The $776 lie


Nicolás Maduro raised the minimum wage by 15% last night, starting December 1st.

Quickly, government news agencies began spewing the lie – there really is no other way to characterize it – that this was the highest minimum wage in Latin America, equivalent to US$ 776. The rub lies in the fact that this conversion is calculated using the official-yet-impossible-to-find exchange rate of BsF 6.3 per dollar – if you were to use the market exchange rate of BsF 102 per dollar, you get a minimum (and I mean really minimum) wage of US$ 48 per month.

For anyone minimally informed (pardon the pun), chavista math is just fiction. But not for certain foreign media outlets – the $776 lie is being voiced somewhat uncritically by, among others, Clarín, Terra, AP, La Tercera, Infobae, and even Reuters. (Note: The AP has posted a corrected version in English)

This might get chavismo some play abroad, but what matters is how it plays at home. And here is where lying becomes bad politics.

Imagine the people standing in line for hours waiting to buy basic goods. Imagine, thanks to the increasingly government-dominated media landscape, them listening to official broadcasts saying that Venezuela has “the highest minimum wage in Latin America.” How do you think they feel? Will this make them feel closer to the government, or more distant?

Lying creates a gap between those who lie and the people who know the truth. Lying works as long as there is a reasonably large segment of the population that is skeptical, or even ignorant, about the truth. But when people know the truth, no amount of lying will help your cause. It might end up sealing your fate.

Lying to those who know the truth does not generate empathy. It destroys it.

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    • That was my own question. How does he even know that? It’d be pretty nice if he told us a story about how he was shown the books where all the parallel accounting is kept.

    • Perhaps Mark Weisbrot was shown an old promissory note from Fidel Castro to Hugo Chavez: “Dear Hugo, I owe you 40 billion dollars, love Fidel…!” ??? That should settle the accounts…..

    • At the very least he doesn’t come across as half the dick I thought he was. Granted, he’s still a believer in the government’s numbers, but all in all a reasonable assessment.

      • Yes, but he leaves out some fascinating tidbits, some of which are implied. A few that stick out:
        * There’s a SICAD I? What about SICAD2, which is more realistic (who is still getting SICAD I or the 6.3 rate?)
        * His previous predictions that inflation had peaked a year plus, or so ago.
        * His assertions that last devaluation was in 2/13, despite stealth devaluations later that same year.
        * On previous devaluations (he mentions five, in the past decade…which is not exactly a positive indicator itself), that they had minimal effect on inflation, which had more to do with the fact that the government still had dollars at that point to buy in imports on price controlled goods to satisfy demand instead of the normal course of increased price pressure.
        * “Las estimaciones privadas apuntan a una tasa cercana a 30, si se dejara flotar la moneda. Pero, ¿qué tal si se apuntara aún más alto, digamos a los 40? A esto se le llama “overshooting”, o rebasamiento.” 30, at this point is a conservative “low” number. Consistent inflation at this point would ally itself to something closer to the SICAD2 rate, or in the 50s. This also aligns with the “estimaciones privadas” that I am familiar with, and with sustained inflation, will only increase over time.
        * The $40 billion, which y’all are rightly questioning. I think this is both pre-bond payments in October and ignores short term illiquidity of the gold reserves that make up a majority of official reserves at this point, or close enough. Additionally, it relies on “estimates” of black funds, which may or may not be realistic.
        * He mentions the parallel rate explicitly, which, I think is a good thing, but then says that the rate is the cause of inflation, not the result of inflation, the casa de moneda pumping out money, a pegged exchange rate and shortages of goods because of said exchange rate.

        His editorial line may have changed slightly insomuch that there’s some uncritical criticism of the government, but, its shifted even less than some of the recent articles on the previous unabashed cheerleading of venezuelanalysis.

        • Yeah, but almost everybody in this forum agreed when Maduro announced the creation of the unique fund that would replace all para-budgetary funds and that he would deposit just 750 millions dolars in it, that there was nothing else in those funds (Fonden, Fondo Chino, etc.). So, where are those 20 Billions Mark Weisbrot mention?. Fonden still exist? doesn’t Maduro announce its desapearence?

          • Well, given the government’s past track record, is it conceivable that perhaps they weren’t entirely honest or completely fabricating numbers, data and other information?

        • What struck me is his willingness to admit many of the faults with the current system, but my opinion was lazy I suppose. I suppose what we want to hear is something closer to “we need to allow the exchange rate to float” rather than Rafael Ramirez’s line of “we need to unify the rates”. It’s easy to take every inch ceded by a chavista as an impressive sign of improvement. Despite the indications of chavismo crumbling it is surprising how far we are from real progress, if unifying the rate is so far from a possibility.

