Artistic inheritance does not cause excessive centralized powers, as too often natural resources do...though intellectual inheritance could

Sir, Janan Ganesh discussing the possible effect on Europe of its “intellectual and artistic inheritance” refers to the natural“resource curse” in terms of retarding development, as “The temptation is to coast on the proceeds from the natural assets.” Clive James and Europe’s culture curse” November 29,

Indeed, that could play a role but the by far worst part or the “resource curse”, is the fact that its revenues are way too often way too much centralized in way too few hands. 

Take my homeland Venezuela. Had its (geographical) liberator Simon Bolivar not accepted to impose in Venezuela in 1829 Spain’s mining ordinances, which deemed all natural resources under earth to be the property of the King/state, our destiny would have been quite different. As is, as someone from another oil cursed nation mentioned to me years ago, “we do not live in a nation, we live in somebody else’s business”, the redistribution profiteers’.

And this does not apply to the artistic inheritance’s culture curse. The Museum of Louvre might centralize a lot of cultural treasures, but it does not remotely benefit as much from it, as do the citizens of Paris.

Of course, when it comes to an “intellectual culture curse”, which could result from handing over too much influence to too few intellectuals, like to Ph.D.’s and opinion makers, that can contain all the inheritance in a silo, in a mutual admiration club, all bets are off, in Europe and everywhere.

https://theoilcurse.blogspot.com/2016/05/the-last-thing-venezuela-needs-is-to.html

@PerKurowski

When compared to Venezuela’s oil reserves, Citgo is nothing.

Sir, Colby Smith refers to Citgo as “the last-remaining crown jewel of Venezuela” “Stakes rise for Venezuelan assets stateside” Alphaville May 17.

Frankly, Venezuela has what has been reported as the largest oil reserves in the world. What is Citgo compared to that? Absolutely nothing!

What’s valuable for Venezuela is its oil, but the value of it has been greatly diminished, first and foremost because the government handles the redistribution of all net oil revenues, but then also because way too many have wanted to profit from doing something with our oil, for instance refining it, abroad.

In 2000, in an interview in the Daily Journal of Caracas I said:

“Until someone convinces me of something different, I insist that anything else the Venezuelan state tries to do with oil, means a loss or a net reduction of the benefits brought by the first phases of the operation, [its extraction].

Because of that and the fact that I have seen the corporation's reports, I still can't understand the economic reasons for having bought and kept Citgo. There is evidence in the reports that it is being subsidized by PDVSA. 

And, for those who argue so much in favor of privatizing PDVSA, I challenge them to make an IPO for Citgo, subject to their obligation to purchase oil products at market prices."

Sir, we have millions of our young growing up undernourished and still some try to hang on to a very high hanging fruit as Citgo, so my current tweet sized proposal is: 

So that Venezuelans can eat quickly, hand over Pdvsa (and Citgo) to Venezuela’s creditors quickly, to see if they can put all that junk to work quickly, to see if they can collect something quickly, and pay us Venezuelans, not the bandits, our oil royalties quickly.

The Iraq Study Group established by the U.S. Congress, reported in 2006 the following: "There are proposals to redistribute a portion of oil revenues directly to the population on a per capita basis. These proposals have the potential to give all Iraqi citizens a stake in the nation's chief natural resource." Sadly it came to nothing

Sir, if that were to be implemented in Venezuela, then Venezuelans would live in a truly independent nation, and not just in somebody else’s business.

PS. A couple of years ago I gave a speech to transfer price specialists in Washington recounting the very curious thing of Venezuela´s state PDVSA that sold petrol at lower than market prices to their then recently acquired refinery subsidiary in the US, CITGO, paying unnecessary taxes to another than their own tax man, probably just because they wanted to show the Venezuela public that Citgo was such a good investment. Crazy? Yes of course, but that´s life in a tropical country.

@PerKurowski

Venezuela poses a unique opportunity, for all citizens of the world, to clearly define what should be considered as odious credits, and how these should be treated.

Sir, Colby Smith and Robin Wigglesworth quote a holder of Venezuelan debt with: “The ultimate objective is to reach a point where [Venezuela] regains market access at market-determined terms without the risk of renewed default”,“Venezuela debt fight pits veterans against hot-headed newcomers” March 13.

