Archive for May 3rd, 2011

Some impressions on visiting Venezuela

May 3, 2011

(Only socialism saves!)

I know, I know, it’s been a while. Between Easter in Mexico, a birthday, my dog’s rough encounter with a Bufo toad and a visit to Venezuela which included packing the orchids, it has been rather hard to sit down and write. As usual, there are lots of stories to tell, but I thought I would start with my impressions during my visit.

The first thing that shocked me was the number of politicians who aspire to be candidates for President and plan to enter their names into the race. I mean, when even Eduardo Fernandez, once know as “El Tigre”, thinks he is relevant, you realize how out of touch many Venezuelan politicians are. I mean, I love democracy and everyone has a right to enter their name in the race, but being involved with politics is not an “on” and “off” button you turn on whenever you feel like it, least of all, when you have a track record of failures that proved you are not what the Venezuelan people wanted ten years ago, least of all ten years into the new century.

Then there is the excessive optimism of many in the opposition. It is as if they can’t wait to hold the election because they are soooo sure Chavez will lose. Hey guys! Remember 2003? Remember 2009? Have you noticed that oil is above US$ 100 and that the opposition has little money and  a front runner whose charisma is measured in microcharms?

And then, Chavez comes up with his new Bill to control prices and protect salaries. Once again, a Bill which is illegal under the Enabling Bill, but I guess legality is not a useful concept any more around here. The worst part is not that Chavez is proposing this Bill, including a “Maximum Price for Sale” that will be determined by the Government, but that the same unions that are being ignored by the Government in their salary demands, back the Bill.

Does anyone remember the word “Conacopresa”. This is the same thing, except with no talks, the Government decides everything. This solution is sooo Cuarta Republica!

But in the end, the problem is that these are just useless measures. Price controls have never worked, all you do is delay adjustments, insuring the permanence of inflation or generate shortages. I guess Chavismo’s goals is to maintain a balance so that the two coexist.

But now there will be a “Monitoring room for production costs in order to establish maximum profit rates which will be adjusted quarterly”. I guess the rate will always go down, this is after all, a revolution, with little sympathy for profits, unless they come from exorbitant oil prices.

The problem in the end is too much monetary liquidity, so the Government goes and reduces bank’s legal reserves, freeing a couple of billion dollars in additional liquidity to give inflation another push.

Way to go! Samuelson and Friedman must be turning over in their graves!

Finally, an airport without water is not precisely pleasant, thanks God for flights that are on time!

Follow

Get every new post delivered to your Inbox.

Join 12,011 other followers