Viridian Note: Venezuela’s Curse

A good one. Read it:

Far from an anomaly, Venezuela is a classic example of that economists call the ‘natural resource curse.’ A 1995 analysis of developing countries by Jeffrey Sachs and Andrew Warner found that the more an economy relies on mineral wealth, the lower its growth rate. Venezuela isn’t poor despite its oil riches — it’s poor because of them.”

(((Read it ‘n’ weep. This Sachs-Warner thing is 8 years old. Ever heard of it before? Me neither.)))

“How could that be? For the same reason so many entertainers go bankrupt. (((Hey, at least we make people laugh, fella.))) Showered with sudden windfalls, governments start spending like rock stars, creating programs that are hard to undo when oil prices fall. And because nobody wants to pay taxes to a government that’s swimming in petrodollars — ‘In Venezuela only the stupid pay taxes,’ a former President once said — the state finds itself living beyond its means. (((Boy, irresponsible deficits like that would never happen in America. Rich people get no tax breaks, either.)))


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