Armstrong Economics Blog/Economics
Re-Posted Dec 28, 2017 by Martin Armstrong
Venezuela has the largest proven oil reserve in the world. However, they are out of gasoline. The government has attributed this to poor management which has led to the stoppage of 80% of the country’s refineries. So much for socialism. The assumption that government is competent of managing anything is proven by this very example.
My old friend, Milton Friedman, said it best:
“If you put the Federal Government in charge of the Sahara desert, in 5 years there’d be a shortage of sand.”
A general with no energy experience was put now in charge of the state oil company. The problem has been political arrests has witnessed a mass migration of those with talent leaving the country with incompetent management. This has resulted in the oil industry simply collapsing as production is plummeting. A lack of investment compounded from the private sector and a collapse in cash flow coupled with chronic shortages of spare parts have crippled operations and we are looking at the first stage of how a government itself collapses under socialism.