Adamant: Hardest metal
Monday, April 14, 2003

Distrust and handouts are killing Venezuela

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Friday, April 11, 2003 By: Gustavo Coronel

VHeadline.com commentarist Gustavo Coronel writes: Years ago I ran out of cash in Disney World, California. I walked into the tiny bank where a teller, dressed as Mickey Mouse, cashed a check for me. My check was from an obscure east coast bank and Mickey Mouse had never seen me before. Still, the transaction took about five minutes, smiles included.

In Caracas, I kept a bank account in a large bank for over 30 years. And yet, every time I wanted to conduct a transaction ... no matter how simple ... I had to go through a tedious and humiliating process of revalidation which strongly smelled of distrust. Today it's even worse. The process now includes fingerprinting, added to the inevitable photograph for which the teller commands you, in police fashion, to take off your glasses.

Distrust is a core characteristic of Venezuelan society.

This explains why there are so few multiple owner corporations, almost none of them quoted on the financial markets.

Venezuelan companies are either family- or State-owned. In both, control is rigidly exercised by the "family." The choice between nepotism or clientelism and managerial efficiency is almost non-existent ... only in Argentina is there more distrust than in Venezuela. In both countries "shrewdness" is at a premium. When you ask a Venezuelan how he's doing , a frequent answer is "defendiendome..." ... "Defending myself".... from real or imaginary enemies, assassins or coupsters.

I still remember former President Jaime Lusinchi, pointing his finger at a reporter who asked him a difficult question and answering: "Tu a mi no me jodes."... "You can not screw me!"

Francis Fukuyama dedicated a whole book to the issue of Distrust.  Societies which trust, like Japan, Switzerland and the US, do well, while the opposite is true of distrusting societies such as China and Italy. In these latter countries the family is stronger but for the wrong reasons. 'Family' runs the business and get together to kill their enemies, affection comes a distant third ... as a result, any wealth generated tends to remain in fewer hands.

Venezuelan family-owned companies tend to perform poorly since professional management is often bypassed in favor of sons or nephews. Most of them have, in fact, gone under State-owned companies, now with no exception since the destruction of PDVSA at the hands of the barbarians, are managed by political "relatives" or clients of the government obsessed with filling out their pockets.

During the last four years, more than $100 billion of petroleum income has evaporated, never to be seen again, due to the incompetence and the corruption of the government of Hugo Chavez. This money came from the liquidation of a non-renewable resource which took between 30 and 100 million years to be formed and which will never be seen again.

The Welfare State is the other main enemy of our social progress. Paternalistic political leaders have led Venezuelans to believe that they can sit and wait for the government to provide them with all their needs.

This explains the long lines of people in front of the Presidential Palace, all holding small and wrinkled pieces of paper on which they have written, sometimes at a word per hour, their list of wishes or needs: a house ... a job ... some cash for emergencies ... used furniture ... a TV set.

For many of these people patiently waiting in line, the act of asking is not begging but the exercise of a right ... it is written in the Constitution that all Venezuelans are guaranteed a house, a job, free education, free health services, especially the children and the elders. But the old and the young are the Venezuelans who are suffering the most.

The people in line then become lottery players, since only one out of one thousand will be heard by the government. As a result, most members of Venezuelan society are no longer working or saving or educating themselves but playing the lottery, waiting for their number to be called.

The conversion of citizens into beggars or lottery players is one of the most horrible crimes a government can commit.

This is what the government of Hugo Chavez has done to poor and middle class Venezuelans.

Because of this crime, the country might already be beyond repair for several generations, after these four years of ineptitude, populism and indiscriminate handouts.

How can we explain to these thousands of social invalids ... to these thousands of poor indians roaming the streets ... to the thousands of children starving to death in every corner of our cities ... that the way to salvation is the way of education and hard work and social solidarity?

How can we tell them that we have to start from scratch, that societies are built by citizens and not by beggars?

How can we tell them convincingly that they had been misled by charlatans?

This is the task that lies ahead, as soon as we wake up from the nightmare....

How can a single person do so much harm?

Gustavo Coronel is the founder and president of Agrupacion Pro Calidad de Vida (The Pro-Quality of Life Alliance), a Caracas-based organization devoted to fighting corruption and the promotion of civic education in Latin America, primarily Venezuela. A member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), following nationalization of Venezuela's oil industry, Coronel has worked in the oil industry for 28 years in the United States, Holland, Indonesia, Algiers and in Venezuela. He is a Distinguished alumnus of the University of Tulsa (USA) where he was a Trustee from 1987 to 1999. Coronel led the Hydrocarbons Division of the Inter-American Development Bank (IADB) in Washington DC for 5 years. The author of three books and many articles on Venezuela ("Curbing Corruption in Venezuela." Journal of Democracy, Vol. 7, No. 3, July, 1996, pp. 157-163), he is a fellow of Harvard University and a member of the Harvard faculty from 1981 to 1983.  In 1998, he was presidential election campaign manager for Henrique Salas Romer and now lives in retirement on the Caribbean island of Margarita where he runs a leading Hotel-Resort.  You may contact Gustavo Coronel at email gustavo@vheadline.com

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