There’s a Mercal for Dollars and it’s called Cadivi

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This little video is just too cool: the center-left data nerd’s case against the undercover backwards wealth redistribution of the Chávez era.

Listen, I don’t actually think this works as electoral propaganda: it’s at least 63% too wonky for that. The narrative they build runs directly counter to too many story lines that are too well financed and too well entrenched, both at home and abroad. And it operates on a level of abstraction and at a pace likely to strain anyone who hasn’t sat through an economics course already.

Still: what they’re saying is true, damn it, and that has to count for something.

1 COMMENT

  1. I think it’s great and really not that complicated. I really could see it being used in the future to teach about this period of our history, at least without the propaganda part in the end.

  2. Again, excuse my ignorance, but I am very curious: What is the reason behind currency controls?
    This currency black market phenomenon (4.30 BF) and its dire consequences have been understood ages. What I have never understood is why Chavez or his gang would continue to do so, how does Chavez benefit?

    • Is a type of political control over teh economy. If you are a wealthy person or businessman and want dollars you need to be in the chaverment’s good books to get them. For example, there have been reports of opposition newspapers that haven’t been able to get dollars from CADIVI due to their editorial views

    • Chavez benefits because he is the one receiving Foreign currency (PDVSA)…so who get more Bolivares to finance “misiones” , the owner of the black market! Chavez! They have all the access to US dollars…

    • Chavez benefits because he gets to manage international reserves and eliminates a source of potential political instability. Socialism with free convertibility translates into capital flight and hyperinflation. Socialism with currency controls translates into shrinking private investment, that can then be more easily replaced by “socialist” investment.

  3. +1

    This is completely understandable and in a narrative comparable to chavista:

    “they give money to people who already has a ton of it”
    “who has dollars? those who can afford a trip, evil businessmen and foreign companies, and what is left for you, el pueblo? nada!”

    Anyone, but the hard-core chavistas will understand this, as the only way to not understand it is being a complete imbecile :p (one of the two requirements to be a real chavista)

    Thanks for posting this! 🙂 Please keep forwarding this kind of stuff because it doesnt matter if this helps or not to a capriles’ win, but to make people understand why the things that have to be done must be done, and why and how it relates directly to them, so as to have their support and understanding to avoid caracazo-esque scenarios.

  4. The fact that you have determined that it is precisely 63% too nerdy for the general public reveals a lot about you, you know.

  5. 99% or more too wonky for electoral propaganda; better to be moth-balled for some future university ec. course; flies into the stratosphere for at least 99% (my estimate) of the voters; will only confuse, perhaps even dishearten, the many millions who depend on Mercal, and some of whom are afraid they’ll lose it if Capriles wins, as per Chavez electoral propaganda.

  6. I think this kind of stuff is great. It just needs to be slowed down and produced for the average Juan and Juana. I am thinking it could be about twenty minutes and done with a format that sticks to people:

    1. This is what I am going to tell you.
    2. Telling you now.
    3. This is what I told you.

    The Opposition should initiate this and other sorts of educational programs to help “de-program” the Chavistas who bought into the whole Chavez hoax.

  7. I thought it was perfect, EXCEPT, as Roy mentions, it needs to be slowed down a little, plus the voice-over needs to enunciate better than it can while talking a lo corrido. If just these two suggestions are taken into account, Juan and Juana (and me) will gain crystal clear understanding and be able too ask more questions, which is the purpose of any education. I liked the vinotinto blend of blue and red – well done.

  8. Wow, thanks a lot for the comments.
    We would deeply appreciate if you keep forwarding the video 🙂
    I would like to answer some of your comments:
    – Max: 95% of the foreign currency earnings in Venezuela come from the Oil Industry, which is owned by the government. what do you prefer? to let people buy from you at market price without restriction or to be able to control to the detail who gets what at what price? if you want power, you choose control.
    – GC: A Gasoline video will come, we just need a lot more data to make the argument bullet proof.
    – Net: I don’t think the 99% number is correct. Our idea was to make it as simple as possible, and I think the fact that it is becoming viral shows it was understood by many.
    – Roy: It was fast precisely because it can´t be longer than 3 minutes. Any longer than that, nobody watches it 🙂
    – Syd: I will do a better effort next time to try to pronounce words more clearly.
    – All: Thanks so much for the comments, and please help us spread the video around 🙂
    Cheers!

    • Animaciones Mantequilla,

      They watched Alo Presidente for hours. You are telling me no one will sit still for twenty minutes to learn about how it really works?

