WP covers Bolivia's attempt to play tough.
During his victorious electoral campaign last year, Morales promised that he would force energy companies to give at least 50 percent of their revenue to the government's state energy company. The plan announced Monday called for a substantially higher percentage -- 82 percent -- to be surrendered by any company producing more than 100 million cubic feet of natural gas daily. He said that all companies have six months to agree to the terms or be kicked out of the country.
This is not the way to get more investment into Bolivia.
36 comments:
Gee, why wouldn't a company want to invest in an area that the gov't automatically seizes 82% of their revenues? Shouldn't they be happy to be allowed to keep 18% of their profits?
Richard,
It's not 18% or profits, it's 18% of revenues. They have to pay all their expenses out of that 18%.
At current prices that might still be profitable. But companies will be reluctant to invest further if the government keeps changing the rules on them.
... Ami.
It's quite naive to think that Morales cares about future foreign investment into Bolivia. That's why this is an effort to nationalize the industry. Morales would love the leeches to leave, and hence the offer. And if there is a chance of still turning a profit they'll stay anyway. But the engine to drive Bolivia's development certainly will not be, has not been, and isn't foreign investment. If it were, Bolivia wouldn't be the poorest country per capita in South America. If he natinalizes the industry, then he can get a whole lotta money to help Bolivian campesinos rather than corporate shareholders. And that's why he's doing it. That's why he'll be more popular. And that why the journal would always write a hack job on such policies that cut at the pockets of its readers and interests.
By the way, casting about the term "conspiracy theorists" suggest a closing of the mind more than anything. Or perhaps warrants the apt description of being "ignorantly blissful." And as recent events prove, perhaps it's better to listen and learn, than to draw errant assumptions based on thin air and naive assumptions and reveal a certain trained passivity.
Education should open minds, not close them. Most of all, it should encourage critical thinking.
Welcome Weaz!
Problem is that foreign investors can exploit Bilivia's resources more effectively than the government can afford to do on its own. Now there's nothing wrong with demanding that Bolivia's people are compensated well for the oil, but once those rules have been set they need to be kept to.
Sorry you're offended by the term consipiracy theorist, it was meant as a light-hearted tease rather than an insult. I'll try to come up with a better term. But realize that critical thinking also applies to reading your blog. I'm a shades-of-grey kind of guy, and I tend to be suspicious of anything that paints the world as black-and-white.
... Ami.
Hmm...foreign investors=leeches...
Can't say, as I don't know exactly what deal was cut beforehand. However, it certainly smacks of Bolivia being the leech here. These companies spent something in the neighborhood of $3 billion to locate and set up the equipment to harvest the natural gas. They also continue paying taxes, licensing fees, and so on. Morales' plan, plain and simple, is little more than taking that $3 billion from the various companies and pocketing it.
As for what would help Bolivian campesinos, money is only part of the equation, and certainly not the most important. Do you know what made the US the economic powerhouse of the world? It's not racial or cultural superiority, it's not "exploitation" of other countries, it's not having the strongest army (hasn't been the case forever). Certainly some luck was involved, but mainly it's allowing more opportunities to earn a profit than anywhere else in the world.
As for profitability, a bond giving a 0.025% APR yield is profitable, but the yield is so low that nobody would buy them. At the very least, I'd expect the companies to pull out their brain trust (I'd include their equipment, but I imagine Morales will insist on stealing that). If they're spiteful (not likely), they could sabotage the equipment. Wouldn't blame them if they did.
Problem is that foreign investors can exploit Bilivia's resources more effectively than the government can afford to do on its own.
Where do you get this from? Make it up?
Shades of grey apply when things are grey. It's naive to think that there is no such thing as black or white, or to not be able to call it when it is.
Bolivia being a leech? Do you know the history of Bolivia? Do you think that foreign corporations have remunerated the people/government in Bolivia nearly to the amount of the value of the amount that they have either extracted or invested? Absolutely not. And we can make a wager on that. Any amount offered would be fine.
If you think that foreign corporations haven't extracted more than three billion dollars of Bolivian gas and oil then pass the pipe.
Do you know what made the US the economic powerhouse of the world? But mainly it's allowing more opportunities to earn a profit than anywhere else in the world.
This is quite naive. Okay, prove it. Explain historically how this is the case. Facts, not theories. Events. If you want to talk in ad hominem flowerly language devoid of any historical events, then now's the opportunity to fill in the blanks.
