The victim of my rant of the day: the Associated Press

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In short supply
In short supply

Clever use of puns aside (“Venezuela hopes to wipe out toilet paper shortage by importing 50m rolls,” chuckle chuckle), I have a small beef to raise about this AP story, reprinted by The Guardian and, most likely, hundreds of other newspapers and websites all over the world.

The piece says that “[m]any factories operate at half capacity because the currency controls make it hard for them to pay for imported parts and materials. Business leaders say some companies verge on bankruptcy because they cannot extend lines of credit with foreign suppliers.”

Some factories may be operating at half capacity because of currency restrictions, but there are other big issues that are, perhaps, more important – mainly electricity blackouts, skyrocketing absenteeism, and basically, no incentive to produce given how prices for their goods are set below cost. The piece makes it sound like if the government could just get the flow of dollars going, everything would be hunky-dory.

It’s not the case. One big problem the government (and Venezuelans) face is that the higher the gap between the official and the black market rate, the greater the incentive for companies with access to cheap dollars to sell them in the black market for a quick buck.

Say you get approval for $1 million to import toilet paper. Do you really think any clear-headed empresario will use all of it to import toilet paper? Any rational businessman would use some to sell in the black market, another portion to store in case the next batch is not approved, another part to pay off the cost of credit stemming from the delays in getting this batch approved, and then, only then, would they import a bit of toilet paper.

Obviously, this doesn’t fit neatly in a single paragraph, but something better, more comprehensive was required. Something along the lines of “extensive currency controls, labor regulations, price controls and other forms of State intervention.” Something like that…

You might think I’m nit-picking, and you may be right. Still – I really feel we need to get the story on the tragedies that have befallen Venezuelan companies. Saying it’s just about currency controls is kind of like reporting that “the Egyptian Pharaoh decided to let enslaved Jews leave the country because of a plague of locusts.” It’s simply not the whole story.

I think the piece short-changes the numerous constraints companies face. I also think the idea that they are operating at half capacity is not factually correct. Many companies are operating at full capacity – but their capacity is so small due to lack of investment, they can’t possibly fulfill the country’s demand.

Oh, and one last note: get some Venezuelan economists to opine on the country -there are plenty of them. There are even some in hoity-toity universities in the US. Let me know if you’d like some names. La patria se los agradece.

HT: Dr. Faustus.

1 COMMENT

  1. Your point is absolutely correct , outside reporting of Venezuelan news items is often very incomplete and short on details not doing justice to the news full implications , maybe because a tipical gringo’s attention span for un- familiar news mandates that it be kept short, simple and uncomplicated . This promotes a simplistic , black and white, cliche ridden understanding of Venezuela’s current situation . This leaves room for pious professionally ‘progressive’ scholars to pontificate on the virtues of the regime or to make excuses for its failings . At times the reporting is impressively good given space constraints ( specially by some magazines or top knotch newspapers ) but generally the reporting is dissapointing .

    • IBear in mind that, for most gringos, the notion of a toilet paper shortage is so beyond ridiculous that it staggers belief. After all, we have entire rows in stores such as Wal-Mart dedicated to paper towels and tp. Moreover, it is ubiquitous enough that teenagers use it to pseudo-vandalize their friends yards in the adolescent ritual of “tping” someone. Daytime television is rife with commercials expounding the virtues of this brand or that and how soft it is, the content of aloe vera, if it is 1-, 2- or 3- ply, etc. Given that a smaller portion of the US population ever travels internationally (beyond a cruise or a trip to Mexico/Canada, most never realze what life is like beyond the borders. So international stories tend to be brief and tailored specifically to what would interest/fascinate readers as something that would confound culaaural norms or expectations. In depth reporting on something gringos would find largely laughable?

      As for the attention span issue….I think that it is grossly unfair to stereotype all gringos as having SQUIRREL!

      • Sorry for the typos and general incoherence, punctuation problems, etc. Typing from a bloody bad android interface. See? Gringos have travails as well. #firstworldproblems

  2. Easy Tiger, the story was a throwaway line.The only reason the story is of ANY interest to ANYONE outside vene borders is because of the headline humor. Nobody really cares about exchange control abuses in a third world country. How often does the Venezuelan press report on local corruption matters common in many african or eastern european countries?
    Venezuelans are the only ones really affected by this disastrous government and very few of them are really informed about the issues: you expect the rest of the world to actually care that inflation in vene is 50%?or that the government is a kleptocracy ?

  3. Es interesante hacerle seguimiento a la “twiteresfera” chavista en estos días. Presentan un país de fantasía donde sobra el papel tualé, no hay desabastecimiento, las empresas socialistas están en plena producción y son rentables, y CADIVI entrega divisas a granel. Según los twitteros chavistas Maduro le torció el brazo a Mendoza y lo obligó a producir más y a rebajar el precio de la Harina P.A.N. Para ellos el que pidió cacao fue Mendoza. País bizarro, pues, que nos quieren pintar estos cínicos tarifados.

