Archive for February 25th, 2008

The infinite ability of the revovolution to innovate: If you can’t control imports, why not exports?

February 25, 2008

And in the latest of economic innovation, just when the Government has started waving the “Certificate of Internal Insufficiency” as a prerequisite for allowing something to be imported in order to reduce shortages, today the geniuses at the Feeding and Finance Ministry created its “anti-particle” certificate and now if you want to export you will have to provide a “Certificate of Internal Sufficiency” for all food exports.

The certificate will apply to a long list of articles, but what caught my attention is that cocoa is in the list. You see, during the last ten years Venezuelan cocoa has established itself abroad as the top quality cocoa in the world, in spite of the Government’s policies. Now, cocoa producers will have to get this permit before they can export. I certainly hope the rules are not as silly as when you want to import something, whereby every time you import an item you have to get the permit for insufficient production, which makes the whole thing a real hassle.

Of course, think about the profit possibilities for Government officials. For a small fee, I may grant you a permit to export that special coffee or sorry buddy, you can’t export that great bull (Venezuela needs all the bull it can get) and sell it abroad, unless…

You get the picture…

Francisco Rodriguez blasts the cheerleaders of the revolution

February 25, 2008

I had heard about Francisco Rodriguez’ article in Foreign Affairs entitled “An Empty Revolution The Unfulfilled Promises of Hugo Chavez “, but had not managed to get a copy until today. It is not only a very clear exposition of the failures of the revolution, but it also blasts the cheerleaders of the revolution for blindly supporting it.

Rodriguez is an Economist with a Ph.D. from Harvard University who abandoned academia to become Head of the Economic Office of the Congress, later National Assembly, where he found lots of resistance to his criticism of the revolution and little revolution going on. He was not only fired, the office was shutdown.

While I am tempted to copy the whole article here, I don’t think it will be fair to either Rodriguez, whom I don’t know, or “Foreign Affairs” where it will be published for me to steal their thunder. I do find it uniquely ironic that in the last two days I have agreed with essentially 100% with two economists, Domingo Maza Zavala in La Vanguardia, and now with Rodriguez. Ironic, because while I stand ideologically in a very different place from both of them, we all agree and what this country needs and where the huge errors are. Below, I simply quote what I think are some of the highlights of Rodriguez’ article in my mind:

On whether Chavez has benefited the poor:

“Neither official statistics nor independent estimates show any evidence that Chavez has reoriented state priorities to benefit the poor. Most health and human development indicators have shown no significant improvement beyond that which is normal in the midst of an oil boom. Indeed, some have deteriorated wor­ryingly, and official estimates indicate that income inequality has increased.”

On the revolution or lack thereof:

“But in fact, there is remarkably little data supporting the claim that the Chavez administration has acted any differently from previous Venezuelan governments’ or, for that matter, from those of other developing and Latin American nations—in redistribut­ing the gains from economic growth to the poor.”

On whether the revolution has or not changed inequality in Venezuela:

“But according to the Venezuelan Central Bank, inequality has actually increased during the Chavez administration, with the Gini coefficient (a measure of economic inequality, with zero indicating perfect equality and one indicating per­fect inequality) increasing from 0.44 to 0.48 between 2000 and 2005”

On how the revolution has improved the lot of the average Venezuelan, including health care:

“But again, official statistics show no signs of a substantial improvement in the well-being of ordinary Venezuelans, and in many cases there have been worrying deteriorations. The percentage of underweight babies, for example, increased from 8.4 percent to 9.1 percent between 1999 and 2006. During the same period, the percentage of households without access to running water rose from 7.2 percent to 9.4 percent, and the percentage of families living in dwellings with earthen floors multi­plied almost threefold, from 2.5 percent to 6.8 percent.”

On the priority given to “social spending” under the revolution:

“given Chavez’ rhetoric and reputation, official figures show no significant change in the priority given to social spending during his administration. The average share of the budget devoted to health, education, and housing under Chavez in his first eight years in office was 25.12 percent, essentially identical to the average share (25.08 percent) in the previous eight years. And it is lower today than it was in 1992, the last year in office of the “neoliberal”� administration of Carlos Andres Perez”

On the illiteracy campaign (Alek and Syndey have proven this over and over before in the blogosphere):

“In contrast to the government’s claim, we found that there were more than one million illiterate Venezuelans by the end of 2005, barely down from the 1.1 million illiterate persons recorded in the first half of 2003, before the start of the Robinson program”

And this one has been my favorite, even if some did not pay attention, the economic crisis began way before the political crisis, but the latter was blamed:

“Chavez deftly used the mistakes of the opposition (calling for a national strike and attempting a coup) to deflect blame for the recession. But in fact, real GDP contracted by 4.4 percent and the currency had lost more than 40 percent of its value in the first quarter of 2002, before the start of the first PDVSA strike on April 9. As early as January of that year, the Central Bank had already lost more than $7 billion in a futile attempt to defend the currency. In other words, the economic crisis had started well before the political crisis, a fact that would be forgotten in the aftermath of the political tumult that followed.”

And finally, here is where I agree with Francisco Rodriguez and not because of our common, if disparate origin in the GSAS:

“It is the tenacity of these realists rather than the audacity of the idealists that holds the greatest promise for alleviating the plight of Latin America’s poor”

Kudos to Rodriguez for blasting the cheerleaders of the Empty (or fake) revolution.