These statements strike me as the type of pablum that people are told without any true basis in fact. I would love to be shown how the United States has grown into an economic powerhouse simply on the basis of free enterprise and investment, that somehow didn't take into consideration the expropriation of land of Native Americans, the use of slave labor, the use of free market access in South America under the Monroe Doctrine, the fortuituous finding of vast petrolium reserves in Pennsylvania then Texas, and similar type of free access to Saudi Oil in the form of the foundation of Aramco.
Please tell us how these events only played a marginal role in American economic development in relation to the idea of "profit opportunity."
I'll be waiting
And Ami, once again as proof of that "critical thinking" of which you are a self proclaimed fan, as regards your statement that "Problem is that foreign investors can exploit Bilivia's resources more effectively than the government can afford to do on its own", please explain what is
Yacimientos Petroliferos Fiscales Bolivianos
And its history. And I think you'll agree that yet again you speak swiftly without a read grasp of the subjects about which you speak.
And Rich, you can do the same lookup as regarding your figures about foreign gas investment in Bolivia, which I think are way, way overblown.
. . . but then again, I shouldn't complain. I mean the doctrine of caveat emptor obviously applies here. This blog indeed is aptly named.
An update of information: I've found something confirming more or less the figures tossed around for Bolivian investment. It is reported that Petrobas, Bolivia's largest investor, invested 1.5 billion dollars. Problem is that Petrobas is a state owned gas company of Brazil. So that kind of shoots the idea out of the sky that private foreign investors are needed. And looking at the fact that Brazil's gas is nationalized debunks the idea that this model is necessary. Kinda can't have it both ways.
But given the fact that Bolivia already had a nationalized gas industry until the early 90's, the three billion dollar figure appears suspicious.
but a cached article is available here:
http://66.249.93.104/search?q=cache:FTDsrMbKxNYJ:news.morningstar.com/news/DJ/M03/D30/200603301431DOWJONESDJONLINE001015.html%3Fpgid%3DqtqnNews4+bolivian+gas+investment&hl=en&ct=clnk&cd=9
First, figures on investment in Bolivia:
The $3 billion figure is the overall foreign investment, not limited to one company or even private industry. If a state-owned firm in Brazil is half of that investment, I can believe that.
Do you think that foreign corporations have remunerated the people/government in Bolivia nearly to the amount of the value of the amount that they have either extracted or invested?
No, I certainly don't. There's no profit to be made if they paid everything they made back to Bolivia, and hense they wouldn't have invested. However, had there not been a potential for profit, they wouldn't have invested the resources they did, and Bolivia wouldn't have access to those resources at all (since they apparently weren't able to do it on their own). The riskier the situation, the higher the profits need to be to make it worthwhile.
I would love to be shown how the United States has grown into an economic powerhouse simply on the basis of free enterprise and investment, that somehow didn't take into consideration the expropriation of land of Native Americans, the use of slave labor, the use of free market access in South America under the Monroe Doctrine, the fortuituous finding of vast petrolium reserves in Pennsylvania then Texas, and similar type of free access to Saudi Oil in the form of the foundation of Aramco.
I never said "simply" on free enterprise. I agree that there were more factors than just that, but that it was the major factor that made it possible for all the other factors to make the US an economic powerhouse.
Facts: The US quit using slave labor nearly 150 years ago (and certainly weren't a world power at that point), so that hardly has any bearing on why we've remained an economic powerhouse of the world (also keep in mind that no area allowing slavery is a world power by any measure). Your oil access analogy falls through when you realize there are several nations which have vast pools of oil, but aren't economic powerhouses in the world (Saudi Arabia, Iran and Iraq all have vast amounts of oil, but aren't known for any other business than oil). As for expropriation of land, the USSR engaged for several decades in expansion by force, seizing vast amounts of natural resources (including oil), but collapsed due, in large part, to bankruptcy.
Ok, every single thing I've mentioned is a negative analogy, merely disproving your points. I haven't proven the US leads because of freedom. The question to be asked is "What makes the US different than other nations who aren't economic world powers?" It's not the slave trade (ended over 150 years ago), it's not natural resources (other nations have more), and it's not land acquisition (other nations tried it, and to a larger degree, and went bankrupt). The US isn't naturally smarter or more skilled than every other nation. What does the US offer that most other nations don't? Opportunity, and that's why most of the world's migrant population wants to come and live in the US.
