Watching Venezuela Implode

Open Letter to Sean Penn from Maria Conchita Alonzo

A small quote:

We live in the U.S.A., the land of opportunity to do and say what we desire, respecting dissenting points of view, of course and without reprisals.

Then WHY do you defend a government whose stronghold upon its people is so oppressive that a big price is paid for exercising freedom of speech: Persecutions, closing of radio and television stations, jail…and even death?

You are fortunate enough to live in a country where you can buy property and claim it as your own to do whatever you want with it.

Then WHY do you promote the interests of a government that violates the Constitution by hindering the possibility of development: Land, industries, commerce, communications companies, foreign investment opportunities, financial institutions and private property? This is an everyday scenario in Venezuela.

feeank, Maria is wrong in one important point.

No one is USA can do whatever they want with their property. There are such things as zoning laws. Then there is environmental laws. Then there is taxation. Then there are police laws. Then there are labor laws.

Unfettering capitalism is no longer with us. And its been this way for a long long time.

feeank wrote:

Open Letter to Sean Penn from Maria Conchita Alonzo

A small quote:

We live in the U.S.A., the land of opportunity to do and say what we desire, respecting dissenting points of view, of course and without reprisals.

Then WHY do you defend a government whose stronghold upon its people is so oppressive that a big price is paid for exercising freedom of speech: Persecutions, closing of radio and television stations, jail…and even death?

You are fortunate enough to live in a country where you can buy property and claim it as your own to do whatever you want with it.

Then WHY do you promote the interests of a government that violates the Constitution by hindering the possibility of development: Land, industries, commerce, communications companies, foreign investment opportunities, financial institutions and private property? This is an everyday scenario in Venezuela.

Thanks for that link. I will be interested to see what comes of it.

SallyNasty wrote:
feeank wrote:

Open Letter to Sean Penn from Maria Conchita Alonzo

A small quote:

We live in the U.S.A., the land of opportunity to do and say what we desire, respecting dissenting points of view, of course and without reprisals.

Then WHY do you defend a government whose stronghold upon its people is so oppressive that a big price is paid for exercising freedom of speech: Persecutions, closing of radio and television stations, jail…and even death?

You are fortunate enough to live in a country where you can buy property and claim it as your own to do whatever you want with it.

Then WHY do you promote the interests of a government that violates the Constitution by hindering the possibility of development: Land, industries, commerce, communications companies, foreign investment opportunities, financial institutions and private property? This is an everyday scenario in Venezuela.

Thanks for that link. I will be interested to see what comes of it.

Then WHY do you support a government with over $100 million in oil revenue that has 71% poverty?

Maria says Venezuela has a 70% poverty rate. The post I posted says it dropped from 56% to 28% between 1996 and 2007. Did it really go back up? Where did she get that number from?

With the way Chavez is treating his economy, I'd be very surprised if it hadn't.

goman wrote:

Maria says Venezuela has a 70% poverty rate. The post I posted says it dropped from 56% to 28% between 1996 and 2007. Did it really go back up? Where did she get that number from?

Goman, I haven't seen the first slum here in Caracas being leveled because of people moving out of them to go live in a proper urbanized area. I haven't seen the first new urban development fully aconditioned being handed to the new owners, these hundreds of families that are lifting themselves out of poverty everyday as your source suggests. I really don't want to engage again in back and forth number-war with you since I can't quote where does Maria gets her figures for, I think the essence of her letter is what's important here.

What I will refute you right now is the example about zoning areas, etc. Thanks for bringing the subject up, I am adultly aware of said limitations to what you can do with your own property, it comes handy since one of the reasons for Henry Falcon's defection from Chavez side was that the government decided to expropiate a distribution center from the Polar company in mid-industrial area on Barquisimeto city (Henry Falcon is the governor for the Lara state, where Barquisimeto City is located, he was unwillingly supported by Chavez' party on the last elections, having proved more popular than Chavez' hand-picked candidate) Chavez decided out of the blue that a series of warehouses deep inside an industrial zone were to be expropiated to be used for HOUSING projects, by the way, violating all stablished zonal determined uses, etc. Falcon stated that this action would prove perjudicial for the city inhabitants since the aforementioned warehouses provided enployement to more than a thousand families, and he suggested making use of several off-city plots of land that were state-owned to build the housing projects. Chavez refused, accused Falcon of siding with the "oligarchy" and threatened to expropiate the whole of Polar Company (the most important privately owned company in Venezuela) if they didn't cooperate. So the warehouses have been expropiated, the city is changing the approved zonal laws for said plots, even though it is deeply rooted in a industrial area, and Falcon has defected to another political party still allied to Chavez, but being labelled a traitor and pariah by every government supporter.

