Here is the top chart of statements that prove Chavismo thinks Venezuelans are stupid:
At #1, Minister for the Productive Economy Ricardo Menéndez: “Unifying the exchange rate could even lower prices in Venezuela”
Sure Ricardo, we are stupid, really stupid.
At #2, Armando Leon, Central Bank Director: ” In practical terms, there is no devaluation, because the implicit exchange rate that is used to fix prices of the things that are being sold in the economy is not Bs. 2.6 and that is what we have observed during the last four months of the year and we had warned about it”
Get it? I don’t. If someone has to pay 65% more for the same thing, that means that someone is going to want 65% more to sell the stuff. But yes Armando, we are stupid. Remember the Bolivar “fuerte”?
At #3, Jorge Giordani, Minsiter of Finance: “Unifying the exchange rate will have a minor impact on inflation”
It must be that he thinks “minor” is like the age of a human being, that is, minor means under 18….percent!
At #4, Hugo Chavez, Dictator: “They say we are generating the conditions to apply a neoliberal adjustment. It is, of course, a strategy to lie outrageously in order to create confusion…monopolistic power, with Fedecamaras in the lead, inflates prices, disregarding economic rationality and laughing at the people”
I got stuck on the “disregarding economic rationality part”, just that he uses “economic rationality” blew my mind. He is clearly absolutely sure we are stupid.
The Devil's Excrement 
January 5, 2011 at 6:32 pm
the inflation index is all based on controlled products
Ruh oh…. I didn’t realize that.
January 5, 2011 at 6:30 pm
Of course, I realize my error. Dutch Disease is a normal-country-like condition. Incentives and choices. Purely economic effects, given certain border conditions like a natural resource and a strong, widely re-distributed income of money from it. Venezuela’s condition is quite more on the artificial side. It’s the results of populism and demagoguery by a central government, extending for several decades. Foreign exchange controls on top of it.
My point is that Venezuelans are not stupid. Only happen to have had little political and economic education for being citizens, and have been instead “educated” by exposition to a set of the worst incentives you can imagine, the younger ones for all their lives.
Of course Venezuelans suffer injustice and squalor under such a system, eventually, but the standard response is to try and ostracize anybody offering a reality check and analysis, instead of actually looking at how things work and changing such incentives. Then, some luck, oil goes up, keep the system going. Until it breaks down. Then, riots, then, blame phantom neoliberals.
Chavismo only comes out stronger, and is successful under such conditions. I am not surprised, given all the insanity Venezuelans take (and took) for granted. As a movement it either knows some of this, or is simply lucky; that along being somewhat in synchrony with Venezuelans’ prejudices and fantasies.
January 5, 2011 at 10:45 am
“Father of the Bolivar Fuerte,” eh? I didn’t know that. Of course, the crime there is not in lopping off zeroes, but the utter lack of fiscal policy to actually make the new currency live up to its name. If Leon actually supported – or even came up with – the name, then I guess that qualifies as Kool-aid. Otherwise he may just be trying to be responsible in his role. Remember, he has really marginal authority; the comments he is making seem to be at the limit of that.
loroferoz, while I agree that Venezuela has suffered in the past from Dutch Disease, I’ve recently concluded that the current ailment is something different. Remember, the essence of DD is that increased revenue from natural resource exports strengthens the local currency, which drives down local production. In Venezuela right now, you’ve got local production going off a cliff, but with the exchange rate falling – and that’s while it’s artificially propped up. You can especially see this given that one of the “cures” for DD is saving some of that income for periods of lower revenue, something that Chile does and Venezuela used to, which should slow the appreciation of the currency. Venezuela is spending that income as quickly as possible, and the currency is depreciating despite what could be termed efforts to keep it strong. (Not the primary purpose of current policy, of course, but a logical side effect.)
Maybe this needs a new name. The Chavez Condition? The Hugo Bug? I don’t have a good one, but it’s clear that the current problems are much more about him than about oil. As Miguel correctly says, he’s got no business whatsoever talking about economic rationality – in any context. I’m not sure he’s ever done anything economically rational, not for several years. Oil isn’t causing the situation, though it is enabling it.