What would you consider proof of this? Immigration statistics? A trade deficit, where more money flows out than in? A statistical analysis of nations and their laws, and which ones are more prosperous/destitute? I don't think that last one exists.
Bolivia wouldn't have access to those resources at all (since they apparently weren't able to do it on their own).
Here's the errant assumption. Bolivia has access to ALL of it's oil and gas production but was forced to privitize its industry under influence and peddling from IMF and World Bank forces. That's where the nice cushy theories break down under the weight of reality.
And sorry, you have disproved no point. If you think that I don't know when slavery ended then that's farcical. If you claim it didn't contribute to America's economic growth then that's simply stupid.
Your oil access analogy falls through when you realize there are several nations which have vast pools of oil, but aren't economic powerhouses in the world (Saudi Arabia, Iran and Iraq all have vast amounts of oil.
No, it's your oil analysis that breaks down when I specifically asked you whether you understood the formation of Aramco, and the US' ability to exploit those resources which there then diverted from benefitting the country itself. That was a major point I made that you completely missed. Once again, these nice cushy theoretical arguments break down in the face of historical accuracy. If you think that the United States and Britain didn't exert maximum control and dominance over Middle Eastern oil (and hence development) then I suggest you learn that history. And a great place to begin might be to read Daniel Yergin's "The Prize."
And the collapse of the Soviet Union didn't have to do with expropriation of land, so that is a poor and irrelevent example. But if you want to make to make the comparison, the Soviet Union DID collapse because of excessive defense spending over a long period of time, something that the US is repeating and something that won't be averted by your fanciful notion of US economic openness as paving the way for prosperity. In fact the easiest two examples that entirely shoot to hell your rather facile theory of economic growth are both China and Japan, two economies that had very restrictive controls on foreign investment (one being entirely state regulated) and yet managed to perform dramatically. And if you looked at ACTUAL economic history, it was when Japan actually stated opening its economy to the outside world (largely as a result of US pressure) that its growth ended and it went into a nearly 15 year recession. Once again, your grasp over actually economic history is simply not convincing.
In short, as I suspected, you offered nothing by way of any historical description of what you claim. And you actually prove my point by not having any real command of the examples you attempt to disprove. In don't think that you have a solid explanation of why, for example, the United States developed more rapidly than other Western European countries, which would have been the natural point of comparison. You completely ignored the references that I made to oil wealth WITHIN the United States, which DID in face set it apart from those aforementioned Western European states. And the pablum about how state entities somehow are more inefficient than private firms was equally unexplained.
And by the way, you mention other nations have more natural resources than the United States? Which ones? And which ones had more access to OTHER NATIONS natural resources? In short, none. No, I don't take your word for it. If you're going to make an argument you need to speak in facts, not simply some veiled generalizations that are absent any type of historical or even quantitative reference point. These arguments are sloppy.
I'll attempt brevity.
Bolivia has access to ALL of it's oil and gas production but was forced to privitize its industry under influence and peddling from IMF and World Bank forces.
Why did the IMF and World Bank have that influence? Because Bolivia didn't have the financial resources. Without those resources, they couldn't get to those resources, hense no access.
If you claim it didn't contribute to America's economic growth then that's simply stupid.
Now the name-calling. Nice. It mainly contributed to the agricultural sector of the US (primarily the South). Incidentally, that also happened to be the poorest area in the US at that time. Economic growth was much greater in the Northeast at that time.
No, it's your oil analysis that breaks down when I specifically asked you whether you understood the formation of Aramco, and the US' ability to exploit those resources which there then diverted from benefitting the country itself.
No, the resources are diverted from the people by the Saudi royal family, not the US.
And the collapse of the Soviet Union didn't have to do with expropriation of land,
You're right. The expropriation of land was an effort to forestall the USSR's collapse. They collapsed because they tried to centrally command the economy of a massive amount of land and people. My point was that taking land doesn't make your economy stronger, which is somthing you claimed.
In fact the easiest two examples that entirely shoot to hell your rather facile theory of economic growth are both China and Japan, two economies that had very restrictive controls on foreign investment (one being entirely state regulated) and yet managed to perform dramatically.
China's recent rise has been impressive, and is in part due to trade concessions with the outside world. Japan has a great work ethic, but they still need a large amount of foreign trade (Toyota being the prime example) to have the economic impact they have (again, limited natural resources).
(Note I'm talking trade, and not just foreign investment.)
