Following the announcement that Venezuelan President Hugo Chávez has created two new Cabinet ministries -- the Ministry of Ground Transportation and the Ministry of Air and Water Transportation -- it may be time to propose a new economic theory: that countries' economic development is inversely proportional to their number of ministers.

I'm not kidding. Last week, Chávez announced that the previous Transportation Ministry will be split in two, creating the two new Cabinet ministries that -- like many others in Venezuela -- will be headed by military officers. The two new positions bring to 31 the number of Venezuelan Cabinet ministries.

Many Venezuelans took the announcement with a mixture of humor and resignation. "We will soon see ships crashing against airplanes," joked one reader commenting on the news of the new ministries in the daily El Universal, referring to the chaos brought about by Venezuela's giant government bureaucracy.

Since taking office in 1999, Chávez has created dozens of new Cabinet ministries, some of them with titles that are hard to imagine fitting on a business card. One of them, created less than a year ago, reads, "Minister of State for the Revolutionary Transformation of Greater Caracas of the Bolivarian Republic of Venezuela."

There are so many Cabinet ministries that nobody really knows their exact number at any given time. At the time of this writing, the Venezuelan government's official website lists 27 ministers, but it hasn't been updated to include at least four that have been officially announced, including the two new transportation ministries.

By comparison, with some exceptions, most countries with the worlds' highest standards of living have fewer than a dozen cabinet ministries. Switzerland has seven ministers, Finland 12, and the United States 15.

What's worse, Chávez has changed Cabinet ministers 176 times since he took office in 1999, according to Venezuelan press reports. There have been 12 appointments of Minister of Production and Commerce, an average of one minister a year, and nine ministers of economy over the past 11 years.

With so many Cabinet ministries and their respective bureaucracies, it's not surprising the World Bank "Doing Business in 2012" report released last week placed Venezuela among the world champions of red tape.

According to the report, it takes one day to register a new business -- whether it's a small repair shop or a big corporation -- in New Zealand, two days in Australia, six days in the United States, nine days in Mexico, 14 days in Colombia, 22 days in Chile, 26 days in Argentina, 27 days in Peru, 50 days in Bolivia, 120 days in Brazil and 141 days in Venezuela.

The reason is that in Venezuela, it takes 17 legal procedures to register a business, as opposed to one procedure in New Zealand, six in Mexico and Peru, and an average of 10 in most other Latin American countries, the report says.

Supporters of Chávez and his followers in Bolivia and Ecuador dismiss these studies as meaningless, and add that during their terms they have reduced poverty rates in their countries. Their critics counter that well-managed countries, like Chile, have achieved much higher living standards while creating a base for long-term growth.

My opinion: The sad thing about Venezuela and other radical populist regimes is that they have benefited from the biggest commodity boom in recent memory, and have squandered that bonanza in feel-good subsidies that will not lead to raise their countries living standards in the long run. As the Spanish saying goes, they create "pan para hoy, hambre para mañana" (bread for today, hunger for tomorrow).

The huge government bureaucracies in Venezuela, Bolivia, Ecuador and other like-minded countries are doing little more than creating more corruption opportunities for government inspectors and their supervisors, and more burdens for average citizens.

In modern democracies, when governments have a big problem, their natural instinct is to create a commission. In populist regimes, when governments have a big problem, their natural instinct is to create a new ministry. Both solutions often fail to solve the problems, but the latter is more expensive and leads to more corruption.

 

 

 

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