- What has happened is that low oil prices have revealed the extent of the Venezuelan government’s mistakes, which had nothing to do with taxing the economy too much and everything to do with managing it too poorly. The simple story is that the government took over one sector of the economy after another — steel, mining, agriculture, to name a few — and got rid of people who were good at their jobs so they could bring in ones who were good at being loyal. This made production predictably crater, and things that used to be made at home suddenly needed to be bought from overseas.
Good read, pretty accurate and insightful. However I don't agree with the author claiming a mistake was that the 'foreign companies who knew what they were doing' were 'forced out'. It's not the worst idea for your people to keep powerful foreign interests out of your oil reserves - the mistake was taking it a step further and nationalizing the industry into a corrupt and incompetent government.
The argument is that Venezuela preferred loyalty over skill: If the level of expertise amongst party loyalists was not as great or greater than the corporate operators they replaced, industry will necessarily suffer. It's the same thing that happened under the Great Leap Forward and the Khmer Rouge albeit to a (so far) less murderous degree. Mossadegh nationalized Iranian oil and was overthrown within the year. Castro nationalized everything and even with backing from the USSR was a constant target of coup and assassination attempts. It may not be "the worst idea" but "nationalizing" is "taking" from the perspective of the owners of that which you nationalize and without delicate handling it's gonna go rough.The simple story is that the government took over one sector of the economy after another — steel, mining, agriculture, to name a few — and got rid of people who were good at their jobs so they could bring in ones who were good at being loyal. This made production predictably crater, and things that used to be made at home suddenly needed to be bought from overseas.