefit, (forget about the smaller shareholders) with a lot of govt pampering . Just another form of clientelism.!! Other times they were shot gun weddings between large international contractors and local ‘do nothings’ whose sole significant contribution was putting the venezuelan flag into the ventures logo and then getting paid a hefty fee for it.( technological transfer ….my foot!!) . Do note that MCM doenst talk about getting private venezuelan interests in Pdvsa but of allowing them to participate with investments in other businesses related to the oil ‘sector’ (as contractors , suppliers etc) .Other wise her ideas for structuring the industry are spiffy and deserve serious consideration !!

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  12. I’m a fan of LL but isn’t the idea of an IPO for Venezuelan oil as allowing popular participation in the industry a little disingenuous ( or rosy)?

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    • Yes, Canuckles, I agree. There is a little pie-in-the-sky about LL’s proposal. But perhaps because it’s a relatively fresh idea, well reasoned out, and simply stated, it sounds more appealing than the mental gnat that Capriles has become, while he preaches to on-the-fencers. Also, LL’s proposal gets the already-converted, who might be tired of the political arena, risking votes on 8D, piqued about an oppo possibility.

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  13. OK, summarizing the whole thing, the proposal is to make PDVSA accountable by opening up the black box and allowing external participation that DEMANDS accountability, now, if we go the stock market route, then its a “the rich get richer, the poor get screwer” situation, so, how can we get the people involved on pdvsa so that even juan bimba gets interested?

    I think we can all agree that by being opened, PDVSA will have be accountable, everything else is just wishful thinking because el gobierno de turno may have its own interests on PDVSA. We all agree that a rich get richer scheme will generate zero enthusiasm in the average Juan so that plan wont work, but, with another parallel plan, yes, it can.

    The parallel plan Im talking about is the torres plan.

    To recap on the torres plan, the government receives income from selling oil, after deducting what it costs to produce it, and stores some money for maintenance, R&D, and expansion, after those deductions, the remaining sum is to be distributed equally amongst all living venezuelans, with the only requirements being a venezuelan and being registered at the SENIAT and pay your taxes. This money is to be deposited on special bank accounts, personal and instransferibles: type A is the money you can spend freely, type B is a mandatory education fund, which is a bank account that can only be used for education paying purposes, type C is just as type B but for healthcare and type D is the retirement (aka “for the old alan”) account, which can not be touched until the person has reached retirement age. The the government charges taxes on everyone and gets its income from taxes and is forced by the citizenship to use wisely their tax bolivares.

    The reason that the torres plan is the perfect compliment for the opening of pdvsa is that a percentage of the stock would be sold ONLY to be paid with your type A or D bank accounts, therefore, tanto juan bimba como gustavo cisneros will have the same purchasing power on this regard, erasing the “rich get richer” part of the problem.

    It would work like this:

    PDVSA stocks:
    government X%, self explanatory
    open bid: Y%, stock that will be sold just like a regular stock: to anyone willing to put their money on it.
    special bid: Z1% stock that can only be bought using account type A funds
    special bid: Z2% stock that can only be bought using account type D funds

    now, with stocks type Z1 and Z2, literally, any living venezuelan owns a share of pdvsa,and is in their right to demand no BS, Z1 would allow for regular stock transactions, and Z2 would work like buying up bonds for retirement, Z2 would allow you tu buy shares with your money, but if you sell a Z2bought share then you wont get the money on the A-type account but on the D type account, with all of its restrictions. se acabo la botadera de plata en seguro social pero igualito tienes la oportunidad de una jugosa pension de vejez.

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    • Please please consider that ordinary people lack the capacity to understand what it means to run a world class oil business , they will want all the goodies up ahead and not think of the complex factors influencing every decision !! An advantage is that they might protest some crazy decisions or measures taken by the govt controlled management , but they may also applaud stupid measures because it suits their inmmediate interests or sentimentalized biases .. Patients dont tell their doctors how to treat their illnesses , you have to hand control of operations and planning to the experts to the meritocratic structure that is competent to run these businesses and not meddle in the details of what it does . You need institutions with teeth, (also meritocratic) to monitor and asses the efforts of the managing technocracy . but politicians role should be largely passive , set up big goals and then recede into the background. What we need is for the oil business to be handled rationally, for the profits from such operation to be handled by institutions that are competent to take maximum advantage of them for the general benefit of the country and for partisan electoral politics to be kept as dissociated as possible from the business processes of Pdvsa and its associate joint ventures. NO more golden voiced orators taking the role of All knowing , all powerful Demiurges juts because they can attract the votes of a mayority .You need a second tier set of meritocratic professional non partisan highly functional institutions to handle the educational ,public health ,economic and other tasks of the State without having to think of winning the next election . . .