January 5, 2011 at 4:01 am
Miguel,
I repeat: it may – may – be that most money was going not to subsidize milk (through preferential rate) but to get dollars for the amigos and it was just way too much.
January 4, 2011 at 8:46 pm
Also, chavistas seem to know that Venezuelans and Venezuela have an almost incurable case of Dutch Disease. A Dutch syndrome as it were.
Though, then, it is actually amazing that they are trying to build Socialism in Venezuela, as they advertise.
There is either extreme cynicism or extreme doublethink at work here.
It might be that chavistas know little about about Venezuelans. Only that Venezuelan ignorance at large is so great that it makes it quite possible to be governed by such an ignorant (or cynic, or deluded) group of people, without anyone being the wiser, except for some intelligent but dishonest boligarchs.
January 4, 2011 at 7:38 pm
Cesar: That is true, but!!!! if you increase the official rate, those same goods are going to cost more, there is no free lunch. The food and medicines that are being purchased at Bs. 2.6 will now come at Bs. 4.3, there is no way to avoid that inflation.
And it is going to be big if they are honest, you know why? Because the inflation index is all based on controlled products most of which are (were) imported at the lower Bs. 2.6 per US$.
The whole thing is nuts. You mention milk. The Government was subsidizing milk imports. This was a subsidy for everyone, rich and poor, because the price was regulated and imports were at Bs. 2.6. That milk should be divided by 2.6 NOT by 4.3, because it was imported at 2.6.
What happens now? It either goes up in price, i.e. the Government changes the regulation, or the Government subsidizes it directly. To me the last one sounds more expensive, the Government will have to pay 65% more for imports and then subsidize it! But the problem was the Government has fewer Bs.!
Chavista economics are amazing!
January 4, 2011 at 7:26 pm
I dunno, maybe Armando Leon (at #2) has a point. In the last two or three years, every time I go to Venezuela I pay attention to the price of the stuff at the supermarket or at the shopping malls. When I use the official exchange rate the prices are outrageous. It’s only when I use the unmentionable rate that prices begin to sound reasonable. Case in point: One liter of milk was about BsF 7 when I last checked in August. That’s about double the price of milk in Europe (for the record, one liter of milk is about 0.60 to 0.80 euros in Spain). In order to match the price in Europe, the exchange rate would have had to be about halfway between the official and the unmentionable. The sticker price in imported stuff like clothes, computer and electronics, and non-essential foodstuff was approximately equal to the price in Europe only when the unmentionable was used. Cars prices go for an exchange rate of about 5 to 6 BsF per US dollar in order to have similar prices to equivalent models and versions in Europe (engine, transmission, trim, etc).
I wonder where is the discrepancy. Someone who worked in purchase at a large corp in Venezuela told me that most businesses, including big corps are increasingly having to use higher exchange rates (bonds, etc) to but material and pay international suppliers because CADIVI is so slow and unreliable. Maybe that explains part of the problem.
January 4, 2011 at 6:01 pm
Island, I have found the best approach for those people (it doesn’t work all the time) is to “do the Socrates”: ask questions and wait until the person answers.
This is something few people use in Venezuela, but if done carefully, it can work. If not, people flip out (which they also do everywhere else, but in Venezuela the reaction is faster…nothing hurts so much as being forced to think if one does not think much)
January 4, 2011 at 4:58 pm
Always remember Miguel that these comments are not aimed at us but to the faithful who believe whatever they tell them.
They already know that we have their number & don’t believe anything they tell us.
I was in a group of 4 University students & 3 parents last night. In addition the grandmother of some of the students was there. She is dyed in the wool Chavista who spends hours each day listening to the propaganda on VTV.
The conversation quickly turned to the realities of the country. The grandmother never said a word as the rest of the group talked.
Will this change her mind after hearing family & friends tear apart the “Revolution”. Not for a minute. Everything we said had an instant answer as provided by VTV and everything that didn’t fall within her belief balloon was media distortion.
It’s so bloody frustrating to try & reach the cult believers.
January 4, 2011 at 4:43 pm
Actually, chavistas think that Venezuelans are a people with no academic education in economics and little understanding of the workings of a Republic.