And by the way, you mention other nations have more natural resources than the United States? Which ones? And which ones had more access to OTHER NATIONS natural resources?
Mexico has quite a bit of oil (and the people are poor), many nations in the ME have lots of oil (and the people are mostly poor), many African nations have vast diamond resources (and the people are mostly poor). Do you want more areas that have an abundance of natural resources, but are poor? More often than not, the problem they have is gov't, not lack of resources.
Oh, there's your access point. What constitutes access? Access to resources doesn't mean you'll profit from them (do you know how many lottery winners end up broke 10 years after winning massive amounts of money?).
If I pay you $1 for use of your back yard, then make $2 by putting up a lemonade stand, did I exploit you by $1? No, you weren't going to put up a lemonade stand, and you got $1 for little to no effort on your part. Change it to $10, and did I "exploit" you for $9? Again no, because you still weren't going to put up a lemonade stand.
Da Weaz,
How many other businesses do you think will be attracted to Bolivia by this move? Or rather, how many businesses who might have invested in Bolivia will now go elsewhere?
If Bolivia will confiscate property owned by oil companies at the whim of Morales, what's to stop them from confiscating other business's assets?
This move may provide a short boost to the Bolivian government's income, but it's a long term death sentance for the it's economy.
Weaz: I'll respond to the part of the thread I was involved in...
Problem is that foreign investors can exploit Bilivia's resources more effectively than the government can afford to do on its own.
Where do you get this from? Make it up?
No, I found some rather nice little graphs that show both known hydrocarbon reserves and output rising dramatically just after privatization of the industry. There are other articles around that discuss increased exploration around the same time due to FDI.
As an aside, your style of discourse in this thread is really annoying. A lot of ad hominem attacks. There's also no point in demanding people prove their points when you haven't proven your own. It's not like they owe you an explanation.
Rather than rattling off dozens of historical references, better to pick a specific small point and actually explain it. We're not going to go and research the history of Aramco just to rebut a point that you haven't actually made, only alluded to.
... Ami.
[ps. I know your generally reasonable in person, but I think you've gotten used to a different tone of debate fpm. The guys who visit here are generally a little right wing, but not as nutty as the guys you were fighting with on your blog.]
Why did the IMF and World Bank have that influence? Because Bolivia didn't have the financial resources. Without those resources, they couldn't get to those resources, hense no access.
Where do you get this from? You simply make this stuff up as you go along. Your arguments are devoid of the slightest historical reference, and so we'll soon have to stop.
If you claim it didn't contribute to America's economic growth then that's simply stupid.
Now the name-calling. Nice. It mainly contributed to the agricultural sector of the US (primarily the South). Incidentally, that also happened to be the poorest area in the US at that time. Economic growth was much greater in the Northeast at that time.
Sorry, that's not name calling. It's called a conditional statement. Are you claiming that agriculture doesn't count towards America's economy. What do you think the North's manufacturing and shipping sectors consisted of. I'm not going to keep going with this, because you simply have NO historical reference other than some vague reference to some general claims regarding American economical development and try to avoid responsibility for your factual deficit by suggesting that I am calling you names. Sorry, that is simply a waste of time.
Mexico has quite a bit of oil
How much oil do you think Mexico has? Do you know how much oil the US had? Do you think the two are even remotely similar? C'mon, I knew that I was dealing with someone with a slim command of facts, but if you're trying to tell me that Mexico had the comparable natural resources as the United States then it's simply an unfair fight.
A final wrap regarding your last paragraph: you simply have a theoretical argument that is absolutely devoid of historical reference and historical reality that is necessary to understand not only American but European economic exploitation. I apologize if this seems like it's being dismissive, but to be honest I received my BA in economics coming up on 20 years ago (18 to be exact) and learned in the intervening years the value (or inapplicability) of these theories in the face of reality: what actually happened.
While it might be convenient to conjure up nice hypotheticals, each and every time I confronted you with a historical question, you declined (other than the North/South over-generalization). If you think that American openness explained it's growth, then you'd still have to answer for China and Japan, countries that you completely ignored. As you ignored Aramco. I am not interested in debating for the sake thereof, but rather exploring real issues. To have such a conversation, we would have to be responsive to each other, and not get sidetracked as this conversation has into whether I am calling you names, or ignoring important issues that have revealed the gaping holes in your knowledge.
