Dumb economic subsidies and arbitrages in Venezuela

January 8, 2011

(I am going to unify them)

Economic theory always talks about the efficient allocation of scarce resources, the acceptance that Governments have to optimize wealth, distribute it as uniformly as possible in order to maximize the well being and happiness of citizens. Clearly, none of Chavez’ “economic” advisers either understands this, nor has explained it to Hugo. The revolution continues to run on a path of destruction, where the State believes that it can do it all, in the process, it is destroying value, reducing those same resources that are scarce and simply trying to redistribute them around. In the end, if your could distribute it all evenly, Venezuela would turn out to be a Nation of poor people. Yes, the extremes have to be eliminated, but the way about doing it have all been wrong in the last twelve years.The subsidies and distortions in the end turn out to be more costly than actually reaches the poor. In fact, the money that it costs to sustain the gasoline subsidy alone could be used to give half the Venezuelan population over the “average” of the GDP/Capita of the country. Not that I am arguing that should be done.

But Chavez’ Government could care less about optimizing or improving resources. When a cement plant is nationalized just to be able to say that the Government owns it, the price of the plant, say US$ 1 billion is spent on buying an existing plant with x jobs, rather than creating a new plant that generates jobs. Even worse, the plant is run more inefficiently, there is less economic value and we are all poorer.

But there are worse subsidies and distortions than the dumb nationalizations. Minister of Planning and Finance Giordani has actually been arguing in the last few days that people were taking advantage of the dual exchange rate of Bs. 2.6 and Bs. 4.3 to the dollar offered by the Givernment.

Duhh!

It took him seven years to learn that?

I could have told him that would happen on day one. It is the story of dual exchange rates in the world and Venezuela.

But what really gets to me is that Giordani  has suggested that even Government imports were being sold as if they were purchased at the higher rate of Bs. 4.3 per US$. So, someone within the Government was making a lot of money out of that arbitrage, because someone had to pocket that difference. The worst part is, nobody is being accused, charged or being fingered. But n the end the truly, really worst part is that those that implemented these idiotic, corrupt, distorted and dumb system, are still running the show.

There is simply no accountability.

And there were many other arbitrages that were absurd and they still exist. It had become fashionable for middle and upper middle class people to send their kids to study abroad. They were given a basic stipend and tuition at Bs. 2.6 per US$ to go study abroad. Hey, with the parallel rate at three times that, how could you go wrong? I am not against education, but I would prefer a program to give scholarships to the best and the brightest at Bs. 0 to go abroad that to fund the well to do at Bs. 2.6.Because most of them could afford it anyway.

And why should I be able to buy US$ 400 of Internet goods at Bs. 4.3 per US$? I was planning to forego the pain of submitting the forms this year to get that amount, but the Government changed policy and I got an email two days ago telling me I had to do nothing, that my card was renewed automatically and I could go ahead and spent my money. This makes no sense at Bs. 4.3, its absurd, its unfair to the poor.

It is the furthest thing from optimizing the allocation of scarce resources. It is the opposite, it is giving money to the rich to buy widgets and gadgets from Amazon, even if they don’t accept my Venezuelan credit card for kindle books.

And I don’t even ask for the travel money, or my US$ 5,000 a year from SITME at US$ 5.3, something some people spend all the time planning and preparing for.

But these things are likely to be tiny in the scale of food imports from the Government and the private sector. Who knows what is authorized at Bs. 2.6, now Bs. 4.3. For that matter who knows what is being imported at Bs. 4.3 and sold at an equivalent exchange rate of Bs. 10 per US$.

But Giordani hails his own decisions, refuses to recognize he imposed this crazy and goofy system and in fact, he is continuing it. At Bs. 4.3 per US$ you still get a subsidy for your kid to study abroad, for your Internet dollars, for food purchased at Bs. 4.3 and sold as if it was purchased at Bs. x higher and likely for breast prosthesis used to enhance the attractiveness of Venezuelan upper and middle class women.

Giordani must be proud of that.

