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Originally Posted by Rekna
Here is a relevant graph from wikipedia on Venezuela's economic state,
It seems to be better than where it was before he took power. Inflation is way down. |
Economic policies have long tails. The decisions Chavez is making today won't be seen immediately. For example, oil is currently selling at all-time highs, and Venezuela is selling most of its oil to the US. The US has refineries that more or less specializes in processing Venezuelan oil. Thing are as good as they can possibly be today due to past investment and relationships made decades ago.
However, current Venezuelan oil wells are producing less oil each month. Investment is needed for improving production and to explore new sources of oil in the country.
The price of oil may go higher given instability in the ME, however, if the ME stabilizes it is highly likely the price of oil will go down. This will hurt their economy which is almost totally defendant on oil. And the sale of that oil to the US.
Investment is needed if Venezuela wants to establish new markets for its oil, in Asia. Currently they have no efficient means to get their oil to those markets. Now is the time those investments need to be made, given the price of oil. They have had a short-term outlook, certainly investing in social programs is important, but they desprately need to direct some of their money towards new oil sources, pipelines to the pacific, and refineries.
Chavez's impact won't fully be realized until we see how these things develop. Right now, I think he is on the wrong track, but it is not too late. There is still opportunity . I respect Chavez's tenacity and his desire to do right by the poor people in his country, this is an interesting test for a centralized state run and controlled economy. Time will tell, but in the past all centralized state run economies have failed.