ESPACIO PUBLICITARIO
CARACAS, Wednesday January 09, 2013 | Update
 
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OPINION

Bottom-Up

Venezuela is one of the most unequal nations on earth: as USD 1 trillion passed through the hands of the state since 1999, top political leaders wound up with far more wealth than many millions of families on the bottom, who are still relatively poor

MICHAEL ROWAN |  EL UNIVERSAL
Wednesday January 09, 2013  09:30 AM
Venezuela's failure has been caused by top-down consumer spending while the world has been succeeding with bottom-up consumer investment. Top-down command economies, which are typical in oil states, historically generate low productivity, high inflation and rampant corruption. Incentives for crony capitalism, theft and political handouts drive the society toward deals and away from work. Dependence on state monopolies discourages entrepreneurship and investment.

Venezuela was spinning in this tornado of self-defeatism for a long time before Chavez perfected the spin and called it a revolution. The policy victims are the bottom half of the economic pyramid, people who are confused by getting bigger handouts for consumption each year but which make them poorer through inflation.  

The question facing Venezuela is whether to continue down the path of failure or to strike a new path toward prosperity. The choice sounds simple but is not because the power elites profit enormously from top-down waste, corruption and inequality. Venezuela is one of the most unequal nations on earth: as USD 1 trillion passed through the hands of the state since 1999, top political leaders wound up with far more wealth than many millions of families on the bottom, who are still relatively poor.

In 2006, I showed in "Getting Over Chavez and Poverty" that the bottom Venezuelan families could work themselves into the middle classes through a capital investment of USD 48 billion in money-making equipment, small businesses, housing mortgages, and education. The key to bottom-up wealth is having private families own the credit, equipment, business, housing and education –not the state. Families need the independent work of making investments pay off for their children. As a result, they become self-reliant, middle-class, independent actors that the state cannot push around at will. This is what happened in Alaska, Norway and now Brazil, which sowed their oil in the bottom of the society in order to set them free. Why this commonplace and common sense solution has never been tried in Venezuela remains a mystery.

michaelrowan22@gmail.com


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That political protest in Venezuela has lost momentum seems pretty obvious: people are no longer building barricades to block off streets near Plaza Francia in Altamira (eastern Caracas), an anti-government stronghold; no new images have been shown of brave and dashing protesters with bandanna-covered faces clashing with the National Guard in San Cristóbal, in the western state of Táchira; and those who dreamed of a horde of "Gochos" (Tachirans) descending  in an avalanche to stir up revolt in Caracas have been left with no option but to wake up to reality.

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