    • Animaciones Mantequilla: “which is owned by the government”

      Just a quibble, the oil is administered by the government but owned by the nation, that is, the people.

      In fact, not just the -2.7 to which you make reference in the video helps the rich. The 4.3 does as well, because each Venezuelan citizen is pitching in with his personal percentage of the oil that went into that 4.3. This implies that if 40% of the population is considered poor, then 40% of that 4.3 is being provided by the poor, regardless on what it is spent. So even if the 4.3 goes into a Mercal, 40% of it is being funded by the poor, which saves the rich from having to pay that amount in taxation…

      • This would be assuming a 100% equal distribution of resources, AKA, rich people getting the same out of the government as poor people, which if you see investment policies by the government, wasteful and corrupt as they are can tell you is not the case.

        Also disregarding the fact that poor people get cash subsidies, and rich people pay taxes. Rich people pay taxes on the usage of such money here in Venezuela (regardless if they expatriate their income), so it is actually in everyone’s interest for that money to be used on value adding activities rather than funding everyone that can get pregnant.

        Also, Dutch disease and comparative advantage for whomever desires manufacture to return to Venezuela (or any non capital investment powerhouse).

        • Fernando, no, it’s not assuming 100% equal distribution of resources. Let’s follow the oil. Take 30 million barrels of oil out of the ground. The government administers all of them for all of us. But since those barrels are originally ours, 1 of those barrels is one that you pitched in. Another was pitched in by the poorest Venezuelan, and another by the richest. The rest, by each and every other Venezuelan. Our contributions boil down to an equal taxation amount for each and every Venezuelan: we each paid a 1 barrel tax, and we pay it every 30 million barrels extracted.

          When the government converts the barrels to cash, it puts a monetary value to your oil barrel contribution. Assuming a $100 per barrel price tag, every Venezuelan’s $100 contribution happens every $3 billion oil sales.

          Now, we get to your reference to distribution. Every time the government spends $3 billion from oil money, the percentage of poor people in the country contributed that exact same percentage of those $3 billion. This is true, no matter on what the government spends the money. EVEN if it spends it on giveaways for the poor, the poor paid for that very percentage of their own giveaways.

          I take it a final step. Since any money spent from outside of taxation saves having to spend money from taxation, oil money saves the rich from having to pay that very amount in taxes, which translates into a large percentage of money that the poor are contributing from oil is saving the rich having to pay that money in taxes.

          Keep in mind that this is all true EVEN if the money is spent as you suggest, “on value adding activities “. The percentage of poor in the nation would be contributing that same percentage of the spending, which, in turn, saves the rich from being taxed that amount of money, so it’s not about distribution, at all.

  9. Great video, just a handful of quibbles: (a) Many times the importer who buys merchandise for resale or as raw materials has to resell their products at a controlled price. They cannot always set their own prices as mentioned here. For instance, selling to state companies such as PDVSA, or selling articles “de primera necesidad”. (b) Subsidized imports are harmful to domestic producers, who could hire highly paid skilled labor to produce many materials that are now imported. BTW, this is not new to Chavismo, Recadi had the same effect in the 1980’s. Finally, a week before the election is kinda late. But maybe these arguments will help the next administration phase out Cadivi.

  10. Sorry, guys: Toro is 63% right that this ad, no matter how cool it is, doesn’t work as electoral propaganda — or, more to the point, as a TV commercial. Specially if the reach of the spot is contained to a few thousand hits.

    But maybe he’s 37% wrong depending on the presumed target audience for a YouTube-only piece like this. Me explico:

    The spot ingeniously gives a leftist spin on why exchange controls don’t work. This is probably the ultimate purpose of the ad, and in line with an evident strategy of targeting the Chavez Lite voters. But, I’m also guessing it’s targeting first time voters within that subset — college kids and so on. The nifty animation, the hip and young caraquen~o voice over, and the seemingly wonkish stats betray this as a target. The Mercal analogy is probably memorable enough, and the “subsidy for the rich” message might just be persuasive enough to make the spot effective. And the final “somos vinotinto” demo is actually very good. So, maybe, just maybe it does help in moving the needle a bit.

    (On another note, the “rich” in question who see this ad probably react by saying “no joda, ni que el cupo de Cadivi alcanzase pa’ gran vaina… me iria demasiado.”)

  11. “Miren este video que sacó el majunche. No sólo habla mal de Cadivi, sino que dice que es como Mercal, así como diciendo que es algo malo. Claaaro! Si los majunches odian a Mercal! Ahora para insultar a algo dicen que es ‘como Mercal’… Además quieren que se acabe el control de cambio, porque lo que quieren es llevarse los dólares de la patria! Del pueblo! Pues más nunca gobernarán, majunches!!”

