On Friday, Miguel Angel Santos, who is a Professor at Caracas’ business school IESA, wrote this wonderful article in El Universal in response to the interview of Minister of Finance and Planning Jorge Giordani. In it, he shows how Giordani uses superficial arguments to explain why the Government is doing certain things, while not being self-critical of all of the blunders the Chavernment has made in economic and monetary policy. I would only add to the article, that I wish the interviewer had asked Giordani, how much were oil exports and private exports fourteen years ago, and how the latter has collapsed due to Government policies, while the former increased due to exogenous causes. Enjoy, and thanks to Miguel Angel for letting me publish it here.
The Grand Inquisitor by Miguel Angel Santos
The Grand Inquisitor sits in front of the reporter from the Venezuelan News Agency (AVN). Long ago he decided not to face the opposition media. Over the years, not only has he been running out of ideas, but also out of patience and tolerance with those who think differently. “The private sector produces US$ 3 billion a year and demands US$ 30 billion.” If that is the demand: why was it necessary to devalue? According to the BCV, our oil exports totaled in 2012 US$ 92.23 billion. What is the problem of allocating one-third to private imports? The Grand Inquisitor knows what the problem is, but the AVN reporter will not ask him about that.
“They say we are bleeding PDVSA because we devote a large portion of the proceeds to social programs.” But in reality, what is bleeding PDVSA is, on the one hand, which it is being forced to pay royalties for more than a million barrels a day that it produces and does not charge for (those that go to Petrocaribe and the Chinese Fund) and on the other, the contributions to Fonden. To the latter, PDVSA has handed over more than US$ 50 billion, which together with the contributions from the BCV total over one hundred billion dollars. What has been done with that money? What has happened to Fonden and the Chinese Fund? Is the Grand Inquisitor ready to be accountable, to show in detail how much went in, what was specifically done and how much remains in it? “We live the insatiability of the dollar, a kind of dollarized nymphomania “. Is there a larger greed, a bigger ” dollarized nymphomania” than that of the government itself?
The Grand Inquisitor lambastes Venezuelans because they do not to leave their money in bolivars, earning interest rates which in no case reach even half of inflation. Because that is how, with the loss of the value of everyone’s savings, the revolution finances itself. Nor does the sanctimonious tartufo make any reference to the fact that since the implementation of exchange controls, the government has placed in circulation 3,650% more in coins and bills (44% annually). “If we eliminate Cadivi and let everything float freely, reserves would not last three days.” With the amount of money that he has printed and the panic that is fully and widely distributed here daily, we have no doubt about this. There is no mention of the connection between these monetary ravings, inflation and devaluation?
Instead, he resorts to the mortification of the flesh, “it can not justified that people gorge on junk food … that is why there is so much obesity.” It is curious that he used this example of obesity in a derogatory manner (for us) and didactic (for the government): “They question that we use the word adjustment. Cretins! If a guy is a hundred kilos overweight, he better get fit or he may get a stroke or a heart attack.” This is true: An 18% deficit, financed by printing banknotes, puts any economy in the neighborhood of a heart attack. “If this is a “paquetazo” where are the privatizations?”. The monk asks this question in a country where the most precious right, the defense of life, was privatized a while back. So have Healthcare and Education. If he has any doubts, he could ask his colleagues in the Cabinet which school do they send their kids to, or to which clinics they take their relatives to.
His Twitter: @ Miguelsantos12