feeank - Hyperbole only works for those already convinced. Most, not all, of her points are hyperbolic. Such as the 70% rate. The inflation rate being mentioned is also hyperbolic if you take a closer look at it.

2 things I don't see as hyperbolic is crime rate. WAY too high for being acceptable and it is not going in the correct track. 2. Chavez thinking everyone who disagrees with him is a traitor.

My point about Zoning Law and the other ones was about the USA, not Venezuela. Meaning you have to follow the rules of the piece of land you own. (Unless you have a lot a clout and can change the rules)

My point about Zoning Law and the other ones was about the USA, not Venezuela. Meaning you have to follow the rules of the piece of land you own. (Unless you have a lot a clout and can change the rules)

And your point isn't valid, you can't compare Chavez randomly taking land from people, to zoning laws. One is clearly laid out, subject to the review of courts and appealing, one is a random jerk in a stupid shirt deciding he's smarter then everyone else.

Goman, after checking your post it turns out the source of this data is the INE (Instituto Nacional de Estadistica/ Statistics Natiotal Institute) This is a governmental office, one I couldn't give any more credit than I give Chavez himself, for the mere reason that it is government-funded. It is not an independent investigative party by any mean and they only function to pump out numbers such as this so well intentioned people like yourself or Mr. Penn all around the world can be fooled by it. I am ready to trust UN-funded studies (and there are several that do reflect some positive things Chavez can claim being responsible for) but for these Chavez-funded claims I can in all honesty tell you that you have been fooled. There hasn't been a significative improvement in the social composition of the country in these 11 years of Chavez government, actually, there has been a huge decline in what was called the middle class into lower middle class. Extreme poverty levels have been improved, I grant you that, thanks to "missions"(endemic scholarship-like programs that enroll disadvantaged people into finishing school/college, the exact nature of the benefit/service provided to the enrolee vary from mission to mission) but to claim that we now live in a country with a solid middle-class is nothing short of lying.

Edit: Adding this link to further cement my point

MaverickDago wrote:
My point about Zoning Law and the other ones was about the USA, not Venezuela. Meaning you have to follow the rules of the piece of land you own. (Unless you have a lot a clout and can change the rules)

And your point isn't valid, you can't compare Chavez randomly taking land from people, to zoning laws. One is clearly laid out, subject to the review of courts and appealing, one is a random jerk in a stupid shirt deciding he's smarter then everyone else.

I am not comparing the two. Maria said unabashingly that you can do anything you want with your property in the USA. I just mentioned no you can't.

feeank wrote:

Goman, after checking your post it turns out the source of this data is the INE (Instituto Nacional de Estadistica/ Statistics Natiotal Institute) This is a governmental office, one I couldn't give any more credit than I give Chavez himself, for the mere reason that it is government-funded. It is not an independent investigative party by any mean and they only function to pump out numbers such as this so well intentioned people like yourself or Mr. Penn all around the world can be fooled by it. I am ready to trust UN-funded studies (and there are several that do reflect some positive things Chavez can claim being responsible for) but for these Chavez-funded claims I can in all honesty tell you that you have been fooled. There hasn't been a significative improvement in the social composition of the country in these 11 years of Chavez government, actually, there has been a huge decline in what was called the middle class into lower middle class. Extreme poverty levels have been improved, I grant you that, thanks to "missions"(endemic scholarship-like programs that enroll disadvantaged people into finishing school/college, the exact nature of the benefit/service provided to the enrolee vary from mission to mission) but to claim that we now live in a country with a solid middle-class is nothing short of lying.

feeank - I never said that Venezuela has a solid middle class. I've said the economy is growing. I've said that Bankers have made a lot of money. I've said inflation is better than before Chavez. But I never said that Venezuela has a solid middle class. Chavez's goal and those that voted for him was to get rid of a lot poverty. Even you have conceited that his missions have done that for many of your fellow Venezuelans.

goman wrote:

feeank - I never said that Venezuela has a solid middle class. I've said the economy is growing. I've said that Bankers have made a lot of money. I've said inflation is better than before Chavez. But I never said that Venezuela has a solid middle class. Chavez's goal and those that voted for him was to get rid of a lot poverty. Even you have conceited that his missions have done that for many of your fellow Venezuelans.