    • Exactly. Why muddy the waters with an intellectual video which, for the average Venezuelan voter, is way over his head, and, worse yet, could even indicate that Mercal might be in danger? Unfortunately, the majority of readers/writers on this Blog are way too far removed from the typical Venezuelan voter mentality to understand this….

  12. Today, thirteen years after the election of Chávez that final victory has still not been achieved. As long as the land, the banks and big enterprises remain in the hands of the oligarchy, the Bolivarian Revolution will never be safe. The deep bond that exists between Chávez and the Venezuelan masses is a reflection of the fact that Chávez aroused them to political life and struggle.

    The truth is that a big section of the Bolivarian bureaucracy was never in favour of socialism. They have been constantly conspiring to put the brakes on the Revolution, halt expropriations and above all prevent the workers from taking control.

    Le Monde Diplomatique recently revealed the attitude of the right wing of the Bolivarian Movement, which has long been dreaming of “chavismo without Chávez”:

    “On a visit to Brazil in April 2010, he was asked about letting another leader emerge. ‘I do not have a successor in sight,’ he answered. But there may be a change in thinking. Last year Chávez told a former adviser, the Spanish academic Juan Carlos Monedero, who had warned of the danger of ‘hyperleadership’ in Venezuela: ‘I have to learn to delegate power more.’ During his extended medical treatment, several top leaders filled the gap and emerged as possible successors: foreign minister Nicolás Maduro (a former trade union leader), who headed the commission that drafted the new labour law; executive vice president Elías Jaua (popular among the Chávez rank-and-file); National Assembly president Diosdado Cabello (a former army lieutenant with a pragmatic approach and strong backing among the armed forces). In May, the critical Monedero remarked that formerly ‘some of us saw the difficulties of continuing this process’ without Chávez, but ‘now we have lost this fear because I see dozens of people who could continue the process without any problem’.”

    That there are “dozens of people” waiting to seize control of the Bolivarian Movement the moment Chávez leaves the scene we do not doubt. But the advocates of “chavismo without Chávez” have no wish to “continue the process” of the Revolution. Rather, they wish to “continue the process” of derailing the Bolivarian Revolution, of watering down its programme so as to be acceptable to the oligarchy, halting the expropriations and putting the whole programme into reverse. In other words, they wish to implement the programme of the Fifth Column of the bourgeoisie within chavismo.

    The key to the success of the Revolution is that control of the movement must be in the hands of the rank and file, not the bureaucrats and careerists who have done so much harm to the Bolivarian cause. It is the workers and peasants who have been the real motor force of the Revolution. They and they alone, must be in control. The only people who can lead the Revolution to victory are the workers and peasants themselves.

    •Defeat the counterrevolution!
    •Expropriate the oligarchy!
    •Power to the workers and peasants!
    •Carry out the Revolution to the end!

  13. We gonna give you the Alfaguara prize for the romantic text of the year. Remember you are writing in English, a language, I learnt in England, doesn’t support much romanticism. So if you want to write “The Open Veins Reloaded” start it in the language of telenovelas.

  14. I don’t know if everybody here is clear that CADIVI was a left over for the middle class. It was never meant to do anything else but distribute among the well connected the dollars, while leaving the middle class dealing with the bureaucracy.
    As put it, the video looks like the guys uncovered “Chavez’ gate”.

    Funny it’s going to be when they decide to do the one of SITME, if you thought CADIVI was a guiso, wait for the episode Chavez and his donors the private banks and the BCV…

  15. Hey guys at CC, check this audio of Diosdado talking to someone about framing Caldera and about Capriles’s lead (acknowledging it) and about a way to knock him down

  16. Very nice animation but you have to be careful with how you present your argument. The way you have it now many would conclude after watching this video that the solution is NOT to eliminate cadivi, BUT to put in place more stringent price controls, ban travelling abroad, and nationalize banks. In other words, turning completely into a second Cuba. I would have emphasized instead the efficiency costs of controls: how bad incentives misallocate resources and reduce output.

    • Agreed, this video would make to the uneducated mind CADIVI to be some sort of thief or monster.

      This video completely avoids the fact that CADIVI is the only thing preventing capital flight (considering our governments financially savvy decision making), which if restrictions were lifted, would make the Bolivar even more worthless, as no sane person would want to keep their bolivares (as shown by black market).

      If your bolivars are worthless, how would you pay for scarce(-ly imported resources).

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