Crisis in Venezuela

[kandrathe]

I am concerned for the people. In many ways, the years of bad management is bearing its rotten fruit.

PRI - Venezuela's economic troubles have become a full blown crisis.

:: giving you that knowing glance ::

This is / was all perfectly predictable as we all need at least a balance between wealth consumption, and wealth creation. We all, like squirrels preparing for winter, aim for excess wealth in case of illness, hurricane, earthquakes, or old age sets in and we'd like to retire.

For a decade, under Hugo Chavez, Venezuela has discouraged wealth creation, and stolen its nation's wealth to pander to the good will and benefit of Chavistas. Add into this economic disaster recipe the usual spice of corruption, nepotism, and unmerited rewards for the inner circle of the faithful.

How authoritarian socialism caused Venezuela's collapse

And, before we get into all that... I know the "excuse" will be; "they did it wrong", again. So, really?

All of these tragedies were avoidable. They are all the result of a mentality that sees only nails for the hammer of government control. Chavez and Maduro kept saying that everything that was wrong with Venezuela was the fault of markets and that if the government either eliminated or regulated those markets, things would get better. They implemented their agenda and it has been a disaster. This socialist brand of economic authoritarianism had the predictable consequence of political authoritarianism, corruption, and a breakdown of the rule of law. It's a lesson worth remembering.

[Jester]

I remember when the Frente Amplio was elected in Uruguay, everyone I talked to about the turn leftwards was very clear: They are taking inspiration from the Michelle Bachelet school of new Latin American socialism, not that unhinged Chavez/Kirchner stuff. Even down there, where socialism isn't a bad word, and everyone is suspicious of the Americans, nobody wanted to be associated with that disaster. And that was 6 years ago, before things got really bad.

This disaster is straight out of Dornbusch and Edwards, a perfect replica of the 1970s, right down to blaming the CIA for the fact that there isn't any toilet paper in the stores. The CIA is good at counterinsurgency and occasionally has someone killed, but blowing up an entire macroeconomy requires help on the inside.

-Jester

[Alram]

I remember when the Frente Amplio was elected in Uruguay, everyone I talked to about the turn leftwards was very clear: They are taking inspiration from the Michelle Bachelet school of new Latin American socialism, not that unhinged Chavez/Kirchner stuff. Even down there, where socialism isn't a bad word, and everyone is suspicious of the Americans, nobody wanted to be associated with that disaster. And that was 6 years ago, before things got really bad.

Mujica dijo que “están todos locos en Venezuela. Se dice de todo y así no va arreglar nada”. Y de Maduro dijo que "está loco como una cabra".

http://www.elpais.com.uy/informacion/mad...zuela.html
(My) Translation: Mujica (the former president of Uruguay -- who by the way is an incredibly cool guy whether one likes his politics or not) said "They are all crazy in Venezuela. They tell you all kinds of things and don't fix anything. And regarding Maduro, Mujica said that "he is crazy as a goat."

[FireIceTalon]

Eh, I was going to post a reply providing a genuine materialist perspective on the situation in Venezuela, but had second thoughts since I know it will lead virtually nowhere. This thread is just another anti-socialist propaganda piece to promote how wonderful capitalism and free trade are, and to goad this into another 9+ pages of the same ol', same ol'. But I won't feed the troll(s).

[Jester]

Mujica dijo que “están todos locos en Venezuela. Se dice de todo y así no va arreglar nada”. Y de Maduro dijo que "está loco como una cabra".

http://www.elpais.com.uy/informacion/mad...zuela.html
(My) Translation: Mujica (the former president of Uruguay -- who by the way is an incredibly cool guy whether one likes his politics or not) said "They are all crazy in Venezuela. They tell you all kinds of things and don't fix anything. And regarding Maduro, Mujica said that "he is crazy as a goat."

Mujica has been a gift. He's become the most extraordinary icon of Uruguay for the world. I was skeptical when I was there (I thought it should have been Astori leading the Frente), but I think they clearly made a hell of a choice. Though, of course, the hard work of actual social reform takes talents other than being popular internationally, and Mujica has been good about letting sensible people actually try and improve things in the long run, rather than Venezuela-style grandstanding and populist absurdity.

-Jester

[kandrathe]

Mujica has been a gift. He's become the most extraordinary icon of Uruguay for the world. I was skeptical when I was there (I thought it should have been Astori leading the Frente), but I think they clearly made a hell of a choice. Though, of course, the hard work of actual social reform takes talents other than being popular internationally, and Mujica has been good about letting sensible people actually try and improve things in the long run, rather than Venezuela-style grandstanding and populist absurdity.

Uruguay in many ways reflects the kind of "unholy alliance" pragmatic approach to economy practices in much of the world's Social Democracies, including most of Europe and the US. Whilst from one side of their mouths denounce industry and capital, from the other favor it in their tax codes instead relying on taxing the wages of the working classes. Here in the US, we instead doublespeak the opposite, denouncing the evils of those -isms yet fully embrace our expanding social spending.

In Uruguay, corporate taxes (without loopholes), peak at 25%, while personal income now with tax reform is up to 43%. The lower middle pay 21% to 27% on average. While Mujica didn't "rock the boat" economically and is an amazing story, I wonder how much was in place due to Tabaré Vázquez and remained throughout.

That said, I do applaud governments that do not to kill their golden geese and work to expand rather than contract their economies. I'm in favor of fair systems that work to empower the average person, without taking it from those common people who earn it. Living in a peaceful, and just society does have a price, but 25% to 50% of your labor annually just seems too steep to me. Industry needs to shoulder more of their fair share, rather than getting political favors, and government needs to become more efficient and effective at all levels (spending less).

