It's embarassing when I have to read soft journalism pieces like the one I came across today in the New York Times about Venezuela's land seizures. Repeatedly, they seem to approach interesting junctures; repeatedly, they veer off to the side.
"Before the land reform started in 2002, an estimated 5 percent of the population owned 80 percent of the country’s private land. The government says it has now taken over about 3.4 million acres and resettled more than 15,000 families. "
That makes it sound pretty impressive, but it doesn't say much at all. Why? (1) Because it doesn't provide any "after" numbers to compare to the "before" numbers. (2) Because the number cited in the first half is private land (generally known as "land not owned by the government).
"The uncertainties and disruptions of the land seizures have led to lower investment by some farmers. Production of some foods has been relatively flat, adding to shortages of items like sugar, economists say."
This same thing happened in Zimbabwe - taking private farmland to give to "the people." And it ruined the country.
(Of particular note in one article: "Stranded without capital and fertiliser, and hit by persistent drought, many of the new farmers failed to use the land productively, transforming Zimbabwe from the bread-basket of southern Africa into a net food importer, and sending inflation soaring." It's important to tie the two together, since I can't find the paper that showed it so convincingly).
When you drive off not only those who currently own land by force, but those who would potentially invest in your infrastructure (will you invest in a country that will allow you to earn a return on your investment, or who will run you off once you build a plant and say it now belongs to them?), you take the burden on yourself. Venezuela is already suffering from high inflation, the danger is whether this will push them into Zimbabwe's inflationary death spiral.
But the Zimbabwe disaster is not mentioned. Violence is given a passing mention - the title of the article is not "Hope and Murder clash..." From the tone of the article, you would think this is just a painful step on the road to utopia.
Thursday, May 17, 2007
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2 comments:
There was an article (I think in the WSJ but I could be mistaken) talking about how the oil companies are debating whether to pull out entirely. This would be bad for Venezuela because even though they now own the oil fields, the don't have the capital needed to continue to develop them.
I am very interested to see how this plays out. What is going to happen when companies no longer want to invest in the country and say "enough is enough". Chavez can't have it both ways, he can't own everything and expect companies to continue to invest when they get no reward if they succeed.
Exactly.
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