Chavez’ Reverse Midas effect moves forward in Venezuela

October 4, 2010

The opposition is a majority. The opposition is a majority. Of course, that would only be important if I were a Democrat. True?

Some people were remarkably surprised by Chavez’ announcements this weekend to nationalize Agroisleña, arm his militia, take over land in Caracas and allowing workers to blackmail Polar’s ice cream company EFE, despite the fact that a new collective bargaining agreement was signed a couple of months ago.

I wasn’t. This is precisely what I expected.

This is Chavez’ history, he has used the ballot box only to justify being President, but he is no democrat. He showed it in February 1992 and November 1992, where he plotted and connived to overthrow and kill people. He repeated it in 2003, when he ordered armed confrontation with a peaceful march which resulted in many death. He came back contrite, but as he did, he was plotting how to erase any trace of his acts, the Truth Commission was stone walled and the “coup” tale was successfully spinned.

Then came the Constitutional referendum, which he lost, but proceeded to pass laws that approved precisely what the population had rejected, thanks to an Enabling Law that gave him legislative powers for months. The only thing he could not legislate was his own indefinite reelection, so he held an unconstitutional referendum that allowed him to run again. Finally, facing a Mayor of the Capital District that he did not like, he created a regional authority over him, removed responsibilities and funding and basically castrated the newly elected Mayor of the Metropolitan District.

None of the above are the actions of a democrat.

And neither are those taken this weekend. Chavez lost his mandate a week ago, but he only uses the ballot box at his convenience. This time around it is not convenient to accept defeat, over half of Venezuelans said they want something else, Chavez was deaf to this call.

Unfortunately, Chavez does not learn either from all of the myriad of mistakes he has made. He has tried over and over again to create parallel structures, all of which became largely unsuccessful. People don’t even remember he threw money at a Government-sponsored baseball league to compete with the professional one. That league played all of one game, which started two hours late waiting for Hugo to throw the first pitch.

Chavez also started Mercal to distribute food and once it became inefficient, he nationalized Exito and Cada in the belief that if he can’t start something that works from scratch, then taking it over from those that run a working structure can do it.

But PDVSA says otherwise, as seven years of Rojo Rojito Incredibly Incompentent Management have destroyed the company and its structure, driving the people who knew how to run it to the competition in Canada and Colombia, both of which have either strengthened their heavy oil industry or, as in the case of Colombia, come out of nowhere to become an important player thanks to Venezuelan brain power and know how. Meanwhile PDVSA languishes in its own problems, including Pudreval, falling exports and no new projexts.

It is the reverse Midas effect, anything Chavez touches turns into you know what. And he continues.

And I will not delve into the details of Agroisleña, Daniel knows orders of magnitude more than me about it, but it is the same story. The Government tried to compete with Agroisleña and it failed. Failed for many reasons, the first one being that the Government’s expropriations and take overs of land had reduced Agroisleña’s business to start with. But more importantly, Agroisleña’s success comes from its gigantic network of stores, its decades of working with people advising them technically, financing them, buying crop from them and having the good credit abroad to import seeds, pesticides and general supplies.

Imagine what will happen now when some retired sargents and colonels are mixed in with improvised graduates of Chavez’ universities and told to manage Agroisleña.

The result is terrifying, but is exactly what has happened with every institution that has had a brush with the reverse Midas effect of Hugo Chavez. Remember Sidor? Iranauto? Conviasa? Venalum? The Cement industry? The Sugar industry with Cuban processing plants? The Rice miracle? The first housing plan? The fourth housing plan? The first employment plan? The ninth employment plan?

You get the picture.

Chavez goes relentlessly forward destroying value and scaring the talent, people and values that he does not understand are necessary for the prosperity of the country. All for nothing, except for the promotion of Hugo Chavez.

And this will continue for two more years. The value destroyed will be immense, the time lost will be invaluable. But get ready for it, because that is what is in store for us for the next 27 months. Chavez has not learned anything about management or how things work in the last 11 years, he is not about to start now…

25 Responses to “Chavez’ Reverse Midas effect moves forward in Venezuela”

  1. Juancho Says:

    Imagine what will happen now when some retired sargents and colonels are mixed in with improvised graduates of Chavez’ universities and told to manage Agroisleña. The result is terrifying, but is exactly what has happened with every institution that has had a brush with the reverse Midas effect of Hugo Chavez.

    You don’t have to go any farther than this simple and totally accurate appraisal. But this is the countries very food supply – something like 90% of the home grown comida is tied to Agroisleña. Arming militias is one thing, but if there’s no food, then what? And since Hugo’s distribution services leaves the bulk of the grub rotting in containers on docks, even imports can’t be counted on. Once the bulk of food distribution falls into Chavez’ hands, look out amigos.

