The Santero Economics Trinity

January 18, 2016

Trinity_knot

Some people took offense at my last post on Santero Economics when the new VP for the economy was named. They thought the term lacked seriousness in an economic debate.

I disagree.

When I first introduced the term, I was making two analogies, one to the famous Voodoo economics term that Geroge Bush Sr. coined referring to Reagan’s economic ideas, but more importantly, I defined why the term was justified by defining what Santeria was and comparing it to the current framework for economic policy in Venezuela and I quote my post from July 5th. 2015:

“Santería, which is composed of a set of beliefs taken from various religions, which are some times incoherent and even contradictory and which are based on hope, spiritual beliefs and ideas with little fundamentals. Thus, we can characterize the current policies as, Santero Economics, as the policies are equally incoherent, based on hope and many times go against each other, with no relation to known economic principles and fundamentals.

And today, I complete the cycle, first it was Tony Boza’s ideas, then Salas’ and now with a description of the foreign part of the Santero Trinity, Spanish economist Alfredo Serrano, who has recently espoused his seven steps to solving Venezuela’s Economic problems.

I will not go over all seven of them in detail, but this reminds me of an article which is somewhere in this blog in which someone suggested Chavez was proposing a society which had nothing to do with who Venezuelans where and ignores their habits, culture and idiosyncrasies. Serrano’s proposals seem to ignore the reality of Venezuela and Venezuelans today. In fact, it seems to ignore the reality of what Chavismo has brought on Venezuela in the last 16 years too.

Let’s look at the proposals:

Proposal #1: The State of “Misiones Sociales” requires an economic mirror; for every social mission, an economic mission is needed to unleash new productive forces internally. To do this, public procurement must serve as the economic muscle in favor of the new democratizing social metabolism. We must pursue  the economic multiplier effect derived from the Social Revolution.

Jeez, I really don’t know where to start, let’s do it at the beginning: Which Social Mission are we going to work with? Has Serrano made a diagnosis of the current status of those “misiones”?  The way I understand it, the educational misiones, Ribas, Robinson and Sucre are sort of half-assed right now, as people are not getting neither the instruction, nor the money, nor the promised programs. And if they were, how would you propose to promote Mision Ribas, for example, as an economic force, when you pay people to study. Do you want them to study or to produce something? My understanding is that it promotes people not working as the “beca” to study is more than enough to live on, or at least as good as also working.

And I don’t see how the health “misiones” can be leveraged economically, least of all, when Barrio Adentro is 60-70% abandoned.

I mean really, tell me how this can be turned and “leveraged” into production, when half of it is simply not functioning:

misiones.jpg

I mean, pick your favorite Mision and tell me whether is active or not and, if it is, whether it can be leveraged into a new-fangled metabolism for economic production. His words, not mine. Mercales show lines and shortages, Barrio Adentro is barely alive, people are not getting their “beca” for Rivas o Sucre.

I mean, really? What country is Serrano talking about? And how is he going to do it?

Let’s move on

Proposal 2: It is necessary to sort out what can be produced and what is not. A productive Revolution requires getting down to work with the new economic engines, considering: a) the real added value that can be generated internally, and b) the outer limit imposed by global value chains. Nothing would produce new goods if it is just for importing much of the value added.

Sounds wonderful! But isn’t that what the Government claims to have been doing for the last ten years? And isn’t the fact that the Government did that, “prioritizing,” that we have shortages, lines and empty shelves?

Are we going to import Martians to do it this time around? Or Chinese? (They are here already). Or Cubans, to see if this time they get it right? Because it seems that all the Government has done in 15 years is do exactly that and the results are sort of lacking…(More than sort of, but let’s be magnanimous)

Proposal 3: Not everything is a matter of engines; it is also  a matter of actors. The democratization of the production system is a necessary and sufficient condition in the new economic era because it is the only way to break the current oligopolistic dependence. The communal power must be essential pivot in the new economic order, both productive and distributive issue and marketer. The commune has to stop being economically marginal; the output is certainly not a neoliberal communal output.