But then I have to wonder, agreeing on the grounds of extreme poverty levels improving, looking at your numbers, knowing first hand what I do know (that the poverty levels in general remain the same, and actually, have worsened the last 11 years, with most middle-class families sliding down to lower middle class status) If according to your statements, grounded on evidence provided by Chavez himself, that the economy is growing and from a 56% we have cut down poverty to a staggering 28%, I would really like to know, where on earth is this 72% of the population that is now lower-middle class at least? (I'm hoping they're not going straigth up to the Super-Wealthy class, I would feel really bad for myself for not seizing the opportunity) Where are they hiding? what jobs are they taking, where do they live? The anwser is that they didn't came out of poverty at all, Extreme poverty has been reduced, yes, but what we have now is a country where 71% of the population depends on the goverments' whim, being publicly employed, mission dependant, or as most people sadly is, out of a formal job and living off menial tasks, "buhonerismo" or informal labor.

Goman, I don't want to make you the target of snarky remarks, I think we can all agree that from both sides there will be lying, there will be hyperbole, I try to form my opinion out of every source possible, from personal experience, official and opposition sources, family & friends accounts and impressions and yes, sometimes even random accounts by strangers in the internet. I think that from what you have stated in the past that you are much less inclined to believe a statement if it doesn't come from a source you have deemed "trustable" on the account of how said source deems certain political views or positions. If im not mistaked (don't want to go back to check your older posts here) you are what could be called a "liberal", you are against U.S. colonialism, etc. I am too. Had I been American I would have voted for Gore, Kerry & Obama. Having said that, I cannot condone Chavez' (or Fidel Castro's) actions anymore than I guess you would'nt have condoned Pinochet's back in the day. There can be, and there is, Evil from both sides of the political spectrum, not noticing it or turning the eye away of it because of automatic solidarity to your political inclination is a screwed-up way to stand up for what people believe in. I do applaud the fact that you've showed some glimmer of a doubt on Chavez and really hope you take a more open perspective on the way you perceive him.

Thanks for the civil discussion.

I've said the economy is growing.

It sounds like he's destroying his middle class, the engine of long term growth, to temporarily lift the poor out of poverty. Like most stupid ideas, over the short term that feels wonderful, but over the long term will be a disaster, just putting everyone but the rich into the poorhouse. And, not coincidentally, cementing Chavez' absolute grip on power.

Malor wrote:

It sounds like he's destroying his middle class, the engine of long term growth, to temporarily lift the poor out of poverty. Like most stupid ideas, over the short term that feels wonderful, but over the long term will be a disaster, just putting everyone but the rich into the poorhouse. And, not coincidentally, cementing Chavez' absolute grip on power.

That's one way of looking at it. And while I hesitate to defend Chavez, because I'm now convinced he's just another cookie cutter tyrant, one could make the assertion that the "middle class" as you and I think of it is actually unsustainable; the American middle class survives on the backs of cheap Mexican and Chinese labor, both domestically and internationally. Same story for the emergent middle class in India, China, and Russia (such as it is); it depends heavily on a cheap supply of labor and resources to expand.

Lowering the standard of living for everyone above the average in order to boost the poor certainly doesn't *have* to be a disaster, unles you believe that poor people are poor by choice (like some in the US GOP do). It just hasn't worked yet because every time it's been tried -- including in Venezuela, from the limited reading I've done -- people don't ever dismantle the highest echelons of the wealthy.

one could make the assertion that the "middle class" as you and I think of it is actually unsustainable;

Absolutely not. We can absolutely maintain this standard of living or even better, even with minimal environmental impact. But we need to be investing to get there, not consuming everything now in an orgy of waste.

