Via the NYT: Vote on Grand Socialist Plan Stirs Passions in Venezuela

In two weeks, Venezuela seems likely to start an extraordinary experiment in centralized, oil-fueled socialism. By law, the workday would be cut to six hours. Street vendors, homemakers and maids would have state-mandated pensions. And President Hugo Chávez would have significantly enhanced powers and be eligible for re-election for the rest of his life.

The wide-ranging revision of the constitution, which is expected to be approved by referendum on Dec. 2, is both bolstering Mr. Chávez’s popularity here among people who will benefit and stirring contempt from economists who declare it demagogy. Signaling new instability here, dissent is also emerging among his former lieutenants, some of whom say the president is carrying out a populist coup.

The record to date of regimes using oil revenues like this is typically not for the stated reasons of justice for the masses, but rather as a means for those in power to stay in power. In other words, I am skeptical of the notion that the main goal here is the sharing of Venezeula’s oil revenue , but rather the goal clearly is to establish Chávez’s basis for power for the foreseeable future.

Indeed, even under the previous political order it was a well-discussed fact that oil revenues fed corruption and often allowed elites to avoid tough policy decisions in the short term to the long-term detriment of the country.

It appears quite clear that the six-hour work week and the pensions and such are essentially a bribe to get voter acquiescence on a massive shift of power to Chávez. For example:

One of the package of 69 amendments to the 1999 constitution would allow Mr. Chávez to create new administrative regions, governed by vice presidents chosen by him. Critics say the reforms would also shift funds from states and cities, where a handful of elected officials still oppose him, to communal councils, new local governing entities that are predominantly pro-Chávez.

[…]

Under the project, term limits would be abolished only for the president, not for governors or mayors. Another item raises the threshold for collecting signatures to hold a vote to recall the president, effectively shielding him from one option voters have to challenge his power under the existing Constitution of 1999.

One of the more misleading, if not ridiculous, description of the situation is to call it “socialist” insofar as this isn’t exactly a true move to socialism as it relies entirely on the global oil economy, which is rather capitalistic in nature. Indeed, the very forces of supply and demand are filling PDVSA’s coffers to allow Chávez to make these proposals in the first place.

Indeed, the overall viability of the model Chávez is constructing is questionable over the long haul (especially if oil prices were to take a plunge–an unlikely outcome anytime soon, I will allow, but not the kind of thing one wants to base an economy on):

walking into a grocery store here offers a different view of the changes washing over Venezuela. Combined with price controls that keep farmers from profitably producing some basic foods, climbing incomes of the poorest Venezuelans have stripped supermarket aisles bare of items like milk and eggs. Meanwhile, foreign exchange controls create bottlenecks for importers seeking to meet rising demand for many products.

Such imbalances plague oil economies elsewhere, with oil revenues often making it cheaper to import goods than produce them at home. But the system Mr. Chávez is creating is perhaps unique: a hybrid of state-supported enterprises and no-holds-barred capitalism in which 500,000 automobiles are expected to be sold this year.