Price controls, instituted by Chávez in a vain attempt to control inflation (remember Nixon in the seventies?), have seriously disrupted the food distribution system in the country, causing severe shortages of basic foodstuffs, and prompting the Chávez government to send police patrols to inspect food warehouses and Mom-and-Pop grocery stores, searching for what they are calling “hoarders and speculators,” while threatening violators with jail sentences.
Meat packers and slaughterhouses are turning away farmers’ cows because the government-imposed prices for meat are too low to even pay the cost of slaughtering and butchering the cattle.
According to venezuelanalysis.com a Venezuela-based “news” service, which is plainly biased in favor of the Chávez regime, the government’s latest useless measure to quell the inflation will be an “indexing” of the Bolívar, reducing 1,000 Bolívar notes to a nominal 1 Bolívar face value.
Having lived through similar currency indexings in both Brasil and México, I have seen that this kind of manipulation of the currency does absolutely no good; prices soon rise to their pre-index levels under the pressure of price controls.
Of course, as with all economic problems in any country, the segment of the population hardest hit by the chaos in the Venezuelan economy are the very same poor Chávez has sworn to help, and who are his most ardent supporters.
Mr. Chávez, you would do well to go back home and mind your own business-literally.
Article comments
— go to most recent comments1 - Palomudo
Wow, superior writers indeed! what a pile of hatred and misinformation.
You are liers at the service of evil.
May you and yours burn in hell!
2 - Clavos
Your comment would carry a lot more weight, Palomudo, if you were to point out just what parts of the article you consider to be "lies and misinformation", and why.
3 - Dave Nalle
So perhaps you could point out what in this article is incorrect. Be specific about the 'misinformation'. If not we can only conclude that the lying and the hatred rests with you, Palo.
Dave
4 - troll
well...one could object to:
*Inflation, which has been rising rapidly due to Chávez’, profligate and importune spending, has reached 20 percent, giving Venezuela the highest inflation in the hemisphere.*
I'm not sure how obvious it is that spending on health - education - nationalization - and building a militia is 'profligate and importune'
and remember - as moonraven informed us - he believes that he has a limited number of years to accomplish his 'good works'
2012 is just around the corner...why worry about a little inflation just now - ?
5 - Dave Nalle
I'm not sure how obvious it is that spending on health - education - nationalization - and building a militia is 'profligate and importune'
Well, that last certainly is. I can't see any reason why Venezuela needs the largest military in the region unless they plan to invade their neighbors. They've also purchased a lot of very expensive military hardware which they really don't need. That's all pretty irresponsible.
and remember - as moonraven informed us - he believes that he has a limited number of years to accomplish his 'good works'
One would think that not having to run for reelection would give him plenty of time to destroy the country at a slower pace.
2012 is just around the corner...why worry about a little inflation just now - ?
Because it leads to real suffering, hardship and deprivation for the people of a country which has a poverty rate of around 40%.
Dave
6 - Paul2
In this entire article Clavos and his buddy Dave repeat their lies and false assumptions about Venezuela, that you have posted in other threads. You've received enough valid data in these threads that proved you were totally wrong and then you just stop replying or deliberately misinterpret sources. So there's no need for Palomundo or anyone else to waste time with you.
1. Chavez has been elected 4 times, certified by the OAS, EU and the Carter center and all his actions are within the constitution - not a dictator.
2. Inflation in Venezuela is -when taking the numbers since 1995- at an all time low (in 1997 i.e. it was over 80%) as you can see here, so the 20% today are actually quite an improvement: latin-focus.com
Source: Banco Central de Venezuela.
3. Venezuela has above average GDP growth in South America as you can see here (2006: 9,4%): frbatlanta.org
Source: International Monetary Fund
7 - Paul2
4. Poverty had dropped steadily since 1997 as you can read here in the report from the Center of Economic and Policy Research (CEPR): From 1997(rate 60.94%) to 2005 (rate 43.47%).
8 - Paul2
5. Unemployment has dropped steadily since 1996 as you can see here Source: Instituto Nacional de Estadística
According to the International Business Times Unemployment was at 8.4 % in December 2006. The lowest rate since more than 10 years.