      • I think Alevre’s use of bizarro comes from the translation made from the Superman comic books, which had the bizarre world; a parallel world in which everything was a grotesque caricature of our own reality.

        bizarre: odd, extravagant, or eccentric in style or mode
        b : involving sensational contrasts or incongruities
        Synonyms: absurd, fantastic, crazy, fanciful, foolish, insane, nonsensical, preposterous, unreal, wild

        • Yes the problem is that is false friend, and the bad translation , and it is many Spanish speakers, just use the word, without knowing that is not same in Spanish. It is like I wrote “I’m sensible today” for “Hoy estoy sensible”… It happens a lot., bizarro in Spanish ifs generous. So the thing is in Spanish we have to use extraño ,éxcentrico.

          If the person writes in English could use Bizarre. If uses Spanish, it is making a mistake

  4. Outside reporting of news on any country is incomplete. It is the world we live in (thank you CNN, followed on by Twitter). Read ‘The Age of American Unreason’ and you will understand. Even here in the UK the BBC is becoming increasingly similar to a regional US news channel (say if a toddler dissapears it takes 10 minutes of prime time, meanwhile genocide, famine, etc may happen around the world, that will get 1-2 minutes and no follow up). It is what it is. I remember very clearly to this day, the BBC news on the day of the Vargas tragedy (+10s of thousands dead) well the opening news item of that evening on THE BBC was that one of the members of the Oasis band had been involved in a pub fight, the third item of the day was Vargas…(can’t recall the second). The Age of Global Stupidity is upon us, and in that context don’t expect any in-depth reporting on Venezuela from a regular newspaper (The Economist and the FT seem to be the only places to take refuge from this malaise)

  5. I lost respect to AP when they became yet another cheerleading media outlet of the Obama administration… right now they don’t care about actual facts. just like CNN. Now you have to see how they were repaid, When the Justice Department secretly got 2 months worth of phone records, and they were just friends.

    So this rant from Nagel comes as no surprise.

    It’s maddening to see how the media, not only in Venezuela but in the rest of the world does not seem to understand that they should not become a blind supporter of the government, eventually you’ll get bite in the butt.

  6. Well, I wonder:

    Do journalists in the English world have to follow at least one course of economics? Macroeconomics? Economic policy? Something like that? I doubt it.
    Most of them do not seem to care about learning the (economic, social) history of the countries they work in either.

    • Exactly! When I did my masters and they sit me in a Class–> “globalization” and mainly it was to explain how to make foreign exchange, what is the IMF, and the World Bank, , etc, I just went to My advisor to waive it. My fellow schoolmates, mostly Americans, asked me You don’t like the class? I said it is not that. The others: The Professors are great and all these things that we have no idea… and well I could not resist and said , well the thing is that is nothing new to me. “How come”, me: “well I already live and see that all the time”; “Did you work in an Multilateral organism? ” me “no”; “Then how do you know?”. I lost my patience “I am from a country when every day on the news, and the newspaper they are talking about how much do we owe, the forex, the international reserves, etc, in here they talk (unless you are into) the front page of a newspaper Who is going to win American Idol” –> and that was a true front page…

      • Well, I must have said this: it’s not just the English world. It’s worse in the Spanish one and let’s not get started with the specific Venezuelan market.

        In Venezuela you don’t see even charts about economic issues in standard newspapers. As far as I remember, we learnt to read and plot charts in 7 grade of school. Why can’t journalists work with that? Charts are just a visual artefact, but they can be eye poppers
        and they can help see things in perspective…and perspective is what Venezuelans lack.

        One of the issues is that most journalists out there are people trying to make a living in a market that is over-saturated (and of course, few people want to pay for it). A lot of those working for those agencies, even such as BBC, are free journalists competing with a thousand.

        Competition seems to be about salary and not about quality.
        Is it too much to ask if journalists had at least one course of macroeconomics, one of economic policies and one of what you just mentioned?
        And the other thing: if they go to a region X, they should by all means try to read a little bit about the economic and social history of that region.

  7. Venezuelans on the
    dole [a giving or distribution of food, money, or clothing to the needy].
    Help! I need to wipe my ass …

        • No one gives a $hit about Venezuela is because of the lack of toilet paper afterwards.

          Hugo Chavez always talked about wiping out the opposition. Now is an opportunity for Maduro to fulfill that pledge.

          Maduro was annoyed when he saw his face on some toilet paper and ordered the production of Henrique Capriles toilet paper. But they quickly found out that it won’t take crap from anyone.

  8. The TP shortage has to do with the fact that this revolution has made it possible for people to eat well, therefore needing more toilet paper. Either that, or iguanas have developed a taste for cellulose, or the drought has decreased the amounts of water needed for it’s production, or it’s all a CIA plot run by documentary film makers hell bent on having a stinky environment.