          • At this point, to retain any sort of credibility, they have to say “something” is wrong. With so many contra indicators, not acknowledging that there are some issues (regardless of how they are downplayed or made to be minor) would be like saying a single wall constitutes a house. No rational person would buy it.

    • Wherever the $40, billion are, some of those dollars are trickling down to Dr. Weisbrot/WhiteBread and Eva Golinger. When they no longer receive their money, they will know the Revolution is out of money.

  1. Let’s assume that the last raise on May 1 was used as a catch up for the inflation since January.
    If we take an avarage inflation of 5% monthly since May (I believe it’s higher) then that is 35% by December 1.

    That 15% is going to go a long way in filling the stomachs of the pueblo.

    • Yes and no. Numerically, that will make some sense.

      However, the inflationary numbers measure past inflation whereas the allocation of an increase is forward looking insomuch that there is small lag effect between application and when it actual generates results for the consumer.

      The real problem here, however, is that this either accelerates transactions (monetary velocity) or will be supported by pumping more cash into the system, or, more likely a tandem of both. Either is inflationary and will not resolve the problem but only serves to exacerbate it. It is a variation on the old parable of the snail inching his way up the side of the well while continually sliding backwards, except that additionally, there is a bricklayer also on top continually adding more bricks to the top of the well.

      The fixed prices being chased by more bolivars will only lead to more scarcity/demand and less production.

  2. Weisbrot announces that the government is just too darn democratic to fix anything. So it’s not because privileged access to dollars at a cheap rate makes the party bureaucracy rich? I guess not, because that would be a “special interest”.

    ” La mayor parte de estos problemas emanan del sistema cambiario disfuncional en el país. No obstante, las encuestas señalan que la gran mayoría del público -hasta 80% en algunos sondeos recientes- rechaza una devaluación para poder remediar el sistema, y parece ser esta presión por parte de los electores -no por parte de intereses especiales- la que impide los cambios necesarios para recuperar la salud económica.”

    • What he fails to notice is that there is an special interest behind the reluctance to implement a new currency system, this special interest is the PSUV interest.

      As Aristobulo Isturiz said, if we unify the currency we would be overthrown (“nos tumban”).

      Nicolas Maduro responding to the special interest of the PSUV is neglecting his duties for the country and letting the crisis to go deeper so the PSUV can remain in power.

      That’s the special interest Mark Weisbrot fails to see, or doesn’t want to admit.

      • “As Aristobulo Isturiz said, if we unify the currency we would be overthrown (“nos tumban”).”

        On I.R. Baboon (Jaimico)’s defense, he actually said that if the currency exchange control dissappeared, then the chavismo was overthrown, meaning that what the chavismo truly cares is about controlling the amount of currency that can be bought, regardless of how much it’s paid for dollar.

        The actual number in the oficial exchange rate doesn’t matter for any more thing than trying to sustain a lie, in this case, the 776$ fiasco.

        The thing about the system that afflicts the economy and the source of all our current woes is the fact that a bunch of assholes have a monopoly on a highly sought commodity.

        Take the control (And the monopoly) out of the equation, and the economy can recover, again, regardless of the cost of the currency.

  3. Imagine the people standing in line for hours waiting to buy basic goods. Imagine, thanks to the increasingly government-dominated media landscape, them listening to official broadcasts saying that Venezuela has “the highest minimum wage in Latin America.” How do you think they feel? Will this make them feel closer to the government, or more distant?”

    Very often, it actually makes them feel closer, Juan.

    I’ve heard things like: “bueno, pero si mi presidente hace tanto para traernos esta comida, lo menos que podemos hacer es esperar en la cola”.

    Re: the “highest minimum wage in the continent”, I wouldn’t be surprised to hear something like: “bueno, si asi estamos nosotros, que tenemos el sueldo mas alto de la region, imaginate como estaran los demas”.

    Propaganda goes a long way.

        • People will continue to be managed by powerful social control mechanisms until a destabilising event/ events ends this status quo. Then whatever happens happens.

          Politicians are the one called for a higher standard, aspiring statesmen at least.

          The lack of messaging on the reasons why we are facing a social explosion and how this regime is taking the nation down the abyss is what worries me the most. – granted, the opposition and the country’s intelligentsia (is there such a thing in Venezuela any more?) are not main players in the coming stand off between militares and colectivos, between the cuban puppets and the “nationalists”, between the factions among chavismo that will fight increasingly hard for a diminished booty.

          However, it is the oppo and the intelligentsia who should be stating the obvious everyday for the record and for those who could be swayed to be influenced.

          The foundation for a potential rescue of the nation should be laid down now once the circo is burning down.