It is absolutely clear Venezuela needs much financing to reconstruct its entire run down basic infrastructure but, as a citizen, having seen how much public indebtedness goes hand in hand with corruption and waste, and how it so often makes it harder for the private sector to finance its needs, I would not mind Venezuela not reaching that “ultimate objective” for a long-long time, especially not as long as the government already receives directly all oil revenues.

Our Constitution clearly establishes that all “Mineral and hydrocarbon deposits of any nature that exist within the territory of the nation… are of public domain, and therefore inalienable and not transferable” and yet 99% of the debt it contracts is implicitly based on its creditors having access to the revenues produced by extracting Venezuela’s non-renewable natural resources, mainly oil. 

So now, the least our legitimate creditors could do, is to help us extract oil; and to that effect the following is a message I have been tweeting for about two years: “For Venezuelans to be able to eat quickly, starts by quickly handing over PDVSA’s junk to its and Venezuela’s creditors, so that they quickly put it to work, to see if they are able to quickly collect something, so to pay us citizens, not bandits, some oil royalties quickly”

But, that said, what is most important is to classify all Venezuela’s debts. Many of these were not duly approved; others had a large ingredient of corruption and lack of transparency and so all these must be scrutinized in order to establish their legitimacy.

For example, when Goldman Sachs in May 2017 handed over $800 million cash in exchange for $2.8billion Venezuelan bonds paying a 12.75% interest rate, to a notoriously corrupt and inept regime that was committing crimes against humanity. Especially since Lloyd Blankfein cannot argue an “I did not know”, that to me is as odious as odious credits come.

Sir, it behooves all citizens of the world to use this opportunity to set up an adequate defense against governments anywhere, mortgaging their future with odious credit/odious debts.

That also includes stopping statist regulators from distorting with a 0% risk weight the allocation of bank credit in favor of the sovereign, against the 100% risk weighted citizens. 

@PerKurowski

More than between left and right, the division is between tax paying citizens and witting or unwitting possible redistribution profiteers

Sir, Wolfgang Münchau writes, “Liberal democracy is in decline for a reason. Liberal regimes have proved incapable, of solving problems that arose directly from liberal policies like tax cuts, fiscal consolidation and deregulation: persistent financial instability and its economic consequences” “The future belongs to the left, not the right” February 25.

The risk weighted capital requirements placed on top of any natural risk aversion distorts the allocation of bank credit in favor of what is perceived as safe and against what’s perceived as risky, has nothing to do with liberal policies. The risk weights of 0% the sovereign and 100% the citizens, just puts crony statism on steroids.

Münchau also “The euro, too, was a liberal fair-weather construction.” That could be but when EU authorities assigned a 0% risk weight to all public debt of eurozone sovereigns, denominated in a currency that is not their domestic (printable) one no one could call that a liberal construction. It was idiotically dooming the euro to failure.

Sir, I feel left or right labels do not really define what we citizen are up against. Our real adversaries are those I have come to call redistribution profiteers. In my home land Venezuela, where the central governments some years has received 97% of all export revenues, that is easy to see. But even in the rest of the world that is happening, unfortunately without being sufficiently understood. Much of it is the result of citizens lacking the most basic societal information, namely how much their central and local government receive in income, from all taxes, per citizen. 

Of course taxes are needed but such per citizen data, published regularly, would also put pressure on improving the day-to-day quality of government bureaucracy. I mean we want our taxes to be spent well. Don’t we?

PS. As a self declared radical of the middle, or extremist of the center, I feel the best hope we now have to improve our societies is by means of an unconditional universal basic income. That UBI should be 100% paid for, be large enough to help all reach up to jobs in the real economy and be small enough so as not allow anyone to stay in bed.

@PerKurowski

The prime element of a Universal Basic Income is its unconditionality, and that’s why redistribution profiteers hate it the most

Sir, John Dizard titles“Sorry, but the world is not yet ready for universal basic income” October 11, but then he writes an article exposing exactly why we need a Universal Basic Income. Clearly he has not understood the real implications of UBI’s most important principle that of its unconditionality; never to be paid out because you are something different, like in jail.

I came to Universal Basic Income by means of my long fight for having all Venezuela’s net oil revenues shared out equally among all Venezuelans. That would have saved my homeland from its current tragedy. Instead those revenues fell into the hands of odious, besserwisser, corrupt redistribution profiteers… who paid it out generously to themselves and their friends… and with especially bad cheese to the rest of Venezuela.