Advertisements

32 Responses to “Dumb economic subsidies and arbitrages in Venezuela”

  1. psychic Says:

    That was instructive writing

  2. loroferoz Says:

    At least we agree on something.

    But still I think that,

    -Involving parents, and maybe educating them, or interesting them in education and culture is a must. Making them contribute is a must, whenever possible. If they have money to spend on booze, they have plenty money for books, damn it!

    -The national government in Venezuela will be more an obstacle than anything in any education reform. This is no detail. Resources and work should go directly where they are needed.

    -Local governments and private associations (for profit or non profit) are closer to parents than a distant government and are more eager, and more susceptible to pressure if need be.

  3. Kepler Says:

    Loroferoz,

    I am not against decentralized education or health. What let you think so?
    OK, what is for you “state”? Is it ‘national state’? Still: you don’t mean national government, do you? Because that’s not what I mean.
    OK, perhaps we should talk about “public”, it is definitely as opposed to privatized.

    How regional the education management is is something one would have to discuss, it may be different for every country and time.
    Germans’ education is ruled by the Bundesländer (more or less like our estados, but with more competences). Still, there are some common things. Some Bundesländer, among those with the top scores, are thinking about making their Abitur, their “bachillerato++” levels more comparable.

    I don’t think a president or a minister of education can solve many things but how the details are solved are not that crucial.

    Important is that:
    1) voters have a say
    2) there is transparency BIG BIG BIG time. This is a huge challenge even in other countries. It would be a revolution in Venezuela.
    We should be able to get information about all kinds of things from all kind of schools in Caracas, in El Tigrito, in Quíbor. And parents should have that kind of information. We should know how many pupils per math teacher they have and so on.
    3) still, the state (be it the estado or the country, but the public organization) should provide for schools free of charge to all children from kindergarten to the end of secondary. It should also provide for books. Yes, they are paid with taxes, but they are one of the things that are worth it.
    4) teachers should NOT be permanent officials but employees who have very good salaries but who are selected among the very best. If teachers do not deliver, they should be sacked. A woman should get the same kind of “feeling” by hearing a man saying “I am a teacher” in the same way as she is now when she hears “I am a doctor”.
    (Kepler running for cover from the feminists)

    I have seen way too many parents in poor sectors in Venezuela and in Scotland. Parents can be genious or not, but you cannot count all the time on them. Fact is, and this does not seem clear to you, that there are a big amount of parents who are less capable of making decisions than a child.

    I grew up attending a school in Los Guayos. We were children (back then) from the middle class but also from the very poor. My level was
    so much higher than that of the average. It was primarily thanks to my parents.
    I went with my mom to other schools because of her work and I saw the conditions in which many of the parents sent the children there. I got hours and hours of stories from my mom and from other teachers – still now – about the state of alcoholism, disease, anything of the parents from those schools. And those are the parents having 6 children.

    I went to Scotland many years ago. I was on an exchange. As an extra job to finance a trip through Europe, I taught Spanish at some schools. I went to posh schools and to very poor schools. I talked to the children and to the teachers. I saw how some of those children, very clever ones, came to school with black eyes because of their drunk father or mother.
    If you just visited the middle class school, you had no idea of what was going on in the other areas. And schools became one of the great supports for those children. Do you expect those parents to use the vouchers right? They could not even fill a form for the bank! And that was in Britain.

    I remember how my mother told us about the parent who wanted to baptize a new child “Hermafrodita” because that was such a beautiful name.
    Now: if you don’t provide enough public schools, these parents will have to choose where to use their vouchers.
    I have discussed with a lot of people in Venezuela about the many new “private universities” there and quite some private schools. They are mostly crap, absolute crap.

    I find absolutely great if the national state allows all kinds of private schools (as long as they do stick to certain subjects like biology and maths and language) and fees. Fine, perfect. But we cannot solve things just by vouchers because fact is many parents are indeed as good as zombies.

    Do anything private with anything else. Guarantee excellent public basic education for all children, even if their single mother is as dumb as a wall and their unknown father even more so.