[Paul2: Please format your links as per Blogcritics protocol. That means like this - Blogcritics and not like this http://blogcritics.org. Thanks. Comments Editor]
9 - Dave Nalle
In this entire article Clavos and his buddy Dave repeat their lies and false assumptions about Venezuela, that you have posted in other threads. You've received enough valid data in these threads that proved you were totally wrong and then you just stop replying or deliberately misinterpret sources. So there's no need for Palomundo or anyone else to waste time with you.
Paul, because everything we've posted about Venezuela has been true, nothing we've said has ever been effectively refuted and no contradictory facts have ever been presented - not by you or anyone else. Bring us some facts and we'll gladly consider them. Remember that unlike those of you who are heavily invested in Chavez' success because of your allegiance to international socialism, Clavos and I have no dogs in this hunt. We don't live there, what happens there doesn't impact us in any way, and we only care because we don't like to see people exploited and oppressed.
1. Chavez has been elected 4 times, certified by the OAS, EU and the Carter center and all his actions are within the constitution - not a dictator.
So disingenuous. He had to CHANGE the Constitution with a legislature which was stuffed with his supporters in order to do the things he has done to expand presidential power.
2. Inflation in Venezuela is -when taking the numbers since 1995- at an all time low (in 1997 i.e. it was over 80%) as you can see here, so the 20% today are actually quite an improvement:
latin-focus.com/latinfocus/countries/venezuela/vencpi.htm
Source: Banco Central de Venezuela.
That's great, but inflation in the entire region is down since then - Venezuela less than all of its neighbors. Hell, Brazil had 400% inflation at one point in the 80s. You don't dispute Clavos' figure here, do you?
3. Venezuela has above average GDP growth in South America as you can see here (2006: 9,4%): frbatlanta.org
Source: International Monetary Fund
Indeed it did. One of the positives. I'm the first to admit that Chavez' regime has not been entirely negative. He seems to have a pretty good head for business of the state-controlled type. He's a good salesman as well. My argument would be that the loss of individual liberty and property rights isn't worth the economic improvements, but the ultimate outcome of that remains to be seen.
can read here in the report from the Center of Economic and Policy Research (CEPR): From 1997(rate 60.94%) to 2005 (rate 43.47%).
This doesn't change the fact that the current rate is still extraordinarily high. What you're saying is sort of like a wife-beater saying that he's a good guy because he stopped beating his wife on weekends and now only does it on weekdays.
Dave
10 - Clavos
Paul2:
1: I have answered this point repeatedly. There is evidence of intimidation of opposition candidates and voters in all of those elections. He is buying those who do vote for him, with promises of better housing, education, etc., and for the most part has not fulfilled those promises. In any case, I never said he didn't win the elections; all my writing about him has been focused on the systematic way he is consolidating ALL power in the country into his own (and no one else's) hands, and setting himself up to be "President For Life," a la Papa Doc, in Haiti.
2: So, because inflation has been higher in Venezuela's past, it's OK that it's so high now?
Again, those who are hurt most by high inflation are the very people he pledged to help and who are his most ardent supporters. As it is now, they can't even get enough of that most basic of human needs, food. But apparently it's more important to Chavez to be away, trying to screw up Bush's trip, instead of staying home and working to fix the economy.
3: Even my twelve year old nephew could have a healthy GDP growth rate with control of those oil fields. As we have seen, rising GDP isn't worth anything if the rest of your economy is in shambles and all that income is under the control of just one individual.
4: Sorry, I don't trust figures promulgated by the Chavez government any more than you trust figures from the Bush administration.
Your much ballyhooed "facts" just don't stack up in the face of the reality in today's Venezuela.
11 - Clavos
Paul,
Sorry, didn't see your #5 until after I published my comment above.
From the IB Times article you cite:
The total number of jobless Venezuelans in December fell to 1,038,779 while Venezuela's total work force stood at 12,323,877 or 66 percent of the total population, the National Statistics Institute announced. (Emphasis mine)
For my answer, see my answer to your #4.
