Dreams and visions for Venezuela´s year 2000

To only think of the possibility that my three pretty, intelligent daughters must, together with their other Venezuelan companions, cross the threshold of the next century holding hands with any of the current options we have for the next presidential election, creates a lump in my throat. By saying this I do not wish to imply that none of these options are based on efficient and well meaning people. It’s just that until now, none of them have managed to present an inspiring vision or dream.

This country is in dire need of dreams and visions of the future. Without them, we will not be able to stimulate neither the efforts nor the sacrifices required to elevate Venezuela into the ranks of the truly developed nations. Evidently, there are no perfect prescriptions to achieve this development, but I do remember that an old Chinese proverb recommends that we aim for the sky, since even if we don’t reach it, we will surely have achieved more that if we had aimed at a lower target.

Let’s analyze an example of a dream. In Malaysia, a country with a population of 20 million living in an area one third the size of Venezuela, authorities recently launched an initiative to create an information technology park at an estimated cost of US$ 20 billion. This park, located somewhere between the capital city of Kuala Lumpur and the international airport on a plot of land of about 50 square kilometers, will consist of two new cities, the installation of fiber optic communications networks of immense capacity and the promise to develop both government as well as a series of laws designed for the management of this cybernetic reality - basically a cybernetic bubble.

Some of the main technological firms of the world have been invited to occupy this park and will be incentivated to participate in a series of futuristic projects such as the creation of “intelligent schools”, teledirected medicine and the design of electronic procedures that will eliminate the use of paper in government.

Until now, based on benefits such as fiscal incentives, protection of intellectual property and guaranteed freedom from censure (something extremely important in the world of Internet), a number of important firms have shown serious interest in joining this project.

Without making judgment as to the validity or not of this Malaysian plan, Venezuela definitely has nothing even similar. If we were to analyze the current local supply of dreams and visions, we would find that we have a depressingly poor selection, headed by the possibility of an intelligent identification system with cédulas with 4K memory chips.

Even in the case of the much heralded and promised train to Cúa, the latter’s recent rebirth is based on publicity calling it a “solution to Caracas’ problems” rather than the initiation of development and progress. In dreams of previous times, when trains criss-crossed the entire country, plans for a train station in Cúa probably didn’t even exist.

Audacious plans, for example the use of the resources obtained during the recent bids in the oil patch to equip four million students with modern computers, offering them total access to information and opening the possibility of a real educational and social revolution, are schemes that are not even being considered as possibilities.

On the contrary, these resources from the oil aperture, obtained by sacking the future flows that really belong to our children and grandchildren, will most probably be used to satisfy and cover the labor costs of a bloated bureaucracy, which, maybe anticipating the Malaysian experiment, seems to have also eliminated the use of paper, even when not by design but by sheer logistical incapacity. What egghead could be happy when confronted by the fact that the international reserves of the Central Bank have now reached US$ 18 billion when the country’s real reserves, its youth, is deprived and undernourished, both physically as well as mentally.

As a nation, I consider that we all have the immediate responsibility to develop plans and visions for the future that would provide not only a sense of direction but that would also satisfy the need for illusion and dream so proper of youth. We must expect and more importantly, require, from our leaders the capacity to understand these plans and visions, to assimilate them and to convert them to reality.

I hope to God that when December 31st, 1999 rolls around, I will not have to announce to my daughters that we will be moving to a successful park in Malaysia. I hope to God that the illusions twinkling in their eyes will include Venezuela.

Just how low can salaries get in Venezuela?

During a trip we recently took to a Caribbean island, I saw a local salesman selling arts and crafts supposedly typical to that island. One of his products was a t-shirt that boldly stated “Different Island - Same Sh..”. This same message could easily be applied to the economic policies implemented in our countries. These policies seem to be based on an economic Hit Parade list rather than on a profound analysis of the problems at hand. This can be good or bad.

It can be good if it forces our authorities to apply rational economic measures in order to avoid the indignity of looking out of place and time in the televised debates that have become so popular in spite of their boring economic themes. It is bad if it implies trying to adapt measures that may be rational in one country, but not in another.

Fifteen years ago, Venezuela was a country that attracted foreign investment by flaunting its sustainable economic advantages. Among these was cheap gasoline, electricity and fertilizers. Additionally, internal production was protected by a series of import duties. This compensated for the fact that the country’s oil income allowed it to maintain an exchange rate that rendered the non-oil sector uncompetitive.

Today, having applied a large part of the economic recipes that are currently en vogue, we find that the only sustainable economic advantage which remains is a rock bottom salary level. This definitely does not seem correct.

