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
The Devil's Excrement 
April 3, 2014 at 3:43 am
i’m able to discover numerous great solutions basically have any trouble!
February 18, 2013 at 11:58 am
[…] The Gran Inquisitor by Miguel Angel Santos […]
February 17, 2013 at 5:24 am
En este vídeo podremos ver las condiciones del hospital de Coche, en Caracas. Mientras Chavez disfruta oyendo música con su Ipod en La Habana!!!!
http://www.muerachavez.blogspot.it/2013/02/el-hospital-de-coche-en-las-ultimas-no.html#.USCpEx1EGSo
February 16, 2013 at 10:00 pm
For those that speak Spanish, here is a good article by Asdrubal Oliveros
http://prodavinci.com/blogs/devaluacion-y-socialismo-del-s-xxi-son-compatibles-por-asdrubal-oliveros/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+Prodavinci+%28Prodavinci%29
The money quote in it is:
La devaluación viene precedida de un año electoral en el que el Gobierno venezolano gastó el equivalente a US$ 141.300 millones, y se importaron casi US$ 58.000 millones; esto se hizo sin tomar en cuenta los recursos que teníamos. Poco importaba… Era necesario ganar… Y se ganó. Pero las consecuencias quedaron: el déficit de caja del Estado el año pasado fue de US$ 49.050 millones y peor aún, el déficit neto de divisas (que no puede ser resuelto con bolívares) fue de casi US$ 12.000 millones. Por eso, la devaluación más que una medida pensada para el futuro, es una consecuencia de un pasado de excesos.
in English:
The devaluation was preceded by an election year in which the Venezuelan government spent the equivalent of U.S. $ 141,300 million, and imports reached almost U.S. $ 58,000 million, this was done without taking into account the resources we had. It mattered little … It was necessary to win … and they won. But the consequences remained: the cash deficit of the state last year was U.S. $ 49,050 million and even worse, the net foreign exchange deficit (which can not be solved with bolivars) was almost U.S. $ 12,000 million. That is why the devaluation more than a measure designed for the future, is a consequence of past excesses.”
XXst. Century Irresponsibility is what Chavismo is.
February 16, 2013 at 7:11 pm
This story about global devaluation http://news.yahoo.com/q-currency-latest-threat-global-economy-114752248–finance.html
started me thinking of why Venezuela was not mentioned. First, oil is exported in USD and the global market price. Second, everything Venezuela imports is also in USD or some other recognized currency. Nobody takes bolivars except Colombian border smugglers! I wonder if the government will use it and say look its a good thing everybody is doing it?
February 16, 2013 at 10:12 am
If just the opposition would take the hint and talk about the privatization tha has happened in recent years, just like Mr. Santos clearly explains in his article, I would be more hopeful about our chances in the upcoming presidential election…
February 16, 2013 at 7:05 am
Summer (3months) internship The Economist: send CV, cover letter and unpublished article on foreing affairs or international politics (up to 450 words) to foreigneditor@economist.com. Deadline April 2
February 15, 2013 at 10:09 pm
With people like Mr. Santos, the pen might be mightier than the sword.
February 15, 2013 at 9:35 pm
Every day Venezuela looks more and more alike Cuba. I’m afraid the gap between the black market dolar rate and the official rate will keep a widening trend despite official devaluations (if I’m not mistaken that gap in Cuba is more than 2000%). Therefore, the inflation and/or scarcity will worsen; and at some point, rationing of basic products will have to be implemented as it is already has been with CADIVI for 10 years. But people continue saying “no vale, yo no creo.”
February 15, 2013 at 9:46 pm
There is a convertible and normal peso. The difference is about 2500% between the two. Perhaps Venezuela will move to a convertible currency for the elites, and worthless Bolivars for everyone else. It would be more efficient.
February 15, 2013 at 6:30 pm
I wonder if the actual economic catastrophe is really surprising to them? Giordani and in general, the chavista’s economic system is fatally flawed but after almost 100 years of historic failed policies, George Santayana’s must feel to them like a ton of Alabama ticks in their butts. And in Venezuela. the saga continues:
The group that benefits simply consumes what is produced instead of turning it into more production.
In time, no one wants to be a producer, when producers are what the economy needs the most.
If a doctor earns the same as a bus driver you wind up with fewer people willing to put in the work to be a doctor.
We are all social creatures who crave reward, self expression and the importance of the individual… whether they get it or not.
“La locura es la repetición incesante del mismo proceso, esperando obtener un resultado diferente”
Albert Einstein
February 15, 2013 at 7:02 pm
An excellent point.
Here is what is truly scary. In Venezuela multiple generations have been purposely inculcated with the idea that ‘we’ are a wealthy country. It’s been repeated over and over in the schools, in the media and primarily by the politicians. Hugo Chavez thrived in this environment. His 14 year reign of insanity is proof of this very simple idea. As a result, Venezuelans are conditioned to respond to only those politicians who promise to unlock this hidden wealth and provide it to the individual. Wanna free refridgerator? A government job? How about a washer/dryer to go with it? In the eyes of most Venezuelans politicians are there to unlock their wealth. It’s a mind~set. It’s why Capriles doesn’t promise too much of a change were he to get elected. He can’t. He’d be stupid to go up against this mind~set and simply tell the economic truth. It is the road to perdition. It may be that the only road to reality is a complete collapse of the system. That may be taking place,….right now.
February 15, 2013 at 9:09 pm
IMHO Venezuela is doomed to the insanity you elucidated so long as oil remains at current prices. During the 90s Venezuela experienced the beginnings of diversification but it was cut short by Chavez and the new oil boom. At best Venezuela can have a more sane populist government.