12 - Clavos
Chris,
Problems with the anti-spam software again. I lost a comment just now.
13 - Christopher Rose
Look again, Clavos. As always, I got your back!
14 - Clavos
Chris,
Thank you, Sir!
15 - Clavos
Paul,
As further evidence that Venezuela's oil is what's fueling (!) the economy, remember that when the price of oil plummeted a few months ago, Chavez was forced to sharply curtail a number of his social improvement projects; and to this day there are a number of half finished government projects on which no work is being done yet.
When the price of oil again goes down, as it inevitably must, given the world's newfound fervor to reduce its carbon footprint, Mr. Chavez will once again be in a lot of trouble unless he starts paying more attention to the economy.
16 - Paul2
Summary of Hugo Chavez' work according to the academic sources I stated above:
1. Inflation is decreasing.
2. Gross Domestic Product is increasing at an overproportional rate.
3. The poverty rate has dropped 17% since 1997.
4. Unemployment is at a 10-year low.
I don't understand how anyone can claim that Venezuela is "burning" or going downhill on the basis of these facts or that Chavez is doing a particular bad job.
I agree that a faster reduction of inflation and a faster reduction of poverty levels is desirable.
17 - KA
Venezuelanalysis.com - yes it is biased, it shares the office space with the government run television station VTV.
CEPR - their source of info is the venezuelan information office (VIO) 100% run by the Venezuelan government (this has already been shown extensively). BTW, it would be ironic if poverty hasn't decline some but based on the oil income one would expect a greater reduction. Also the CEPR numbers cited show a ~20 reduction in poverty in one month, makes you think how they got the numbers.
So Venezuelans should be happy they "only" have 20% inflation. I'm confused don't people want a better future not a worse one?
18 - Clavos
1. Inflation is decreasing.
Inflation is emphatically NOT decreasing. It is lower than it was ten years ago, but much higher than it was a year, or even six months ago (17%). It is, in fact increasing, and rapidly so.
I already refuted the rest of your points upthread, but here's yet another set of data, from Wikipedia:
In the view of the libertarian Russian economist Andrei Illarionov, Venezuela's policy of state capitalism (successive governments carried out wide-ranging nationalisations from 1958 on) was a debacle: The “patriotically motivated” economic policy proved devastating as Venezuela slid into its deepest economic crisis. By 2004 its per capita GDP was 37 percent lower than half a century before that. The degrading impact of state command in the economy spread beyond government institutions " it caused the degeneration of Venezuelan society, affecting two generations of people who grew up during state capitalism. Today, Venezuela has no political forces capable of leading it out of the historical deadlock.
Also, from the same source article:
Venezuelan officials estimated the economy contracted 7.2% in 1999. A steep downturn in international oil prices during the first half of the year fueled the recession, and spurred the administration to abide by OPEC-led production cuts in an effort to raise world oil prices. (The petroleum sector dominates the economy, accounting for roughly a third of GDP, around 80% of export earnings, and more than half of government operating revenues). Higher oil prices during the second half of 1999 took pressure off the budget and currency. With the president's economic cabinet attempting to reconcile a wide range of views, the country's economic reform program had largely stalled. The reforms were mainly in microeconomics such as the reduction or abolition of education and hospital fees. The government sought international assistance to finance reconstruction after massive flooding and landslides in December 1999 caused an estimated US$15 billion to $20 billion in damage.
There was a sharp drop in investment and a general recession during 2002 and 2003. Total GDP decreased 18.5% during the first semester of 2003 compared with the same period in 2002. This is the steepest decline in Venezuelan history. The hardest hit sectors were construction (-55.9%), petroleum (-26.5%), commerce (-23.6%) and manufacturing (-22.5%).
In 2002, the Venezuelan economy, as measured by Gross domestic product (GDP), contracted by 8.9% compared to 2001. The petroleum sector, which contracted by 12.6% in 2002 as compared to 2001, was adversely affected by a decrease in exports of petroleum products resulting from adherence to an OPEC quota established in 2002 and the virtual cessation of exports as a result of a national strike by forces intent on removing Chavez from power,The non petroleum sector of the economy contracted by 6.5% compared to 2001. This situation was accompanied by a significant devaluation of the Bolivar during 2002, which resulted in an accelerated inflation rate. The inflation rate, as measured by the CPI, was 31.2% in 2002 compared to 12.3% in 2001.