Such a comedic talent gone to waste

A pair of articles:

First, Mark Weisbrot at the Huffington Post with Venezuela is Not Greece. Then Johnathan Catalan at Mises.org with The Fine Print of Central Banking. Lots of links in English in both, numbers are from the Venezeulan government for the most part, so apply filters as you feel necessary.

Both articles are wrong. Since the main source of revenue of Venezuela is oil. Oil is priced in dollars hence the de facto peg to the dollar.

Also the Mises article has no historic reference. For example Inflation has gone down during the 2000s. IE they are getting less like Zimbabwe, not more like Zimbabwe. I already posted that a while back. Why do you keep ignoring these facts?

What really is needed in Venezuela is more public financing of education. This is a long term goal that the private sector have never financed.

Chavez is just swinging at windmills instead of getting the job done.

One thing I disagree with in Catalan's article:

Unsurprisingly, this has caused irreparable damage

Damage? Sure, tons of it. Venezuelans are in much poorer condition because of the nationalization of the industries there. But irreparable? Not hardly. Economies, after all, built from zero to begin with, so they can certainly start building again when they have all that modern infrastructure in place.

This bit, though, was nicely put:

By this time, it should be clear that monetary inflation is not a method by which to increase production. By printing money, the government does not simultaneously produce capital goods.

In other words, money is not wealth. Wealth is energy, physical things, and knowledge. The government is creating wealth tokens from nothing, and using them to take wealth out of the economy. It's not particularly surprising that the wealth tokens are losing value at about 30% a year. Further, he's stealing that wealth from the people least able to afford it, the people he claims to be trying to help, the poor. Rich entities can adapt to inflation and even profit from it, but the ordinary slobs take it in the shorts.

But, surely printing more money will allow investors to buy more capital goods? Knowing that the supply of capital, during a specific moment in time, is fixed, by giving certain entrepreneurs more money it will only allow them to bid capital away from other entrepreneurs. Furthermore, over the long run an increase in money will, at best, cause the price of capital to adapt to the increase in the supply of money. There is no physical increase in the volume of capital available to entrepreneurs.

In other words, there's only so much actual wealth at any given time, and injecting new money gives an unfair advantage to those close to the source. It steals wealth away from the people who have it, transferring it to the people with the newly-created cash. And they don't provide wealth in return... all they put into the economy in exchange for real goods is wealth tokens. The actual wealth available doesn't change, it just moves to people who are giving nothing back. This means that less wealth is available for everyone else. Further, those entities are using that wealth in consumptive ways, so it's not being properly invested for growth. Instead, it's being consumed and destroyed.

You see that in this country, too, with the constant expansion of Wall Street and the cries of pain from Main Street. We inflate our wealth tokens through a couple of levels of indirection, and via exciting new meta-tokens called derivatives, but it's the same basic process. Our method just benefits banks more than the central government.

Venezuela's market has been absolutely flattened by an overburdening government. Nationalization turned vibrant industries into dead factories, while regulations and price fixing crushed what remained of the private sector. With no true recovery possible, the regime has turned to the printing press as the solution to its economic problems. But, as events clearly show, this has not led to prosperity. It has only led to further suffering, as inflation quickly erodes Venezuelan savings and further damages Venezuelan industry.

It'll be interesting to see how that plays out, because Chavez is pretty much adhering purely to the goman prescription for how to manage an economy.

Goman, how bad will things have to get there before you realize that your model simply doesn't work?

Oh, and:

Goman wrote:

For example Inflation has gone down during the 2000s.

Per that article, inflation was about 30% in 2008, 25% in 2009, and back up to 30% (annualized) in the first three months of this year. (Note that you have to measure via non state-controlled industries; when they artificially force prices down, you get shortages and serious economic damage, instead of measurable inflation.) What source are you using that says it's going down, and how did they arrive at those figures?

Chavez is just swinging at windmills instead of getting the job done.

Ah, okay, so when Venezuela collapses, it'll all be Chavez' fault for doing the wrong things, not because of the terrible monetary policy?

While Government officials confiscates 2000 Tons of foodstocks from private companies arguing said companies are"withholding stocks to generate food shortage and raise prices in a conspiracy against the government", in several PDVSA's food distribution affiliate, PDVAL warehouses and docks 56000 Tons of imported food have been found rotting this week.