“UBI…cannot be done within the bounds of the existing social contract in advanced countries.” Absolutely, as long as we allow redistribution profiteers to define those bounds.

Those redistribution profiteers who, circling their wagons in order to defend the value of their franchises, convinced Dizard of that “big tax rises and reductions in other benefits would be needed, even for a modest basic income”. Their most usual tool is using very high figures for that basic income. There is absolutely nothing that would stop advanced countries from beginning by paying out some US$ 200 per month to all its citizens. That would help oil the economy much more than a tax cut.

We urgently need something to help create decent and worthy unemployments in time, before all social order breaks down… and redistribution populists like Hugo Chavez and pals take over. 

@PerKurowski

What if the Norwegian citizens had had the chance to manage their own individual oil funds or share of oil revenues?

Sir, I refer to David Sheppard’s “Norway fund to sell off oil shares” November 17

At first sight we are of course all impressed with that the Norwegian Oil Fund has been able to accumulate US$200.000 per Norwegian. 

The question is though, had the Norwegian oil revenues been paid out to and invested directly by the Norwegians, would they in average have more or less than US$200.000, and would the Norwegians, in average, have been stronger citizens as a result of having to take on that responsibility on their own?

And when we read that what we always thought as the Norwegian Oil Fund or the Norwegian Government Petroleum Fund, is now known officially as the Government Pension Fund Global, the natural question we have is if all that money is now only to go to pensioners? If I was a young Norwegian with ideas of my own and in need of capital, I am not sure I would look too favorably at that possibility.

And let’s be honest about the results. Much of it, or perhaps even most of the financial returns obtained, which are perhaps more than the oil proceeds injected, have been direct consequences of US and Europe having kicked the 2007-08 crisis can down the road, injecting huge amount of liquidity with QEs which, together with the ultralow interests maintained, have inflated all financial assets.

Sir, I was appointed the first diversification manager of the Venezuelan Investment Fund created in 1974, basically a fund very similar to the Norwegian Oil Fund. It took me only two weeks to become convinced it would not work, and so I left.

All this sort of centralized accumulations of wealth sooner or later loose contact with the final beneficiaries and with their original purpose and fast (Venezuela) or little by little (Norway) begin functioning more in terms of the wants and needs of those managing it.

When we now start reading about how that Norwegian fund begins to assign more and more value to issues like sustainability and ethics, which of course is good, we do wonder though how much of that is more based on managerial show-off than on a real mandate from its final beneficiaries.

Again, if I was that young Norwegian in need of capital, or just wanted to construct my own retirement nest, I can easily hear me saying… Great, you do all that but, before you start, give me my share. 

And let’s face it. One reason Norway’s government have been able and willing to set aside oil revenues in the fund is that they receive other type of compensations, like gas/petrol consumption taxes. Norway has the highest gas prices in the world, about $2.40 per liter (Venezuela less than $1 cent per liter)

I hear you Sir. “Here is just a Venezuelan being envious of the $200.000”.

Of course I am envious but, believe me when I say, that as a defender of oil revenue sharing, I would much have preferred my fellow citizens to have only a tenth of that amount, but in the process have learned more of how to stand on their own, and freeing themselves from having to depend on redistribution profiteering governments or fund managers.

PS. What about the Norwegian Fund selling off oil shares? Sounds reasonable but their current 6 per cent invested in the oil and gas sector is not that exaggerated either. Can you imagine what the Norwegians would say if Norway runs out of oil and the Fund stands there with no investments in oil?

@PerKurowski

What stops a Supreme Court of Justice of Venezuela in exile, to request the embargo of oil unduly received by Russia?

Sir, you suggest that one of the few ways the Maduro regime could manage the restructuring of PDVSA’S bonds, is that “Moscow might… extend the cash Caracas needs to service PDVSA debt in return for cut-price stakes in local oil ventures”, “The geopolitics of Venezuela’s debt” November 5.

You really think Moscow would throw its relative scarce good money at this?

The Venezuelan Constitution in its Article 12 establishes: “Mining and hydrocarbon deposits, whatever their nature, existing in the national territory, under the territorial sea bed, in the exclusive economic zone and on the continental shelf, belong to the Republic, are the property of the Public domain and, therefore, inalienable and imprescriptible.”