In short, under Chavez' leadership, the Venezuelan economy has been extremely volatile, due in large part to their continuing near total dependence on oil for revenue, and gross mismanagement by the government.
Current percentage growth rates, coming as they do from abysmal lows, are meaningless.
Meanwhile, Chavez is gallivanting around South America playing the demagogue and yapping at Bush's heels like a Chihuahua.
The "academic sources" you cite are getting their information from the Chavista government.
All the sources I cited, except for venezuelanalysis, have no connection with the government and give a very different picture of the current and historic state of the Venezuelan economy during the Chavez regime.
19 - GWEH
Palomudo and CEPR are shilling for Chavez... CEPR's Mark Weisbrot is a big DC recipient of Chavez dough. Checkout this website for the complete lowdown.
20 - Paul2
#17
1. None of the sources above are from Venezuelananalysis.com, a site that always footnotes its sources, BTW.
2. If you've read the CEPR report, it analyizes the statistical methods used and concludes that they are valid and haven't been changed.
3. GDP growth was 9,4% in 2006 according to the International Monetary Fund, it's not affiliated with Mr. Chavez.
4. Inflation is at a 10-year low.
5. Statistics offices are always run by governments-everywhere in the world. Theres no need to show that, because it doesn't mean anything.
6. The European Union, the Carter Center and the OAS are not affiliated with Mr. Chavez.
7. A 17% poverty reduction in nine years is an impressive figure.
8. You've not made one educated statement in your post that enhances this discussion or any of the facts presented.
9. Go shopping and shut up.
21 - Paul2
Clavos,
it's March 2007.
Economic developments can only be assessed on a long-term basis, thats why I used long term figures.
You've not refuted any of the data referred to in #6,#7 or #8, concerning inflation, GDP, poverty reduction and unemployment.
Venezuela depends heavily on oil. So does Saudi-Arabia, Dubai and the United Arab Emirates.
22 - KA
Paul2, venezuelanalysis can cite all they want , but it doesn't change the fact that those sources are clearly biased, and that many are currently or were at onetime on the pay roll of the venezuelan govt.
BTW, I do read the inaccurate reports by the CEPR (Mark Weisbrot) I've actually read his PhD thesis have you?
Inflation at a 10 year low? really? show me the numbers!
23 - GWEH
One last thing, the person posting as "Paul2" is either misinformed or shilling. In either case he is ignorant about the realities in Venezuela.
The Chavez government has a large Cuban sponsored PR propaganda and disinformation machine in the US. A lot of this activity is funded via the embassy in DC or the Venezuelan Information Office (VIO) in DC. VIO dishes out over $1 million per month placing them at the top of foreign government PR expenditures in the US.
The rule of thumb with Venezuela is simple: Everything the government says in public and private is a lie. Whatever they say about their enemies (US) applies to them first. Venezuela is very complicated and bizarre. Chavez's inner circle is comprised of psychopaths. His supporters are either stealing, misinformed, or ignorant.
24 - Paul2
KA+GWEH
1. I didn't use venezuelananalyis, so it doesn't matter what you think about it. You link to venezuelancrisis on your site, that speaks for itself.
2. I've cited six real sources to support my arguments, you haven't cited anything and you've not presented any arguments either, besides calling people "psychopaths, stealing and being ignorant."
3. Your choice of words suggests that you are not suitable for a rational discussion and have not been properly educated.
25 - KA
GDP growth was actually ~11% for '06 but is going to significantly drop this year to ~5% then 2.5% in '08 again growth was due to oil income (not sustainable). - the poor lose out
CEPR- I won't comment they are unreliable
unemployment is now in double digits again ~60% work in the informal economy which is reliant on consumer spending which is rampant.
In short things will begin to look ugly sooner rather than later unless oil prices increase drastically.