PANINI-nomics in Venezuela

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Benchmark of our woes
Benchmark of our woes

Over the past two weeks, Venezuelans have poured into the streets, but not simply to protest. Throngs are desperately trying to get the officially licensed sticker albums of this year’s FIFA World Cup from Panini.

Every four years, soccer fans the world over buy the officially licensed Panini sticker album in order to get a glimpse of which of their favorite football players will be summoned by each of the 32 national squads, and to find out which stickers are harder to get. But to us economists, Panini also sheds some relevant features about the state of the economy, as our own Gustavo Hernandez has recently written about.

As Gustavo explained, for this year’s Panini World Cup album, an five-sticker envelope costs 50BsFs, roughly 7.93$ if we apply the official (but increasingly rare) exchange rate. Back in 2010, for the Panini album of the tournament that was hosted in South Africa, the same five-sticker envelope had a price of 4.5 BsFs, or almost 1.05$ at the official exchange rate back – a price increase of 1011.1% in BsFs over the past four years, or a staggering 252,78% annual increase in the price (we ain’t Zimbabwe…yet).

Yes, stickers are not included in a fixed and representative basket of goods and services of the household’s consumption bundle, so it’s not a proxy for determining the inflation rate. Still, it’s a simple way of explaining how our purchasing power has been made more feeble after every FIFA World Cup.

Another interesting comparison can be drawn from assessing how much those same stickers cost in other countries, vis-a-vis their price in Venezuela. For instance, in neighbouring Colombia, an envelope of 5 stickers is costing 1,200 Colombian Pesos, or 0.63$. If we embrace the “Law of one Price“, putting aside trade barriers and the cost of transportation, not only are Colombians better off than we are (since they’re buying the same stickers more cheaply in dollar terms), but also our Panini-sticker-equivalent exchange rate would be around 79.37BsF for each greenback (almost the same rate at the black market prior to SICAD II). Will smugglers begin taking advantage of the difference in price between the two countries?

As we anxiously await for the tournament to kick-off on June 12th, let’s hope that by the time Russia 2018 rolls in, the Panini albums confirm that our economic travails are behind us.

1 COMMENT

  1. An increase from 4.5 to 50, over 4 years, is an average annual increase of 82.5% (certainly high, but a far cry from the 252.78% stated above). Taking the straight average of the overall percent increase is a meaningless calculation.

  2. In Brazil these envelopes costs 0.45$ each with today’s exchange rate, but they come with a “made in Brazil” written on them. Colombia probably don’t produce those envelopes, but Colombia has free trade agreements with most of world, what allows them to import goods cheaply to their market, whereas Venezuela has the worst of both world: it’s not a producer nor has free trade agreements with anyone. If you don’t produce these envelopes and don’t let they be imported cheaply, it will obviously be more expensive than in other markets.

  3. I call that, Zara pricing.

    I remember one time, I was going to travel abroad with my then-girlfriend, and she wanted a cute jacket from Zara. She thought it was kind of pricey, I thought it was outrageous. So I removed the VEF sticker from the price tag, and lo-and-behold, the were setting the VEF price of the clothing at twice the black market rate times the full-price tag in EUR.

    Then and there I decided, If government ever uses the Chaz! method on Zara, Pull and Bear and related corporations, I would not shed a tear.

    Good riddance.

    PD: The worst part is, we don’t even know who’s importing the Panini album and stickers. There’s always the chance SICAD II or even SICAD I dollars were used. Double-plus-whammy if the importer overbilled the load on the way in and is now overcharging on the way out.

    • I feel for you given that you were buying things for your girlfriend, but consider:

      1. How many bribes they had to pay to get that clothing to the store.
      2. Then the cost of security
      3. The difficulty of getting money back out

      Realistically, it seems about right that the cost of doing business is more than twice as much in Venezuela. Making every consumer disgusted with business owners is a large part of the tactic of Chavismo.

      • It’s not only “twice as much”.

        Clothing stores usually have a wide profit margin, that allows them to go periodically on sale (20% off! 30% off! 50% off!) and still remain in business.

        So, while a Zara store in Spain can pay even if they sell clothing at a nice discount on the EUR price tag, Zara stores in Venezuela (at least before the Dakazo) indexed their VEF prices using the full EUR price at twice the black market EUR rate, and their discount season put their price as the full price using the regular black market rate (instead of twice).

        1. They shouldn’t have to pay any bribes to get CADIVI dollars, since they decided to work based on double parallel rates, thay can just buy dollars in Cúcuta or contact any black market currency trader. I don’t think the GNB would charge higher nationalizations fee’s than they charge price controlled industries that also need to import (like Polar) and don’t price their wares at double the black market rate.

        2. They do have to pay more employees here, so they have like a couple of watchmen. On the other hand, a single spaniard employee could cost more than a whole store in Venezuela (or maybe two spaniard employees). EUR 500 a month (an hypothetical spaniard monthly wage I pulled out of my hat) is worth about ten Venezuelan minimum wages. So in the end the increased need of security personnel more likely than not evens out on account of the dirt cheap local salaries.

        3. There’s no difficulty in getting the money back out if they buy dollars in the black market. And it’s profitable too, considering they get at least twice as many black market EUR from every sale here than they do in Spain.

  4. It would be interesting to see how many cards a minimum salary would buy over time and vs. other countries. That´s a good indicator of how much the economy has decayed.

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