Perhaps when you look at even why such institutions as the World Bank and IMF were even created, and why not one country that has followed those policies improved much their standard of living since the 70's, certain mysteries of the world regarding why and how the US has developed would be a bit clearer (hint: it ain't the openness ;-)
Ciao.
to brianh,
How many companies will be likely to invest in Bolivia? Not many. But that's the point, if the sector is nationalized, then Bolivia won't need investors, but clients or buyers. How many investors don't by Russian oil after Putin absorbed Yukos? None. In a market based within declining natural resources like gas there are few options. Long term death sentence? Hardly, unless countries can figure out ways to manufacture natural gas. Nope, not going to happen.
Straw man argument.
By the way, where do you think the EU is going to get oil from as Russia threatens to move West. Read the papers lately? There ain't nowhere else to go.
Sorry.
Ami,
Then show me the graphs that you refer to regarding privitization and we can see how accurate they are. Sorry if I don't take your word for it, but given some of the other claims that you made, I have my doubts.
Research Aramco? Don't do it for my own benefit, but the role of Aramco and oil in America is perhaps the single largest event in American economic history of the latter 19th century and early 20th century. Call my attacks ad hominem if you want, but you can't claim to understand much about the development of the American economy if you don't understand the role that petrolium played in it. And it is not my job to teach it to you from square one. I made reference to a book by Daniel Yergin as a place to start, but we need to have a common language to begin a discussion. And throwing around little theories devoid of an understanding of actual events in economic (or political) history simply doesn't cut it.
And perhaps my style is grating. But it is grating to me to see such limited command of factual knowledge wíth this cavalier attitude towards theories that haven't really worked much in the past, with this reverential attitude that people have unconvered the Rosetta Stone. So please understand that perhaps we are both annoyed with one another.
For my part, I can get over it. ;-)
Weaz,
Here's one I just found.
On this page:
http://www.eia.doe.gov/emeu/cabs/Bolivia/Full.html
You will find this graph:
http://www.eia.doe.gov/emeu/cabs/Bolivia/images/bolivia-ng_production.gif
Note the rather sharp increase in production starting in 1997.
What other claims have I made that you find questionable?
I never claimed to understand a lot about the development of the American economy - I think you're thinking of somebody else.
The only reasons I'd be interested in studying the history of Aramco are 1) if there's some lesson there for today's developing economies, or 2) the story is so interesting that I'd enjoy it more than the thousands of other interesting stories I really should read more about.
So if you're a teacher and want me to read about it, then sell me on why I should care. Otherwise you'll have to actually provide the relevant details rather than expect me to find it myself.
I have a lot of factual knowledge about things I'm interested in, and as far as I know the things I say here are pretty well backed up. If something I've said is incorrect then I'm quite happy to learn about it, but you haven't convinced me yet.
... Ami.
The graph of proven and probable reserves is also informative, as it reflects the results of exploration:
http://www.eia.doe.gov/emeu/cabs/Bolivia/images/bolivia-ng_reserves.gif
.... Ami.
Problem is that foreign investors can exploit Bilivia's resources more effectively than the government can afford to do on its own.
Where do you get this from? Make it up?
No, I found some rather nice little graphs that show both known hydrocarbon reserves and output rising dramatically just after privatization of the industry. There are other articles around that discuss increased exploration around the same time due to FDI.
Yeah, the reason why I asked you to back up your claim is because I suspected that you had made it up. Find some post-facto graph that shows and increase in output fails to reflect two critical factors: first, Bolivia's gas was largely privatized in the early 90's. And there is no attributable increase in standards of living over the same period of time. So the idea of lining foreigners pockets while Bolivians remain South Americas poorest citizens seems quite beyond reasonable dispute. I suspect that, as is the case for Venezuela, the ensuing riches derived from the gas wealth will be much more benefitting to Bolivians than it has been in the past. Your graphs don't challenge that at all, and if fact support it, when you look at the flatline of Bolivian GNPs per capita.
And yes, perhaps I conflated your query with that of the conversation that Richard and I had. But in terms of American economic development, no single story has been as important as the development of petrolium resources in the US and in particular in the story of Standard Oil, from the latter 19th century to its breakup (and reconfiguration) in the early 20th century. Aramco was the flexing of American muscle as a replacement to fading British imperium after the Second World War and ensured cheap access to Saudi Oil, an arragement that still exists today. The message for developing countries? Don't let first world nations come in and rob you blind: something that all of the NICs learned and applied quite well.
