Milking Venezuela for all its got!

August 29, 2007

So, it took all of thirteen days for Un Nuevo Tiempo (UNT) to come up with the obvious and tell Chavez that he does not need to change the Constitution to shorten the work week or to start some sort of social security program for those who are part of the informal economy.

Jeez, I am no lawyer, but I realized that the first day.

In fact, they forgot that the 2000 Chavez Constitution gave a time limit to come up with a new social security program for workers in the formal economy, which curiously has yet to be implemented due to the lack of interest on the part of the all-Chavista National Assembly. But since Chavez needs to counteract the fact that people mostly reject his indefinite reelection, then he needed to throw in some populism into his proposal, even if he has yet to deliver in his seven year old promise.

But it is truly sad that the opposition response has not only been so disjoint, but that this particular group decides to fight populism with even more populism: Hey Hugo, let’s not wait to destroy the country till January, let’s do it together now!

Because everyone seems to be thinking about politics and making money and not about our poor country, which is being destroyed, materially and spiritually, very fast.

I mean, has anyone thought about the inflationary consequences of reducing the work day to six hours? It is as if the country’s inflation was running low and we could afford all this. In fact, since inflation is accelerating they are going to add fuel to the fire by increasing costs, without increasing productivity.

To begin with, shortening the work week will not increase the number of jobs very much, like Chavez seems to think will happen. The first thing that companies will do is to pay overtime to their current workers,. In that manner, they will not need to train anyone new and they will put more money in the pockets of their current workers for doing the same job they are doing today. There are limits to this, as the law establishes a maximum number for hours worked in a week, but you can be sure companies will stretch these to the limit.

And this will be cheaper than hiring new workers, as many benefits do not accrue for extra hours worked, even if these hour cost more. In any case, estimates are that labor cost will rise by 25-35% just due to this change in legislation, which companies will pass on to prices, not precisely aiding the Government’s anti-inflation plan (??). Moreover, this creates even more rules, limits and restrictions in an already rigid labor environment, which will only complicate matters when there is a downturn. And you can be sure one is coming as the swap rate hit almost Bs. 4,950, CADIVI seems to have slowed down handing out dollars to importers and the Government will not stop spending between now and December to insure its victory in the upcoming referendum.

But as if this was not enough, UNT also supports Chavez proposal for the creation of the pension fund for workers in the informal economy right away, just adding to the harebrained populism of the Government.

Has anyone done the actuarial calculations on such a fund? If my memory serves me right, Norway, which has a fund with some US$ 190 billion had to change its pension rules for its 4.8 million citizens, because the fund will become insufficient as oil production declines. So, we will now provide social security to all of Venezuela’s 26 million inhabitants, whether they contribute or not, whether they work for the formal or/and informal economy.

Yeah! Sure! We will probably need oil at $500 a barrel for that.

But there seems to be a pattern here: Talk to anyone who is anti-Chavez, but working with the Government and they tell you that they are “milking” the Government as long as they can. Because who knows, they may not be able to do it if Chavez gets really tough and they have to leave the country. Talk to someone who is openly anti-Chavez about why they don’t speak out against the things the Government does or says, and they will tell you that they have to protect their business from Government intervention. Then of course are the boliburgeios who are certainly milking the country all they can, because you never know if Chavez does not last and they may lose their easy access to the Government’s udder or they may not be given any more suitcases to carry.

So, it is a culture of milking the country and our future and that of the country be damned! Everyone is trying to maximize their gains just in case their sweet deal disappears. Meanwhile the Government offers and offers without caring if its debasing the currency, fueling inflation and/or destroying the industrial base of the country; it simply has to win the referendum to have more power. And of course, the illustrious opposition groups have not even had a meeting to decide upon a fairly simple common course: Stop the indefinite reelection of Hugo Chavez. Jeez, you would think they at least have a strong motivation in this common goal of getting rid of the autocrat.

But it seems as if Chavismo’s plan is to slowly control everything in the country, by which time the only thing left standing in Venezuela may be an emasculated PDVSA and it would have been a very empty victory indeed. Meanwhile, the opposition’s plan seems to be to hope that a military backed Chavista overthrows Chavez and this guy (or gal!) will utterly fail in running the country and all of a sudden power may fall into their hands.

At which point they may start thinking what it is they plan to do with that power, just like Chavez did in 1998.  And who knows, after seven years they will give it a name and call it the sixth Republic.

And if all of this fails, the milking will continue by all sides, until the udder runs dry…

Bleak future, no?

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