Breaking down Maduro-nomics

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Good ol' Joe Schumpeter - he's no Karlin Granadillo
Good ol’ Joe Schumpeter – he’s no Karlin Granadillo

Maduro. Sunday night:

“I have decided, once the Enabling Law is approved, to set percentage limits on earnings in every sector of the economy”

Really Nicolás? Every sector? How long is that going to take? Do you even know how many sectors there are? Are you going to apply the same blanket percentage to everything? Oh, and how is one supposed to calculate these percentages?

For example, depreciation – is everyone going to have to estimate depreciation in the same way? What about capital costs? What about companies with high fixed costs? What about the cost to bribe some National Guardsmen to get your container out of the port – stuff that doesn’t normally go into the books – are you going to take that into account?

Really, every sector of the economy? Oh, that’s not going to be a disaster. At all.

Thankfully you’ll have the Enabling Law to help you. Because right now you simply have no power whatsoever to control how much private businesses earn. Why, you’re just as powerless as a sloth in a jungle full of hungry eagles.

“… obligatory limits, such as those that exist in every country in the world.”

Hmm. Every country in the world? Are you sure that somewhere, perhaps in the Cayman Islands, or in Liechtenstein, there isn’t a business that can set its own prices and its own earnings, based on, you know, rational business decisions made by someone seeking to maximize their profits? I mean, I’m sure you’ve studied this, not to question you or anything, but I’m just wondering.

“There are going to be minimum profit margins on everything, as well as maximum margins.”

Thank goodness for that. Minimum profit margins! Why, you’ve solved the basic problem of capitalism, what with all those dastardly businesses that fail because of negative profit margins. Thankfully, here your brilliant bureaucrats will swoop in and make sure people earn at least the minimum margin. People not buying your product because it’s crap? Minimum margin! Cost overruns preventing you from selling at a price above cost? Minimum margins! It’s so easy.

“We will also use the Enabling Law to put in jail those people receiving dollars from Cadivi and using them to speculate, and steal and loot the people.”

Well that’s a relief. Because, you know, there are no laws about this at all.

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I hate to say this, because it’s painful for those living through the nightmare that is Maduro’s Venezuela, but the deeper he digs his own grave, the more likely it is that the solution is just around the corner. Think about it: what would you think if Maduro began making sense on the economy? If he started making the right decisions? Wouldn’t we be more worried if he was making sensible choices, if he was actually making the Revolution viable?

At the rate he’s going, even chavistas don’t give him more than a year.

1 COMMENT

    • He is not making a mistake. He is in a fight to the death. And he might win. He is perverse, like his Cuban mentors.
      He created the “guerra economica” by withholding dollars, the prices went up; by force he made prices drop; everybody is “adjusting” prices – even without government intervention –so Maduro appears as a hero for winning the “guerra”. His popularity grows; the MUD, with the help of those adjusting prices voluntarily and with the help of “intellectuals”, including this site’s posters, gets fewer votes than madurismo and Maduro consolidates his power. That the scenario he is gambling on!
      If he wins that is it. Rebellion? From whom? With what arms?
      Venezuela’s last chance is Capriles. Go knocking on doors asking for votes, so that you, later, will feel that you did everything you could.
      After this election there will be no other opportunity. If Maduro wins Venezuela is in for at least 50 – 75 years of darkness.

    • When that “mistake” becomes destroyinh my chances of buying a house,a car,getting a good job,supporting my family and who knows,maybe a 1 week vacation a year, you don’t really want to sit back and let him keep making the mistake.
      Specially with the malandros,scarcity and inflation stalking me at every corner.

      Sadly,you’re right. Venezuelans have no tools to fight the system and the tyrants.
      So let’s bend over and watch em work.For 6 more years at least

  1. I don’t want to nitpick the term “Maduro-nomics”, but technically you add “nomics” to the name of someone who has a very clear vision about the current state of the economy, and as a consequence that person has defined a list of long-term economic policies designed to boost the economy, to create revenue, to create jobs etc. None of that seems to be happening.

    But I don’t see that no one in the government has the knowledge to even comprehend how modern economies works, let alone come up with a solution. Oh no, not by a long shot, ideological wishful thinking is what they have been doing all along.

      • Yes I’m aware, but that’s sort of my point isn’t?

        They want to establish by law what they can’t control. My guess is that someone in the government knows what kind of economy policies are needed to get us out of this mess, but they would rather sink the country in the ocean than to enact economy policies that contradicts the legacy of their beloved leader.