This is the Bolivarian doctrine in two plates, break the country down, subyugate private innitiative, import everything, ask for commisions, ka-ching!!

http://finance.yahoo.com/news/Chavez-warns-Venezuelan-food-apf-2239181294.html?x=0&.v=1

http://www.miamiherald.com/2010/06/02/1659170/chavez-rotten-food-at-state-run.html

Price controls and confiscations are late-stage failures in an inflationary regime. Inflation can be dealt with to some degree, but if companies are forced to hold prices steady (or have their stuff stolen), you end up with shortages, since they can't make a profit providing the goods. The shortages, in turn, drive total economic collapse.

Malor wrote:

Price controls and confiscations are late-stage failures in an inflationary regime. Inflation can be dealt with to some degree, but if companies are forced to hold prices steady (or have their stuff stolen), you end up with shortages, since they can't make a profit providing the goods. The shortages, in turn, drive total economic collapse.

See also: Zimbabwe

Venezuela's structural high inflation is because they give away their gasoline for free and they subsidize imported food and the sort like you pointed out. But wages in Venezuela have kept up and surpassed inflation. Hence the reason why they grew at a relatively fast pace during the 2000s and were not in a hyperinflationary depression like Zimbabwe. You want to stop that structural inflation, stop subsidizing gasoline. Since they don't grow enough food in Venezuela yet for their populace, not subsidizing food is a political nonstarter even if the opposition takes over. And I bet they also, like Chavez, won't touch gasoline subsidies hence structural inflation in Venezuela is here to stay.

Wages in Zimbabwe did not keep up with inflation, hence hyperinflation. Its productivity was based on agriculture. Venezuelans is on oil. No hyperinflation in Venezuela for their future unless something happens to their oil business.

High inflation <> Hyperinflation

The best definition I've seen of hyperinflation is when prices of goods take inflation into account... that is, if you know that the replacements will cost more, you build the inflation into your initial price. That's when it starts getting out of control.

Inflation can go for quite awhile, but the economy starts to really break down as soon as price controls are imposed. We're starting to see that now, so my guess is that Venezuela has maybe three more years until it implodes.

Aetius wrote:

Venezuela cuts diplomatic ties with Colombia when presented with proof of FARC presence inside Colombia.

It is a bad cop (Uribe) - good cop (Santos) game Colombia is playing with Venezuela.

http://weeksnotice.blogspot.com/2010...

goman wrote:
Aetius wrote:

Venezuela cuts diplomatic ties with Colombia when presented with proof of FARC presence inside Venezuela.

It is a bad cop (Uribe) - good cop (Santos) game Colombia is playing with Venezuela.

http://weeksnotice.blogspot.com/2010...

Note I should have said Venezuela, not Colombia - I fixed the original post.

Interesting - I don't know that I agree with that, but it's definitely plausible. There's a Guardian article linked in the comments there that details U.S. involvement. Chavez is bad enough, but the last thing Venezuela needs is U.S. involvement.

Venezuela cuts diplomatic ties with Colombia when presented with proof of FARC presence inside Venezuela.

Yeah. From what I understand, this is more about a lame duck Uribe trying to commit Santos to a hostile foreign policy toward Venezuela.

Paleocon wrote:

Yeah. From what I understand, this is more about a lame duck Uribe trying to commit Santos to a hostile foreign policy toward Venezuela.

Or Uribe serving Chavez' head on a silver plate to Santos. After all Chavez said before the elections, that if Santos were to be elected he would not meet him because "he was a mobster, a fascist", 3 days after Santos took office Chavez goes to pay a visit and "heal the rift". Talk about tail between the hindlegs.

So whatever happened after Columbia documented that terrorists were basing themselves in Venezuela? I didn't hear a lot about it, but the BBC made it sound like the evidence was pretty solid. I know Chavez pulled out his diplomats in a huff, but beyond that, I've heard nothing.

Malor wrote:

So whatever happened after Columbia documented that terrorists were basing themselves in Venezuela? I didn't hear a lot about it, but the BBC made it sound like the evidence was pretty solid. I know Chavez pulled out his diplomats in a huff, but beyond that, I've heard nothing.

...Venezuela's got oil, right?