Venezuela’s human-capital flight

Activists of CPB, the Communist Party of Bangladesh, staged a protest in front of national press club to support Venezuela president Maduro and criticize the U.S. role in Venezuela February 3, 2019 in Dhaka, Bangladesh. After the assembly, the CPB burnt a doll of U.S. president Donald Trump. (Photo by Khandaker Azizur Rahman Sumon/NurPhoto via Getty Images)

By Mary Anastasia O’Grady
Nov. 9, 2020 Anno Domini
Wall Street Journal

In an animated video clip posted to Twitter on Nov. 1, Democratic Vice- Presidential candidate Kamala Harris argued that America needs to strive not for equal treatment of individuals but for equity. “Equitable treatment,” she explained, “means we all end up at the same place.”

Efforts to guarantee outcomes are at odds with what it means to live in a free society where equality under the law is the guiding principle. So either Ms. Harris was blowing smoke or she wants to change America into a place where liberty takes a back seat to central planning. The latter is called socialism, a system that is not particularly kind to the poor.

Hugo Chávez also promised to make everyone in his country equally well-off. The concept sold in a nation that believed it was infinitely rich because it was swimming in oil. Intellectuals reasoned that he ought to stick it to the haves. When he did, they packed their bags and left.

Of the more than four million Venezuelans who are estimated to have fled their country since 2015, many are unskilled workers who have been forced into menial labor or lives as mendicants in foreign countries. Images of their march into exile have provoked compassion and grief across the globe.

Yet it is the flight of the knowledge worker that has done the most harm to the nation. As one Venezuelan economist told me recently, “you can be sure that the country’s most skilled professionals were among the first to leave and valued tradesmen were not far behind.”

The Bolivarian revolution’s earliest large-scale assault on know-how came during a lockout at the monopoly oil company Petróleos de Venezuela (PdVSA) in December 2002. Union leaders and the largest association of private enterprises called for the labor action in response to Chávez’s antidemocratic tactics. By February 2003 the effort had fizzled out. But the regime used it to purge at least 18,000 PdVSA and related-company employees, gutting the industry of most of its experienced personnel. By replacing fired workers with political loyalists, Chávez believed he was protecting his golden goose. Some of the most sophisticated PdVSA minds saw the future and fled.

In 2009, the regime expropriated Venezuelan companies that served the oil industry in the Lake Maracaibo area and in the eastern part of the country. It was one of many politically motivated mistakes that would lead to the end of investment flows. But as long as oil prices were high, the costs of such recklessness was hidden.

The party ended when prices tanked in 2014, government revenues dropped precipitously, and central bank money-printing led to a mega-devaluation of the bolivar. When PdVSA salaries couldn’t keep up with inflation, another wave of oil engineers— this time led by a younger generation—went abroad to work. In the years that followed, more oil technicians threw in the towel on life in Venezuela.

This vicious circle of declining revenue and human-capital flight has brought the once-mighty Venezuelan petroleum powerhouse to a standstill. Drilling operations and refineries no longer function properly, making the country especially vulnerable to U.S. sanctions.

There has been a loss of competency in a host of other industries as well. Gone is the presumption that one can turn on the tap for running water. This is reality in many poor countries, and people adapt. But for wealthy Venezuela to fall into such an abyss is mind-boggling.

From 1992 to 1999, José María de Viana was president of the state-owned water company, Hidrocapital, serving metropolitan Caracas. In an October interview with the Venezuelan news site TalCual, he spoke about the pain that this crisis is causing the poorest Venezuelans and “patients who are confined to hospitals where, in most of them, there is no water.”

“It was a long process,” TalCual wrote, paraphrasing Mr. de Viana, “that began with professional decline of the [water] companries” that, until 1999, “had the skills to maintain the delicate economic-financial balance that made it possible to cover costs and meet the needs of the population in a timely manner.” The nation’s electrical grid has similarly deteriorated as Venezuelans with the proficiency to maintain the system have left for greener pastures outside the country. Power failures are now routine.

The prospects for reversing Venezuela’s skills gap aren’t good. With incomes of less than $3 a month, many teachers have been pushed out of the profession by the need to survive. Last month the president of the association of professors at the Simón Bolívar University summed up the catastrophe this way: “A country without its children and young people training, learning, as Venezuela is in these gloomy moments, is condemned to continue to being dragged down as a nation and to be more violently devastated.”

It seems like a recipe for all to end up in the same place—to borrow a phrase from Ms. Harris—but not in a good place.

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