Caracas Chronicles

One last item to add to my Rosales-bashing spree. Looking at his headline proposal, I find it deeply ironic that the guy is being touted as the “serious” oppo candidate here. This is a guy who is running on a promise to give a minimum wage to everyone who is unemployed.

Have you stopped to think through how aggressively irresponsible that is, how impossibly unworkable?

Start with the reality that Venezuela’s minimum wage is worth 90% of the average wage in the legal economy. Then realize that 90% of informal sector workers earn less than the minimum wage. Now, as a thought experiment – and this is destined to be no more than a thought experiment, cuz the proposal is so bizarre there’s no chance anyone would actually try to implement it – imagine what might happen if you offer Venezuelans a minimum wage to just hang out.

Very obviously, nearly everyone in the informal sector will stop working, claim unemployment, and go rumbearse los reales. What’s the point of working 14 hours-a-day, six or seven days a week when the government will pay you more to sit at home and watch telenovelas?

And there’s more: the very large majority of Venezuela’s legal workers who now earn the minimum wage or just barely above it – would reason in the same way. Working just wouldn’t be worth the hassle to them.

So you’d end up with 95% of the country’s labor force on unemployment benefits. A back-of-the-envelope calculation suggests oil prices would have to reach roughly umpteen-zillion-dollars per-barrel to sustain the fiscal commitment implied in all this.

The adverse incentives problem inherent in Rosales’ proposal are so glaring that what I find remarkable is that serious economist types are lining up behind his candidacy. This is the “serious leader” we’re told can redeem the anti-Chavez movement? Gimme a break.

By contrast, Rausseo’s line about how “people who want the government to go around handing out cash shouldn’t vote for me” makes him look like a paragon of fiscal responsibility. At first I thought it was just a cheap chavista zinger, but it’s true: El Conde del Guacharo is the most serious candidate the opposition can come up with!

Don’t get me wrong. I’m not above resorting to a bit of populist pandering when appropriate. But the scale of the irresponsibility in Rosales’s big headline policy just beggars belief. To my mind, it casts serious doubt on the guy’s overall judgment. How is he going to weasel away from this one if he manages to get elected somehow? Or – worse – is he out of it enough to think he can actually implement it?