And so, though I am not a lawyer, it would seem that any negotiation that assumes that local or foreign oil ventures receive an ironclad guaranteed access to Venezuela’s oil might be very naive.

I ask, if Russians end up taking oil from Venezuela under a shady deal not approved by its real General Assembly, that which is recognized by so many countries, what stops its Supreme Court of Justice in exile to request international courts to embargo it?

As I see it the best thing to happen would be a constitutional reform in Venezuela that decrees all net oil revenues belonging equally to all its citizens. What judge will then order the embargo of oil that belongs to citizens who at this moment need it to avoid death from starvation?

And the biggest benefit of doing so would be freeing the Venezuelans from having to live under the powerful thumb of a government that centralizes all that oil revenue, 97% of all the nation’s exports, in very few hands… sometimes even the hands of outright bandits.

Sir, those who awarded odious credits, should not be able to negotiate behind the back of Venezuela’s people, with those who contracted odious debts.

https://perkurowski.blogspot.ca/2017/06/a-simple-but-complex-question-from.html

http://theoilcurse.blogspot.com

@PerKurowski

The only real game changer for Venezuela would be sharing out all its net oil revenues equally to all Venezuelans

Sir, I refer to John Dizard’s “Russian oil group looks to Venezuela’s opposition in search for fresh collateral” July 29.

If Venezuelan oil revenues had been shared out equally to all Venezuelans, the current Venezuela tragedy would not be happening. It is as easy as that. To centralize those revenues in the hand of the government is an invitation to, sooner or later, have these to be managed by well-intentioned fools, outright bandits, or a poisonous combination of both, like now.

One sole change in the article 12 of Venezuela’s constitution, in order to declare the Venezuelan citizens to be the owners of all oil reserves, instead of the government, would be one of the biggest game changers ever.

In such a case could Venezuela’s creditors go after the oil belonging to about 32 million Venezuelans and not one government? How would a judge decide if he knew that creditors were trying to go after each Venezuelan’s US$30-40 per month, that which could help stop millions of human beings from starving or dying from the lack of medicine?

http://theoilcurse.blogspot.com

@PerKurowski

Sadly Bolivar did not free Venezuela from its natural resource curse

Sir, Gideon Long writes about the immense significance Simon Bolívar has for all Venezuelans. “Bitter enemies invoke spirit of Bolívar as vote looms” July 27.

As a Venezuelan I can only agree with most of it but, unfortunately, in October of 1829, Bolivar ordered the continuance of what had been decreed in 1783 by Carlos III of Spain, namely that all precious metals and “juices of the earth” reserves belonged to the Republic.

With that Bolivar guaranteed the Venezuelan governments would not depend exclusively on the citizens and that, sooner or later, some would capture the government to steal it blind.

If we Venezuelans are to gain real independence all our net oil revenues have to be shared out entirely to the citizens.

Had that been achieved earlier, the current disaster would not have had a chance to happen.

It is a great tragedy that freeing Venezuela from the curse of centralized oil revenues is still not on the agenda of anyone the most important opposition leaders.

@PerKurowski

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.

@PerKurowski

http://theoilcurse.blogspot.com

http://petropolitan.blogspot.com

Venezuela’s constitution has de facto decreed that 97% of its exports, is to be managed by some few in the government.

I refer to Daniel Lansberg-Rodriguez’ “Venezuela’s broken system cannot fix itself” April 24

Sir, Venezuela’s constitution has de facto placed 97% of its exports to be managed by some few in the government of turn.

I ask: if that were the reality of your country, would you as a citizen prioritize changing the government or changing the constitution?

I do not think my homeland has a sustainable good future, unless we dilute the excessive powers of our government, by sharing out all oil revenues directly to the citizens.

A government that is not sustained, frugally and solely, by taxes paid by the citizens, will never act sufficiently responsibly in favor of the citizens.

@PerKurowski

http://petropolitan.blogspot.com

http://theoilcurse.blogspot.com

If a citizen of an oil-cursed nation, like Nigeria, would you like a FT lending support to its central besserwissers?

