Posted on 11/04/2009 7:19:43 AM PST by La Lydia
....Chavez blames the water problems for El Niño but...it can not be blamed for what is happening. Problems with Venezuela’s water and electricity’s supplies are not new. When Chavez came to power, the Caldera Government was thinking of privatizing some of the regional electric power companies for the simple reason that the investments required with oil at around US$ 12 per barrel were beyond the capability of the country’s government.cChavez clearly disagreed with this even as he was not using the word socialism at the time. And he stopped the nationalizations, while simultaneously freezing rates for water and electric services.
This immediately limited the ability of the water and electricity companies to fund new projects and do maintenance. No new major electric power plants have been built in the 11 years of the Chavez era. Instead smaller plants were built, most of which contribute little to the country’s power grid, because they were built without taking into consideration the ability to connect and transmit the power...
And then there is the incredible story of Venezuela buying power plants from Cuba. These are small plants of up to 40 MW, great for Cuba which does not have the modern interconnected power grid, but not as useful in Venezuela. Cuba does not make these plants, they buy them from Sweden or Spain and re-export them to Venezuela at an outrageous price...Oh, I forgot, the 300 small power plants purchased from Cuba are currently not operating because of problems with the filters with Venezuela’s diesel.
In the middle, when oil prices were high, Chavez rather than invest money in new power plants went out and nationalized all private power generation companies, spending over US$2 billion in buying fully functional electric companies, rather than patching up Planta Centro or Guri...
One of the problems is that Chavez has named, time after time, retired or active military to lead these electric power companies, all of which had no prior experience in the electricity genration or transmission business. To top it all off, Chavez now creates an additional bureaucracy, creating the Ministry for Electric Power on top of Corpoelec (which Chavez created in 2007), the company which was supposed to consolidate all of the country’s electric power, transmission and generation. However, no cost efficiencies ahve been achieved as each of the regional companies still runs independently, with its own Board and independent structure, including bodyguards and perks for the Executives. And the first Minister for Electric Power has no experience in the area, as he is a former oil worker who is totally loyal to Chavez and his revolution.
The situation is no different in water, where rates have been frozen in another one of Chavez’ perverse subsidies to the rich (The poor mostly do not pay for their water, if they have it). Which is the reason why Venezuelans use more water than they should, besides the fact that there is a very leaky distribution system due to the lack of investment...It’s called underdevelopment and is all part of the Devils’ Excrement.
Sure! Privatize it- I would be happy to invest there knowing he would nationalize it again after it is working
/sarc
It was the Caldera government, back in the 90s, that was trying to figure out how to privatize it, not Chavez.
When the revolution succeeds, the first thing to go is the electricity.
True.
Socialism at its finest!!!
And they never learn. When these geniuses start planning their revolutions, nobody every says, “And how are we going to maintain the food supply, water and power, once we have destroyed everything that came before in the name of the People?”
Hail Congress, he can’t do it without them. Cap and tax is a congressionally led abomination. We need to start screaming bloody murder before they do this to our country, too.
Definitely coming soon to a country near you!
Smart grid + no investment in electric generation = shortages and cutoffs.
Best to check into generating your own power.
Don’t forget the blackout curtains so everyone doesn’t see that you have power and they don’t.
Socialism ALWAYS leads to decay of the infrastructure. We can expect the same to happen here if the communists retain their control of power for any length of time.
And Obama has wet dreams about being Hugo.
Ewww. No thanks for THAT mental image.
With all the outages and durations thereof here in North Central WV, I gotta believe that Chavez is running Allegheny Power.
That’s why they want control of these things -
food production, energy production, access to medical care
All of these can be used to reward their allies and punish their enemies.
A couple of things stand out -
[Chavez] stopped the nationalizations, while simultaneously freezing rates for water and electric services. This immediately limited the ability of the water and electricity companies to fund new projects and do maintenance.
No profit means no surplus capital for new projects, and no socialist system yet devised has managed both to replace this with centrally-directed funding and to place that funding where necessary. There are simply too many inefficiencies within a centrally-planned economy for that, not to mention far more of a tendency to have the funds bled by petty corruption along the way.
That's problem one. Maintenance of existing infrastructure is problem two. It is a signal failure of socialist management not to understand that all income into a capitalist enterprise is not profit. Profit is what is left over after one has accounted for the funds necessary to maintain the system, maintenance being one of those, salary being another. Attempting to control the system at the demand end only by freezing price to the customer cuts profit first, to be sure, and then it cuts the other areas as well. Decay sets in immediately and management of the enterprise afterward becomes merely the management of decay. This is really not difficult to understand.
One lesson in management that seems to need to be relearned every couple of generations is that different styles of management are needed to reflect different management objectives - project, operations/maintenance, and research being three examples. The notion that one style fits all was quite popular in the heyday of the MBA in the United States. A lot of companies paid the price for believing it. I bring that up because:
...Chavez has named, time after time, retired or active military to lead these electric power companies, all of which had no prior experience in the electricity generation or transmission business.
The theory that a good manager can manage anything without understanding its technical nature was also quite popular at one time, with results differing from modest failure to complete disaster. Usually what happens is that the manager adapts, learning the technology at the expense of the operation, if the operation can afford that inefficiency. If it can't, all that happens is that the decay accelerates. Even a general with the best of intentions is going to find operating an electrical generation plant a challenge; add to that the corruption inherent in supporting political cronies and gaming the system, and it's simply an impossible problem. Threatening to shoot the workers for not spinning hay into gold doesn't turn out to get you much gold.
The upshot to all of this is difficult to see on a theoretical level (which is why socialism is still so popular on campus) but is so universal in real application that it's impossible to deny: redistributive systems feed off the creation of other systems and do not replace what has been stolen. In time there is no more to be stolen. That the ruling class is the last to suffer is cold comfort to anyone else.
When you stop capital formation, several bad things happen. Chavez doesn’t care, because he doesn’t get it. But I wonder if our government will figure this out in time.
At least Hugo served in the military, J.F Kerry type traitorous scumbag though he may be.
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