CARACAS, Tuesday September 29, 2015 | Update

Success or failure

In 1960, Venezuela was one of the ten richest nations on earth with a GDP per capita of $6,000

Tuesday September 29, 2015  03:44 PM
The two economies I know best are Alaska and Venezuela. Both are oil states but one succeeded grandly while one failed miserably for obvious reasons.

In 1960, Venezuela was one of the ten richest nations on earth with a GDP per capita of $6,000. But in 2015, Venezuela's per capita income is still $6,000 which puts it in the bottom third of the 200 nations on earth. In 55 years, Venezuela has no per capita GDP growth.

Compare that to Alaska. In 1960, Alaska was one of the poorest of the 50 states with a GDP per capita under $5,000-- and for the indigenous Natives who comprise 20% of Alaska, it was under $1,000. This made Alaska the most unequal of the 50 states --Inequality compares the number of rich and poor ina population.

Yet by 2015, Alaska's GDP per capita exceeded $50,000 – that's ten times the income of 1960. And more importantly, Alaska is now the most equal of the 50 states. In other words, the Natives are in the middle classes with everyone else.

Alaska did ten times better than Venezuela in shared prosperity because of two development tools. The Alaska Permanent Fund is owned by all the people equally and receives 20% of the oil income produced annually. The APF distributes some of its earnings and invests the rest. This has provided over $1,000 per capita to each Alaskan for 40 years.

The Alaska Native enterprises are owned and controlled by Natives who each have equal shares.Over the years, $60 billion in corporate revenue was produced, providing jobs, income, and opportunity to the Natives, lifting them from poverty. Today 7 of the 10 biggest enterprises in Alaska are owned by the Natives, and Alaska grows from robust tourism, industry and commerce – not just oil.

In contrast, Venezuela nationalized oil and industry, making politics the central business of the country. Manufacturing, agriculture, and tourism largely disappeared over time. Political corruption, disinvestment, hyperinflation, scarcity, poverty and inequality hit like earthquakes.

If prosperity and equality are what you want, the path to get there has a well-worn track. Choices have consequences.

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