We Guayaneses Were Into Basic Goods at International Prices Before It Was Cool

The government's decision to allow basic staples to be freely sold in formal shops at international prices has been a novelty in Caracas this week. In Ciudad Guayana, they've had it for months.

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It’s one of the great frustrations of my profession: for the most part, economists can’t run experiments. We’d love to take out a petri dish and add, say, a bond swap in a certain oil company to see the market’s reaction. It would be so cool. But it can’t be done, so we rely on models and are always on the lookout for real world situations that replicate an experiment somehow.

That’s “el deber ser”, but that’s not how chavismo rolls. Their notgiveafuckness allows them to try out half-baked ideas on a grand scale without bothering about trifles like feasibility studies. Chavismo turns whole cities into petri dishes with their “pilot plans”. Often, these are horribly misguided, so being the test case means you’re the first to suffer the consequences when it all goes wrong.


When Vielma Mora announced his plan to supply Caracas with imported products at international prices, I got another bit of hipster frisson: we’ve had that for months.

The farther the city is from the capital, the crazier the experiment.

Enter Ciudad Guayana, truly a petri dish of a city, we sport a non-functioning public transport system called the Transbolivar. Actually, whatever is going wrong where you are, we were way ahead of you: we had water and electricity rationing long before “El Niño” was even a thing, the smart patrolling started out in 2013 for us, and we had the chronic product shortages way before it made it to the Caracas headlines. Malaria, difteria…you name it, we set the trend.

So when Vielma Mora announced his plan to supply Caracas with imported products at international prices, I got another bit of hipster frisson: we’ve had that for months.

When our (literally) starving market got even this tiny, insanely-priced new source of supplies, everyone freaked out. Suddenly the shelves were full of rice, pasta, wheat flour, cooking oil, even sugar.

Check out the date...
Check out the date…

The first week, Whatsapp chains like this started going around. Excitement wore out quickly, though, as people quickly realized that at these prices, products just don’t run out.

That’s the crazy thing that happens when no one is forced to sell at a loss. Once I was in a birthday party and all the cumpleañera could talk about was the cake, and how she was able to find all the ingredients with ease, no shady intermediaries, no phone calls. Some bachaqueros even got some, but it was pointless: you could find it cheaper at the stores.


All they did is bring bachaquero prices indoors.

This forced the bachaqueros to actually compete and lower their prices, but just a little. When the dust settled, the lines were still there. The hunger, too. In my house, the Brazilian stuff is a complement: we bought sugar a couple of times to make juice, and once we made an pumpkin cake with the wheat flour, but that’s about it.

All they did is bring bachaquero prices indoors.

The pasta is sticky, the wheat is salty and the sugar sometimes comes with some kind of metallic residue you have to take out with a magnet. Right now, people are so desperate no one is worrying about sanitary regulations or proper permits. All the packages are in portuguese only, and the are no sanitary labels to be found. The parties involved (lots of GNBs among them) can get away with it because the bar is really low for them, their competition are the bachaqueros, who aren’t afraid of selling you a carrot for toothpaste.

So, Caraqueños, don’t get your hopes up. This kind of piecemeal reform, that happens without an overarching strategy to overhaul the productive system and really get on top of pervasive price distortions, isn’t really much use to anyone.

If you happen to be rolling in cash, there’s some marginal benefit to being able to buy this stuff at a store rather than from a black marketeer. But for the vast majority of people, little will change: tomorrow, you won’t be able to afford what you can’t find today.

Se los digo yo que vivo en el futuro.

 

22 COMMENTS

  1. In the old Soviet Union and their satellite nations there were always secret stores where government officials could buy their food at reasonable prices. There would always be a sealed-off warehouse with a hidden door. There must be something similar to that going-on in Ciudad Guyana where PSUV types, and others designated by the party, can buy their staples without having to stand in lines for hours on end. It is an integral part of living in a socialist state, some or ‘more’ equal than others. Find that location/store and make it a focal point of all future demonstrations.

    • My contact in Caracas says that the heaviest people are PSUV management or gubmint officials who “sin colas de espera”. They get stuff (often from people that TAKE it from) and never miss a meal. Ever.

  2. Good article! I think there’s more to take from this announcement though. What are the implications in terms of policy change? Is this a move towards eliminating price controls without (of course) recognizing their failure? To me this is HUGE

    • I wouldn’t go so far as to say this is an official policy change. This smacks more of “we gotta do something or we’re toast”.

      And, of course this being Venezuela, someone is likely to be making bank on this.

      • It could also be that one enchufado’s getting filthy rich out of this.

        Let’s not forget that chavismo’s only drive is to get as much dollars as possible in the accounts of their so-called leaders.

