Archive for May 20th, 2009

Whatever happened to zero inflation for the poor?

May 20, 2009

Chavez and his cronies always come up with novel economic theories. About a month or two ago, a new one claimed that inflation was not a relevant problem for the poor, because through the chain of Government owned supermarkets Mercal, they could buy everything with zero inflation.

Funny, because increased the price of 14 items of the products sold by Mercal and now the theory is turned around and it is claimed that the increases will only have a 1.4% impact on the CPI. Of course, this is the CPI that a month ago was not felt by the poor, but now that they want to dilute the effects of the new increases into it, they use it. However, others calculate that the impact is 12%.

You may be wondering how come they have to increase the prices if most things Mercal sells at imported at the official rate of exchange of Bs. 2.15 per US$? Simple, all of these products were being sold below cost and now the Chavez administration is taking the capitalistic approach of not losing money in their “socialist” enterprises.

Which only tells us that money must be very tight if the Government has decided to resort to such measures.

And, of course, to hell with our new economic theories which have a lifetime of less than two months, if that long…

It is after all, an ever improvising revolution, with no real consistency behind it.