Encore Episode 335: When Benevolence Backfires
Words & Numbers
00:00
The Unintended Consequences of Socialism
In the 1990s, Venezuela was 1976. The oil companies were largely foreign owned. Venezuela's government pointed to all the profits these foreign companies were earning and said that's not right. So the government nationalized the oil industry. This was broadly seen to be a good thing. For maybe a long while. It worked. But it was working for a reason that people didn't realize at the time. Once the government took over the industry, no person had a profit incentive to reinvest the oil company profits into maintaining the physical capital. And when that happens, you can bet that physical capital will deteriorate.
Transcript
Play full episode