  4. loroferoz Says:

    Kepler, The USB and UCV are not directly managed by the Venezuelan government. They fight every day to NOT BE MANAGED BY IT, since long before Hugo Chavez appeared.

    Whoever said the market was a simplistic formula? To me, it’s allowing all the possibilities to coexist.

    I spoke of cooperatives, of municipal schools, of states’ schools, of a lot of alternatives, private and public. I did not say privatize public schools. I said diversify. I said bring the State down to local, closer to its “users”. I said decentralize responsibilities. And funds. Encourage competition.

    Maybe parents know nothing. Maybe. Maybe they could get to know, and be involved, if they were not treated like grown children in charge of children who have to be imposed upon. Maybe they could demand that their children be given useful skills.

    But if they have to go all the way to Caracas… And yet some people want politicos to go out of Caracas, but get pale at the idea of decentralized health care and education. Zany, isn’t it?

    That which I said for a reasonably free market society (freedom is never absolute and never infinite) could apply to education. But I was not implying that. I was saying that productive, ambitious people who are eager to offer something to society (for free or paid for) are leaving Venezuela in droves; this is a symptom that the skills and attitude that is rewarded by Venezuelan society and economy is becoming the polar opposite of that. Against that, Classroom education (no matter how much) is like putting arms out to stop a tidal wave.

    The State (the central government) works in Europe, and in the U.S.

    And from what I heard from old times, worked in Venezuela before 1976. Particularly, public education. But no more. My experience across the board , for all my life, is quite different. The ministries are to their functions now what the Venezuelan military is to national defense now. And have been that for a long time.

  5. Gordo Says:

    “Collective fear stimulates herd instinct, and tends to produce ferocity toward those who are not regarded as members of the herd.” Bertrand Russell

  6. Kepler Says:

    Well, perhaps those jaleas de mango will become competitive in Moscow’s exotic food shops. Bugger off, you Colombians!

    Como dijo nuestro líder: Venezuela puede transformarse en una potencia exportando arepas.
    Y ¿por qué no también jalea de mango? Avanzamos sin descanso, duélale a quien le duela.

  7. Kepler Says:

    “In a reasonably free market society, where you can get angry at bad service and sue for fraud”
    Like in Alpha Centaury?
    Loroferoz,

    I went to a public school. I went to a private school. My mother was a teacher at a public school. She showed me several schools with completely different levels. My dad and a lot of my friends were/are professors. I think I have an idea of how schools work in Britain (where I worked), in Germany, in the Benelux and, through friends and my brother, in the US.
    I tell you: there are more ways than what you have seen in your private school.
    I saw the notebooks and quality of education some Venezuelans had before I was born and could compare it to what we were having. Public education before was way better.

    Understand this: there is no simple formula. There is no magic system. There is no perfect world. There is no “free market” anywhere, not in Texas and not in the City of London.

    Pupils in Chile have huge problems, but compared to what Venezuelans deliver…my God. Is it in Venezuelans’ genes? No, it is not. A lot of things went wrong, specially beginning in the sixties and not at a national level first.

    By the way: public universities and private ones in Venezuela vary a lot. As far as I know, law at the Santa María is an absolute joke. I remember I read ‘abstenerse egresados de la Santa María’. The level at the Universidad Simón Bolívar was, at least 10 years ago, very good. The level of some -just some- faculties at the UC and UCV was good for Latin American standards, while other faculties were a bad joke.
    I could compare a bit with university in Germany, Britain and the Benelux again.

    We won’t solve it just by using vouchers. And we cannot afford to leave it to million of parents who know nothing. You don’t even need to be of good will. Unless you really want to be the one-eyed in the land of the blind, the best think for you and for all of us is that we make sure the average Venezuelan child gets top teachers. You can do that in state schools. We had some good ones before. We could expand the system and learn as several other countries are slowly doing in Latin America.

    As I said: investing a bit in state schools is, if properly done, peanuts. For me you can privatize anything else, anything, but not that.

    Again: if you started to learn how every single developed country got the education level it got at their golden age, you will see a lot was done through the state.