    • My GE mother told me once that it does not matter how much you ate, you would go to the bathroom and it would weight the same ( and there is a paper Do not ask me to look it up because I really don’t want to make sure about the statement)

  9. Not the first time there has been a toilet paper shortage. I lived in Caracas for a year and a half starting back in 2007 and at one point I found myself stealing rolls from bars & restaurants because I couldn’t get any in stores.

  10. Juan, your example of the empresario makes a subtle, but key assumption about the disconnect between the production sector and the government. You say that a rational empresario would do A,B,C. The government (Jaua’s recent statements about Lorenzo Mendoza come to mind) would say something to the effect that the producer should make sacrifices for the motherland. That is, produce at a loss. Maduro’s statement about burying the hatchet with Mendoza echo that disconnect:. I paraphrase Maduro referring to the meeting: “He had a capitalist model; we have a socialist one and we are convinced that only under socialism we can build the motherland.”
    So, the nuts and bolts you care about in the AP story are important, but the basic issue is that the government remains delusional about how markets operate. As long as the government expects producers to operate at a loss and have a sustainable market economy, we have a problem.

  11. respectable commenters and host bloggers here please be aware it makes NO sense to analyse events in Venezuela seriously. I understand Juan’s rant, but as others before have mentioned, Angelina’s operations or Beckam’s career plans are more important.

    …the toilet paper story is just another result of a cuban led master plan to have venezuelans distracted and busy looking for food, arepas, pollo, medicinas, repuestos, etc….

    Papel toale and water / electricity shortages make for a great distracting, and humiliating, combo.

    Only when we understand the root cause, will we attempt to look for the right solutions.
    Educar, educar y educar.

    Tell people in simple terms why their quality of life is being driven down on purpose, why the nomenklatur just gets more powerfull, rich and unaccountable, and why they (the enchufados) cant afford to loose power.

  12. Jesus, why is toilet paper the first thing to go in communist/wannabe communist countries? My Nicaraguan family tells me about the toilet paper shortage under the Sandinistas in the 80s and some Russian friends that grew up in the waning days of the Soviet Union also tell me about how sometimes toilet paper was in short supply. Is the New Man just supposed to go around with an unwashed bottom?

  13. When the Caracazo broke out I was on a business trip to the Netherlands , After a NY friend called to tell me what was happening I searched for news on the event in all the different national channels that the Hotel was connected to . To my surprise only the Spanish and Italian Tv had some coverage and while the BBC mentioned it almost in passing all other national channels basically ignored the event . People who seriously follow international news are a minority in any country , most simply go for the splashy cheap headlines or for news which are closer to home , the average reader or tv audience know next to nothing about Venezuela and just gets by using cliches and stereotypes (e.g. a land where there is a tiny minority of uber rich landowners who cruelly exploit a mass of hungry huddled peasants, with a band of brave revolutionaries who fight for their redemption ) . For the most part news reports are skewed to interest this ignorant average joe with frivolous or scandalous items . and yet there is always a not insignificant segment who are better informed and who do seek to know more about whats happening in Venezuela and other places . There are publications or news agencies that cater to this better informed audience and who sometimes surprise us with reports or articles which are really sharp and accurate . There are lots of people ( evidently not a mayority) in the US , Canada and other developed countries who know about Venezuela and follow the news with an informed interest. Anyone wanting to let the world know about Venezuela must have this audience in mind and forget about the average joe who here or anywhere else has not the slightest concern or understanding of things happening outside the narrow span of his familiar interests . The AP note had two parts , one where it referred to the toilet paper shortage and another where it tried to explain in more general terms why it was happening , Nagel’s complaint concerned the paucity of this latter explanation but everyones attention appear to have rivetted on the toilet paper issue which was never the centre of his commentary.

  14. I’ve been reading this blog for many years, and we all knew all along this disaster was going to happen! We knew WHY it was going to happen! Now that it is finally happening… we can dwell on how bad things are! Hmmmm. Now what? I think it is extremely important to note that Maduro is sending people to China and Cuba to learn how to govern (as though they would know what to do). He’s even looking for a solution from Polar? How can it ever be solved when they can’t seem to abandon the very ideology that caused this mess? Until they do things, will get worse, maybe irreversibly!

    Over the years, I relied on my belief that they would not want to be in power during an economic melt-down. I was wrong, although Hugo Chavez made a timely exit, didn’t he? He found a bus driver to take the wheel, and we were all forced on the bus. It appears to me that Chavrament can only come up with worthless long-term solutions! Who was it that said that “pride” is the last thing to fall?

  15. Juan, we don´t think you´re nit-picking but explaining the truth and reality of companies i our country. I´ll be sending your article to a local newspaper here, that (obviously) just mentioned part of the problem (hey, we need to mail-attack all those news agencies with your articles!) on their tiny reference to toilette paper shortage in Venezuela.
    By the way, if you do start “nit-picking” I think I know what you´ll be using… ;o)
    Abrazos,

  16. Maduro says he will flood the market with 50 million rolls of toilet paper. Let’s do the math. 50 million rolls for a population of 30 million. Uhm, that’s less than two rolls per person. That’s enough for about two weeks, maybe.

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