Yikes! Social Liberals Vs. Capitalists?

I won't waste time with a long introduction. This post is a response to a response to a post I wrote, which in turn was a relative response to another post.Alright then, let's go!

Now, Sandmonkey responded to my post by saying:

Well, Faisal, let me ignore your mindboggeling comparison of those who die on the hands of terrorists and those who die from poverty for a minute, because You said you don't want a blog-bashing post and I believe you. This will be a discussion of the issue at hand and the mode of thinking. Ok? But first of all, let me correct you on 2 things: The Oil companies in Bolivia aren't US or from other developed countries, and this wasn't done for the "benefit of the people".

Hold on a second! I made that comparison for a reason… ignoring my comparison is like saying: "we'll just imagine you didn't say this". But… but… I did! I said it!

I will, of course, continue to look at the rest of the arguments that were made, but we can't just forget about the comparison. No way. I will bring this up again as I go through the post. I also want to say I'm glad that you didn't take it as a blog-bashing contest. That would have been useless and such an intellectual turn-off!

Now, you said you wanted to make two corrections. Let's take the first; that the oil companies in Bolivia are not from the US or other developed countries. This is factually incorrect. I actually quoted an Exxon Mobil spokesperson in my first post. But, more information about the "nationalities" of these companies here, here, here and here. Brazil's PetroBras has the highest share and then come the three European companies (or joint venture in one case) and Exxon Mobil. That's three major operators from developed countries.

As for the "benefit of the people" argument, I guess my whole post will go through that.

Sandmonkey also said that "Brazil isn't exactly what someone would call a rich or developed country. And do you know how much the bolivian government stole, sorry, i meant nationalized from them? 1.6 Billion dollars worth of investment . That's money the brazilian people will never see ever again. Is that, in your opinion, right?"

This is a bit tricky to answer, I must admit. On one hand, and straight off, I would have to say Hell No! Of course, it isn't right. $1.6b is quite a large amount of money, especially for countries like Brazil and Bolivia.

But, again as I mentioned in my original post, Morales clearly stated that the contracts would have to be re-negotiated within six months or the companies would be nationalized. I'm guessing what he is doing, at this point in time, is ensuring that no foul-play (as far as he is concerned) or some form of sabotage takes place. Whether I support his decision or not, it would be reasonable to suppose that these companies might decide to take action that Morales would not want; dismantling equipment beyond the abilities of the Bolivians to put back together, shipping equipment and other forms of capital out in secret etc.

Keep in mind that the statements in the previous paragraph refer to matters from Morales' point of view… regardless of whether I (or anyone else) agrees with his decisions.

Now, this re-negotiation (assuming it occurs and matters do not deteriorate drastically – which I do not believe will occur with the way both the Brazilian President and Morales have been handling the situation after the announcement) will probably end up changing the current contracts in such a manner as to benefit the Bolivians (through their government and respective agencies and institutions) more.

Oops. Noticed I didn't answer the $1.6b question. Open a notepad file or something next to your browser so that you don't forget, I will be getting to this question in the next part of my post, but I will say this: If there is proof that a certain party was complicit in any action or whatever that involved depriving another party of their economic rights and thus their right to live a dignified life where their needs are satisfied (because of work they do, of course) then I support nationalization 110%. (Please keep in mind that I am not, at this point, claiming that the companies, related to this specific topic, were in fact party to any such behavior. I was merely declaring my view on this matter).

Moving on. I need to make sure that something is clear; Morales, during his campaigning had always mentioned that the nationalization of energy/hydro-carbon industries was a main and important point on his political agenda. The people voted for him based on this agenda. In fact, that vote had one of the highest voter turnouts in Bolivian democratic history. Morales won a clear and comfortable victory. Conclusion: A large portion of Bolivians wanted this. The Majority wanted this. Morales, as a man/human being/living entity or whatever, is merely a representative of this group of people. He didn't seize power through force or through illegal practices.

Sandmonkey then said:

Second of all, does it strike you as odd at all that the moment they seized the companies, it was venezeulan technicians who went in and ran the sites ? Does it not seems suspicious at all, that the bolivian candidate that was supported by Chavez all the way , suddenly nationalizes the industry and hand it over to the technicians of his "ally"?

As about the Venezuelan technicians part, I honestly see no relevance to the topic at hand; if that post was in fact a response to my post, then it's the nationalization and its disadvantages/advantages to Bolivia and its people that was under discussion. Excuse me if I think that the attempt to tie Morales to Chavez is an attempt at sensationalization by linking Morales to someone who is not quite liked by many countries in the west.

