24 September 2006

Guevara Economics

Since we at La Contra Revolucion are unrepentant Free-Marketeers, we relish in exposing the rational and economic shortcomings of socialism. Socialistic, planned economies don't work. Specially when they are planned by Marxists who base their theories on Marx's inaccurate and erroneous critique of capitalism. It puts a smile on our faces to find proof and examples of socialistic failures that can be held up as examples for the rest of humanity to avoid.

Case in Point : Venezuela's Oil Industry:

From a Washington Post editorial:

...Since Mr. Chavez took power seven years ago, Venezuela has mismanaged its oil so disastrously that production may have fallen by almost half, according to the estimates of outsiders, reducing global oil supply by a bit more than 1 percent. ...

... It takes sustained determination to reduce output by that much, and Mr. Chavez has provided it. He inherited a competent national oil company that produced three times more per worker than its Mexican counterpart. He immediately starved it of investment capital and dispatched ignorant political cronies to oversee it. When this abuse provoked a strike, Mr. Chavez fired the staff en masse, getting rid of two-thirds of the skilled employees and managers....

...Mr. Chavez imagines that he can damage the United States by rerouting Venezuelan oil to other markets. He fails to understand that oil is fungible: If Venezuela's crude is sold to the Chinese, the Chinese will buy less of it elsewhere, freeing up supplies for U.S. consumers....

Chavez, who wants to use Oil as a weapon against the Imperialists north of the Rio Grande, doesn't realize that his clever scheme will misfire and fail. He doesn't have any real refinery capacity. His refineries are in Texas. In order to sell the Venezuelan sludge to the Chinese he will have to accept lower margins. Lower margins times reduced output plus subsidizing Cuba equals huge revenue shortfalls. This will not affect the US at all. It will just affect Venezuela's economy which Chavez is bound and dertermined to run into the ground like Castro and Guevara ran Cuba's economy into the ground.

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