Uff! As someone once said, “Como se come eso?” (How do you eat that stuff?)

First of all, we are talking about a crisis that needs to be resolved TODAY, not in five years. People need to eat, for example. People in the communes are concerned about making ends meet, getting stuff that they can’t get, standing in line and surviving under current hardships. What are you going to do? Bring a whiteboard telling they have to produce milk, meat, tomatoes, mangoes chickens and rice?

Has this guy ever considered how it is different to breed cows in the tropics? Or to grow any sort of plant? Does he know about how the Government nationalized and destroyed Agroisleña, the only provider of technical advise, seeds and even funding to the small producers? In order for the communes to get into any of this  “productive” stuff, you would need to return Agroisleña (now Agropatria) to its original shape, before you can even think about educating, teaching and training the communes to produce really basic stuff. And the Government that destroyed it is supposed to do it?

Really?

To say nothing of obtaining the required medicines and vitamins to grow a healthy chicken, which have been lacking for months even to producers that have the money. To say nothing of being able to buy the cows that can produce milk in the tropics, feed for them and the medicines for when they are ill.

All very long term and you need a lot of money if you ask me.

4. We must avoid falling into the  neoliberal trap to address the issue of foreign exchange from the exclusive focus of the nominal value. Is it important to discuss the exchange rate? Yes, as long as previously defined what the new currency allocation matrix. At a time of scarce foreign exchange, it is crucial to choose how they will plant to flower currencies other real economy in the shortest possible time. It requires a kind of acupuncture so he is they will be given an anti-inflationary,  productive use and pro growth to the available foreign currency.

The “neoliberal trap” of focusing on the nominal value is because keeping the nominal value artificially and incredibly low is what has given rise to the biggest corruption racket and trap in the history of Venezuela and dozens of billions of dollars lost to Government officials as well as to exports to Colombia, which the Government has for years been unable to stop.

Again, will we have Martians running this? Does Mr. Serrano even understand what is happening in Venezuela every day and how inefficient, corrupt and incompetent Chavismo has been in the face of all these distortions?

I will skip 5, but here is 6:

6. Faced with restrictions outside, it is essential to make progress on tax sovereignty. There is enough room to do a tax revolution based on principles of social justice. It must implement a plan to combat fraud and tax evasion. It needs to raise in whatever it takes to ensure social and productive investment, and preventing external shock has negative impact internally.

Really? Who will pay this tax? Social justice when professionals make less than $30 a month? Again, who will pay? Companies? Which ones? What is the magnitude of this revolution or uncollected tax? Does Mr. Serrano understand even who pays taxes in Venezuela? Does he know the cutoff for yearly income to pay or not taxes? Does he know that banks make money by buying tax free bonds from the Government, which will be impossible to sell if they were not tax free? Really, with an economy with a 10% GDP contraction the solution is a tax revolution? Please…

And the best is the last point. I dont know where Mr. Serrano has been, but here is point 7:

7. Another answer is to return to the regional path effectively. It would surely trigger special margin Sucre plans to import priority goods bypassing the dollar. It is essential also import new paths without dollar, Mercosur, with some compensatory methods, while a new map of investment is achieved from the region.

Well, I will not even comment on this,  the “regional path”, enough said, wonder what Macri thinks?…but I have to wonder, has this guy ever been in Venezuela for any length of time?

 

 

 

 

 

 

 

 

 

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32 Responses to “The Santero Economics Trinity”

  1. Pumba Says:

    cualquier parecido on la realidad https://youtu.be/yb0qIZD9g7M?t=3166

  2. Humberto Says:

    Pure incomprehensible nonsense Miguel. You are a better man than I for having the patience to read and try to understand this utter crap.

  3. Juan Largo Says:

    One of the kids who grew up in my house in Valencia worked in the government and I know for a fact that this and Caracas Chronicles are read by both Chavistas and MUD – and Kepler’s work is as well. So while it is enticing to slam Sendero Economics, which we all know has no basis in anything real, those proposing viable alternatives that work in the real world are contributing to the solution. Not to say that identifying the problem is not axiomatic to change.

