But there is hope. A change in government, one that comes about through collapse due to sheer incompetence and corruption, will open the doors for many thousands of expat Venezuelans to return, bringing with them the skills and knowledge they have gathered from the far corners of the world.

Venezuela is not a small island like Cuba, where the slaves can be kept captive by not allowing them boats. Nor does it have the USSR or an oil-rich sugar daddy to pay the bills. Perhaps most importantly, Hugo is not Castro.

I believe there is reason for hope, good reason.

Unfortunately, we need a boatload of work to get to the point where we are exporting more than raw materials.

The money that pays the government contracts comes from where? Taxes.

I have yet to hear of a government that produces anything anyone wants to buy. Governments get their money by taking it away from those who do produce things of value, under threat of force, i.e. confiscation or imprisonment if the taxes are not paid. Or, as in Venezuela’s case, the means of production are confiscated by the government under the pretense that the revenues will be used to benefit “the people”. How much actually gets to “the people” after passing through government is anyone’s guess, but it’s safe to assume not much.

In your question about gold, I assume you mean when Venezuela’s gold supply runs out? With a strong economy and production base, exports could be traded for gold. That’s one answer. Another is that a gold-backed currency might be more valuable, it would buy more as gold became more scarce. It’s an interesting question, but the US dollar was backed by gold from 1789 until 1972. When the US went off the gold standard is when inflation took off.

Truly I don’t see endless economic growth on a finite planet as being desirable or wise. If Venezuela could feed itself and produce most of what it needed most of the people would be prosperous and content.

I think that a lot of the reason DC was spared has a lot to do with government contracting, whether defense or not, rather than tax collection.

It’s interesting to note that we have so much phosphate, and so little fertilizer going locally. I guess we could state that The Revolution will Not be Fertilized!

Back in the day we supplied Pequiven with the bags for several of their fertilizer products. We were told then that the only fertilizer exported was done so AFTER satisfying local demand. We were not their sole source, but based on the amounts of bags printed with “for export” versus no indication, I would say that they were mostly truthful about this.

Your acquaintance’s idea of converting the Bolivar to the gold standard is interesting, except I have a question:

Since the gold supply is not infinite, what happens when it runs out?

“The sole state to actually gain jobs is an unlikely candidate for the distinction: North Dakota. North Dakota is also one of only two states expected to meet their budgets in 2010. (The other is Montana.) North Dakota is a sparsely populated state of less than 700,000 people, largely located in cold and isolated farming communities. Yet, since 2000, the state’s GNP has grown 56 percent, personal income has grown 43 percent and wages have grown 34 percent. The state not only has no funding problems, but this year it has a budget surplus of $1.3 billion, the largest it has ever had.

Why is North Dakota doing so well, when other states are suffering the ravages of a deepening credit crisis? Its secret may be that it has its own credit machine. North Dakota is the only state in the Union to own its own bank. The Bank of North Dakota (BND) was established by the state legislature in 1919, specifically to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men. The bank’s stated mission is to deliver sound financial services that promote agriculture, commerce and industry in North Dakota. ”

http://www.webofdebt.com/articles/cut-wallstreet.php

Yup, Venezuela has coltan. If we are to believe the source, but it’s probably true. Venz has huge resources of all kinds of things; I work in agriculture, soil fertility and chemistry. From that viewpoint, Venezuela’s most valuable resource is phosphate, the rarest of the main fertility minerals N, P, and K. Nitrogen is easy enough, the air is ~80% N. K, Potassium, is also a very common element, 2.4% of the earth’s crust. P, Phosphorus, is rare, only 0.12% of the earth’s crust. Most of the soil in Venezuela is phosphate deficient, but the country has huge phosphate resources that could make the phosphate deficient areas highly fertile. It just needs to be spread around.

It would require a change in the Venezuelan attitude towards agriculture before this could happen. Perhaps when there is no money to pay for imported food something will change. At the present time I believe the phosphate is only being mined for export.

You mention that DC and North Dakota are still fine. I think we can discount DC, as it is a tax-based parasite, but North Dakota is interesting. It’s the only US state with a state bank, as opposed to a private bank. The North Dakota state bank has been around for about 100 years. Interest from loans goes to the state, which offsets the need for taxes. North Dakota’s economy is also overwhelmingly agricultural, and interestingly the soil in ND is naturally rich in phosphate.

In conversation with a friend the other day he said “If I ran Venezuela, I would begin mining gold, and change the Bolivar to a 100% gold-backed currency, the only one in the world. Many people worldwide would value that and want to invest in Venezuela.” Quite an idea.

Seriously, though, it is unwise to study the economy of the US as if it were one huge economy. It is better to study it as a union of various smaller economies. My take is that right now, certain areas of the US are definitely showing an improvement . Washington DC, North Dakota, and other areas have come thorugh relatively unscathed compared to say, Florida or California.

One thing that does worry me about the US is the loss of manufacturing. I may be old fashioned, but service jobs suck compared to manufacturing in terms of what is given in to the economy. Bringing back jobs in the manufacturing sector, once their gone, is a very hard proposition indeed.

Is this blog reserved for those who bash Venezuela while promoting the US, and anyone with a critical opinion about the great and wondrous US of A is not welcome to post here?

The last time the US economy was looking (almost) this shaky was the late 1980s. That’s when the “rust belt’ was happening, and imports were largely replacing US manufactures. The software revolution pulled the US’s chestnuts out of the fire that time, lasting until the late 1990s when the dot-com bubble burst. A new bubble was then created in real estate, which topped out in 2007. Since then, there have been efforts to blow another bubble on Wall Street, but at P/E ratios of 150:1 only fools are throwing money there.

Without good paying jobs, workers cannot be the consumers that have been the driving force of the US economy, yet you are seemingly promoting “cheap labor” as a good thing? Good for whom?

Just where do you propose that the next big creative development that will save the US economy will come from? Serious question, I’d like to hear some ideas.

I am very aware of Venezuela’s problems. Are they worse than those of the US? No, only different. You apparently are not aware of the sheer amount of untapped mineral resources in Venezuela. Some oil has been exploited, but iron, aluminum, phosphate, gold and many others remain largely untouched. Venezuela also has a huge untapped potential for agriculture; the US is already using all of its farmland, at least the parts that haven’t been paved over for malls, roads, and suburban housing tracts.

A change of government and the opening of opportunities would bring many educated expatriots back home to Venezuela, I think, and they would return with valuable experience of how the rest of the world works. In the meantime, Venezuela’s resources remain untapped, rather like money in the bank.

Time will tell.

Or not.