On which strange theory is the government basing its policy of raising the price of gasoline sold in the local market to international levels while at the same time paying doctors, teachers and other professionals’ salaries that are only a fraction of what they would receive elsewhere? Should the country really need to introduce certain artificial measures to maintain its economy’s competitivity levels up to par, it would be much easier to justify applying subsidies to fertilizers than to exact the sweat of our farm workers by paying miserable salaries and benefits.

Obviously, this note does not imply that we should be subsidizing inefficiency or that we should be paying salaries to those that do not show up for work. Those that do not work evidently do not deserve a salary either in New York, Tokyo or Caracas. On the other hand, those that do work deserve salaries that are reasonable in New York, Tokyo and Caracas.

When a public sector worker is competent and performs his or her duties with responsibility while receiving a fraction of the pay that would be reasonable, he or she is making a contribution to the state that is exactly equivalent to the payment of taxes. As is the custom, this tax payment will never be accounted for in our so-called fiscal paradise.

The difficult problem Venezuela is currently suffering through with regards to labor and salary structures, and which has resulted in salary levels comparable to poor countries rather than to an oil rich nation, is clearly a product of the failure to properly select and adapt an economic policy.

I attribute this failure to two basic factors. The first is that while the selection of an economic plan was aimed at strengthening the private sector, the only parts of this plan that were actually implemented were those that increased the state’s income. The magic used to achieve this was the ability to effectively disguise planning officials armed with a soviet style centralist philosophy in a neoliberal skin.

The second factor is that due to a cyclical weakness of the oil sector, the need to adjust any measures to the basic reality that we are indeed an oil country was blithely ignored. As an example of this, you may remember that some experts managed to find a comparative sustainable advantage in the cultivation of apples in Venezuela.

The reality is that in spite of the fact that our politicians have hawked a series of agendas, the country does not have a coherent model that can guide it’s development and guarantee workers, handymen and professionals a reasonable income in a globalized world. Obviously, the only way to develop such a model is by means of a unified effort by the main players in our economy, that is, the business and labor sectors. The first logical step is to avoid the traps set by the party guilty of having set them against each other in the first place.

In the absence of other subsidies and advantages in Venezuela, only salary levels remain as a means of attracting productive investment that can offer Venezuelans dignified occupation. Given the inefficiencies of the state such as bad infrastructure and the lack of physical, judicial and social security, these would most likely have to be offset by accepting salaries that wouldn’t cover the basic requirements of a Tibetan monk on a vegetarian diet.

 

The petroleum ombudsman

Ten years ago during an interview with a local reporter, I expressed my worries about the long term future of organizations such as Petroleos de Venezuela. While satisfying a real need for freedom of action and informative confidentiality, we have unfortunately also set the organization on a path towards degeneration of its operative capacity, no matter how efficient it may have been at the starting point. 

During this interview I even stated that the day could conceivably come when it could theoretically be more attractive to have politicians sit on PDVSA’s board than suffer the effects of an encysted meritocracy, unaware of the country’s realities. 

Venezuela’s challenge at that moment was to find a way to avoid this. It still is.

During the last few weeks we have received information pertaining to our oil industry which seems a bit strange and contradictory. Some “experts” harp on the fact that the internal cost of producing gasoline exceeds by far its price in the national market while others maintain just the opposite. 

The industry has announced a reorganization plan which would result in annual savings of US$ 2 billion. The other side of the coin of such sweet savings would seem to be the bitter possibility that the industry has been throwing these resources out the window all these years.

What does all this news really mean? Are we in bad shape but doing better, or are we in good shape but doing worse? This is very difficult to answer. 

As Venezuelans, shareholders and indirect beneficiaries of the petroleum industry we should have access to qualified sources of information. This information should be somewhat more objective than that we receive today from sources dedicated to different agendas, may they be government, opposition or industry insiders.

In this sense, I believe it may be interesting to promote the appointment of a Petroleum Ombudsman who, beginning with the limited role of providing truthful information, could eventually develop into a real defender of the Nation’s interests. The Ombudsman, a word of Swedish origin that identifies a spokesman and representative of the interests of society, is a figure that is used in many countries and performs many different functions in areas that are of relatively lesser importance than what the oil industry is to Venezuelans.

In addition to his role of truthful informer, the Petroleum Ombudsman can assist in the evaluation of the consequences of a great variety of aspects that affect the industry. One interesting case would be the implications of a request by Venezuela’s Central Bank to expand the oil industry’s role by asking it to delay payments to suppliers of goods and services in order to reduce excess liquidity in the local market and, as a result, fight inflationary pressures.