    He wants the control, as all despots do, but without the wherewithal to run anything, it’s all straight down the drain.

    It might be interesting for a Globovision crew to go around and document how Chavez and company is actually doing with the assets they have nationalized. We are afraid of inventories and follow ups here in Venezuela, but this one begs to be done. I think few have any idea that the bulk if not the balance of all nationalized assets have floundered if not collapsed entirely. How about that Merida trout farm. Who has current photos of that?


  2. Kepler Says:


    Rand was a best-seller writer, not a philosopher and much less an economist.
    What she wrote was pure fiction and it was, unlike what Orwell wrote, really fiction-fiction. Her ideas have never brought about anything and anyway: Venezuela is the last place in America where they would work. Venezuelans are dependent on oil and if some productive people just leave the country Venezuela will keep on living on petrodollars for decades, even if the standard of living will just keep going down the drain.
    Look at Cuba. Cuba does not even have oil.

    Miguel can take his decision, as I did, but honestly: leaving the country won’t make it more difficult for Chavismo.

  3. deananash Says:

    Oh Miguel!, how I wish your words were true: “And this will continue for two more years.” Unfortunately, from your own introduction, Chavez is a democrat only when it suits his needs. He isn’t going anywhere in two years – at least not via the ballot box.

    So, since we know that he isn’t leaving via the ballot box, it’s way past time to start looking at alternatives.

    The first has long-since begun, and is my personal favorite: A FULL STRIKE. How has it begun? Well, I’m referring to a strike by those whose work is meaningful (read productive). That is, as Ayn Rand so aptly wrote: “the men of the mind”.

    The only problem with this is that the effort has been too limited (too slow). Which is why I repeat, FLEE Venezuela now! Withdraw your minds from the service of the emperor.

    Of course, there are other ways to get rid of Chavez, but sense violence begets violence, AND there are no quick fixes anyway, I don’t recommend them.

  4. Gerry Says:


    Do you think this new clean data base will be the foundation of the new voting register?

  5. GWEH Says:

    Island just read the article… that is just registration my friend. They are going heavy-handed about it but what do you expect. I assume that if they have to call up people they will review the list and be selective about who and where. 18 year olds will go to the army others elsewhere.

    One immediate benefit to the regime is the creation of a new clean database from which to data mine.

  6. Roger Says:

    Where do I start? “Been there, done that” as Fidel is now saying. Here are Soviet posters from the bad old days I keep waiting for Chavez to say that Venezuelan will have to WORK HARD for the Bolivarian What ever!

  7. GWEH Says:

    if the real purpose of the militia is to defend chavez then every man and woman under arms does count. You train a 50-year old grandmother how to use an assault rifle – get out of the way. The militia is not a cure-all for coups, rebellions, insurections, riots, disobedience but it can be a very valuable option that may just get your ass out of a sling.

  8. GWEH Says:

    Bloody Mary you must not be Venezuelan because Chavez embodies the essence of all that is Venezuelan. Chavez is the product!

  9. GWEH Says:

    Island, we have 60+ year olds serving in Iraq and Afghanistan so it’s not that far out. I know plenty of folks over 60 who can handle a firearm. You are reading too much into this don’t try to make sense of the regime. As long as you can load and shoot you are good to go for the militia. Weight does matter and would only issue AK-103’s to the militia for it’s 3-4 pounds lighter than their many FAL variants. This makes a huge difference more so for the folks you mention try running around all day with 15 pounds in your arms.

  10. framethedebate Says:

    With 40 + percent of voters supporting the fat man, there are legitimate reasons to believe that the devistation of Venezuela will not come to a halt. In spite of all the horrific evidence, there is enough sentiment in favor of the “Destructor” that the path chosen will continue. Apparently those hardest hit by Chavez are used to turning a blind eye and not matter how much the country turns into an annexation of Cuba, they will provide unwavering support. A bleak future indeed. Reality be damned in the name of the revol(t)ution

  11. island canuck Says:

    The story is now published in La Patilla:

    According to the article you will need the military carnet to:
    1) To register in educational facilities & universities.
    2) To get a operator’s licence for cars, boats or airplanes.
    3) To have any kind of a position or employment in any public organization
    4) To receive any kind of public scholarship
    5) Any job in any private company as the owners will be obliged to demand that you have the registry card or face fines.

    As I’ve said before there has to be an ulterior motive for all this.

    It would be interesting if anyone with a knowledge of military law could advise us on the ramifications of registering with regard to basic human rights & constitutional rights.

    In other words is this just another way to circumvent the constitution?

  12. island canuck Says:


    But 60 years of age? It certainly is ridiculous.

    The point wasn’t the weight – it was the age. We aren’t talking about 25 year olds here.

