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Bolivia,
sleeping on top of the world's second largest natural gas reserves
after Venezuela, is the latest banana not-quite republic to
nationalize its gas fields. It is
imprecisely wandering behind Venezuela and other countries that just
cannot succeed relying upon entrepreneurial capitalistic methods. |
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Ecuador and
Peru will follow. Each of these countries has lecturing demagogues
who dream of making the world cower as they stand on balconies
waving to adoring illiterate peasants. |
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industrialized world's media scream and whine about "resource
nationalization". The news media, losing audience daily, believes it
can hold its audience by yelling and shouting scary stories at its
dwindling number of viewers and readers. |
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Socialist governments run by
uneducated or terrorist demagogues are
emboldened by
high oil prices and may
likely continue to nationalize oil and gas resources. Why not? How
else can countries like Russia, Bolivia and Venezuela survive?
Stealing resources and assets from foreign companies adds to
their failing treasuries. Their problem is that unless they actually
sell their resources, they will not earn money. If
industrialized nations do not buy, poor countries do not earn money. |
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These weak nations with peasant or
demagogue leadership must extract resources or they have gained
nothing in the intermediate or long run. Extraction and sale of
their resources requires technology and intellectual skills. That
means they will eventually - perhaps quietly - contract again with
multinational companies. |
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The industrialized world should
relax. They need to buy oil and natural gas less than demagogues need
to sell it. Speculators will pump up prices on trading floors, but
eventually supply, demand, price, risk, reward, and utility come
into equilibrium. |
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These nationalizing tactics are
attempted every few decades by a different set of socialist
demagogues. Socialism does not work except to hold down the
intrinsically poor, uneducated masses. The stolen monies rarely ever
trickle down to their haciendas. |
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Global investment money is smart.
It will go where the risk is minimal and the potential reward is
highest. Monies will flow where contracts are binding. Guess where
that good stuff is? |
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