  4. Roger Says:

    While he is not my cup of tea, everyone who has suggestions should
    submit them. Somebody must have something that would work. You would think the thousands of LatAm studies profs and others who would just love to publish a paper? Gather them, read them and debate them. There has to be a plan that will work. Another failure is not an option unless you like the Army one.

  5. nacazo Says:

    Geroge-> George
    Venezuelans where-> Venezuelans were

  6. Dr. Faustus Says:

    Does Santero Economics include operating in a utopia-like environment, cut-off from the rest of the world? Well, the rest of the world is LEAVING Venezuela, and writing off their investments. Running for the doors. Newell and Goodyear, 3M Co, Colgate Palmolive Co, Herbalife Ltd, Pesico, Ford Motor Co., Cadbury Chocolate, Procter and Gamble, Clorox, Abbott Laboratories, Abbvie Inc, Merck & Co Inc, Pfizer Inc and Zoetis Inc. Gone! Outta here. Write-off all of the assets.
    http://www.reuters.com/article/us-usa-companies-venezuela-insight-idUSKCN0UX1EM

    • Boludo Tejano Says:

      That’s a good thing for Chavezuela. After all, each multinational leaving Venezuela means that there is one less imperialist bloodsucking multinational looting Venezuela.

  7. Lee Kuan Yew Says:

    These “proposals” are nothing but a deliberate Lie. Another smoke screen. Flares. Maliciously designed to fool some very ignorant people (starting with the 30% Maduristas or the 60-70%% Chavistas that still exist).

    Chavismo knows the Economic disaster is practically irreversible, unless they free the economy completely, and stop Stealing so much. Unless they ask the FMI for Trillions, and get into a massive, extremely tough austerity plan. Unless they give up all “public” industries, and let Private, educated business people run the country, starting with PDVSA. No price controls, no exchange controls, private, transparent BCV, fire 2.5 Million Enchufados, and cut off Half of the useless ministerios. And even if they did all that, plus Tax people, plus raise Gas prices, it would take Decades to get back to the 90’s Vzlan Economy.. It’s that screwed, at every level. Not just the top, and even “el pueblo” is highly corrupt, under-educated, with horrible work habits, unprofessional, sick. And 1.5 Million of the best Professionals left, will not return, not with 28000 dead per year.

    So they come up with this fake crap on purpose now, to buy some time, steal some more. And then when the MUD rejects this package of inter-galactic bulsshit, they will have yet another Scapegoat to blame: The Burguesito, Capitalista Asamblea, that doesn’t let El Pajarito Govern. Starting last week, even Global Warming, not enough rain, apagones, colas, 500% Inflation, crime, International Financial Default, Everything will be the MUD’s fault, Henry’s fault, plus of course the Guerra Economica and the Imperio.

    Perfect plan. Again, Chavistas are much more Competent that many of you think. At Lying, and Stealing. Some of you Economic Analysts even take they bait, and start analyzing such obvious crap somewhat seriously.. Just what they want. Can’t wait for Jose Guerras’ brilliant rebuttal..

    • Diocletian Says:

      I find it interesting how Maduro is basically insisting that he (and not the NA) get the blame for the economic implosion.

      Are there more resources to steal? Have some of the smarter Chavistas left to Bolivia or somewhere to enjoy their wealth? It is always possible to find some place that will take in “exiles” with cash.

  8. Charly Says:

    All of that will end up as ranchonomics.


  9. You must remember Serrano lives in Quito, Ecuador, and his target audience is Maduro and other communists with weak to no economics education. Serrano’s work products, like Salas’ are pseudo intellectual Marxist purée. Baby food for brain damaged Chavistas.

  10. amieres Says:

    Proposal 4
    “The democratization of the production system”

    This sounds like expropriation of all companies to be handed out to the comunas.
    Extremely dangerous, but it is part Economic Emergency Decree.

  11. captainccs Says:

    >>>which are based on hope, spiritual beliefs and ideas with little fundamentals.