  3. So, while there is little or no milk for Venezuela children US farmers have dumped 43 MILLION gallons. There is worldwide glut of milk.

    http://time.com/money/4528053/milk-glut/

    Why? Because it is a comodity, subject to occasioanl gluts due to over supply, just like oil. What?

    http://www.npr.org/sections/thesalt/2016/08/05/488708017/why-do-milk-prices-spike-and-crash-because-its-like-oil

    So, do you prefer low milk prices due to market conditions, or no milk at controlled prices.. tough decision.

  4. I still don’t get it why only obscure brands not known even in Brazil appears in Venezuela.

    This is the site of the largest supermarket chain in Brazil: http://www.paodeacucar.com/ , with almost 2,000 stores, I defy anyone to find just one of these products being sent to Venezuela there.

    Maybe, as Dr. Faustus suggested above, the ruling elite keep the good brands for them, while the bad ones go to the civilians? This is bizarre. Oliver soap? Trigolar? WTF!

    • It seems likely that “bad brands”/”unknown brands” would be cheaper for the buyers in Brazil. Plus, Venezuelan consumers would likely take ANYTHING, so it becomes a dumping ground for all kinds of crap. Remember when flameproofing became a requirement for baby clothing in the developed countries, and then Venezuela suddenly became swamped with “flammable” baby clothing?

    • It’s called “Dumping the garbage no one buys in Venezuela, they’ll buy it anyway because their government fucking starves them to death”

      • Ulamog and Daveed,

        I undertand your reasoning about cheap products being preferred, but there are ‘regular’ cheap products in the link I posted above too that could be sent to Venezuela, what is confusing is that whoever are importing these products to Venezuela seems to prefer very obscure and unknown cheap products, even without sanitation labels, as the author of the text has pointed out. It looks shady.

        • “Unknown/possibly unsanitary” items likely offer greater profits to the smuggler/importer, because they would be sold in Venezuela at a similar price but can be sourced in Brazil at a lower price. Venezuelan consumers likely do not have a choice: it is the “unknown/possibly unsanitary” items or nothing.

          • Yes, but do you understand that you can’t export to another country nor sell in Brazil itself without sanitary labels? Those products are not only cheaper, they seem to be illegal too. That’s my point.

          • That’s where good ole’ corruption comes into play, Marc, I am not against a product that’s cheaper, I am against a swindle, like bachabasuras selling pots and bags full of lime instead of milk for example.

            The authorized products might be cheaper than “deluxe brands” but the swindles are dead cheap, while you can sell ACME rice at 2000 Bs after buying it for 1000Bs, the unlabeled and full of gravel replacement for pigs can be sold for the same 2000 Bs (Because people will buy it no matter what) after buying it at 100 Bs, it doesn’t matter that a couple of people end dead after eating that shit, what the bachaquero cares about is that they took the money, period.

            The bachaquerism is the chavista’s version of capitalism, loaded with all the incredible bullshit and ignorance they have on the matter, buy cheap supported by your “revolution” and sell as high as you want, and no one will complaint because they’ll otherwise starve to death, because that’s what chavismo is about.

  5. Here’s another question.
    At what exchange rate are these products being brought into the country?
    If 90+% of the US$$ are being allocated at the Bs.10 rate and only a small proportion at the DICOM rate of around Bs.660 them one might suppose that some enchufada is making a HUGE amount of money on the difference.

    And these imported products are everywhere these days even here in Margarita. Almost every small store & bodegon has products at huge prices.

    Very interesting!
    The last big theft before they collapse.

  6. “If you happen to be rolling in cash, there’s some marginal benefit to being able to buy this stuff at a store rather than from a black marketeer. But for the vast majority of people, little will change: tomorrow, you won’t be able to afford what you can’t find today.”

    An important point.

    That marginal benefit, one that seems likely to come regardless of who is in power, is a scary thing to contemplate. Can the vast majority of Venezuelans get by with subsidies OR without them?

  7. Nah, you don’t need to be rolling in cash to obtain some marginal benefit. Let’s start with the fact that people who are rolling in cash either do their grocery shopping in Miami or Aruba and have the stuff sent over in freight; they were never really affected by the crisis.

    As for the ever-shrinking Venezuelan middle-class, buying imported goods at the supermarket -and paying with your debit/credit card- instead of going to the not-so-hidden black markets in Petare, Coche, Quinta Crespo or elsewhere around the country and risking theft, are a bit more than “marginal” benefits.

    Those who obtain marginal benefits are precisely the poor, since they are the ones who most desperately need to save a few hundred bolivars when purchasing things. While a poor person would probably prefer to wait in lines for the subsidized products, we both know that at any given moment, they might need to head to the bachaqueros to buy toilet paper or their child’s milk or diapers, and having the benefit of paying a bit less for those “emergency” moments is not that bad.

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