Oil Wars

There once was a senator from the state of New York who was famous for paying close attention to constituent complaints. For his efforts, he became known as "Senator Pothole".

In the wake of his recent electoral defeat Chavez seems to be doing his best to mimick that senator's actions. Just watch these videos and you'll see "President Pothole" in all his splendor.



The thing that I found interesting about these videos is that at the same time they show the best of Chavez, and the worst. That is after watching this it is easy to understand why he is loved by millions. But it is also easy to see why entire project is likely to end in failure.

First, what is good. He we see Chavez freely taking questions from the public (yes, a pro-Chavez public but the public nonetheless). He freely listened to all sorts of complaints, mainly about the poor state of the local roads. Personally, I can't think of an instance of the governor of the state I live in ever taking these sorts of questions from the public.

Second, Chavez acknowledges some problems that definitely needed acknowledging. For example, that neither the mayors, nor governors, nor the president himself have the resources needed to solve all of Venezuela's problems. Well, it is about time someone took note of the obvious. Further, he noted that government officials need to spend time getting a first hand view of what is really going on in the field and not spend all their time cloistered in offices in Caracas relying on filtered and possibly erroneous information. That too is certainly good advice.

Unfortunately though, in between the snippets of sage advise we see the real reason Venezuela's resources are being poorly managed - Chavez himself.

For example, he tells the president of PDVSA, the Venezuelan state oil company, that he needs to go out and inspect first hand the roads being built by PDVSA. Now there is an obvious question of why an oil company is being assigned the task of building roads, but lets leave that aside. The real question is how much time does he expect the president of PDVSA to spend inspecting roads? How many projects are being carried out by PDVSA? Probably alot. And would the president of that company have time to inspect them all. I would think not, especially if he actually tries to run the oil company too.

In reality, if contractors are hired to carry out projects, or state companies are assigned to carry them out, and they aren't don't then it says there is a flaw in the contracting process and a flaw in the oversite process. That is what should be fixed - the notion that a handful of ministers are going to run around the country attending to every little problem is amatuerish - to say the least. Yet Chavez seems to think things can be run like this. They can't of course, and the fact that Chavez is trying to run them in this fashion is a big part of the problem.

But things get worse. Next he hears a complaint about tolls on the local roads. A women complains, the audience chimes in, the road in question is in bad shape in spite of the tolls and what does Chavez do? Simple, he eliminates the tolls. And not just that one toll - but the vast majority of tolls throughout the country!! And the hapless governor, who could barely get a word in edgewise, was simply told to do it or the national government would send in the army to knock down the toll booths.

Now, maybe some of these tolls should be eliminated. If the funds are not being used to effectively maintain the roads then certainly that should be looked into as well. And when he finally did get a chance to speak the governor stated the tolls weren't even enough to cover the cost of operating the toll booths (then indeed why have them!).

Still, even if Chavez was right in saying the tolls should be removed, and I am not taking a position one way or another, this is certainly no way to make such a decision. Technically, it is the states and localities that run these things. Yet shows once again that he, El Presidente, trumps everyone and everything. So much for decentralization and democracy and rule of law.

Further, like any decision there are costs and benefits to both sides. Was anyone wieghing the costs and benefits of this decision - that is, how much money do the tolls bring in? how is that money used to maintain the roads? if the tolls are eliminated where will the money come from to maintain the roads? how do the tolls effect the people using the road?

But none of that was asked about much less looked at. A crowd wanted the tolls eliminated and Chavez decided on the spot to please them by doing just that.

Does this sound like a sound decision making process and one that will lead to better and effective government?

I certainly don't think so.

Then Chavez takes note of the horrible fact that Venezuela exports asphalt at the same time that its roads are in bad shape. So what does he do? He banns the export of asphalt - as if that will fix even a single Venezuelan road.

Of course it SOUNDS nice. It SOUNDS like he is doing something, rather than ignoring the problem. And that is probably what he wanted.

BUT IT DOESN'T FIX THE PROBLEM.

Chavez rhetorically asks "how can we be exporting asphalt to the United States when our own roads have holes in them". Unfortunately, no one in the audience thought (or dared) to shout out the obvious answer - "Because you aren't spending enough money to fix them or you (or better said, your government) aren't making sure the money is well spent."

And in point of fact, stopping the export of asphalt won't do anything to address either of those issues. For example, if money is the problem will stopping the export of asphalt really help much?

Not necessarily because of a minor little detail Chavez completely omitted in his talk - Venezuela gets money from exporting asphalt and now by it not exporting asphalt that revenue will be lost (very tellingly he didn't even bother to ask the president of PDVSA how much money they earn from those exports). And that lost revenue may be the money Venezuela needs not just to fix the roads, but the schools, hospitals, and any number of other things that need fixing. 
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