    You just described religion, all of them! LOL

  12. Sales Man Says:

    “….the new democratizing social metabolism. We must pursue the economic multiplier effect derived from the Social Revolution.”

    No. Sorry. No reason to keep reading. As long as lunatics like Alfredo Serrano are given any credence then Venezuela is doomed to poverty and mayhem.

    He should try fiction.

  13. Boludo Tejano Says:

    Miguel Octavio, I just sent a comment that got sent down the memory hole. Poorly done HTML,or too much HTML?

  14. Boludo Tejano Says:

    Miguel Octavio;
    Has this guy ever considered how it is different to breed cows in the tropics?
    Come now, Miguel Octavio. Hasn’t your friend Carlos Machado Allison told you about the spectacular successes of Cuba in cattle breeding and cattle production in the tropics? Repeat after me: Ubre Blanca! Ubre Blanca! Ubre Blanca! 🙂
    (We will ignore a comparison between 1960-2010 increase in milk production in Cuba compared to Latin America. But repeat after me: Ubre Blanca! Ubre Blanca! Ubre Blanca!)

    The democratization of the production system is a necessary and sufficient condition in the new economic era because it is the only way to break the current oligopolistic dependence.

    Chavismo has been running things for SEVENTEEN YEARS now, and you are talking as if Chavismo just began to take the reins of power. “Oligopolistic dependence?” You have been nationalizing , expropriating , and regulating for seventeen years. That’s a generation. About the only thing left of oligopoly in Venezuela is Polar, and consensus seems to be that if Chavismo took over Polar, the country would collapse, it being that Polar is much better run than what Chavismo has taken over. I recall seeing a video in which Polar workers- not Polar management- said that it would be a disaster if Chavismo took over Polar. You want to listen to the workers, right?

    6. Faced with restrictions outside, it is essential to make progress on tax sovereignty. There is enough room to do a tax revolution based on principles of social justice. It must implement a plan to combat fraud and tax evasion.

    And the first order of business is to take down the biggest fraudsters: Godgiven, Derwick, bachaquero and drug bribes to the GNV and FAV. Right?
    Pardon, my mistake. It is social justice that the above enrich themselves. Or are you proposing that they pay income tax on their illicit gains?
    I’m sure Godgiven is more than ready to pay his fair share. Just give the word. Right?

    Proposal #1: The State of “Misiones Sociales” requires an economic mirror; for every social mission, an economic mission is needed to unleash new productive forces internally. To do this, public procurement must serve as the economic muscle in favor of the new democratizing social metabolism. We must pursue the economic multiplier effect derived from the Social Revolution.

    Miguel Octavio has more patience than I . This looks to me like gobbletygook written by a third year sociology student who has learned a lot of new terms and thinks he can explain it all, when he actually doesn’t have a clue. But he is very good at producing incoherent prose, which appears to me the implicit goal of sociology classes. “Social metabolism?” Give me a break.

  15. Noel Says:

    Reading Mr. Serrano’s manifesto, one doesn’t know whether to laugh or cry: he relishes a mumbo jumbo which reminded of my high school philosophy professor; he longs for the “good old days” of Raul Prebisch’s import substitution; with an equal desire to replicate the disastrous Greap Leap Forward of Mao; all of that seasoned with infantile anti-Americanism.

    Yes, this man, if let loose could absolutely destroy the country.

  16. Ira Says:

    I didn’t learn a lot about farming while growing up in Brooklyn, but I know LITTLE about the decimation of America’s small farmer.

    It’s a tragedy, but an agricultural fact of life that huge companies with huge resources produce exponentially more, and gets product to market at much lower cost.

    So is the era of the little farmer in Venezuela over? Or SHOULD it be over–to best fill the country’s stomachs?

    I can see an incredible role that the home gardens/plots can serve in VZ’s hinterlands, but as an effective national food policy, don’t you need the big boys?

    Just asking.

    • m_astera Says:

      Ira-

      I’ve been around agriculture all my life; I work as a soil consultant now.