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    • the theory depends on an analysis of potential amounts that would go into the various bank accounts (a little too complicated, I think), moreover in an ageing industry that desperately needs HUGE amounts for infrastructure investment and R&D, after more than a decade of neglect, to put it mildly.

      If all that goes into the bank accounts is $2.98, the theory is not going to be very attractive, even for the poor.

      The theory also assumes if we go the stock market route, then its a “the rich get richer, the poor get screwer”.

      Know this: investing in stocks for a piece of the pie means you take RISK. Period. If the funds are simply part of a hand-out scheme from pdvsa and are being deposited into your account, you do not own a share of the golden goose which is giving you a guaranteed or even fluctuating amount, if pinned to the marketplace. Therefore, you have no right to demand anything. Thinking you do, is simply juvenile.

      If the industry in which I invest (as a poor person relative to pension plan investments, etc.) is well managed, transparent, and in an economic environment that keeps improving, my $10 has just as much opportunity of gaining, as do the millions from the big boys. Ceteris paribus. If I think that’s unfair, well then I’m a juvenile and shouldn’t be investing, period.

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    • kernel_panic,

      I like your thinking. What I support is even simpler, so perhaps you’ll like it even more.

      The idea is that the government not own any portion of any oil business. This ties with what bill bass points out, that the oil business should be left exclusively to oil business people. These businesses would have to pay a royalty off the top for all oil extracted. The government’s role would be to ensure a optimize royalty income. This same setup applies to all natural resources.

      All the royalty goes into a single dampening account. The money does nothing there but sit several months. The average daily income over the several months is calculated daily and gets distributed evenly to the personal debit account of each and every registered citizen. Each citizen accumulates, transfers or spends the money at will.

      Juan Bimbo would be receiving the same *amount* as Gustavo Cisneros. While to GC this amount is next to nothing, to JB it could mean everything.

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      • And JB would be receiving it not because he is poor or politically attractive, as now, but only because he is Venezuelan.

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            • With all due respect to the chinese, once it is proven that maduro is unconstitutional ever since he came to power because of “continuidad administrativa” they can eat a lumpia on anything signed with the venezuelan government from january 9 2013 onwards. Or whenever it is proved that april 14 was a fraud, same. Same goes with any other thing that is found to be illegal that the current government has done.

              No puedes denunciar a la policia que te robaron si tu tambien eres ladron.

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      • extorres, the idea that the gonverment owns a portion is to be, mostly, a proxy or a buffer, but for stocks instead of money.

        Since there would be restrictions on Z1 and Z2 types of share, trading with such instruments has to be watched more closely than regular stock, so, the system would be like a REAL vickry auction (not that sicad BS), anyone interested will declare how much is willing to spend,at which price and if its a type A or type D account transaction. Here the government will have a pool of shares that it will buy/sell from regular shareholders and buy/sell to interested citizens. Lets say that the government will have 10-15% of PDVSA shares, for the december 2013 monthly auction the government will offer 5%, the auction takes place and all stock is sold, then the government is left with 10% of the shares, for the january 2014 auction then the government has to replenish part of its stock by buying shares, as to reach somewhere close to 15% again, now the january auction takes place and only 2% of the stock is sold but the government had bought 4% to replenish, then the government will have 12% of the stock and so on. The other way around is that the government has initially 15% then people sell 3% to cash in some money, the government has now 18% of the stock, then, it will offer that stock on the next auction or will sell it to regular shareholders to recover the money they have paid to juan bimba for selling his Z1 stock.

        Why? because it will keep Z1 and Z2 shareholders controlled as to avoid monkey business between them in a “rich get richer” scheme.

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        • kernel_panic, I see how the stocks work. But do you see that that is way more complicated and prone to loopholes and corruption than the no-stock model? Also, by not being involved in the oil business other than to optimize royalty income, do you see how the government will have less overhead, focus on other stuff better, and feel less ownership over the business therefore less likely to cause less efficiency through meddling? Leave oil business to oil men, and politicians to politics, and the money from oil to the people, equally, so that the government’s only incentive is to improve the chances of its people’s success, whether it be in the oil business or not.

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