Either way, let's say it wasn't an attempt to sensationalize and it's relevant and all that. Well, I hate to say this… but most of the sources I've attempted to check online mentioned nothing about Venezuelan technicians taking over these facilities. It might be that I missed that fact while browsing through, literally, at least 90-something news and opinion pieces on the matter.

Either way again, if he enlisted the help of another country's technicians because his couldn't manage on his own, I honestly see no problem with this. As about Chavez… well of course he'd support Morales. Their "economic reform/policies" agaendas seem to have found a common point, an intersection if you will, where they both see eye-to-eye. I'd support him if I were Chavez: LOOK! LOOK! I'm not alone! Third world countries tend to do that.

Interestingly enough, when I followed one of the Sandmonkey's links I found this (it was the last paragraph of the article):

Under Monday's decree, foreign companies must sell a majority stake of their participation to YPFB. Yet it remains unclear how Bolivia will come up with the several billion dollars needed for that deal.

Pssst! There's the bit about compensation. It isn't exactly hardcore, confiscate-nationalization if you're buying the shares/stake, is it? (The YPFB is Bolivia's state-owned natural gas company).

Aaaah! Now we get to the meat of the matter; the war of ideologies. I've noticed that many of the comments on Sandmonkey's post are screaming against socialism. Well, I'm not going to defend socialism because, in all honesty, Im not rooting for socialism. What I'm going for are certain ideas that I believe can be integrated into any system; the fact that they bear close resemblance to socialism is… well, it is what it is. I have no explanation for it.

When sandmonkey says

Do you know what Morales now wants? He demands that any company that comes in to get only 18% of the profits, and give the other 82% to the Bolivian government. And they are wondering why the hell no one has stepped up to take them on that offer yet. Man, I work in the Oil and Gas sector, and let me tell you, that kind of profit margin is beyond unacceptable. The return on the investment would take forever to actualize itself, and let's face it, any government that sees it well in its right to nationalize your investment whenever they see fit, is a government that you can not trust with your investments. So yeah, sure, they did take over the facilities, but no one who actually knows how to run the business will touch it with a 10 foot pole. Morales, if he really wanted to help his people and raise their income level, has fucked up big time. Bolivia doesn't have much oil to begin with, so the return is not even close to the risk.

… all I can say is:

1. Don't you think that the number, 82%, is a bit of a strange number? I did. First thing that came to mind was: Why on earth did this guy not say 80 or 85? I mean come on, I sincerely doubt that they went to great pains calculating some sort of cost-benefit analysis and came to the conclusion that with the 82/18 combination they will get the right number of investors. First thing I did was check things out and, then I found this. Now, I can begin to understand the number:

The state assumed the majority control (51% of the actions) of all the oil-producing companies in the country and two refineries of the Petrobrás (brazilian state company); decreed an increase of the gas tax of 50% for 82% and gave a period of time of 180 days for the companies accept the measures, otherwise they will have to leave the country… Formerly, in the beginning of the privatization process, the companies stayed with 82% of the invoicing and the state with 18% left. In that time, the executives of the company Repsol YPF (Spain and Argentina) celebrated the fact that, for each dollar they put in Bolivia, the company got 10 dollars of profit.

So basically, the situation was reveresed when the companies were privatized. Hell, it isn't even fully reveresed because before privatization, the state owned 100% of all assets. Even more, I came across this article. This is the bit which caught my attention:

Although Mr. Morales said on Thursday that no compensation would be paid because there was no confiscation of energy companies' assets, Bolivian officials have said that if the new contract talks fail, expropriations are possible, and in that case, restitution would be made.

As always, its the little stuff that is mentioned by some anonymous officials that usually goes unnoticed… no matter the significance of the declaration or statement they made.

As about Socialism and Capitalism and all that. I am surprised at how much people do not realize the complexity of things like Socialism and Communism. Idealistic as they are, these theories came out as by-products of events like the Industrial Revolution where Capitalism reigned supreme and workers were treated like shit.

A simple response to this would be: but hold on a second, if Capitalism is simpler, then just apply its tenets and you're safe. Occam's Razor you idiot! Sadly, that isn't the case. But, what also isn't the case is that socialism failed… as a system. Look at Sweden for god's sake! That, is what I am arguing for. Russia was a perfect model of State Capitalism; the state was responsible for the distribution of resources and production. The State, and not the workers or peasants, was the owner of property.

Cuba have some of the best doctors in the world. If that's Socialism, then to hell with the Scandinavian Model and let's go Socialist!

