Maggie Thatcher said this would be a problem
In 2010, Pdvsa [Venezuela's state oil company] sold its Ruhr Oel assets to Russian company
Rosneft for $1.6 billion (€1.2 billion). Citgo, which operates in
Louisiana, Texas and Illinois, can produce 750,000 barrels of refined
oil a day. The network controls 6,000 gas stations in 27 US states,
mostly on the east coast. “Citgo should not sell for less than $10
billion,” Chávez said in October 2010. “If we sold it and put the money
in some banking accounts with interest, there would be dividend benefits
of I don’t know how much each year.”
Even socialist demagogues can't escape opportunity costs.
While the government weighed its options to sell, Chávez
used Citgo as a political tool. He and Joe Kennedy III’s NGO, Citizens
Energy, created a program to distribute gas and heating oil to
low-income American families on the east coast of the United States. The
government said it donated $500 million in fuel between 2005 and 2013.
But now, Chávez is dead and his successors are in bankruptcy.
Eventually, the socialists die and leave their heirs no money to steal from other people.
If gas prices on the domestic market – which have not
changed since 1996 – went up to meet production costs, Pdvsa would save
$13 billion in subsidies. Citgo’s sale will bring in a similar amount.
And, when that is gone?
A solution to government bankruptcy would be to sell a property right in tax collection and graft.ReplyDelete
Currently, government officials have no constraints. It is a tragedy of the commons. Over-fishing results from no ownership of the fishery. Over-graft results from no ownership of the government.
A new class of corporations would bring order out of chaos. Call it Graft Venezuela Inc. It could manage the big picture and run the graft operations in an efficient and sustainable manner, especially for the children of the politicians. Yes, graft would go up a bit, but the government would be more stable.