  4. Daniel; I was just going to make the same comment. Chavistas making minimum wage get their info from government media only. Anything else is treason. They believe we’re rich and have a better life than people in other countries.

    On Sunday someone wrote in the aporrea forum about PDVSA giving rides to people (the Jaua nanny case). He only got 4 responses basically asking where he had gotten such information and that was the end of it. They only see what the government lets them see, only hear what the government tells them. Anything else is just a lie.

    Many Chavistas feel that they’re doing better than they would with the opposition. One wrote in reference to the 15% increase: “Si hubiésemos votado por Capriles lo mas probable es que muchos estuviésemos dentro de unas fosa común o buscando a familiares desaparecidos, no tengamos duda de eso”. So, what can we do to convince them otherwise? I have no clue.

    • Well, chavistas at this stage are a lost cause. I’m focusing more on wavering voters, the folks in the middle whose beliefs are closer to the opposition but who still feel an emotional connection to chavismo.

        • Interesting. Poor guy is probably torn up inside.

          This part made me chuckle…what nonsense.
          “Para mi el máximo legado de Hugo Chávez era el real establecimiento de la democracia.”

          No, his ultimate legacy is the rotten state of the country and a regime increasingly hostile to basic human rights.

        • The idea that Chavez would have stayed the exact same course if he were still alive is not even implied…Because they still think that criticizing el comandante is tantamount to blasphemy.
          I always thought it was a pity that Chavez croaked before he had to get his hands truly dirty, and his pseudo canonization is proof of that.

  5. Here is an analyst who first states that Venezuela is currently subject to capital flight then states:”Evidentemente, algunas personas saldrán perdedoras de una devaluación; no solamente quienes hicieron fortuna, legal o ilegalmente, de su acceso a dólares preferenciales, a 6,30 o 10,60. Esos serán los mayores perdedores.”

    Who is this fellow kidding? Those “perdedores” are laughing all the way to a bank in Miami. As GRO above said, he doesn’t come out as half a dick. He just comes out as a full blown one.

  6. “Lying creates a gap between those who lie and the people who know the truth. Lying works as long as there is a reasonably large segment of the population that is skeptical, or even ignorant, about the truth. But when people know the truth, no amount of lying will help your cause. It might end up sealing your fate.”

    “Ignorance is the root of misfortune.” Plato.

    I call silly the people who love to raise those Bolivarians thieves to the status of ‘evil geniuses’ and call them ‘incredily clever’, ‘very talented’, ‘astute demi-gods’, ‘wisdom kings’ etc. The cold truth is that they
    were only able to conquer everything they did in our third world backward, backwater, uneducated, socially and economically disadvantaged countries because of the people’s ignorance and naivety (including from the so-called ‘elite’). They would not have been able to achieve 1% of what they did in Latin America in any civilised and developed country in the world. Thus, I refuse to call them ‘evil geniuses’, because there is no merit in enslaving the defenseless. As Nagel said, those psycopaths will start to fall when the people awake and understand their methods and how their lives could have been so much better without the Bolivarian chains around their ankles. First and foremost, how freedom can taste like!!!

  7. Primero de Justicia’s leader says he wants a higher salary increase for everyone. Voluntad Popular talks about 45% for all.
    Is the purpose to drive the government into doing that and thus getting into more trouble? Really?

      • And yet I mean that question. I wish there were a single journalist who could ask Borges that question in front of the cameras:
        “Sir, do you really think salaries should keep going up even if that will lead to higher inflation and and and as economist X and Y said or are you saying that so that the government is forced to take that step?”

        But then I reckon if journos did that to a politician in Venezuela, something like this would happen:

  8. When I want to put the crappy Venezuelan salaries into perspective (or go into the whole “extraction smuggling” bullshit) I put the Colombian minimum wage in VEF.

    The 2014 Colombian minimum wage is 616,027, and right now VEF 1 = COP 20.60, which means a regular worker in Cucuta can get at least VEF 29,904 a month. For comparison’s sake a Venezuelan minimum wage is less than VEF 5000 a month (including the recent raise) and a Senior Engineers in Caracas are being recruited with salaries in the range VEF 20,000 – VEF 30,000 a month.

  9. This would be funny if the country wasn’t sink in such a shithole, Maburro tries to stretch the lie even further, claiming that minimum wage isn’t 776$, but 1097$:

    At times like this, is apparent that this idiot is clearly trolling venezuelans.

    Also, the regime’s cooking a fraud even bigger and dirtier with 2015’s elections, if this other statement by the usurper could be taken seriously:

    I guess they’ll try to cheat the elections like the castros do every time in pedophile-island, claiming that they won with more than 100% of the votes.


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