How Chavez is destroying the Venezuelan Economy

[HoreTore]

What? Did you bother to read any of the article?

Yes?

[Ice]

Yes?

Then, how did you miss the part about price controls creating a shortage of vital goods while creating a black a market and double government spending over expanding Venezuela's resources?

[HoreTore]

Then, how did you miss the part about price controls creating a shortage of vital goods while creating a black a market and double government spending over expanding Venezuela's resources?

Hmm, let's see...I didn't?

[Scurvy]

this bit?

Since 2003, Mr. Chávez has more than doubled government spending on free medical care, higher salaries, gasoline subsidies and other services. That created more demand for goods and services, which fueled inflation. In response, Mr. Chávez expanded price controls, which now cover meat, sugar, eggs, milk and other products. That led to food shortages as producers balked at selling their goods at the mandated prices. The shortages produced a black market, where prices have soared.

The artcle is fairer than most, it does Chavez the justice of pointing out that the Venezuelan economy is actually doing quite well (despite government spending and price controls... )

[HoreTore]

Since 2003, Mr. Chávez has more than doubled government spending on free medical care, higher salaries, gasoline subsidies and other services.

Except the gas subsidies, everything on that small check-list is mandatory for a good country.

The fault IMO is not the price control, but what they controlled. If you put it on food, black markets will soar. However, how can you create a black market for electricity, for example? A fixed cheap price on electricity will do wonder for the industry, especially when you raise wages...

[The Wizard]

It's old news; the people we rented our house from when we lived on Aruba (until 1998) were from Venezuela and staunchly anti-Chavez. For that (and for partaking in an anti-Chavez march) they were beaten and hounded by Chavez's supporters, and fled the country to go and live in a house for four with a family of six or more. That's the political reality in the so-called "democracy" of Chavezian Venezuela.

I don't think this whole lending/mortgage business is gonna lead to a Venezuelan slump, or even a crash. That's because I don't think that's gonna happen anywhere. If it even has major effects they'll be meted out in a just as slow way as the entire process leading up to the "crisis" until now.

[Seamus Fermanagh]

The point of the piece is not that Chavez is doing short term harm -- he's not. It would be hard to argue that medical care for the poor, for example, is a bad thing.

The problem is awaiting Venezuela somewhere in the future. By using government oil money to subsidize gasoline and prop up salaries, and by NOT insuring in oil-industry efficiency improvements or allowing a largely free market to set prices, Chavez is creating a recipe for devaluation and hyper-inflation. This could well cripple the economy in the future.

As I've mentioned in other threads, the only real value in the government controlling oil profits is if those profits are plowed into infrastructure -- not into band-aids on existing problems.

Good roads. Strong bridges. Well-equipped hospitals. Education. Health Care. Vaccinations. Oil Industry improvements in efficiency/profitability. Incentives for foreign investment (tethered to hiring locals/underwriting education for same). These cannot help but make Venezuela better in the long run. Chavez is doing some of these, to be sure, but too much of the oil largesse is being frittered on things that are more "consumable" in nature.

I'm sure there are economic inequities in Venez. There are in most places. The failure of Socialism is its belief that such economic strata can be erased. Capitalism, despite its faults, has a demonstrated ability to raise the entirety of the economic condition. Inequality still exists, but all are better off than their ancestors were. So far, a moderately regulated capitalism (few to no "trusts" or monopolies; clear air/water regulations; minimize fraud and graft) is the best humanity has come up with.

[HoreTore]

and by NOT insuring in oil-industry efficiency improvements

So, what other reason did he have for setting up a meeting with a bunch our oil-dudes? And why have our government stated that we are looking to export our state-of-the-art oil technology to him...?

[JR-]

hmmm, i wonder who will generate the wealth that will pay for these social programs once the majority of Venezuela's middle class has emigrated and the oil money gone?

sounds like a recipe for future poverty.

[Seamus Fermanagh]

So, what other reason did he have for setting up a meeting with a bunch our oil-dudes? And why have our government stated that we are looking to export our state-of-the-art oil technology to him...?

These would be good moves by Venez.

[Xiahou]

The point of the piece is not that Chavez is doing short term harm -- he's not.

Actually, it sounds like there is plenty of short-term damage. It's just that it's been kept more or less in check by the oil dollars that Chavez keeps throwing at the problem. Things will get really ugly when their production fades or if prices drop significantly.

[Tribesman]

Actually, it sounds like there is plenty of short-term damage. It's just that it's been kept more or less in check by the oil dollars that Chavez keeps throwing at the problem.

You mean he is balancing the books by utilising a productive asset , what a strange thing to do .

Things will get really ugly when their production fades or if prices drop significantly.

Production fades ? how much proven reserves does Venezuela have ?
They cut production didn't they , was it you who was critical of the governments move when they announced it ?
Prices drop significantly ??????? given the state of the middle-east , Nigerias growing instability and Chinas thirst for more and more when can you see a significant price drop .
China did do a big deal for future supplies with Venezuela didn't they , investing huge amounts of money in it are they not . A huge investment that covers roads , pipelines , refineries and ports isn't it .
So would that be a huge investment in infrastucture then ?

[Ice]

Hmm, let's see...I didn't?

Hmm, let's see, how is that opposite of hurting an economy?

[Tribesman]

I'm glad you are still posting in your typical 4 year old pattern Tribesman.

Well since a 4 year old could probably write a better article than that at the start of the topic its very apt isn't it


There you go Ice , now read the question again .....So now Ice , could you explain what the goods are , where and why there is a shortage , and what exactly is the black market in those goods ?.... and answer the question if you can instead of repeating that tripe in the WSJ , if you cannot answer the question then either find out before you make another pointless comment on it or desist from pointless comments on the subject .

[Ice]

Well since a 4 year old could probably write a better article than that at the start of the topic its very apt isn't it


There you go Ice , now read the question again .....So now Ice , could you explain what the goods are , where and why there is a shortage , and what exactly is the black market in those goods ?.... and answer the question if you can instead of repeating that tripe in the WSJ , if you cannot answer the question then either find out before you make another pointless comment on it or desist from pointless comments on the subject .

Now the WSJ in tripe? I'd like you to do better.

Like I said in other threads, if you have info to share, share it.

I'm not jumping through hoops for you, troll.