Socialist management

Venezuela continues to provide an object lesson on socialist management. Last month, Venezuela suffered a devastating oil spill (subscription required):

[On February 4], a pipeline carrying pressurised oil fractured in the state of Monagas. The crude soared 25 metres (82 feet) into the air and flowed for a full day. Anywhere from 40,000-120,000 barrels poured into a river that supplies drinking and irrigation water. Some 550,000 people now lack water at home. . . It may take months to clean the supply.

The spill exemplified the decline of Venezuela’s state oil company after Hugo Chavez fired everyone who knew anything and replaced them with his cronies:

PDVSA has struggled under Mr Chávez. In 2002 its workers went on strike to try to force him from office. In response, he fired 18,000 PDVSA employees, including senior managers. He then stuffed the company with tens of thousands of loyalists from what would later become his United Socialist Party (PSUV).

Since then oil output has stagnated, and accidents are on the rise. According to Eddie Ramírez, one of the sacked managers, the “old” PDVSA averaged less than two accidents per million man-hours. In 2010 there were 9.4 accidents and almost six deaths per million man-hours.

Chavez also got rid of the independent contractors in 2009, so it’s no surprise that he has no one left who can run an oil company.

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