Sir, you write “If the government were to reduce its stakes in the oil joint ventures to a minority it would not only raise some $20bn towards achieving other objectives. It would liberate the oil companies to invest, providing the country with a more realistic chance of raising production” “Nigeria’s recovery plan gives grounds for hope: A burst of reform will help Africa’s most populous nation to fly again” March 9.

Is that really so? Could it not be that its government would then just waste the $20bn obtained now against the loss of future oil revenues; and that a future populist could easier come to power exploiting a re-nationalization platform? By the way, for how long is the extraction of a non-renewable natural resource be described as “production”

Sir, you know that Nigeria, like Venezuela, are oil cursed nations in which oil exports represent 90% or more of all the exports, and the revenues governments receive from oil 70% or more of all fiscal revenues. And yet you seem to indicate that with a correct recovery plan, which means centralized government bureaucrats still calling the shots, perhaps with somewhat less ammunition, there is “grounds for hope”. 

Sir, if you were an oil-cursed citizen, I am sure you would not like a renowned international financial paper lending such support, to those powerful local oil bureaucrats, vulgar redistribution profiteers, that insist they should manage oil revenues, since they are much more experts and therefore know much better than you what good for you and your family.

Or is it perhaps that you are too beholden to all governments that do the oil-revenues spending?

@PerKurowski

Publishing what governments earn in natural resource income, is much more powerful than “publish what you pay” rules

Sir, David Pilling lashes out at the House of Representatives (at Trump) for voting to nullify a rule known informally as the “publish what you pay” rule, which obliges oil and mining companies to disclose payments they make to foreign states. “Trump, Tillerson and the African resource curse” February 23.

Pilling puts forward the case of Equatorial Guinea where, “Since oil was discovered, per capita income has rocketed to nearly $40,000 at purchasing power parity, the highest of any sub-Saharan African country. That comes as scant consolation to the three-quarters of the population who live in abject poverty on less than $2 a day.”

Does the population of Equatorial Guinea know that? Most probably they don’t have the slightest clue about it. Just like the poor in my homeland Venezuela do not have a clue that, from their beloved Chavez, they got less than 15% of what should have been their per capita share of the nations fabulous oil income. That is of course so because the redistribution profiteers, like everywhere else, do not want such information to be known.

If for instance a Voice of America (or any other media for that matter) would daily beam out to citizens in natural resource rich countries, how much their monthly per capita share of such income would be, that would produce more beneficial consequences than a hundred “publish what you pay” rules.

Why is it not a “publish what they earn” rule suggested? Probably because, among redistribution colleagues, that would not be considered comme-il-faut. Hey, someone could even begin reporting daily on how much were the overall monthly fiscal revenues on a per capita basis. Horror!

PS. David Pilling, many of your crocodiles are pussycats next to ours

PS. It is interesting to note that the “publish what you pay” rule was irrelevantly part of the Dodd-Frank Act; that which failed to even mention the Basel Committee for Banking Supervision. Here and here

PS. David Pilling thinks that since this rule applies to all, the playing field is now level. He should look into Venezuela and all the chinese natural resource investments. 

@PerKurowski

FT, where’s the real hurdle? In PDVSA’s debt swap, or in PDVSA and Venezuela’s government?

Sir, Eric Platt and Jessica Dye write: “Analysts and bankers remain optimistic that a deal will be clinched, as a default would cut both Venezuela’s and PDVSA’s credit lines with lenders and deepen the country’s recession.” “PDVSA debt swap plan hits hurdle” October 11.

Really? Could it not be so that helping to finance one of the demonstratively most inept governments ever could only deepen and prolong a recession that, right after a huge oil boom, in a country that states it holds the largest oil reserves in the world, has its citizens starving and without access to medicines?

Venezuela is in utter disorder, and its people in utter despair, and still its government sells gas at less than US$ 4 cents a gallon, thereby allowing some to smuggle it out and make juicy profits. That, no matter how you look at it, is a de facto economic crime against humanity.

So “T Rowe Price owned $274m worth of the 2017 bonds”. Does T Rowe Price really think that its clients, though they might make huge speculative profits in the short term, are truly benefitted long term by financing an entity as mismanaged as T Rowe Price knows PDVSA is? Would T Rowe Price’s investors have liked it if Venezuelans had financed a PDUSA and thereby helped keep a hypothetical authoritarian regime in power? When is what is being financed going to be an issue? Or is it really that you can finance anything at all, as longs as the risk premiums are juicy?

