Chavez used the revenue generated during the good times to his own political ends. He structured giveaways to desperately poor people so that they'd vote for him. If he took more of a "teach the poor to fish" approach rather than just "give the poor fish to eat" approach, the country would have the potential to reduce its reliance on oil. By being the only real arbiter of how the industry's proceeds are distributed, there is an "other people's money" element to this. I will grant you that societies that rely almost exclusively on one or just a few natural resources are almost always highly dysfunctional.

Not really the central point to me at least - its lack of flexibility in a socialist, centrally controlled economy. Look at what France is going through now - to spur hiring, they need to make it possible for employers to fire. In other words, let the market drive hiring/firing determinations, instead of centrally mandated employee protections. Otherwise, it is simply not economically viable to hire - risks are too great.

But look at how French workers protest the loss of employment protections that would generally be unheard of in this country. Economies can't shift and diversify if market signals can't get through.