Crude Nation - Shows the Crude Reality

I heard of this book via John Oliver's Last Week Tonight episode on Venezuela.  And was interested to know more about the country that was increasingly making all the wrong headlines.

I found the book very helpful in giving a deep insight into how day-to-day life works in Venezuela and how does the society think. It has been in the news and the author has meticulously made his case giving a context of how things are why they are and what can be done to change it for the better.

The way Venezuela works is shocking and totally unintuitive – people and the government do not believe in saving for the future because the country heavily relies on oil money (ever since they found oil in the early 1900s). Because the government spends heavily all of the oil revenue there is high inflation which causes further incentive to not save as it eventually loses its value kept in a bank. Faced with shortages and ever-lasting price controls make matters worse - smuggling and black market. The government faced with challenges and following populist measures plunders coffers of well-run private companies – nationalizing them, filling them with loyalists, thus increasing payroll and making them heavily inefficient.

Day to day life is full of crazy wait in lines at shops and still failing to get basic necessities like spare car parts and even toilet paper. The book contains so many such examples giving a clear view of the life that at a point you find them repetitive. But they are basically needed to understand how things work in an economy gone wild!

The book explains the Dutch disease – a phenomenon that occurs when the success of one natural resource ruins the rest of a country’s economy. Countries like Norway have taken special care to avoid it when they found oil in the North Sea). That was a new learning!

The stark call out in the book was that due to rampant corruption

“…Venezuelans wanted a firm hand that would upend the rotten state of things…… Venezuelans lack enough formal education to achieve abstract thinking. Most of them are susceptible to emotions not rational thoughts when it comes to politics.”  

Sounds like a vicious circle - deny the public opportunities to learn, know better and then play to the gallery. The general public’s view of money and governance is heavily distorted, out of touch than the whole world. They view government’s duties to be as a favor to them and are heavily used to populist measures.

The author calls out well-functioned oil-based economies who have created Sovereign Wealth Funds to diversify and invest for the future as an example. But looking at the present state of affairs it looks unlikely to happen unless there is a sudden painful event. Also, when I picked up the book I hoped it may provide an answer if the “socialist” policies led to its present dismal state but it doesn’t talk about it. You may have to draw your own conclusions.