  8. Nur_Ich Says:

    buying kindle books on amazon really sucks, had many problems with that, too.. until recently. If you’re interested, write to the email on this comment I I can explain to you, what I did and also I can give you access to my kindle library online, if you’re interested 🙂

    Also my “cuñanda” wanted to buy a Kindle on 30.12. to spend her 400$, but they won’t take the money from the card until they send it, so she cancelled the order, because she didn’t get an email, that her cupon is renewed…

  9. loroferoz Says:

    “I believe it is the informal education that determines the success in a free society.”

    Most of which is given by REAL WORLD EXPERIENCE, and which determines what course of action a person will take.

    In a reasonably free market society, where you can get angry at bad service and sue for fraud, ambitious persons strive to produce the best service and insure themselves against doing bad service. For personal gain or for the satisfaction of doing it.

    In Venezuela, the set of abilities, and the actions of ambitious persons are entirely different. Persons with the capability to serve and produce are leaving Venezuela because they cannot thrive here. The ones favored by reward are those able and willing to just screw everyone else, through political power or delinquency.

    This impinges strongly upon education. I can well remember what I was taught at school, and what I learned by myself about ethics. When I go out in Venezuela I feel that being nice is being a fool (“pendejo”, excuse the French). Whatever education you can give to the young in Venezuela is completely negated by reality, by the actions of older Venezuelans, and specially by what the government does to everybody.

    It is no wonder; our “Socialismo” and “Social-democracy” gives birth to a “sauve qui peut”, a “law of the jungle” stituation. The most elementary rules of honest businessmaking were and are routinely thrown out the window by it’s individual hierachs and by the government at large.

    Economic transparency and responsibility on the part of the government is necessary. Not just because we need to save and invest and the government holds the currency. But for education to actually be worth something to those being educated.

    As for (Venezuelan) State regulated and managed education, Kepler: My experience as a Venezuelan is that nothing directly managed by the Venezuelan government can ever work. That’s why Universities are fighting tooth and nail. That’s why pre 2002 PDVSA fought. TO NOT BE MANAGED BY THE GOVERNMENT. That’s why the Metro de Caracas, which did not fight, is in such a sorry state.

    If education ,and anything else, is the goal, think cooperatives, NGOs, or religious groups even. Think county (alcaldia) and individual states’ schools. Think of a voucher system and private education targeted to the less affluent. Think how to get resources to worthy groups, for them to provide education. There are alternatives to proven failure!

  10. NicaCat Says:

    @m_astera, thanks for the link. I’m looking forward to reading it!

  11. m_astera Says:

    Correction: John T Gatto

  12. m_astera Says:

    Re education, John T Gotti’s “Underground History of American Education” is the single most frightening book I have ever read. I have never even been able to finish it.

    I would suggest that all fans or foes of government mandated and funded education read some of this classic before they speak further on the subject.

    Here’s the whole thing in pdf”
    http://mhkeehn.tripod.com/ughoae.pdf

  13. ElJefe Says:

    Kepler,

    I was actually thinking exactly the same thing today with regards to Latin America’s former masters. If they didn’t get full parliamentary democracy until 1982, what hope in hell do we have? However, one thing we do need and fail miserably at continentwide is education. Very few people in Venezuela or anywhere else seem to have the rock-solid basic education necessary to do a job well and, with some effort, truly innovate. I’m always reminded of a Nicaraguan sociologist that told me once why our democracies are unsustainable: We don’t all agree that red lights mean stop, and many drivers run them blatantly. Seeing as how most Central Americans never took formal driving lessons, this should come as no surprise. The same is true of democracy. A healthy democracy requires an active, engaged populace to safeguard it, and to fully understand the complexitites of the democratic system we need some sort of an education. However, ignorance is bliss and growing up uneducated is kind of like growing up in a bubble. Life is hard, but you are also shielded from knowing just how truly far behind the curve you are. As long as the education gap in Latin America remains horrifying, caudillos will continue to thrive and occupy the bottom rungs of the world economy.