Until the world becomes small enough to enact some global corporate (tax and regulatory) equality, it will be the commoners struggling to survive that bear the greater (tax and social) burdens.

[Jester]

In Uruguay, corporate taxes (without loopholes), peak at 25%, while personal income now with tax reform is up to 43%. The lower middle pay 21% to 27% on average.

I'm no expert on the Uruguayan tax code, but that seems very high for the income tax figure. I was always under the impression that it was a land of high sales taxes and relatively low income taxes. PwC suggests that the top income tax rate is 30%. Where are your numbers from?

While Mujica didn't "rock the boat" economically and is an amazing story, I wonder how much was in place due to Tabaré Vázquez and remained throughout.

I think Danilo Astori has been the guiding force behind most of the Frente's economic policies under both presidents. I don't get the sense Tabaré Vázquez focused much on it, and I think Mujica focuses on it even less than Tabaré. (He doesn't seem like the details oriented kind, to put it mildly.)

-Jester

[kandrathe]

I'm no expert on the Uruguayan tax code, but that seems very high for the income tax figure. I was always under the impression that it was a land of high sales taxes and relatively low income taxes. PwC suggests that the top income tax rate is 30%. Where are your numbers from?

Corporate vs Personal. But, you may be correct in income alone. My understanding of spanish being less than perfect. I now suspect the summary rates I quoted reflected the combined individual rates. About 10% to 25% on income with ~22% VAT on goods, and a few other property(or rental), school, etc.

I think Danilo Astori has been the guiding force behind most of the Frente's economic policies under both presidents. I don't get the sense Tabaré Vázquez focused much on it, and I think Mujica focuses on it even less than Tabaré. (He doesn't seem like the details oriented kind, to put it mildly.)

Well, yes. I totally agree with that. I was just giving them both the credit for knowing to leave Astori to manage it.

Maduro's declaration of a fresh three-month state of emergency has sparked fears that the government will try to seize control of private companies. Many Venezuelans have already left, including Francisco Flores. "Venezuela has taken good working companies, given them to the poor but not equipped them with the skills to run them so they go bankrupt," he said. "That's just a recipe for destroying a country." The therapist, who now lives in London, said the regime was based on a principle of keeping everyone "equal but poor".

Unfortunately for the people of Venezuela, this reality reads to me like the plot of Atlas Shrugged, without any apparent heroics. For anyone interested in the parallels, I offer you Joel D. Hirst, author, activist, humanitarian.

[kandrathe]

I guess a best case scenario at this point, given Maduro's oblivious delusions, would be some popular mid to high level military officer staging a successful coup, and engaging a civilian political coalition by freeing opposition leader Leopoldo López from prison to help them begin to recover.

Thoughts?

Latest... Zapatero Meets Leopoldo López, Who Suggests Spaniard Brought Deal From Maduro

[kandrathe]

Today... Huffpost -- Venezuela Is About to Explode

It's like watching the water recede before the tidal wave comes crashing back down on Caracas. So sad.

[Lissa]

Well, there's more to this occurring than just who's in control. The problem stems from two main sources, first the lack of building up any other revenue stream for the country outside of commodities (oil in this case) and secondly the fact that the Saudis (which are browbeating OPEC right now) to keep pumping like crazy has dropped the price of oil so much that Venezuela (and a few others) has lost its main revenue stream (they've been screaming to cut back on oil production). The former is the real travesty here, the prior governments didn't adequately prepare (by getting other ways to bring in revenue) and it's killing the Venezuela economy.

So, Venezuela isn't going to recover any time soon until the Saudis start lowering the amount of oil that needs to be pumped out of the ground. And then, Venezuela's government is going to have to take the oil revenue and start creating other revenue streams so this kind of situation doesn't happen again.

[Alram]

I had a chat with a fellow in Columbia this morning and he commented that a lot of Venezuelan business people are moving to Columbia. They want to set up business in Columbia, he said, because they do not trust the economic climate in Venezuela.

[eppie]

I am concerned for the people. In many ways, the years of bad management is bearing its rotten fruit.

PRI - Venezuela's economic troubles have become a full blown crisis.

:: giving you that knowing glance ::

This is / was all perfectly predictable as we all need at least a balance between wealth consumption, and wealth creation. We all, like squirrels preparing for winter, aim for excess wealth in case of illness, hurricane, earthquakes, or old age sets in and we'd like to retire.

For a decade, under Hugo Chavez, Venezuela has discouraged wealth creation, and stolen its nation's wealth to pander to the good will and benefit of Chavistas. Add into this economic disaster recipe the usual spice of corruption, nepotism, and unmerited rewards for the inner circle of the faithful.

How authoritarian socialism caused Venezuela's collapse

And, before we get into all that... I know the "excuse" will be; "they did it wrong", again. So, really?

All of these tragedies were avoidable. They are all the result of a mentality that sees only nails for the hammer of government control. Chavez and Maduro kept saying that everything that was wrong with Venezuela was the fault of markets and that if the government either eliminated or regulated those markets, things would get better. They implemented their agenda and it has been a disaster. This socialist brand of economic authoritarianism had the predictable consequence of political authoritarianism, corruption, and a breakdown of the rule of law. It's a lesson worth remembering.

They should have just printed 1 trillion billion gazillion dollars and everything would be fine again.

---

I am concerned for the people. In many ways, the years of bad management is bearing its rotten fruit.

I am concerned for the people in countries where politicians try to get elected by slinging filth to their opponents.
(indeed I am not ONLY talking about Venezuela)