Alejandro Velasco

And people are just like Venezuelans, they're using cheap dollars to just shop internationally.

Shop internationally.

But of course, that's at the individual level.

This is also happening structurally.

And this is...

I don't know how in the weeds you want to get into the dynamics of a petrostate.

Let's go in the weeds into the dynamics of a petrostate.

Okay.

Into the weeds we go.

So the major problem of a petrostate, it's not just dependency on a single resource which is volatile in an international marketplace.

The major problem of a petrostate is that it creates perverse incentives.

And so

When, for instance, you have a period of oil boom, especially as massive as the one induced by the oil crisis of the mid-1970s, and Venezuela was just reaping massive amounts of petrodollars, the incentive to invest those petrodollars in domestic industry in order to induce import substitution industrialization, which is to say,

to substitute our dependence on imports by industrializing our economy so that we can domestically produce what we would otherwise import.

The mass availability of petrodollars makes it far cheaper and far quicker to just continue importing rather than investing those resources in the domestic economy and therefore create a different economy.

industrial apparatus that could generate independence, economic independence, away from imports.

It's incredibly hard to do that, right?

It's sort of like saying, you know what?

You're sitting on a winning lottery ticket

don't really spend it, just save.