Perhaps you didn't get my point, Da Weaz. Every example I brought up was in refutation of your claims. You named 3 items you claim responsible for US economic strength (slavery, land acquisition/theft, and possossion/access to natural resources). For each, I brought up at least one example of other nations having one or more of the same factors, yet they don't have nearly the economy of the US. Did one or more have SOME role? Sure, but they aren't weren't a MAIN role, especially since other nations (specifically Japan) WITHOUT one or more of those factors.
As for personal attacks, I take 5 words to call you on an attack on me, to which you then devote a lengthy paragraph. I wasn't dwelling on it, but apparently you were/are. Sorry you don't like being called on something.
Weaz: a few points:
1. Can you support your claim that Bolivias natural gas was privatized in the early 90's rather than the late 90's? The references I've found state otherwise.
2. You're right, the data I referenced doesn't address the welfare of the Bolivian people, but then I never made any claims about the welfare of the Bolivian people. I only claimed that foreign companies were better able to exploit the resources. As far as I can see that claim stands up pretty well.
Overall, my position remains the same. As far as I can see, Bolivia needs FDI, and I believe that nationalizing the gas reserves is a mistake because it will discourage further investment.
If Bolivia isn't generating enough revenue from it's natural gas, then a more sensible solution would be to increase taxes gradually and with considerable warning. If they announced a plan to increase taxes to 50% (or whatever) over the next five or ten years then investors would be able to plan properly.
... Ami.
Here's and interesting article that was prompted by Evo's actions.
"Why Isn't Socialism Dead"
http://www.tcsdaily.com/article.aspx?id=050506I
I think this quote from an early 20th century thinker explains a lot:
"For example, in the introduction to Reflections on Violence, Sorel says that the French thinker Renan "was very surprised to discover that Socialists are beyond discouragement." He then quotes Renan's comment about the indefatigable perseverance of socialists: "After each abortive experiment they recommence their work: the solution is not yet found, but it will be. The idea that no solution exists never occurs to them, and in this lies their strength.""
Weaz,
My question about business investment in Bolivia was intended to mean non-oil businesses. But again the answer is NONE. No one would invest anything in a country that will seize private property at whim.
A country can't develope on ONLY a government run oil franchise. Escpecially a socialist government run oil franchise. Socialism is a failure every time it's tried.
Capitalism works, every time it's tried. Earlier you mentioned the explosive growth of China, but that growth didn't start until the government allowed people to have private ownership, start private businesses, and determine their own economic fate. A big part of the growth in the country is being spurred by American companies who are investing there. Walmart, KFC, Google, etc are all pouring capital into the country and reaping the benefits while providing valuable goods and services to their people.
Sorry, Richard, maybe try making a point rather than refuting straw men. I did not attempt to explain American economic development, rather I mention various things as an aside and you incorrectly interpret them as my attempt to provide a coherent explanation of American economic growth.
And I devoted a paragraph to what I felt was another straw man attempt to avoid a true discussion.
And I will not linger on it as you once again ignore the larger points.
C'est la vie, and have a great weekend.
Well, I actually made a mistake. I misread the article that said the Yacimientos Petroliferos Fiscales Bolivianos was privatized in the early 90's, but was privatized in 1996.
Nevertheless, the point remains, who actually cares if output is increased if the people don't see any appreciable gain in their standards of life.
And you may suggest that a tax is better, but you really haven't offered any credible reason why nationalization won't serve the people even better, especially given the assistance, financial and technical that Venezuela is attempting to give the Bolivians.
But at least we're now talking the same language.
And hope that you will find no offense in my tone. None is intended.
The first paragraph appears to be a rather ad hominem attack against socialism. In places like Finland, socialism is alive and kicking in free public education and nationalized health care. Socialistic reforms pulled the United States out of the Great Depression after the market collapsed. So I think that discussion is frankly not one worth having.
And your praise of all things capitalistic and repugnance towards all things socialistic may seem comforting, but those grand and simplified ways of seeing the world for me are simply counterfactual, and like the paragraph that I wrote above, simply not worth having.
So go out tonight and raise a glass for capitalism, and wonder why the world is changing in ways that just don't reflect your enlightened and clear understanding of the path to prosperity.
Damn, those South Americans are jest dumm.
But various lessions I see you've learned quite well. Hopefully, over time you'll recognize that life and an understanding of economic systems isn't fortune cookie facile.