  14. Kepler Says:

    I know Spain is a mess and I know it has been largely helped by the EU. I sometimes look at them and say: Oh, my God, no wonder! Still, things are not that simple. The States had other conditions and an opportunity of expansion that was unique (Western Territories, France in a mess etc).
    There were times when Spain was not that primitive compared to other countries, in spite of what Goncalo de Berceo wrote in the Middle Ages 🙂
    What I am saying is that most Venezuelans have no idea how far we are from the rest and how much vulnerable we are thanks to oil.

    Our country now does not need just high oil prices, it needs a permanent yearly increase of probaly 10% or more not to crumble down. That’s just so fucking sick. And most Venezuelans are not producing anything.

    Los iberos al menos podrían alimentarse.

  15. Pedrop Says:

    The longer I spend in Spain the more obvious it becomes that Venezuela, and Latin America in general, hasn’t much of a hope of digging itself out of any self-made cock up.

    Spain at heart is a peasant gypsy like country completely dependant on the EU for financial and political security. Unfortunately they managed to cross the Atlantic and spread their ‘values’, namely greed and corruption set against a background devoid of any compassion.

    Just a pity you got the Santa Maria instead of the Mayflower. Seemples !

    ———————————————-
    And from quote above –

    ”So: Venezuela is much worse off than even Spain or Portugal or Greece”

    But Spain has been funded for a decade or so by the EU and now to be funded by the Chinese, Portugal will no doubt be asking for a handout and the Greeks, well they just massaged the books to suit their own needs.

    And Venezuela has the second highest crude oil reserves second to Saudi Arabia. Mind you the Spanish excel in the olive oil game.

  16. Kepler Says:

    Antonio,

    Most Venezuelans have no clue. They have never been abroad and they do not know how to interpret, filter, look for information on the outside world.

    This is it: many think what the regime says, that Venezuela has “only 8% unemployment” or something like that…at most, it is some points higher, they think. And they hear Spain has 21% etc. Well, indeed Spain is in deep shit and it has 21% unemployment. Fact is, though, that in Venezuela 50% of the population “works” in the informal sector and that gives you less security and money than the dole for the Spanish jobless.
    So: Venezuela is much worse off than even Spain or Portugal or Greece.

    I have a little poll in my blogs. In English you see most people (and most are non-Venezuelans) say Venezuela is poor. In my Spanish blog, even if there are less visitors, you can see what Venezuelans (13 so far) think: most think Venezuela is very rich.

    Delusion.

    Vivimos aun en El Dorado. Nos comportamos como los Welser y los iberos desesperados buscando la ciudad del oro y pensando que si no la hemos conseguido es porque alguien nos miente.

  17. A_Antonio Says:

    I would like to comment how in Venezuela looks like nothing happens, nobody in government are worry about the last ranking from CMA of the risk of the country of do not pay its debts. Only Grecian risk is higher.

    In Europe, the markets are burning, worry on unemployment and economics are high.

    In Venezuela, business as usual, looks from Chavez nothing will really happens, nothing change.

    Do grant the Oil that much insurance?. If Portugal, Spain and Ireland are in the edge of economic implosion; how in Venezuela does not sound like nothing really will happen?

  18. Kepler Says:

    Mick,

    I don’t care for a “degree”, but the borders between formal and informal education are fuzzy. The thing is, as a German minister said many decades ago, “we cannot just cut each other’s hair”. And that is the problem in the States and increasingly in many other places: people are just going for services. Actually, the problem is we need people who can not just repair cars or produce cakes, but also invent new cars or build them with their hands and produce new ingredients and automate production.
    Germany is doing a lot of things wrong, but in that I have to say it is doing fine for Western standards: it has a boom, it is exporting and exporting and exporting.
    You don’t need a mechanic quoting Goethe or Shakespeare. But you have a more sustainable economy when he has a solid basic education and can become really inventive not just on how to fix a car but how to produce a new gadget.

