Venezuela and Norway: Opposite Lives

 

Peruvian President Pedro Pablo Kuczynski recently called on fellow Latin American leaders to come together to the aid of Venezuela. Kuczynski dismissed out of hand his Venezuelan peer, Nicolás Maduro’s protestations that his country was doing all right. It’s a lie, as everybody knows.

“The prescription is simple but hard to implement,” Kuczynski said in an interview with Bloomberg Television. “Help them out. There are no medicines in Venezuela. People are starving. We can do a club of countries –Chile, Argentina, Colombia, Peru. We have pharmaceutical industries. We have food. We can help out. Now, Maduro doesn’t want that, because he says everything is perfect in Venezuela. But that’s not true. Everybody knows that.”

He knows what he is talking about. Not only his expertise as a former Finance Minister and Wall Street veteran qualify him for his comments. He also has first-hand experience. As it happens, his brother, Michael Kuczynski, was your correspondent’s Economics teacher some twenty years ago. One day in class, a scion of American banking dynasty Pierpont asked Michael about the chronic turmoil in a wealthy country like Argentina. As your correspondent happens to be Argentine, he paid particular attention to this question, and its answer.

“Commodities do not make countries rich,” Michael responded. “In fact, they actually may impoverish them.” And he evoked a childhood road trip his father took them along all the way down from Peru across the Andes into the Argentine fertile hinterland, the Pampas. So Michael and Pedro Pablo rode along with their mother on that trip. Their father had long dreamed about Argentina’s fabled agricultural wealth. Legend had it that anywhere in the Pampas any traveler had the right to slaughter a cow and feast on its meat as long as they left the animal’s hide – its most valuable part – behind.

And so did the Kuczynskis. They did stop by a road side, and had a cow slaughtered for them at a ranch, and some gauchos – the Argentine cowboys – roasted the meat for their Peruvian visitors. The trip had left an indelible mark on Michael’s mind, and it cannot have been forgotten, we guess, by his brother.

If indeed Argentina’s rural wealth has been a curse, Venezuela’s has been manifold. Only the worst possible mismanagement and the distortions that extraordinary abundance cause in a nation’s development can explain today’s disastrous situation in the country. How else, otherwise, could the ninth largest oil exporter in the world – and the country with the largest global oil reserves – could have gone from boom to such a catastrophic bust in the span of just a few decades?

Now compare that to hard-working, boring Norway. A distant 22 in terms of reserves, the Scandinavian country in the course of two decades has amassed the largest sovereign wealth fund in the world, that now stands at $882 billion, twice the national GDP.

Notwithstanding Norwegian frugality, so much money does attract a lot of attention. Or as one of the fund’s manager has said, it is hard to grow a fortune and tighten the belt at the same time. There is now a generation of Norwegians – those under fifty – who were born in one of the richest countries in the world. Sure, there are the elderly in the country’s rural interior who remember a past of hardship two generations ago. But those old days are long gone, and pressure is building to put that money to use.

The country, culturally and demographically homogeneous throughout its history, has begun to change, too. Refugees, especially from Syria, have begun to change the face of Norway, if not yet its ways. As could only be expected, the country is not alien to the strains that are felt these days across Europe.

And yet, Norway and Venezuela remain at opposite ends in almost every respect, as much as the ant and the grasshopper of the proverbial parable. Had Plutarch found their comparative story compelling enough, he might have personalized both nation’s path to wealth and poverty, to include it in his Parallel Lives. Or perhaps he would have written a revised book: Opposite Lives.

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