June 24, 2017

If Venezuela’s social compact shared out all oil revenues directly to citizens, it would better resist lower oil prices

Sir, with respect to the possibilities of lower oil prices you write: “The real dangers… lie in emerging markets that rely heavily on oil exports and have large young and restive populations. Austerity will strain the social compact between rulers and ruled in the Gulf states. It will inflame existing conflicts in Nigeria and Venezuela.” “A sustained oil glut can have unsettling effects” June 23.

No! To refer to lower prices inflaming conflict in Venezuela is to ignore the true origins of the problem. The higher the oil prices the less do oil-regimes take notice of citizens… when oil revenues are large the citizens are mostly a nuisance to those in power… and the citizen’s mind-frame is set on how to get the largest share possible out of those revenues. That only guarantees a rotten to the core social compact. That only guarantees that sooner or later the nation fall into the hand of rotten to the core regimes, like the current one.

So in fact lower oil prices could help is it forces real changes. For instance if the net oil revenues were shared equally among all Venezuela’s citizens, we would have a much better and sustainable social compact. Not only because the real source of needed austerity would be more easily identified, but also because the decisions of millions about what to do with their share of the oil revenues, responding to their private and individual needs, would allocate resources more efficiently than what the well-intentioned or dark interests of some few would do.

Venezuela has the immediate need to get rid of its current government. But when that happens, then, immediately, its immediate interest becomes how to rebuild a devastated nation… before the next conflict breaks out. Nothing better than to completely rearrange how the natural resources not produced by granted to Venezuela by the providence is shared.

PS. Britain too would do better sharing out all revenues derived from taxes on petrol equally to all its citizens.