In Time Magazine, Girish Gupta gets a rare chance to expose Distortioland in all its contradictory glory.
Venezuela [is] simultaneously one of the most expensive and one of the cheapest countries in the world: take-out noodles can cost $30 or $3 depending on whether you have access to the local currency or US dollars; a night at a five-star Marriott hotel costs $700 or $70. It is the same principle that [allow those who have] access to US dollars, to fly so cheaply…
Some business visitors here are paid expenses in US dollars at the official rate even though they obtain their local currency on the black market. One young European business consultant, who asked not to be named, was able to pay off his entire student loan after a month’s work in Venezuela. Those with foreign health insurance plans that pay out in foreign currency are able to make a more than ten-fold profit on claims. For example, a visit to the doctor can turn a profit of $115. This is because an appointment costs around 800 Bolívares, which is noted on the claim form. The insurance company then converts this at the official rate and pays out $127. But, if the patient had initially converted US dollars on the black market to pay for the appointment, the actual cost of the vist would have been around $13. Similarly, with such arbitrage, an MRI scan can net a profit of around $500. A week-long stay in the hospital can be even more lucrative, bringing in more than $10,000. This has turned a few foreigners here into hypochondriacs.
I know how hard it can be to get an editor to go for one of these exchange control stories. It’s abstract, it’s confusing, it’s hard to fit into a cookie cutter narrative. So hats off to GG for getting this into print. Not easy. Not easy at all.