Another matter on which the solid, objective opinion of an Ombudsman would be more than welcome is the oil opening. Our happiness would be more complete when we are asked to celebrate the oil opening, could we only rest assured that the reasons for this aperture are not related to excessive fiscal pressure imposed on the industry which has limited its investment possibilities and even forced it to contract debt.

The existence of an Petroleum Ombudsman that is respected by the country would guarantee the collaboration of the nation’s citizens when it is justified. I am sure that among all Venezuelans of good faith that love this country, there isn’t one that would outright wish to contribute towards a deficit for the oil operators by purchasing gasoline at prices below production costs. On the other hand, among these same Venezuelans, very few would be prepared to pay a higher price in order to contribute to a Central Government that squanders its resources.

During the interview I mentioned at the beginning of this article, I maintained that should PDVSA be politicized, citizens would at least be in the position every five years of being able to pass judgment as shareholders of its management’s achievements. This was interpreted by the reporter as a recommendation to politicize PDVSA. This, as you can imagine, caused much embarrassment, and I was very relieved that the article was published on Saturday and during a period of vacations when few people read the press anyway. Today, talk about politicizing PDVSA does not continue to be a crime when we are seeing the latter become a political player; what is the same is not cheating (lo que es igual no es trampa).

Much more on this in The Oil Curse and in Petropolitan

A million-dollar cédula

I realize that the dance of billions of Bolívares (millardos in Venezuela-speak) can often make it difficult to determine if we are talking of important amounts of money or not. When we speak in terms of dollars, it is usually clearer. During the past few weeks, we have been subjected to the debate swirling around the government’s decision to acquire a new national identification system valued at US$ 500 million.

US$ 500 million is a truly large sum of money! It is equivalent, for example, to the cost of 600,000 good computers or 35,000 middle range automobiles. It is superior by a long shot to estimates of the investment required to renew the entire metropolitan aqueduct of Caracas. Measured in day-to-day matters, this sum amounts to approximately 2.1 billion subway tickets. The financial cost of this investment, at a modest 10% interest rate, would be US$ 50 million per annum, which allocated to an estimated 2 million cédulas issued per year would result in a unit cost (interest only) of US$ 25 per document produced.

What is truly surprising, is that the debate this decision has raised is centered on whether or not formal steps corresponding to the award process, either by formal bid or through direct negotiation, have been complied with. There has been little mention of analysis, nor have many questions been raised, as to how the use of the nation’s resources is being prioritized. Suppose, strictly for argument’s sake, that a 10% commission will go towards fattening a corrupt official’s bank account. Suppose, as well, that the investment per se is really not necessary and that the objectives established could be reasonably covered with an investment of, say, US$ 100 million. The cost to the nation of the crime represented by the commission paid would be US$ 50 million. The cost of a flawed decision, even if taken by Mother Teresa herself, would be US$ 400 million.

A country often must undertake considerable institutional investments even when basic primary needs have not been met, but in this case, the cost-benefit ratio used by the National Government to support this huge outlay is difficult to fathom. Although it would obviously be nice to have a cutting-edge national identification system, the country has many profound needs that are far too important to allow us the luxury of trying to resolve a basic organizational problem by simply throwing money at it.

When we contemplate the dilapidated state of our health and education systems, it is difficult to understand the decision to dedicate such an important amount of resources towards resolving a problem which seems to be secondary in nature. Even developed countries such as the United States and the UK don’t even have identification systems.

In Venezuela today, we have severe problems related to the lack of basic equipment, material and even passports. These problems undoubtedly are caused by an absence of administrative capacity and this could mean that even if we invest in a new national identification system, we would very quickly be suffering the impact of this very same indolence.

It has been suggested that, should we not accept the proposed system, the one that contains a 4K memory chip, our only other alternative would be a student ID card. I don’t quite understand what is so wrong with our traditional laminated cedulas; if only they were ordered and issued on time.

If the political will to avoid fraud and to severely punish officials perpetrating the same does not exist, the system, no matter how much we invest in it, will not work. The only probable result would be that the tariff charged for corresponding illegal transactions would simply be increased.

As a pacifier, we are told that there is no reason to worry since this will essentially be a government to government transaction. Maybe we should be asking for a citizen-to-citizen conversation instead. I’m almost certain that the German citizens, should they be shown photographs of the operating rooms in the Hospital Pérez Carreño, would not see the ethical value of sending us a US$ 500 million personal identification system.

