Economics salad

Over at, Emilio Rivas posts this bitchy, incompetent semi-response to stuff recently published here, so I thought I should take the bait…it’s just too tempting…

I don’t know who Emilio Rivas is, but I know what grade I would give him if I had to evaluate the paper he’s just published at Venezuelanalysis – a straightforward F. The guy has what an old prof of mine would call “una ensalada de economia en la cabeza.” Rivas makes basic mistakes of economic reasoning and ends up unwittingly making my point for me.

Start with the title: this economic miracle jazz. Rivas cites forecasts of 6-7% GDP growth this year as a sign that a “miracle” is around the corner. But as any economics undergrad – or anyone with a bit of common sense, really – can tell you, if you’ve just come from a 10% contraction last year and this year you only grow by 6 or 7%, you haven’t even clawed your way back to where you were two years ago. How this qualifies as an “economic miracle” is murky.

Rivas doesn’t know it, but alluding to the oligarchical strike last year weakens his case. As he points out, 2003 was effectively an 11-month year. Even if the pace of economic activity doesn’t change at all this year, the statistics would still show growth of 8.3% – simply because 12 months is 8.3% more months than 11 months. Put differently, unless economic growth exceeds 8.3% this year, the economy can’t be said to be operating at a faster pace than last year at all!

(As for 3-year projections of 6% growth – this is a wish cloaked as an assertion mascarading as an argument.)

So, c’mon, this economic miracle stuff is surely just a bit of propagandistic flourish. It’s not serious analysis.

But the thing that really tickled me about Rivas’ argument is the type of data he trots out to make his case. I mean, the world must be crazy when I, the reactionary fascist right wing capitalist running dog, am citing household consumption statistics and informal employment figures and food consumption numbers, while Rivas, proponent of the radical left wing people’s collectivist egalitarian revolution gives us THE CARACAS STOCK MARKET INDEX! And the bond market! And Central Bank monetary aggregates! These are the great triumphs of the people’s revolution?! What the hell kind of alternate universe are we in?

Rivas, hermano, you’re making my point. What I’ve been saying all along is that if you happen to be privileged enough to have access to the stock market, or to be a banker, or to be an international bond-holder, then this government has actually been quite good to you. But how many people do you know in the barrio who own CANTV stock? How many who’re invested in emerging market sovereign debt? Hell, I’m the one who invests in emerging market sovereign debt here, not them!

Do I really need to remind you that you’re supposed to be the left-winger here, and me the right?

Lordy, lordy, lordy…