Disappearing Venezuela's Social Democratic Heritage

This piece in by Chris Kraul Sunday’s LAT, describign how chavistas have been using Charlie Chaplin’s 1936 classic, Modern Times, for propaganda purposes underlines so much of the way...

This piece in by Chris Kraul Sunday’s LAT, describign how chavistas have been using Charlie Chaplin’s 1936 classic, Modern Times, for propaganda purposes underlines so much of the way the Chávez era has led to the wholesale falsification of Venezuela’s 20th century political history. The story misreports, misunderstands, misconstrues and misattributes Venezuela’s labour history in ways that would make any historian cry. 

A taste:

Since January, in a bid to expose the evils of “savage capitalism,” the Labor Ministry has shown the Chaplin film to thousands of workers in places such as this rundown industrial suburb of Caracas.

Chaplin wanted his Depression-era movie to make a point, that “once inside the factory, workers had no meaningful rights,” said Los Angeles-based film historian and Chaplin authority Richard Schickel. “It was very relevant in the moment it was released, a time of social unrest and the emerging U.S. labor movement.”

Seventy years later, Chaplin’s fable is all too relevant in Venezuela, said several factory workers who saw the film recently.

In a way, the first thing that jumps out at you is not so much Kraul’s staggering ignorance as his utter lack of inquisitiveness. The piece details the way chavistas have used Modern Times to make a point about labor exploitation in Venezuela. A minimally curious writer might then ask, “hmmmm, are labor conditions in Venezuela today really comparable to labor conditions in the US during the depression? Do Venezuelan workers really have no meaningful rights? does it really make sense to describe Chaplin’s film as ‘all too relevant’ in Venezuela?”

Well, lets see, what were workers fighting for in the 1930s in the US? First and foremost, they were worried about the right to form unions and bargain collectively…rights that have been guaranteed and widely exercised in Venezuela since 1958.

Bad start. OK, the minimum wage, then? Nope, there has been a minimum wage in Venezuela, for decades. Not only that, figured as a percentage of the average wage, Venezuela’s minimum wage is the highest in the America’s – fully 90% of the average, meaning that, for all intents and purposes, Venezuelan wages as a whole are decreed by the Central Government.

Not that either, then. Perhaps the eight hour work day is a good parallel? Nope, Venezuelan workers got that reivindicación decades ago. Vacation pay? Got it. Severance pay? Got it. Mandatory employer contributions to pensions? Got those too. Statutory overtime pay premiums? Check.

Hmmm…how about some more lavish perks – the kinds of things European workers protest over these days? Statutory employer-provided childcare and dining facilities, say, or an open-ended ban on layoffs, or subsidized housing, subsidized worker training, subsidized transport, or statutory profit-sharing, or paid maternity leave? Hell, these are demands that would have made US workers blush back in the 30s – but, you guessed it, Venezuelan workers have all of those as well!

In fact, Venezuela has some of the most restrictive, rigid, employment-zapping labor legislation anywhere in the world.

So restrictive is the legal framework that in the paper I wrote about yesterday, Hausmann and Rodriguez set out microeconomic evidence showing how labor market rigidities have hampered Venezuela’s attempts to crack non-energy export markets, deepening our dependence on oil exports and contributing to the country’s economic collapse since 1977.

In effect, with existing legislation, the legal economy can’t begin to generate enough jobs for the size of the workforce we have, leaving about half of Venezuelan workers to scrape together a living somehow in the informal sector. Once there, they have no protections whatsoever. UCAB researchers have found that 90% of informal sector workers earn less than the legal minimum wage. It’s hardly surprising that, for informal workers, finding a job in the “savage capitalist” economy Modern Times sends up is a universal aspiration, a wistful dream that’s simply out of their reach.

Given the very high costs associated with Venezuela’s hypertrophied labor legislation, it’s easy to see why the informal sector has swelled. Venezuela has a plainly outsized “fiscal wedge” (cuña fiscal) – the gap between what it costs an employer to create a legal job, and the pay a worker effectively takes home. By some researchers’ estimates, every Bs.100 in take-home pay for legal workers costs employers Bs.171 to generate – with the extra Bs.71 going to cover various taxes, mandatory contributions, and statutory workplace perks. These figures dwarf the notorious fiscal wedges in countries like Germany (51%), Belgium (56%) and France (47%).

For all his efforts to “even-handedly” present business viewpoints in his piece, Kraul catastrophically fails to grasp the basic ridiculousness of the way Modern Times is being used to push an extremist ideological agenda. What Kraul tragically fails to process is that Venezuela’s legal labor force is a relatively privileged elite within the working class, the better-off half in a vicious insider-outsider dynamic that condemns millions of people to the atrocious poverty and total insecurity of the gray economy…and that the more legal goodies that relatively privileged elite gets, the more expensive it gets to create legal jobs, and the harder outsiders find it to crack into the legal job market.

Maybe, on his way back to the Meliá from that poultry plant, Kraul should’ve stopped to chat with some of the buhoneras in the Boulevard de Sabaná Grande and asked them what they think about the terrible exploitation of the quince-y-último set. The look of baffled fury he would’ve gotten from them perfectly mirrors my outrage at his deeply ignorant little piece.