    The US is still doing it in software and some other things, it cannot survive just by having excellent people to fix German cars or use Chinese bakery products (OK, Chinese bakery still sucks, but something else, toys or whatever)

  19. Mick Says:

    The US is less than 1 percent indigenous, about 10 percent ex-slave, and 90 percent immigrant derivative (those seeking greener pastures or their offspring). Genetically this is the land of the freedom seekers. There is no other place on earth that is more diverse. People don’t immigrate here because its cheap or easy or pretty or holy, they come here because of the opportunities available under this society regardless of its flaws (and don’t get me wrong, there are plenty).

    In the corporate world there is a paper ceiling. Your credentials are what get you in the door for interviews. In any of the companies I or my wife have worked, the people without credentials had to work much harder for promotions. What this tells me is that of two workers of equal level in a company, the one with less formal education is more of a go getter.

    In the entrepreneur world, college degrees only matter if you are selling to the corporate world. Consumers only care about what you do for them, not about your formal education.

    I believe it is the informal education that determines the success in a free society. Why would you care if a baker can do his own books, when he has a reputation for the best pastries in town. Maybe your mechanic can’t read, but he can make your car hum. It is the skill and talent of a society that makes it thrive.

    As long as Venezuela is experiencing a “brain drain”it does not have any hope of breaking free of the devil’s excrement as its sole provider. Not soon, but someday, oil will not be extremely valuable. With the talent gone, just imagine what would be left of this 21st century socialist society if you took oil out of the GDP equation.

  20. zumbap Says:

    Con las lolas note metas!

  21. Kepler Says:

    Firepigette, you are obviously not seeing the background of a huge percentage of the high-tech entrepreneurs and scientists now in the USA.

    The US did not get the education for the white just from “free market”, which anyway never, ever existed in the US nor in any other developed society.

    It is this kind of dogmatism, looking at the world either using the “free market” or the staticist chimera, what brings us problems.

    Again, I repeat: it is not about lowering standards. And it is not about coaching for a given test if that test is precisely about analytical thinking and general problem solution.

    What the states should do is to introduce competition in the state system: bad teachers should be sacked, period, good teachers should find working for a school a very attractive job, so that children get the very best teachers even if their parents cannot afford that.

  22. firepigette Says:

    Kepler,

    US universities are mostly attended by US citizens and are not thriving because of foreigners.They thrive DESPITE them.Some foreign students are an excellent plus, but many are an academic burden.They are sought after because of higher tuition.More money for Universities.Here in NC it is very cheap for a resident to attend, but not so for foreigners.

    Standards are routinely lowered for foreigners requiring less than adequate language skills for graduation.Great language skills are basic even for higher math.Only in lower more technical studies are they not needed to any great extent.But for a good general education they should be basic.

    We coddle minorities, which is our big problem right now.We lower our standards in many poorer school districts to the hip hop culture( disintegrated language) and to illegal Mexicans who cannot speak English.Other districts have top of the line schools.

    We cannot compete on testing levels with small homogeneous cultures such as Sweden or Belarus.We live in a huge country of all races and cultures….and as such will have varying to a great extent, especially because we do not live under THAT much standardization and or repression.

    I send you an interesting article on the subject:

    http://www.pdkintl.org/kappan/k_v91/docs/k0912ri1.pdf

    A free market represents a free mind.Teaching to standardized tests does not create a creativity stimulating education; in other words the ability to think outside the box, which is what most inventions,innovations, and in depth thinking require.

    A more technical and standardized emphasis however might be the first step for a developing nation such as Venezuela as long as there are schools that give different choices for those who want and can use a deeper, more creative education.
    I hate to see that sort of emphasis anywhere, but it may be all that can be aspired to in the case of Venezuela, at least on a temporary basis.

  23. Kepler Says:

    Dean, you don’t need free market for education. The US did not get to where it got a decade or so ago by free market on education. Not a single developed country did.

    It was rather rising standards in public education AND allowing free market to offer alternatives, among other things (of course, then there was the unique expansion to the West on land that was occupied by people with lower education standards and levels of technological development.