        • Communism is a religion. They are communists. They have been communists all along. Communists do not care about the well being of their countries. And learned people help them along the way!

    • Jeffrey : In their mind profits are evil but losing money is good , a form of socially responsible generosity . thats why all govt run enterprises lose money , they dont say it but they feel that money making is the cause of all injustices and that if they erradicated all venal thoughts or endevours then social justice would be assured in the world . They criminalize luchre . . strangely enough they appear to make an exception of selling oil at very high prices , where the profits are made from selling it to capitalist countries. The law by the way does creates a ceiling for profits but never a floor , you are free to lose as much money as you like. .Funny however how they ( and most of their Venezuelan followers ) hallow sumptuary consumption , its the lands real religion only they prefer not having to pay for it !!

      • Bill,

        They don’t actually think it through, logically. They just want what they want, and think that makes it a natural law of the Universe.

  2. “I mean, I’m sure you’ve studied this, not to qquestion you or anything,” –>Well in a Martha Hanaecker’s panfleto maybe, because I don’t think he even got High School Diploma

  3. Me pregunto qué fórmula usarán para fijarle el margen de ganancia a un plomero, o cualquier otro servicio… 30% de ganancia, suena bien. Sobre qué específicamente aplican este margen? El costo de los repuestos de la moto que deprecia al ir a reparar una cañería? Los insumos que no produce, pero usa como bien complementario a su servicio (e. g., llaves de paso)? O tal vez en base al “imposible-de-cuantificar-objetivamente” mix de habilidades, conocimientos y demás aspectos del capital humano que el Sr plomero ha acumulado a lo largo de su vida y le permiten arreglar el lavamanos de tu casa? Sí, eso debe ser.

  4. Take a look at this tweet of the Cuban Ambassador in Venezuela (hats off to @venpublica)

    Rogelio Polanco ‏@CubaPolanco 12 Nov

    Querían guerra #FASCISTAS ? Pues les advierto que lo hecho por .@NicolasMaduro hasta ahora no es mi el 1% d lo que va a hacer. #VamosConTodo

    • Wow…now I took a look at the tweets of that idiot. It’s really amazing! The guy is behaving like no ambassador could behave ever anywhere else!
      It’s completely insulting!

    • The problem with some of these guys seems to be that – aside from the usual military indoctrination which leads to the perception that all big problems can be solved with bullets – they fear capitalism as an unforgiving autonomous and competitive system. And really, the economy is a beast. I am not surprised they want to be ringmasters, but they are gonna get mauled!!

    • you should fix your compass stat, cuz Ayn Rand is not an economist, and she is not an advocate of socialism, neither she claims that big government is the solution to every ailment known to mankind, just like these wacko socialist that are running the country.

      • Man, you didn’t understand what geronl was saying. It’s not because he mentions her best-sellers that he claims she supported the ideas appearing in those books. She writes about those ideas, that’s all.

        • Pardon me, but for me geronl was seem to implying is that NM was somewhat basing his decisions on Ayn Rand’s novels. Or was he talking about Joe Schumpeter? Because we are all talking about NM.

          Now I’m not sure and thanks for pointing it out @Kepler

    • I can totally foresee a comerciante pulling and Ellis Wyatt and leaving a note hanging from his Santamaría: “Lo dejo como lo encontré. Tómenlo. Es todo suyo”.

      @jctt: I believe geronl meant Maduro is taking notes from Wesley Mouch, not from Hank Rearden or Dagny.

    • Weisbrot is truly grasping at straws with this one. In a way, I find people like Weisbrot as more evil than the Chavistas in power. Most of them probably started out with high ideals (albeit, misguided), and became corrupted by the system they created. Weisbrot’s education and training is such that he knew all along what would be the result of Chavismo, but he chose to ride the gravy train anyway, making him an intellectual traitor to reason.

          • Sanity, I guess. Maybe economic measures such that that official rate and the black market rate converge around 25 or something. Not an economist, though.

          • What would have to happen for the black market rate to go down?

            The question could be IMHO, What would have to happen for the black market to disappear at all. That is what would it take to eliminate the need for a black market, which exist only to satisfy the demand of foreign currency that otherwise is being denied by the government.

  5. Cuba has a Vice Minister of Finance and Prices. Maybe Fidel told Maduro he needs to control prices and Maduro followed orders.

    The next step is to create a huge bureaucracy that can check every financial transaction in Venezuela to make the price is within bounds. This Ministry of Prices may employ 1 out of every 4 Venezuelans given that each person may make 25 purchases every day.

    I wonder if there will be limit on the price of bribes?

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