And here's an article for you guys to consider:
http://www.opednews.com/articles/opedne_stephen__060503_evo_morales_now_join.htm
Weaz: A few reasons why nationalizing industries is detrimental:
1. Future investors, in any industry, will require higher returns to justify the risk of nationalization.
2. Assistance from Venezuela (or any single entity) is dependant on who happens to be in charge at the time and what the conditions are there. What happens if Venezuela expericences its own financial problems? Why not accept assistance as well as FDI?
3. If taxes and other fees are structured well it should be possible to get most of the benefits of nationalization without the down side.
If they were starting from scratch then I might look at it differently. Probably a healthy mix of public and private development could capture the most benefit for the Bolivian people. Bring in outside money and expertise, but fund things yourself where practical. I think that's the approach that was taken by Norway.
Since I don't know how the current deals are structured, I can't really say for sure, but presumably a public gas company could be introduced to pursue new exploration without nationalizing existing reserves.
... Ami.
Weaz,
Both of us are predicting what will happen in Bolivia based on our own views of how economies work. We'll find out who's right in 3 to 5 years. Unfortunately the Bolivian people will have to suffer to prove yet again that socialism doesn't work as an economic system.
Yes, there are socialist programs that are supported by capitalistic economies in most countries. We have our own group of social programs from education, retirement, medical, welfare, etc. All programs that are less than complete successes, but we fund them anyway...
In Finland, their free education system seems to be a raging success (I don't know anything about their medical system, if it's a social medicine system that's working well it's an exception) . Ami could tell you more of the details, but it is a social program that actually seems to be working. But that isn't the driving force behind their economy. They have private businesses that are fueling those programs. The programs would colapse without the capitalism that provides the funding.
Weaz,
Can you repost the link to that article. The one you posted looks truncated.
Brian: You should be able to copy the link, even if it appears to be cut off.
Anyway it's here
Weaz knows at least as much about the Finnish system as I do, but in any case, Finland has both public and private health care.
My own experience has been mixed. There are both private and public clinics for GPs, and it can be difficult to get appointments at the public clinics. I think the Canadian system works better in this respect: private clinics, but the government pays the fee.
... Ami.
Ami, at some point you will move beyond these facile textbook responses and move to the real world. I think it's quite absurd that McDonald's will be worried about nationalization of hamburger restaurants. The real world works much differently than these simple little bromides that allow people to feel like they know a little economics.
But if you want to debate on a higher level, then critique this:
http://www.sciencedirect.com/science?_ob=MImg&_imagekey=B6VG2-44HTP6Y-1-2&_cdi=6026&_user=949111&_orig=search&_coverDate=05%2F31%2F2002&_qd=1&_sk=999789995&view=c&wchp=dGLbVlz-zSkWz&md5=8e6fbabc74df409172924a6ff4352948&ie=/sdarticle.pdf
Maybe for a chance then we can really start talking about Bolivia, rather than Economics 101 much of which breaks down as you get to upper level courses.
As I said, when talking about the real world, perhaps it's best to talk about the real world.
And maybe critique this with references from other works. I've said that I have found fault with the absence of a factual discussion. It would be a nice opportunity to prove me wrong.
Da Weaz, I've tried talking about facts, but you miss my points. For example, you didn't get what I was saying about the IMF and World Bank. As you already know, the World Bank is a lending institute intended to provide capital to poor countries to help them develop. It's debatable whether they do more good than harm (you seem to believe they do more harm, and there's evidence for that). The IMF works at regulating currency value. If a country has enough resources to explore for and exploit other natural resources, they don't need any assistance in either of those things, and as such, the World Bank and IMF wouldn't have any influence on their actions (i.e. if Bolivia didn't need those things, they couldn't tell Bolivia to privatize squat).
Fair is fair, and I'll respond to any challenges of fact you make when you have responded to the various ones I've already made.
Weaz: While McDonalds does count as FDI, I would be much more concerned with manufacturing industries, not service industries. But even McDonalds will take into account country risk factors when evaluating investment opportunities.
If you Google for "country risk" you'll notice that this isn't merely an academic Econ 101 issue. There's a whole industry built around evaluating the risks involved in global investment. Actions that governments take do have real-world consequences to FDI.
I skimmed the article and, to somebody like me who's not focused on Bolivia, it seem quite reasonable. Was there something in there that you're particularly interested in? I didn't notice anything that contradicts what I've said.
... Ami.
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