Choices

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Item 1: Venezuela’s population grows by about 450,000 people each year. At that rate, assuming 4.5 people per household, you need to build about 100,000 new homes every year just to keep up with population growth.

Over the length of the Chávez era, the government has been averaging about 12,500 new homes built each year, with the private sector adding another 30,000 or so. That’s a shortfall of over 57,000 homes every year: which compounded over the 12 years Chávez has been in power adds up to nearly 700,000 new homes that ought to have been built, but haven’t been. That’s over 3 million people who’ve wanted to strike out on their own and start new households, but have been forced to either stay on with relatives in increasingly cramped conditions or strike out to build shanties with their hands.

But it’s worse than that, even, because Venezuela already had a housing shortage back in 1999, which means the backlog is even bigger. We’re talking about, probably, a million-house backlog, which you’d need to clear while also building an additional 100,000 homes a year to keep up with population growth.

If you set out to clear that backlog over a reasonable time-frame – say, a six-year term – you’re talking 265,000 new homes per year or so. That’s about 6 times the current rate of home construction,  mostly for very poor people with no access to credit and very limited ability to pay.

Figuring a very modest $20,000 per new home – and assuming you can magically clear all the building supply and human resource bottlenecks a drive on this scale would create – this would be a $32 billion proposition spread over 6 years. Assume you can somehow wring out half of that figure from the beneficiaries, and you’re still looking at a public subsidy north of $16 billion over six years.

Item 2: Some 16,000 – 20,000 Venezuelans are murdered each year – and just 5-7% of those crimes result in a criminal conviction. If we managed to increase the conviction rate to, say, a still unacceptably low 50%, we would be looking at 8,000-10,000 new murderers going to jail each year.

Except there’s nowhere to put them, because Venezuela’s prisons are filled well beyond capacity. Built for fewer than 30,000 inmates, Venezuela has 40,000 people in them – most, it should be added, awaiting trial.

In order to achieve something as basic as just making it more likely than not that if you kill someone you go to jail, Venezuela would have to install at least another 50,000 prison places over six years. Assuming you’re not ready to declare an amnesty on theft, rape, etc. and so you want to put more than just outright murderers in jail, you can easily double that figure.

But that’s just the start.

If you’re going to investigate, catch, prosecute, defend, judge, feed and guard those extra prisoners, you’re looking at a chain of new expenditures all up and down the justice system. You’d need to train, hire and equip thousands of new law enforcement professionals, build hundreds of new police stations, dozens of new crime labs and prisons.

The back of my envelope suggests that can’t be done for less than $18 billion over six years: about $3 billion per year. That would represent a 10-fold increase over the sums allocated to the Justice System in the 2011 budget, by the way.

Choices: Now, it’s 2012 and you’ve just been elected president.

Chávez, by some unexplained miracle, has agreed to hand over power to you.

You sit down to review the 2013 budget and realize that if you scrimp on absolutely everything else – freezing firefighters’ wages and school meal programs, cancelling all outstanding weapons buys and defunding every cultural institution in the country – and push your borrowing right to the edge of what your finance minister considers sane, you can free up $3 billion extra per year over the next six years.

What’s it going to be? Decent housing or basic safety?

Both are absolutely rock-bottom basic human necessities. You can afford one or the other, not both.

One way or another, one thing’s for sure: the firefighters are not going to like it.

1 COMMENT

  1. Wow, that’s an interesting exercise there, Kimosabe. Too bad it’s completely off base.

    First off, the housing crisis will not be overcome overnight. It won’t necessarily require public funding exclusively – yes, there will certainly be a level of subsidies required, but many of the households lacking decent housing are lower middle-class, and they can pay some sort of mortgage. Without working with private industry, you’re screwed, but the idea is to bring them into the table so that the sum of public and private investment in housing is at the level required.

    Moreover, you’re neglecting the fact that part of the housing problem can be overcome by investing in the “shanties” and ranchos and making them stable homes. In that sense, some families could benefit from subsidies to “habilitar” their barrios. The housing problem cannot be solved by making everything new again, but rather, by working with what you have.

    Regardless, the numbers I’ve seen do not resemble those figures.

    As for the jails, lowering the crime rates will also take time, and there is no doubt that Venezuela needs more and more humane prisons. But the problem is at the prevention stage, that’s where the focus should be. Investing in new prisons and neglecting the sources of criminality will leave you broke and with a whole lot of corpses around.

    The challenges are enormous, that’s for sure. But they’re not as insurmountable as you paint them.

    • Of course this is a very rough, back-of-the-envelope exercise: more a consciousness-raising exercise about the absolutely dire financial straits any new government would find itself in than a real budget.

      I do note that the housing figure assumes that the beneficiaries cover half the cost of new – or refurbished – housing. That’s going to be a challenge, but assuming the higher figure ($6 billion/year, the one that UCV Urban Planning Dept. profs were using when I talked to them a few years back) makes the exercise just impossibly bleak.

      The prison system numbers are even more speculative, but there’s no way that the massive prison building and equipping programme needed is ever going to be cheap. At the very least, people have a right to expect that the “normal” (i.e., 50%+1) thing that happens if you kill someone is that you go to jail. But even that would require huge investment all up and down the system.

    • Then again, you have to bring the private sector in, even for things like building prisons.

      You’re right in that the financial reality come 2012 is going to be bleak. But you make is sound like there is simply no hope. I think with some outside-the-box thinking, it can be done. Not immediately, though.

    • Well, I’m not really sure what “bringing in the private sector” means in that context. Of course you can put out the jail-building out to tender – but you still have to pay the people who win the bids! Or are you picturing vending machines in jails to offset running costs?!?

      On hope, all I’m saying is that we need to aterrizar. The transition debate needs to be done on the basis of a clear-eyed awareness of the state’s ability to pay, as it’s likely to be on Feb 2nd, 2013. The pressure to edulcorar la píldora is going to be very intense. And that can only lead to desperately warped expectations.

    • Nope, you don’t need to pay the jail builders, just ensure them a running budget that will justify the building of the jails. It’s the same thing that Chile has done with the thousands of kilometers of highways they have built in the last few years: the private sector builds the infrastructure, and the government ensures a hefty return to those investors.

      The difference is that you don’t have to put down the money right then and there, but it’s more of a gradual thing whereby you ensure a steady flow of income. In other words, the private sector builds the jails, and you make sure they get enough funds over the years to compensate their investment.

      Of course, contract enforcement is THE issue here. Regardless, private provision of infrastructure is a well-developed area, one in which institutions like the World Bank can provide a lot of know-how.

      As for houses, the idea would be the same: allow people to take out mortgages in a very regulated fashion, and the government is the lender of last resort. That way, the government is not the one exclusively financing and/or building the homes, but rather it is subsidizing and facilitating credit. Kind of like Fannie and Freddie, but improved.

    • Well sure, you can of course look at different financing options. There’s no free lunch, though: if you’re going to shove off the up-front financing costs on the private sector, you’re going to have to compensate them for that down the road. One way or another, the tax-payer (or, erm, the oil-pumper) is going to pay. How much, exactly?

      Similarly for housing. The UCV Planning Department had a brilliant – though politically likely to be very controversial plan – for what amounted to “planned invasions” – the government would take some land, build roads, sewers, put in gas lines and power supply and water, then divide it up into lots – each hooked up to all the basic services – and more or less let people self-build their homes there. “It’s a million times cheaper than the way we do it now, where people build first and then, once the barrio is entrenched enough, we go in and put in the infrastructure after the fact.”

      All these things need to be thought about. I’m just saying, it’d be better if we thought about them with price-tags included.

    • Juan, the private sector has to do the job in both areas, there is no doubt about it.

      Property entitlement is a key issue in solving the housing problem.
      Another would be intelligent decentralization. Apart from the obvious things, one of the extra things is that if the state needs to replace/open up positions for some ministry not in Caracas, not in Valencia and Maracaibo, but in secondary cities. I am not talking about such an awful experiment as Brazilia, but more like what I see in Germany, in Britain, in the US: many “national bodies” are not located in the capital, but in some other city. We could start smal. Expect resistance as interests will want to keep all those jobs in the capital. Outsourcing to other regions would also generate more employments elsewhere.

      Another issue is that we need to do what the Europeans started long before the Crusades began: settle down land claims. At this stage We need to make accessible to everyone what lands are owned by whom where. If they get certainty and property rights, people will start developing there.

      Still another issue: now that Mr Ratzinger said it, people can start using those latex things. Birth rates in Venezuela are among the highest in South America.
      Only thinly populated Bolivia, Paraguay, with a larger population distribution, and tiny EU-sponsored French Guyana have higher birth rates.

      About prisons: indeed, the private sector needs to play a big part there in building those prisons, but I am very cautious about taking a US approach on that. The US has by far the largest proportion of people in prison among the OECD countries and yet crime is not better there. Prisons and the whole vicious circle there has become a big business for some people.
      What are Canadians doing?

  2. Clearly, I have neither the skills nor the data to produce a credible transition budget. But we need one. And the choices it’ll contain are not going to be pretty.

  3. Francisco, this is certainly one of the best topics this blog has discussed yet. And one I expect to get more and more interesting as we approach that “2012” goal. The issue with the post 2012 Venezuela is not going to be about housing, or about building new jails or even providing safe and widespread basic services (like water, electric power and the like). The way I see it, the main challenge facing the new “president” and her/his cabinet is how to keep the country in one piece, how do you take 14 years of constant conflict and turn 35+ million people into a united nation that wants to work towards a better future, and that’s only after you manage to make sure those 35+ million people can agree on what “better future” means.

    Unfortunately, I am the pessimist type when it comes to the life after Chavez. I believe the only way out is to have a hard dictatorship a la Pinochet that would force the changes that are required. The challenge with that? 1-)determining what the “required changes are” it will of course depend on who you ask, and there lies the issue and 2-) making sure we don’t follow on an “peor que la enfermedad” sort of situation.

    So, we can talk numbers, we can talk about houses, jails or new power generating stations or new aqueducts…. that will only be talk unless we understand (and have 35+ million people agree) on what Venezuela needs to look like.

    As always, a great post..

    Cheers!

    • If I thought a post-transition government would need to bathe in the blood of thousands of chavistas, I’d sign up for a PSUV card tomorrow.

    • I suspect that AJ is correct in that to dig Venezuela out of this economic and social morass will probably require a Pinochet or Pinochet-like dictator. As such dictators go, my favorite example is Lee Kuan Yew of Singapore. At this point in time, the fabric of the society and the institutions of the country are too badly wounded to recover without some time in the ICU.

    • It will probably be worse than a dictatorship by Pinochet or a facsimile. It is called seeing the Face of National Failure Staring at The Face of Venezuelans.

  4. Regrettably, AJ is quite correct. If by some weird miracle Chavez is ousted in 2012 and he gingerly hands power to his opponent, there’s going to be a lot of political fallout to deal with first. I can sincerely imagine an April 12th scenario repeating itself as government thugs and cronies make haste for foreign embassies, airports to foreign destinations with no extradition laws and quite a huge number of chavistas taking to the hills and launching a guerilla campaign. We already know that deep down the hardcore don’t believe in Democracy. For them, Chavez losing power in 2012 is the equivalent of the government being overthrown and that’s it.

  5. Francisco,

    The government has never been good at building housing. All that needs to be done is to remove the roadblocks preventing the private sector from building housing. Primarily, what is needed is rental housing. If the laws that favor renters over landlords by such a drastic margin are reformed and the legal system is made to function, there will be sufficient profit and incentive to generate investment in building new rental housing.

    It really is as simple as that.

    • Well, that’s part of the solution, but I don’t think it’s as simple as that. Some subsidy component is going to have to stay in place – the household finances for too many housing-deficit people are too tight to envision a solution without it. And while the private sector could finance and built a lot of new housing, it’s still the government’s job to put in the roads, the water mains, the electricity, the gas lines, the schools, the primary health clinics, all the urbanism around house-building.

      Personally, I like the proto-housing idea. Venezuelans *know* how to build their own homes – they’ve been doing it for generations. But the state still has a role enabling them to build those homes in safe places with basic services and retaining proper ownership rights over what they build.

    • OK, safe places are scarce in the Greater Caracas area. Carabobo, with one of the most fertile regions, has a population density that is three times that of the Netherlands, only with quite some mountains.
      And Chávez wants to take away 100 meters of Cerro El Avila National Park for more buildings there.

      Two of the problems with building elsewhere: no jobs, outside the core of urban centres lots of spaces have no clear land property rights: they belong to “the state”, “the military”, some terrateniente, very often but not always with military links.

      Venezuela is still a feudal state. One needs to deal with more than property rights for the people in Caracas’ hills, I think.

    • Roy I don’t know how your arguement is rental laws, when there are so many people that are unable to buy a home. Rent is very costly. I was renting an apartment that cost me almost, 3400 Bs. as opposed to $800 CND, as much as I rent my house in Canada, and it was smaller, less equiped and without a gym, indoor swimming pool, squash courts, tenis court, sauna, and countless other things.

      You can argue that since the black market prices are 8,10 per USD, then that would be no where close in conversion, 450 as opposed to 800, but still for the apartment that was a silly price and that wasn’t even in Caracas, my apartment is in the suburbs, 30minutes from Toronto, right next to the downtown of the suburb and the big mall.

      There is no skirting the fact that more houses need to be built, and many of these houses must go to people in need rather then more land lords.

      For a canadian living here, the divide between the poor and the rich is staggering to me, and Chavez is only making it worse. If you people think that giving the private industry money to solve the solution will be it, you must not live here.

      To give you an example of what people are going through here, my sister in law and her husband are both graduates in Industrial Secruity. Both employed and head their departments making sure everything is up to code. They make reasonable wages, 2500 to 3000 Bs monthly, three times minimum wages. They have two daughters. They drive a beat up caribu which is often in repairs, and just recently saved enough money to morgage a house. Between food, care repairs, and everything else they barely scrap by. Their house has leaks and it needs a lot of work. And this is a family with two working parents, both with “good” jobs. A laptop costs 4000 to 5000 for any computer with 2MB of RAM. Meaning their monthly wages combined, something a person in Canada can do on minimum wage alone, and still have money to spare.

      A house, a bad one, costs 300,000, around 40,000 USD using 8.1 as the conversion rate. Without intrest, and lets say they are able to miraculasly save 2,000 bs. per month to put down on the house, your looking at 12 years to pay down the principle, and we haven’t started talking about intrest.

      To show you the stark contranst, I can make one of their wages by selling one laptop that import. Sure, my money is tied up for a good deal of time, close to a year, but most of that time is often spent getting the certificado de no producion for the next shipment, putting it into CADIVI, waiting for the aproval, and so on. And I do this as a pass time during the harvest season of sugar cane, as my work with the sugar industry keeps me busy during their reparation period.

      The silly difference between rich and poor in this country needs to be bridged if Venezuela truely wishes to get rid of Chavez. Oppertunities need to be given to the middle class, lower middle class, and the poor. Education should be a priority.

      To answer your question, I would put the money into housing, some kind of credit system for poor people to buy houses. I would get rid of CADIVI and gradually liberate price controls. I would cut a lot of the red tape on importation, so that Jose, if he doesn’t like the gauging prices that the rich elite of Venezuela are setting, he can buy it from abroad, Columbia perhaps.

      The poor in this country have a reason to be angry. I know they are bad mouth regularly, but they have been abused by a rich elite for years. Rich elite that changed laws and constitutions for their whim. This is their payback, pure vengance and hatred, at the expense of their very own country. I think it is wrong, but I think what the elite have done in this country to them is just as bad. This falsey that private industry will solve everything is wishful thinking, and a complete ignorance of history. Goverment controls are going to be needed for builders, penalties established, and criterias placed on who can buy the houses or else you will have an elite buying all the houses and the lower classes made to live their lives renting a house until they can’t afford it due to old age or loss of jobs. And then we are back to what you had, the cycle will just continue, or get violent.

      Sorry for the rant, but I truely can’t believe some of you live here with some of the comments you make. Or your simply too high up in your ivory towers to know what real venezeulans are enduring.

    • Khyber,

      Well said.
      A lot of people from the A and B sectors are not aware of this:

      1) in spite of all jams and all those crappy cars around, most Venezuelans have no car (this has repercusions for many things, like voting…and yet Venezuelans from A and B are not aware how badly we need to provide for transport to those people during election time, as Chavistas do

      2) the median Venezuelan would have to spend more than a month’s salary to buy textbooks for two children. In the US – Texas included- and in most of Western Europe textbooks are provided by the state (as loans) and notebooks are given as well. 80% of Venezuelans attend public schools. Most are not like Hugo the Small’s former school, which now looks like a private one and has cooling systems, but are rather rackety (save far away in the countryside). Public schools in Venezuela were already among the worst in Latin America in 1998 and their quality has gone down the drain since. The solution is not privatization.

    • Khyber,

      The reason rents are so high, is exactly because the laws make it so risky for a landlord to rent their property. Under current law, if a tenant decides not to pay his rent, it will take several years to have that tenant removed, during which time, the owner will not realize any income from that property. In fact, it type of business is so risky that few are willing to do it. As a result, many apartments are left vacant rather than renting them.

      If the laws that define the relationship between tenants and landlords were reformed to make them “fair”, far more rental units would come onto the market and the prices would come down as supply and demand finds its new balance.

      Your arguments that tug at the heartstrings but ignore basic economic principles are what got Venezuela into this mess in the first place.

  6. That is true.

    1. More examples for you. A new car almost costs as much as a house here. I bought a crossfox for 50,000 Bs. 3 years ago. I’m selling it now for 120,000, on tucaro.com, which the wife checked out, they are selling some for 150,000. Ok so my crossfox has leather seats, but it’s still a tiny thing. The new spacefox that came into the VW dealership where I take my car for service are going for 180,000 Bs. There is no way they could spend that much money on a care.

    They don’t have any Gols simply because importation of cars has been difficult. Now I understand why they are that expensive. VW has to pay for the places they own, the people that work for them, and in a year they have only managed to bring in some 20 cars due to importation problems.

    That is saying that a new Spacefox is worth some 20k+ USD on the 8.1 conversion, something just out of this world.

    Me and my wife, for elections this past september each drove 3 car loads of people to vote. We aren’t involved in any political party, and simply did this out of civic duty. Granted they were all anti chavista, but I’m pretty sure they wouldn’t have voted.

    2. 1100 is what my wife’s sister has to pay in books, and every two semisters she has to get new gym cloths which is also some 200 Bs. So your right about that. I often say that Canada is more socialist then Venezuela for this reason and health care.

  7. Roy,

    I comletely disagree. It’s an excuss. I’m a canadian, and the people knew I was not going to run away with their house because I couldn’t, yet I got the same price others have. I know two people that rent houses and they say that it’s because cost of living is so high. 3k though is still high. I don’t charge 2k CND for my apartment, which is equal to a months wages, 3k Bs is what a professional makes in a month. You can pay 2,300 for a one room and kitchen here in Mérida.

    To me it’s just an excuss used by people, threat or no threat those prices rise every 6 months by 10% to 15%, their excuss is inflation. If tomorrow Chavez leaves, I can garentee you that prices will remain the same.

  8. Also by the way Roy, laws that define relationships between tenant and landlords is far worse in Canada for the landlord then in Venezuela. It is the obligation of the landlord to repair certain problems that happen in the house. Contracts are more flexible for the tenant. Kicking out a tenant is just as hard, maybe harder. And you also have to pay their electricty and utility bills if they hadn’t during winter. You can’t turn off utilities to a house during winter, not electricity and not water so the charge goes to the landlord if they didn’t pay.

    The only added threat here is that if you’ve rented a house for 15 years or whatever the term here, it is your house. And maybe it’s harder for the landlord to boot you out. But landlords have no obligations to repair plumbing and some other problems that arrise, or have to shovel the walkway if they are renting the basement for example during winter as the landlord can be sued if the tenant slips on the walk way to the basement.

    • Kyber:

      You obviously have never been a landlord in Venezuela, chamo.

      Several family members in Caracas used to make a little money on the side by renting their apartments. In every single case, it took YEARS to get the tenants out when the contracts were up and the owners wanted to move back in. In one case, it was 10 years and the renter eventually left all the toilets cogged with cement as a goodbye gift. All they had to do was keep depositing the old rent in a court, and they could go on indefinitely.

      One of my relatives, who owns of the apartments, decided to become a lawyer and fight her tenant. Imagine, she had the time to get a law degree before she could evict the bastard! Now, about 30-40 % of her work comes from landlord – tenant disputes.

      I am unfamiliar with Canadian tenant laws, but they are not relevant to the discussion of what to do about housing in Venezuela. What is relevant is what the law in VENEZUELA says about landlord – tenant disputes.

  9. FT, I know Juan already brought this up by why use calculations in your argument, they don’t make any sense? I know it wasn’t the main point but I can’t really get past it?

    “8,000-10,000 new murderers going to jail each year”, so your assuming each murder is done by one person and a new person would take their place on the street?

    Also even if Venezuela could build enough houses to house every family in six years, it probably shouldn’t, I’m sure we are well aware of housing bubbles by now.

    • Well, it’s an approximation exercise – really, I’m basing the number of prison places I think we need (75,000 – which is about 2.5 times our current installed capacity) by benchmarking with Brazil: they have a similar demographic structure and 2.5 times as many prison places per capita as we do.

  10. I understand, I just would have preferred if you said “I’m basing the number of prison places I think we need…” and left out the back of the envelope calculations, which seemed a bit like chavenomics.

  11. …OR…
    You could build a giant meat-grinder like the one in the documentary movie, “The Wall” by Alan Parker, and mass-produce sausages and hamburgers out of convicts, while they march to the tune of Pink Floyd.
    Therefore, you’d be fighting criminality *and* hunger at the same time, while keeping the barracks, the prisons and the poor people happy with double-helpings of “chunky-funky chicken” stews, twice a day.
    (Fat inmates would be used to beat the Guiness World Record of biggest mondongo, canned and sold at your local Mercal. So cow’s went mad from anthropophagy? No worries, Venezuelans are already mad -or how do you explain Dr. Diablo’s?).
    Cheers

  12. A blatant disregard for the principles of economics over a very long time has put the country in this mess, and it only can be corrected if we let the economy function the way it is supposed to, among many other things. Certainly the Universal Convention of Human Rights of 1948 needs to be applied and enforced as well. How to change our lust and craving for power and replace it for a lust and craving for achievement would go a long way to redefining the role of politicians. As it is most achievers are leaving the country in droves, eventually you get a country without the critical mass of achievers to get anything done.

    • Johnny,

      “eventually you get a country without the critical mass of achievers to get anything done.”

      Exactly! And I love how you phrased it.

  13. It doesn’t matter what the problems are, every new government follows the same mantra – it was the previous governments fault.