      The short answer is no on huge producers, especially right now in Venezuela. Far too much capital investment (especially on equipment) and lack of expertise and training. What would probably work is to provide seeds and fertilizers to the common people and give them a plot to plant beans and yuca and tomatoes. Along with fertilizer and a way to irrigate, and a little instruction. The small people’s gardens are what kept the USSR going during the collapse. Likely the same today in Cuba.

      • Boludo Tejano Says:

        The small people’s gardens are what kept the USSR going during the collapse.
        Excellent point.history.how stuff works: USSR: Economic System:

        Small personal plots were allowed. The land was owned by the state, but each farmer had the right to keep profits. Although these plots made up only about 3 per cent of all farmland, they produced more than 25 per cent of all the Soviet Union’s agricultural output.

        Incentive can trump size. My experience in Latin America was that the open air markets or the small ma and pa grocery stores had prices that were competitive with supermarkets.

        • captainccs Says:

          >>>My experience in Latin America was that the open air markets or the small ma and pa grocery stores had prices that were competitive with supermarkets.

          Open air markets usually have better prices but ma and pa grocery stores tend to be more expensive. These days it’s very much an item by item affair.

          One reason that sometimes ma and pa grocery stores have lower prices is that they have old inventory bought at previous and lower regulated prices. They are not allowed to increase the price to offset inflation. I used to buy the very best rum at the cheapest prices in slum type liquor stores. The people in those neighborhoods could not afford them and if they had been in the store for some time they were much, much cheaper that in supermarkets with high turnover.

          Also one can find drugs in small town pharmacies that often are not available in big city ones for similar reasons, low demand. Just be careful with expiration dates.

          The prohibition of raising prices with inflation was what bankrupted my computer business in 1984. We were not allowed to raise the price to the public but the wholesaler was allowed to charge us the new price. In practice this was a theft of my working capital as I had to sell equipment for Bs. 10,000 that would cost me twice that to replace.

          The stupidity is not new, it just has a new name and Simon must be turning in his grave that they are soiling his good reputation.


      • Uhu. So If you live in Catia and you used to work as a plumber’s helper you get a plot just outside Guarenas? How does that work? Who guards your plot at night to keep thieves away? Who pays for the fence?

    • captainccs Says:

      >>>I can see an incredible role that the home gardens/plots can serve in VZ’s hinterlands, but as an effective national food policy, don’t you need the big boys?

      This was the one clause (105) of our previous constitution that I found to be in error, it said that large estates (latifundios) were contrary to the national interest. It didn’t prohibit large scale farming but made it cumbersome because you could only do it via cooperation.

      You see this same ill advised thinking taking over in the US in the hate for the 1%, as if success itself were evil.

      I’ve said it before, Chavismo just made bad stuff worse.

      • Ira Says:

        Yeah, I’m interested in your perspective on what the “philosophy” is, because the U.S. philosophy…damn the little guy…has resulted in beyond incredible production, at the world’s lowest costs:

        Based on income/spending ratios/formulas, Americans enjoy the lowest food costs of anywhere on earth.

        Huge Corporate farming simply works better.

      • m_astera Says:

        “Huge Corporate farming simply works better.”

        According to Syngenta, Monsanto, Cargill etc. I’m in the business and see it differently. Massive production of bulk crops devoid of nutrition, with the side effect of long-term soil destruction is the result. Unlike mining or manufacturing, the growing of high-quality food, for the purpose of feeding healthy people and animals, does not lend itself well to the industrial model.

        The corporate bottom line of maximum output and profit for least input and expense mines the fertility of the soil. I’ve seen plenty of examples of mined-out soils in Venezuela.

        • Ira Says:

          If you’re poor and hungry, do you think anyone cares that Corn Ear A is supposedly “healthier” than Corn Ear B?

          And I would hardly say that Cargill et al is destroying farmland.

  17. Dave Barnes Says:

    These proposals reek of turbidity and turgidity.

  18. .5mt Says:

    BRB going long on the Sucre. Ummm, where can I find them?


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