They also know for a fact that Venezuelans have had their practical “schooling” in economics and politics, the experiences that actually shape behavior (and the attitudes transpiring through behavior) in Distorsionlandia (since 1976, in Venezuela).
Chavistas are very realistic in believing that most Venezuelans have had little contact with macro-economic and political sanity (or with actual citizenship) in their lives. Most Venezuelans have been told all their lives that a government that is fiscally irresponsible (and is also their irresponsible banker, for fiat money is a form of cheque) can make them prosperous. That more irresponsible spending, populism and arbitrary intervention is the answer to previous failures of the same. When they might have had some contact with reality, it was quite shocking; more than anything the results of adjustments aimed at trying to patch up Distorsionlandia to keep it working.
Chavistas are of course, not entirely responsible for the situation outlined. Not even half responsible. They got in the game when it was well under way and played it without scruples and great success.
January 4, 2011 at 3:53 pm
I think my favorite stupid line is when Chavez reminds everyone at home and abroad that all economic indicators measure neoliberal economies, not socialist ones and are therefore inadequate at measuring the Venezuelan reality. That argument only goes over well with someone that has zero understanding of basic monetary transactions. And yes, he’s gotten this far assuming everyone else is an idiot. Why stop now?
January 4, 2011 at 3:20 pm
Stupidity is very generous and democratic. Scholarly interest in the study of stupidity was motivated by a bank robber who smear lemon juice on his face thinking that it would make his face unrecognizable in the security film at the bank.
The problem is not only that those guys are stupid, but that they lack the metacognitive ability to know that they are stupid. The name for that illusion of superiority is anosognosia.
The following link will lead you to the original article in the field: “Unskilled and unaware of it”, Journal of Personality and Social Psychology, 1999
http://scholar.google.com/scholar?q=unskilled+and+unaware&hl=en&as_sdt=0&as_vis=1&oi=scholart
and to other articles related to the field of stupidity.
Now, we have a bigger problem because it is not only that we are governed by a stupid person who smears his face with lemon juice thinking that the camera won’t be able to film him, but he is the chief of police, the magistrate, and the bank owner.
The craziness of Venezuela becomes less crazy once one recognizes that stupidity rules, and has deep pockets to buy a coterie of ass kissers telling the clown that his jokes are very profound.
January 4, 2011 at 3:19 pm
To me Leon lost credibility long ago, he is after all, the “father of the Bolivar Fuerte”. Local production will be stronger, but within a year 30% inflation will once again limit them. But for Chavez to talk about economic “rationality” is just hilarious.
January 4, 2011 at 3:05 pm
#1: Could be true, in theory. A lower exchange rate could make local production more competitive. Of course, this is only true in an economy where competitiveness has not been destroyed by other means. The stupid part here is Menendez assuming that someone would actually start up a goods-producing business under current circumstances.
#2: I wonder if he’s just saying that the implicit exchange rate is determined in large part by the unofficial trading rate. I never though of Armando Leon as someone who had drunk the Kool-aid, so I’m inclined to think he’s not spouting the party line. It’s anything but irresponsible for a central bank director to try to dampen inflation expectations.
#3: Can anyone believe anything Giordani says anymore? His reason: “hay mayor transparencia jurídica, luego de la reforma del sistema financiero venezolano”. Huh??? What does taking over a bunch of banks have to do with inflation?
#4: Again, could be right in theory. Doing something contrary to economic irrationality does not necessarily equal economic rationality. You can look to Argentina in the last 30-40 years for repeated solid proof of that. Of course, if you alter the quote in one detail, it’s absolutely spot on: “a strategy to lie outrageously in order to create confusion…monopolistic power, with ME in the lead, inflates prices, disregarding economic rationality and laughing at the people.”
January 4, 2011 at 2:56 pm
He has gotten this far on the assumption that Venezuelans are stupid. Why on Earth should he think that he cannot continue to do so?
January 4, 2011 at 2:51 pm
You know what? All politicians (pretty much) do this kind of thing.
In my country we have politicians boosting the deficit during a debt crisis. Yes more debt should help. right.
A lot of politicians around the world count on voters being stupid and they are usually rewarded with re-election. ugh.