Sir, to be clear, I am not writing this solely in “opposition” to the current Venezuela government. For decades, long before the Chavez years, I have been opposed to odious debts, odious credits and odious borrowings… anywhere.

PS. I am supposing no one would dare to expose such naiveté as arguing that lending to PDVSA is distinct from lending to the Venezuela government.

@PerKurowski ©

In Venezuela there’s much human suffering because of lack of food and medicines; but petrol is 1 US$ CENT PER LITER!

Sir, I refer to your editorial "Venezuela’s problems can no longer be ignored" August 19.

Of course as a Venezuelan I pray for my country to get out of that tragic black hole into which crooks or naïve fools has submerged it controlling 97% of its export revenues. 

When we get out of it, which we will, we must see to never to fall into it again. And what we must do for that is to share out all oil revenues directly among the citizens, so to have our governments operate solely with the tax revenues provided by We the People.

But for the rest of the world, there also are important lessons to be learned. One is that stupid and irresponsible economic policies can cause just as much violation to human rights than any of those other sources usually identified. And when those economic crimes are especially grievous, those responsible for them should be prosecuted in international courts.

For instance, right now when there is huge human suffering in Venezuela, because of the lack of food and medicines; petrol (gas), even after it was raised a mindboggling 6.000 percent in February this year, is still being sold at less than ONE US$ CENT PER LITER - FOUR US$ CENTS PER GALLON.

That petrol should be sold, as a minimum, at its world price as a commodity. And the resulting revenues shared out equally to all, so that its citizens could be better positioned to deal with the de-facto state of emergency that exists; and petrol consumption would go down, and more petrol could be exported, and more food and medicines imported.

@PerKurowski ©

http://theoilcurse.blogspot.com

Argentina, and so many others need, urgently, clear definition of what are odious public-sector credits and borrowings

Sir, I refer to Benedict Mander’s “Macri is surrounded by former bankers as he seeks international investment” May 13.

I have always been convinced that most of debt that at any point of time gets to be qualified as “odious”, has had its beginnings in odious credits or in odious borrowings.

Odious public sector credits are those that lenders approve even though they know the resources will not be put to a good use, only because the risk-premiums are right. A really extreme example of this would be an oversubscribed public bond issue to finance something like the crematoria ovens of Auschwitz. 

Odious public sector borrowings are those carried out by governments, in lieu of real correcting measures, or because of other political short term interests, without any consideration as to how it is going to be repaid and who are going to repay, usually those of a generation down the line.

And so therefore I have always held that, no matter how important it was to introduce a Sovereign Debt Restructuring Mechanism (SDRM) that had to begin by defining clearly what should be considered as odious credit or odious public borrowings. That since these, for the good of us all, should not receive the same treatment as bona-fide credits.

And in this respect when I read that “luring money back into an economy starved of investment after a decade of interventionist policies” is considered “a vital element” I feel it might be time again for us to prepare to cry for Argentina.

And, just in case, this has nothing to do with who governs Argentina, in fact I very much welcome the recent change. It is what I have opined in my country Venezuela, pre-Chavez, during-Chavez, and that I will surely also opine after the long overdue Chavez/Maduro change comes into fruition.

To use a credit card to buy food and medicine for the people is understandable but, for governments to load up on credit card debt as a substitute for doing the reforms that are needed, or to finance new investments supposed to “take care of it all”, that is just immoral.

When it comes to public sector debt, and for instance capital requirements for banks, it would serve us citizens much better if ethic or good governance ratings were used instead of simple credit risk rating… a good credit risk rating resulting from the government receiving large oil revenues, is just to add salt to injury.

@PerKurowski ©

FT, are you aligned with the interests of redistribution profiteers and besserwissers, or with citizens’?

Sir you refer to that “Next month, Switzerland will hold a referendum on whether to introduce an Unconditional Basic Income”, and then you opine “this measure seems premature today [though] it is worth running data-driven pilot projects to test the concept’s future viability. More effective tax regimes and smarter forms of wealth redistribution will be needed to ease our social strains.” “Bring on the robots but reboot our societies too” May 7.

I come from Venezuela, where the poor, from that so lauded 21st Century Socialism, have not received more than about 15 percent of what should have been their individual share of the fabulous oil revenues over the last 15 years, tops. So please don’t tell me an unconditional universal basic income, in this case funded by oil revenues, “seems premature”… it is way overdue.