Finally, as an intellectual exercise, I asked several of my friends to come up with some of the bad things one can do with a false cedula. None of the suggestions they came up with come even close to the horrifying things someone can perpetrate with, for example, a false driver’s license. Except, perhaps, the role false cedulas may have had in electing our governments. For this to be avoided, 4K of memory might not be enough.

PS. In Argentina they were seemingly not as lucky

Traducción:

Reconozco que en el baile de los millardos de bolivares puede a veces resultar dificil determinar si se esta hablando de un monto importante o no. Cuando se expresa en dólares no. Durante las últimas semanas se le ha indicado al pais la voluntad del gobierno de adquirir un nuevo sistema de cedulación en 500 Millones de dólares.

500 Millones de dólares es un monto realmente grande. Equivale por ejemplo al costo de 600.000 buenas computadoras o a 35.000 carros tipo mediano. Es bastante superior a las estimaciones de costo requeridas para renovar todo el sistema del acueducto metropolitano. En elementos del dia a dia significa 2.130.000.000 de tikets de metro A una modesta tasa del 10% representa unos intereses anuales de 50 Millones de dólares y los cuales repartidos sobre un nivel de 2 millones de cédulas al año resultaría en un costo, solo por intereses de 25 dólares por cédula.

El tema ha generado un debate en el pais. Lo sorprendente de éste es que se ha centrado en determinar si se han cumplido o no con los pasos formales referentes a un proceso de adjudicación, sea por via de licitación o negociación directa, y menos en analizar o cuestionar los procesos de como se esta prioritizando el uso de los recursos del pais. Supongamos exclusivamente para fines de una discusión de que existiese una comisión del 10% y que fuera a engrosar la cuenta de algún funcionario corrupto. Supongamos además que la inversión en sí no fuese necesaria y que los objetivos previstos pudiesen razonablemente cumplirse con una inversión de 100 millones de dólares. El costo para el pais del crimen de la comisión es de 50 Millones. El costo para el pais de haber tomado la decisión equivocada y aún cuando así lo hubiese hecho la propia Madre Teresa, sería de 400 Millones de dólares.

A veces un pais puede tener la necesidad de efectuar inversiones institucionales aún cuando existan necesidades primarias insatisfechas pero en este caso resulta dificil entender la relación costo beneficio que pueda haberle sugerido al Gobierno Nacional este cuantioso gasto. Por supuesto que sería agradable poseer un sistema de identificación de vanguardia pero el país tiene necesidades mucho más importantes como para permitirse el lujo de tratar de resolver a realazos un problema básicamente de orígen organizativo.

Es dificil en Venezuela cuando contemplamos el lastimoso estado de la salud y de la educación entender que alguien sugiera dedicar tan importantes recursos a resolver un problema que pareceria hasta ser secundario por cuanto paises desarrollados como Estados Unidos e Inglaterra ni siquiera poseen sistemas de identificación.

Si en Venezuela tenemos un problema actual debido a la falta de equipos básicos, láminas y hasta de pasaporte es indiscutible que dicho problema se origina ante nada en una falta de capacidad administrativa y lo cual podría significar que aún cuando se efectúe la inversión en poco tiempo nuevamente suframos los impactos de la desidia.

Se nos ha dicho que de no aceptar la propuesta desarrollada, la del chip de los 4k, nuestra única alternativa sería la de un carnet estudiantil. No entiendo que de malo tiene nuestra actual cédula de identidad laminada, si la pidiesen y emitiesen a tiempo.

Si no existe la voluntad política de evitar los fraudes y de castigar severamente a los funcionarios incursos en los fraudes de identificación, el sistema y por mucho que se invierta, no funcionará. Probablemente el único resultado sería el de elevar la tarifa que se cobra por la ilegalidad.

Como un pacificador se le indica a la nación venezolana que no hay de que temer por cuanto esta operación se efectuara de gobierno a gobierno. Quizas debamos recurrir a una conversación de pueblo a pueblo. Estoy seguro de que el pueblo alemán, de mostrarles una fotos de la sala quirurgica del Hospital Pérez, estarían poco de acuerdo con el valor ético de vendernos un sistema de identificación en 500 Millones de dólares.

Finalmente y como un ejercicio intelectual le pregunté a varios de mis amigos sobre que cosas malas se puede hacer con una cédula falsa. Ninguna de las sugerencias llegaba ni cerca de los horrores que puedan producirse con por ejemplo una falsa licencia de conducir. Excepto quizás la de poder elegir nuestros gobiernos y para evitar tales desgracias quizas 4 k no sean suficientes.