The Devil's Excrement

Perhaps there is no better way to show what this post is all about, than to present today’s cartoon by Weil in Tal Cual:

(Look my dear, there goes our President, may God protect him)

Indeed, how is it that such an ineffective administration can maintain such a high popularity level? How Chavez can be such a snake farmer, that people whose purchasing power has been decimated by six years of this so called revolution, still have a hope that things will improve, even if they seem to be getting worse each day.

You see, one of the mysteries of the last six years is where has the money gone? It is a premise of the Keynesian economics, so favored by most Venezuelan professionals in that field, that public expenditures alone can sustain the economy, generate economic growth and at least, give the appearance of prosperity until the day of reckoning come, when income drops and you have to face the music. But as the following slide from a presentation sent by a friend and reader I had not heard from in a long time shows, this economic formula has failed miserably in the last six years:

Despite a 142% increase in oil income, a 66% in the country’s debt, a 323% in spending, GDP per capita is down 11% in the last six years.

But you know what Chavez says; he claims that the economy does not have to grow for people to do better, a concept that certainly is in conflict with traditional economics knowledge and experience. It is clear that economic growth by itself does not generate prosperity, but the second slide shows that inflation is up 292% in the last six years, but what is worse, food inflation, which is the one that hits the poorest the most is up 383% in the same period!:

 But by now you will be saying, well if salaries are up more than that, who cares? The problem is they are not, as shown in the next slide:

And this does not even take into account the impact of the 12% devaluation today. In any case, only 30% of the population is actually employed.

Any Government policy has two attack two fronts: Growth and employment. But employment after a brief foray at the 10% level recently, is back up to 15% this month, according to official numbers, even if not shown in this graph up to June of last year, when it was at the same 15% level (which is suprising to me by the way):

But the President speaks of salary increases who only benefit the employed, jobs are not being generated and mortgages are going to be subsidized by everyone (more on that later, when time allows).

But in the end, the revolution is simply killing everyone softly, like in the famous song, but apparently some feel loved by it anyawy. The poorer get much poorer, while the rich are getting a little bit poorer, except those that are attached to the lifeline (or nipple!) of the revolution, those are getting much richer!. But despite this reality, Weil’s cartoon still reflects to some degree the reality of the effects of populism. Indeed, killing you softly with hunger, but extremely popular!

This entry was posted on March 4, 2005 at 12:16 am and is filed under Venezuela.