    Let people choose but guarantee there will be a great basic education for all. The US has most of the best universities STILL, but not primary or secondary schools. The universities are still thriving because there are millions of foreigners who can get there with an already good education and there are still lots of wealthy US Americans and some others through scholarships.
    Still, the system is not tenable.
    The problem in the US is that teachers’ unions became really mafia like, like in many other places, going even against increasing standards. That is not “state education”

    When I have mentioned the PISA study, which few US Americans really know- some of them decry “oh, no, not stupid standards for all, mediocre standards”. The PISA study is not really a standard, but just one little tool for measuring up some – some- aspects of education – those with regards to some aspects of analytical thinking for maths and reading and comprehension and science-.

    When the independence of the US came to be, the US had a huge advantage compared to Southern Europe: the vast majority of the people in the nation (the initial states) were literate and skilled. They actually had arrived like that from Britain and later other places.

    What we need to do in Venezuela, without too much sticking to one concept only, is to learn more about what Europe did at the end of the Middle Ages to improve education, what the US did at the start as well. We should take away subsidies for the rich or the middle classes and reduce those that do not work for the poor, but FOR GOODNESS SAKE, you can guarantee excellent state education for primary and secondary levels and also allow the free market to offer “extras”.
    If there is one thing the state should do is that, not
    spend so much money making weapons companies and other security contractors wilthy rich.

  24. bobthebuilder Says:

    A great post which pinpoints exactly the problem in Venezuela today. Chavez talks a game about equality and distribution of wealth, but Venezuela doesn’t have a socialist or communist government. It has a government intent on keeping power by any means possible.

  25. Dean A. Nash Says:

    The problem is never the inequality of income – i.e. income gap – but rather, the inequality of education – what I call the “education gap”.

    This is what all needs to be corrected, and NOT by lowering standards to the lowest common denominator, but rather, by allowing free market principles to work their magic in this hypercritical segment.

    Fully developed countries can’t get this right, so Venezuela has, practically speaking, NO CHANCE.

  26. geronl Says:

    The basic fact is that the government cannot redistribute wealth efficiently or in a way that makes economic sense. Only the free market can do that efficiently.

  27. moctavio Says:

    Liz: Not all banks require you to prove your are traveling.

  28. loroferoz Says:

    I can only hope that the irony will not be lost on Venezuelans that as Venezuela got “Social” and then, (in the last 12 years) “Socialist”, it becomes, paraphrasing Abba “A rich man’s world”.

    No wonder, with double digit inflation. With salaries becoming literally schoolboy allowances. With the local currency becoming worthless, and real money out of the reach of many. With so much money and freebies to be had if you can get at them (have a car, will have free gas, have a credit card, will have cheap dollars) With government control of trade and exchange…

  29. Mick Says:

    If you look at any society, you will see that the middle class is made up of people who make their own way. Maybe they get an education or maybe they just reinvest every penny they can into some small business. They don’t inherit much, they seldom get rich, and they never have to live in scarcity.

    The rich usually get a head start through some sort of title. This might be a family name, money, land, or a profitable business. Sometimes they come from making the right deal, such as loyalty to a certain politician or by buying Windows for $50,000(more often the former).

    The poor, on the other hand, start with multiple handicaps. They obviously lack wealth and title, but they are often also uneducated, unwise, easily manipulated, and short sighted.

    Hugo, like all socialists, Marxists, communists, populists, they do not want to lead a middle class. They do not want to answer to the people, they want the the people to answer to them. They want to have total control over subservient followers, and therefore must eliminate the middle class.

    Look around, there are still plenty of rich. But, everyday there are fewer middle class and more poor. That’s why the studies might show fewer poor. They are not raising the standard of living, they are lowering the benchmark against which they measure.

  30. liz Says:

    Miguel, are the $5,000 from Sitme supposed to be linked to a trip abroad or not?


  31. […] This post was mentioned on Twitter by Miguel Octavio. Miguel Octavio said: Dumb economic subsidies and arbitrages in Venezuela http://bit.ly/fSgzHV […]


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: