Who's right, Miguel, Juan Cristobal or Giordani?

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  1. Inasfar as the ending of exchange controls cannot be an overnight process, the first and second options aren’t really mutually exclusive, “Upon taking power, I will immdiately implement the necessary steps to end exchange-control”. Or am I missing soemthing?

    • Well, but the gap in emphasis is clear enough: LL is clear he wants this to be one of the very first things his government does, HCR is clearly looking to take a far more gradual approach.

    • Neddie,

      As it takes time anyway to eliminate change controls, you have a point, but there is a difference in emphasis in the 2 approaches,and it is a matter of opinion which approach is better.

      One immediately starts the process with the goal of eliminating them ASAP.The other states that some time is needed for even starting that process.

      The group of Capriles want to appeal more to unsatisfied Chavistas,and help them overcome their misgivings to join the opposition,and the group of LL wants a clean break and more drastic change.

      I doubt anyone knows for sure how good each tactic is, however I tend to side more with LL’s way of thinking here, as I believe that any kind of in between stance is bound to give more ammunition to Chavismo.Also my feeling is that we don’t need those people on our side, as many of them have been collecting money through unscrupulous means (CADAVI et al) anyhow.

      One thing is that they voluntarily change sides, and the other is that we try to ” buy” them off, to lure them in.

  2. I think it is a “no brainer”. Of course Miguel is right that cadivi sucks and should be eliminated. But the next president needs room to maneuver. And, he is not going to get elected by promising an immediate price hike.

  3. Well most people don’t have much of an understanding of economics. If economic policy was a democracy we would probably be broke.

  4. There are four months between victory and taking over. How much longer does a plan need? Thirteen Years like Chavez? The hard part is going to be taking office, once you get there, never look back.

  5. After 13 crazy/wasted years, you could take two approaches:
    (i) we have to do everything now! and probably burn out the country, or
    (ii) lets calm down and move towards sanity one step at a time! and probably burn the country anyways.

    I mean, how do you manage Venezuela after Chavez? nobody knows…

  6. It’s naïve to think only chavistas and “boliburgueses” benefit from the exchange controls. How many people in the opposition are also profiting, in many ways, from CADIVI? Is it only chavistas or also people from his own side that Capriles is trying to appease?

  7. Remember CAP II? his economic measures were “correct”; but rather flawed politically.

    Anything done to jump-start the economy after this nightmare has to be done like walking on eggshells…

  8. Economic measures like exchange controls, devaluations, interest rate changes, etc are never taken gradually or announced in advance. They’re always executive decisions with an instantaneous application. It’s done that way to reduce speculation lest people take advantage of the opportunity to steal more money.

    You may argue that’s why HCR doesn’t want to promise to remove CADIVI from day one, it’s after all an announced measure. But the fact is he has to remove it anyway. The longer CADIVI stays in place the more damage it does by creating more corruption and by distorting the economy.

    Let me do my own flash poll:
    If you’re the new manager/owner of a store and you know there is a backdoor always opened where people have been coming in everyday and employees sell the merchandise at discounted prices and keep the monies for themselves, would you:

    a) close it immediately.
    b) gradually close the door.
    c) leave it open.

    • Perhaps, but in illustrating the case for “executive decisions” with a micro example you do not seem to allow for a notion of “excess” and its political consequences. Even the changes you mention are often confined to a range that limits them; when they step out of them severe social crises ensue.

      • Please be more specific in what you think those excesses, political consequences and social crisis would be.
        I ask because I don’t see who is going to be opposed to a removal of the exchange control. Apart from a temporary initial inflation (that is unavoidable even if you keep CADIVI because you still need to devalue the currency sooner or later [sooner it’s usually better in these cases]), I don’t see what other negative consequences there may be.

    • Yes, you close the door, but… what if the well-connected employees who sell the merch at “precios solidarios” (wink, wink) react in one of these ways? a) Riot and torch your place down; 2) Leave en masse and make you go bankrupt in a week; or 3) Have you dragged to their friendly judge, who argues that you deserve 30 years in jail? What do you do? How do you react, protect yourself? I feel that’s what the climate is in Venezuela right now.

      • So in fear of any of those possibilities, better to leave the door open see if you can close it in the future. Fact is the moment you arrive is when you’re stronger. They’re not going to send you to a judge they’re going to fear being sent themselves to a judge. They’re going to be fearing for their jobs if they care for them or they’ll be gone by the time you get there.
        If you leave the door open you showed them your fear, you blinked first, you already lost their respect and that of the ones who put you there to fix the problem.

      • Think of the movie Roadhouse. The first thing he did knowing that the torching would happen was hide his good car, and buy a junk car. The hoodlums torched the junk car thinking he would take the message, but he couldn’t care less.

        A new president has got to go in with a plan that takes into account the torchings, not one that fears them so much that he ends up doing what the hoodlums want.

    • Amieres, your example does not work because these are not “employees”, these are citizens that translate in your example as “shareholders”. And you cannot fire the shareholders, you have to live with them…

      Besides, we have 2 clear examples of how to apply changes in Venezuela:
      1) All at once, like Carmona Estanga, and he lasted 1 1/2 days.
      2) one step forward, two steps back, back and for again and again, like Chavez, and he has been in power for 13 years and counting.

      If we have learned anything from Chavismo is that you could move the Venezuelan people like a herd of cattle to anyplace you want, but you have to do it little by little while talking nonsense and making them laugh.

      • Who do you think benefits with CADIVI? the shareholders(meaning all Venezuelans)? Or some insiders and very few in the general public. In case you’re wondering is the latter at expense of the former. So back to the example yes you can and should fire those employees that want to keep lining their pockets with public money.

        • Amieres,:

          Have you ever traveled with Cadivi Dollars?
          Paid an airplane ticket in Bs?
          Ever bought something on the internet with Cadivi Dollars?

          If you have, then you have benefited, probably less than an employee of Cadivi, but probably more than a llanero of Bajo Apure.

          BTW, I wish that CADIVI and all other control would be eliminated today, but I do not think that it is possible.

          • Of course it’s possible! What makes it impossible in your view?

            What’s your point? That people that have “benefited” from CADIVI are going to oppose it’s removal? Really? They know very well, just like you and I do, that those controls bring nothing good to the nation. That they are inefficient and unfair. That they breed corruption. That even if they personally may have enjoyed advantages that others could not, in a broader sense they haven’t really benefited, they just didn’t do as bad as others.
            So you think the middle class is going to protest if HCR announces the removal of CADIVI I don’t think so.

            There aren’t going to be any widows of CADIVI except for some chavistas from the previous administration and even they will know that was a temporary boon that wasn’t supposed to even happen. They’re not going to protest for not getting more loot.

          • Again, I am for eliminating Cadivi and all other controls ASAP. But if you eliminate them at once then I believe the shit will hit the fan, simple as that.

            Why? Lets imagine that an oppo candidate actually wins the elections AND the government accepts it AND Chavez steps down AND the new guy actually becomes the president of Venezuela. Many ifs, huge ifs.

            I am pretty sure that Chavistas will make the country almost unmanageable by then, a little spark could trigger chaos and you could bet your behind that the military will be waiting for any excuse to step up and take over. Imagine that the president elect comes in and eliminate Cadivi right away, well buddy the Cubans control the barracks around the country, control the barrios, they just have to give an order and your new president elect is soon exiled to Miami.

            I think that you MUST clean up the military, introduce oppo people inside all the government institutions and powers, organize an efficient power structure that could implement the government plans, secure the position of the new government and THEN you could start amending all the wrongs and elimination stupid controls like Cadivi. If it takes 4 years to do so, then 4 years it is. We will have to live with that.

            To expect that the new president will come in cortando rabo y oreja is a pipe dream. Carmona Estanga rings a bell? did we learn anything?

          • Jau
            Even in the doomsday scenario you paint you have to remember that for HCR to have the political power he needs to clean the administration he needs to show improvements in the economy and the services. Step one for that purpose is the elimination of exchange controls. Notice also I’m not talking about eliminating all controls like you are. I would be careful about that and do it in a step by step process, but like I said step one is CADIVI.

            There is no danger of pissing off anyone by eliminating exchange control. Those that have made a lot of money off of it sure are going to be sad to see it end but they all know is goting to end with a new government. That is a given. They should be scared that they could end in jail eventually for the corruption so I don’t think they’re going to be making too much noise about it.

            Again I’m talking about CADIVI not Mercal or Barrio Adentro or price controls. It’s eliminating exchange control and getting it back to the way normal economies work.

          • From Petkoff regarding Agenda Venezuela:

            I call it the “syndrome of the Dove”, expressed in Thorton Wilder’s novel “The Ides of March”, structured in the form of letters from Julius Caesar to his friends. The first letter was sent to a general friend, Marco Vinicio, where he talks about his plans on the eve of his ascension and says, “By the way, Marco Vinicio, the first thing I’ll do is remove that ridiculous ceremony of the dove “, which was to read the mercy of the court, opening a dove and reading its entrails. Fifteen letters after Cesar tells his friend: “Marco Vinicio, I could not stop the dove ceremony, every time I try so many people and interests appears to prevent it I’ve come to the conclusion that this ceremony is the cornerstone of the Empire”. We can be victims of this syndrome.

          • Dude, you are wrong. Those wo travel or buy stuff with CADIVI dollars are the minority. For gods sake, access to credit in Venezuela is for the “rich”.

  9. The poll is kind of interesting, but I would like to point out that the poll could be 1,000 to one against Miguel…. and he still might be right.

    I have been reading all the arguments, and I have arrived at the conclusion that I just don’t know. This is unusual, because I don’t normally find myself without a firm opinion on most issues. I started out agreeing that any changes to the system should be planned, publicized and prepared for in advance. However, Miguel makes some solid arguments for eliminating currency controls at once and with no advance warning. This is one case where I will admit that I just don’t have the expertise needed to make a sound decision.

    I do know one thing, though… If it were up to me, and the economics were the only factor, I would probably listen a lot harder to Miguel Octavio, simply because his resume and experience in economic issues is more solid than Juan’s (con todo respeto pana).

  10. Ok, here’s an idea for a poll.(But, I would not suggest making polling a regular business…)
    Ask Venezuelans if-
    a.do you think Venezuela will be most likely attacked by USA.
    b. do you think Venezuela will go to war with Cuba,
    c. do you think Venezuela will likely have a civil war.

  11. While most of the world has seen a decrease in violent crimes – Venzuela has seen a huge
    increase. Coincidentally, much of the Moslem world remains a highly violent place also- and
    coincidentally -these are “friendsand brothers ” of Chavez.
    Also, repression has increased in Venezuela – as is the case again with best friend Castro’s Cuba.
    Do you see a pattern here?

  12. Poll after poll will tell you Chavez/Cuban plans have not workedd
    example- has the Cuban advisors helped increase tourism?
    Has the Cuban advisors increased agriculture production?
    Oh, yes, the Cuban sports trainers- really -taking jobs away from Venezuelans?
    If you start polling questioning these things I suspect the government will stop it…

  13. I concede defeat, Juan has been a formidable opponent, this is what democracy is all about.

    However, given his approach, I look forward to defeating him soundly in 2018…

    • That’s big of you. Honestly, I think there’s like a 55% probability that his approach would work out better than your approach. It’s a balance of probabilities thing, but I’m perfectly willing to accept I have it wrong.

      • Honestly, I don’t see much difference in the approaches. moctavio is saying kill controls ASAP, but he’s not implying that he would let the country implode; JCN agrees that the controls do need to be killed with appropriate timing, but he’s not implying that he would let the country implode, either. The way I see what they’re saying:

        JCN calls it
        priority 1: A,
        priority 2: B,
        priority 3: C,
        priority 4: kill controls

        moctavio calls it
        priority 1: kill controls (required steps: A, B, C…)

    • If anything, my overwhelming victory at the polls proves *you* are right. As we have seen, the majority of people always pick the wrong side.

      By the way, has TIbisay announced that the trend is irreversible and my victory is definitive, or is she still at the salon?

  14. I’d like to point out something that may have been missed: Language.

    The first scenario was: Should make a positive commitment to scrap Foreign Exchange Controls (Cadivi) as soon as he takes office.

    The second scenario was: Should leave himself room to move gradually towards scrapping Foreign Exchange Controls (Cadivi)

    In no way does the first scenario state that Cadivi will be scrapped once the incumbent takes office. But rather, the incumbent should make a positive commitment …. this can be, yes, we’re scrapping Cadivi gradually, as of 6 months from today.

    Juan and Miguel are TIED!! Congratulations!


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