And Sir, why do we really need to test the hypothesis that people know better what to do with their own resources than what the governments with other’s resources? Is that to find ways to help profiteers and besserwissers to keep control over the redistribution?

As I have written to you I support a worldwide gas/carbon tax which revenues should be paid out by means of a universal basic income, in order to align the incentives in the fight against climate change and against inequality.

And I also support a social pro-equality tax, which revenues should be paid out entirely by means of a universal basic income, from citizens to citizens, so as to avoid all the dangerous populist and demagoguery intermediaries.

Sir, if we can separate all the redistribution from governments’ normal functions, then we will also be able to make these perform better for us. For instance, we might suddenly realize that all tax evasion and tax avoidance put together could be less than government waste.

PS. And bring on the robots to bank regulations. These at least have smaller egos that stand in their way of admitting and learning from their mistakes. The robots would, long ago, have eliminated the risk weighted capital requirements for banks, which only dangerously distort the allocation of bank credit to the real economy, for absolutely no good reason at all. 

@PerKurowski ©

What if all redistribution is paid by a special tax and shared out equally keeping redistribution profiteers away?

Sir, Marin Wolf discusses the utterly important issue of redistribution of income (and wealth) “The welfare state is a piggy bank for life” April 1.

Citing the Institute for Fiscal Studies Wolf writes: “in the course of adult life, only 7 per cent of individuals receive more in benefits than they pay in taxes”. That sounds as the society is very equal or that the redistribution is very inefficient/costly.

In Finland they are currently analyzing the possibility of a Universal Basic Income. That might not redistribute efficiently over lifetime needs but, by keeping redistribution profiteers away, it might still be a much better alternative than current procedures.

Wolf writes: “benefits paid to individuals, such as housing benefits, tax credits paid to those in work and pensions. In the UK, such benefits amount to a huge sum: 33 per cent of current spending (and 12.5 per cent of gross domestic product) in 2014-15.”

How much money does that represent per citizen? What if it was just paid out directly to all from a specific pro-equality income and wealth tax? If done so that would make it easier to separate re-distribution from the general government functions, and that added transparency could at least help keep some political demagogues at bay.

What causes more inequality, market or government imperfections? In Venezuela, that is a question easy to answer. The poorest Venezuelans have not received even 15 percent of what should be their per capita share of the net oil revenues

@PerKurowski ©

The strongest opposition to a universal basic income (UBI) would come from the redistribution profiteers to be substituted

Sir, John Thornhill discusses an upcoming book of Andy Stern titled “Raising The Floor”. In it the author “argues powerfully for the US government to provide a universal basic income (UBI) of $1,000 a month to every citizen” “A basic income — welfare for the digital age” March 15.

Having seen a real fortune in oil income being wasted and stolen away in my homeland Venezuela, I have for soon two decades been proposing something similar… although clearly there we would be talking about much less money per citizen.

In Venezuela, during the years of XXI Century Socialism I seriously doubt its poor got more than 10% of what would have been their per capita share of the country’s net oil revenues.

And lately I have also proposed a Pro-Equality tax on the wealth of all paid out in equal shares to all.

But, when it comes to opposition to the idea, that will surely come the strongest from the redistribution profiteers… those who have a vested interest in doing the redistribution.

@PerKurowski ©

Corporations and their tax payments distract the full attention the citizens deserve from their governments

Sir, I refer to John Plender’s “A strange aversion to corporate tax” January 4. I have an aversion to corporate taxes that is not duly reflected there.

In my homeland Venezuela the government gets directly 97 percent of all exports and, when oil prices are high, we citizens become almost a nuisance to those in charge of administrating such revenues… only when oil prices are low do they begin to remember us.

As a result I have held that the ideal tax system is that in which the government gets all of its income directly from identified citizens… not anonymous sales taxes, and that makes me to have an aversion to corporate taxes too. The corporations, with their often very high profits equally, quite often, constitute a distraction that hinders the governments to give full attention to us citizens.

100 percent citizens based tax system, true tax heavens, would also be the best way to diminish the needs for tax havens.

http://perkurowski.blogspot.com/2012/03/my-tax-paradise.html

@PerKurowski ©