  14. Venezuela will not solve its housing crisis until the government gets out of the business of building homes, and creates some policies that encourage the private sector to build more. Why do you think so many U.S. residents own homes? I’d argue that the biggest reason is the tax deduction makes it far more affordable than it would be otherwise.

    I’m not saying Venezuela has to adopt the same policy, but the focus needs to be on fueling the housing demand, not the supply. Another way is to subsidize home loans for the poor. Figure out how much they can pay, subsidize the rest, for example. This has some big advantages: one, it would create far more demand for housing than can be built for the same amount of funds (and proportionally create more jobs). Two, the cost per beneficiary would fall over time, given both inflation and generally growing incomes, which would continually free up funds in the existing budget for more loans. Three, there’s the pride of ownership factor – the homeowner has to work to own that place, rather than simply “win the lottery.” Can’t overstate the implications of that, as it reduces dependence on the government – which is the precise reason Chavez won’t adopt it.

    Of course, another reason why this won’t happen is the expropriation factor. Why buy a house when it might be taken on a whim? The demand for housing is much less than the shortfall, and that’s the primary reason.

    • There’s plenty of scope for experimenting with various policy mechanisms: vouchers are one option, outright rent-subsidies (coupled with better tenant-landlord regulation) another. Any policy that works on the basis of carefully considered, properly worked-out incentive structures for buyers and builders would be an immense step forward over what we have now.

      Whichever policy mechanism you come up with, though, there’s still no free lunch: it’s going to cost the taxpayer money. A LOT of money.

    • It will cost them a lot of money, but the question is, when? Some options require a lot of cash up front, while other options entail different financing mechanisms.

      Take, for example, building highways. If the state goes ahead and builds a highway, it needs a lot of cash up front, cash that comes from the pockets of Venezuelans, current or future ones. But if a private company builds it and the state secures financing for a long period of time via dedicated tolls, then the costs are stretched over the lifespan of the highway.

      In the first case, all Venezuelans end up paying up front. In the second case, only Venezuelans who use the highway pay, and they pay for it over an extended period of time.

      In the end, it’s Venezuelans who are paying for the highway, but the way it is done makes a huge difference in terms of the budget of an incoming administration.

    • What about building motorways by using penal labour? Murdereres and whose who voted more than 3 times for Chávez?
      OK, OK, it was just an idea, it was just an idea!

  15. And by all means, the new government will have to clamp down, very hard, on the inflation the government traditionally generates in Venezuela. There’s no improving the life of anyone if the money they manage to get their hands on, is worth nothing. It’s pure charity, and you cannot keep charity forever.

    If the poor are so badly off, it’s because their incomes cannot keep pace with inflation. If loans are a dream, it’s because interest rates are too high and your salary goes down. If houses are a forlorn hope.

    It’s not so much the rich, though they benefit comparatively by it, as it is the State, with inflation, bad government and a system of dependency, that gouges the poor in Venezuela. Of course, most people miss the connection. But you have only to look at Venezuelan (not U.S., not Brazil, but ours) history before 1976 and after to convince yourself.

    I predict it will take the virtual elimination of the Bolivar and it’s substitution. Choose gold, dollars or euros.

    At least, opening up the used car market to imports (and also the construction market) is a good idea. Being gouged at the pleasure of so-called businessmen who cannot stand foreign competition is galling in the extreme. Another part would be elminating MOST of customs.

  16. Quico, the problem isn’t what to do with the money, the problem is thinking it’s ours to decide. That’s what the petro-state is! It is hypocritical to gripe about it when it’s someone else managing the money in a way with which we disagree, but then “ponerme yo” when you get those others out.

    Well, until someone in charge of the petro-state decides to get rid of the petro-state we will continue to have a petro-state. You can’t pretend you don’t know the evils of the petro-state since you’ve written extensively about it.

    So the decision isn’t what to do with the money, but rather how to prevent government from being the one to decide what to do with that money. Cash distribution.

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