As with Abdel Nasser… I can't even begin to talk about Abdel Nasser. You're Egyptian Sandmonkey… I don't think I have the patience nor stamina to enter into another discussion about him. Suffice to say that I agree with you whole-heartedly, it is a fact after all, about the gold, the Egyptian Pound and the state of the economy before-hand. Let me also tell you that my own mother (who hails from the landed-aristocracy – before Nasser obviously – and whose family lost a WHOLE LOTTA LAND because of his nationalization) had this to say about Abdel Nasser: Shoof ya Faisal. It's true that we didn't get to eat Apples every year. It's true that he took the land and all that. BUT, the poor people who lived miserably at the time of the king had food on their table every night.

I'm not a huge proponent of Human Rights and all that… in the sense that it isn't really something that I think about all the time or associate with athoritarian regimes and all that. I am a Political Economist, so I think Politics and Economics. I want people to have land (I want to own land myself!), I want people to invest and enjoy the returns on their investments (the more the better, I say!) But, I cannot accept that people do this while others cannot find food, or clean water, or clothes or shelter and are not given a fair chance of obtaining them. Again, if that is Socialism, then I'm all for it.

As about the approaches… well, again, I'm all for micro-financing and micro-banking. I'm all for lending money to SME's and households so that they'd start their own projects and make money off that. I'm also all for free education up and until University levels, an efficient public health-care system (in addition to private health care) and public utilities (or at least the option of some… in some way or another).

What I am not in favor of are entities like the World Bank and International Monetary Fund who send their smiling, suit-clad, theory-toting representatives/employees to my country and "forcing" the government to "Go West". That is exactly what happened. They come and they decide that Egypt, as with most other countries they've attempted to help, needs to restructure its economic system in order to 1. Repay all its international debt 2. Thrive economically.


What happened is that they forced the government to spend less money by hiring less people and removing subsidies from foodstuffs and other products (most of them essential products that are used on a daily basis – salt, sugar, flour etc). You know, this would have been totally fine were it not for the fact that there was no one in the Egyptian market to replace the government as the LARGEST SINGLE employer in the economy and, of course, poor people's purchasing power does not increase because subsidies are cut. And Egypt boomed for a bit and the people suffered.

If you want to say that socialist governments have only brought misery and doom unto their people, I will generally not disagree with you. I will say thought that the whole truth goes a bit beyond that; it isn't their socialist tendencies or whatnot that doomed them, it was their (generally) authoritarian, totalitarian system of rule that stripped their citizens of all their rights, freedoms and ability to prosper and/or achieve social mobility. THAT, I am definitely against.

Let me just say this about Bolivia, I just remembered something someone had said, if foreign investors do not go to Bolivia, then Morales will learn his lesson the hard way and he'll obviously have to change the way he deals with the world. Let me just say this: I sincerely doubt that any wide-spread boycott of investment in Bolivia will occur. They might face a bit of a problem in their energy sector for a couple of years (maybe!) but no more.

As for me benefiting from capitalism, well… I never said I did not. Even if I hated capitalism, I am not in a position personally to change the International Economic Order or World System generally. Having said that, I don't think that pure capitalism works for me (in terms of what I think would be best for all or at least most of the people). And sure the Chinese benefited from Capitalism… they couldn't afford not to. They "got with the system". Notice though that the chinese only have a couple of cities that have non-socialist laws and exemptions for foreign countries.

Also note that it's free trade (another concept which scares the living hell out of me) that the Chinese utilized most intelligently to get where they are now.

TAKE NOTE: My first post was entitled: "Why I'm a SOCIAL LIBERAL" (not Socialist or Capitalist-hater)

I also believe that Socialism and its pretext of working for the public good has always been and still remains the ultimate excuse for tyrants and dictators to validate their powers and control.

Couldn't agree with you more. The fact that it can be used to sway the hearts of men (and women of course) to help the tyrant, dictator or whatnot entrench himself further is something that I cannot deny. But, I can definitely say that Socialism (as a theory and not a living entity) cannot be blamed. That's like saying it's the bread-knife's fault that it was used to kill someone.

In Short: I am NOT a socialist! Nor do I support Capitalism! People who think life is just Socialism and Capitalism really need to read-up on the way this world is run. It's much, much more complex than that. I support certain policies, most mentioned above, that I believe should be applied in any state. If you wish to call it Socio-Capitalism, Communism or friggin Geography… please do so.

And thus, I await to see what Morales will really do after all the attention that he wanted to get, and did obviously. I want to see if what he did will help his people, like he said it would and based on the fact that his people voted him into power because of these promises.

So, about the $1.6b? Well, if he covers any losses (in terms of money invested until that point) then I'm personally cool with it. If not… well, then I'd have to see how that company treated the Bolivian market and government when it comes to the contract and so on and so forth. So basically, I have no conclusive view on the matter.

That's the way I see it.



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