    There was an obvious reason why the “government” wants all these people to register when they already have all the info at their disposal through the cedulation program.

  13. GWEH Says:

    Island I understand what you say but it’s not that ridiculous. In the US we have Selective Service Registration mandatory for all males 18-25. In the US we have overweight and out-of-shape 18-25 year olds like crazy… under your logic they should not be allowed to serve! Did you know that the US military changed basic training to include yoga and calisthenics to accomodate this group? Crazy!

  14. GWEH Says:

    I agree there is too much optimism and wishful thinking. Khyber you show some realism when you say Chavez is long term but what are you thinking when you say Venezuela is on its way to dictatorship… I thought we passed that milestone a while back!

  15. island canuck Says:

    Albionboy said:
    “…by doing so these people come under military law, going against the government (read Chavez) then becomes treason,…”

    Wow, it just shows you how innocent mentally we all are. That would have never occurred to me. I wondered long & hard what the possible advantages to this could possibly have been.

    My bet is that the majority of people will just laugh this off & do nothing. He can’t possible fine all the people & companies in Venezuela just before an impending presidential election.

    Also I find it strange that the rest of the mainline media have not picked up on this yet.

    Very strange.

  16. Bloody Mary Says:

    Sometime ago I heard that kids that are subject to domestic violence become hyper-self-protective and create a tendency to become psychopath. Based on rumors about Chavez hard childhood, I think his attitude and actions has a lot of scene. What amaze me is how people that is around him still support him and serve him…. of course corruption and incompetence should be the answer, but these people must have family are something else to care about in the medium term…… or not.

  17. albionboy Says:

    “Why, for instance, does an overweight 40 or 50 year old woman or man need to register for military service??”

    You miss the Machiavellian way of thinking of Chavez, by doing so these people come under military law, going against the government (read Chavez)
    then becomes treason, thats why this guy is in power 12 years later.

    He’s playing Chess, while the opposition is playing the fool.

  18. Alex Dalmady Says:

    “And this will continue for TWO more years.” (caps are mine)
    You are the definition of optimist.

  19. island canuck Says:

    Another item of interest has popped up in the last 2 days although the only media I’ve seen it in is El Sol de Margarita.

    Apparently in Oct. 99 a new law was passed requiring that all Venezuelans, men & women, aged 18 to 60 register with the military.

    Failure to do so by late October this year will result in a fine of BsF.780.

    In addition if you are a company or business & have employees with no military carnet you will be fined BsF.1.300.

    I have never heard anything so ridiculous in a land of ridiculous.

    First of all here in Margarita the pueblo is not going to pay any attention to this.

    Second what the hell is the cedula for. The government already has all this information.

    Why, for instance, does an overweight 40 or 50 year old woman or man need to register for military service??

    It is so unbelievable that is defeats all sense of logic.

    Just another example of why people who don’t live here will never understand the reality.

  20. Ira Says:

    Miguel, you left out the trout farm he took over.

    I wouldn’t be surprised if all the fish DIED already.

  21. What's Next Venezuela? Says:

    Chávez is destroying Venezuela. He didn’t win the supermajority of the National Assembly thanks to that awfull management of the country, however, instead of changing the course of it, he radicalizes it. Yes, he is still in power, but he’s increasingly losing popularity, the only thing in which he bases his government.

    Follow us on:

  22. albionboy Says:

    Chavez is the socialist neutron-bomb, destroys business, but not the population, that comes later.

  23. Khyber Says:

    I wish I had your optimism, but in all honesty I’m out of here not because I think in 27 months he will be removed, but because I think a dictatorship is very well on its way going to be a reality.

    The arming of militias. The years of pushing his agenda on the military and moving the people he wants to move up the ranks. His promises that he will not work with the opposition. 200 years of this revolution. There is not a chance he will step down to let anyone else be president. When that day comes, he will round up all the opposition members and charge them with treason, have them run out of the country or worse.

    I wish I can be more hopeful, but I think democracy is only an illusion in this country, and I’m taking my wife and kid out of it.

  24. Gringo Says:

    David Jackson clone:
    “Popular classes…rape of capitalism.. indigenous..Bolivarian..power to the people..poder popular…marginalized..greedy..racist.. ecological sustainability with 20 cents per gallon gasoline…solidarity..lap-dogs [running dogs of Mao] of…hierarchy…end hoarding of food…smash saboteurs…crush the bloodthirsty chigüires… and equality..Hugo Hugo he’s our man if he can’t solve it nobody can…Yanqui de mierda..revolutionary”

    How many cents a word do I get?

  25. Robert Says:

    It will not doubt take a full generation to recover Venezuela once he is gone. And the clock starts ticking the day he leaves and is not replaced by another autocrat

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