Ever wonder why Venezuelans, such as the poor lady in this picture, have been jumping ship en masse for the last couple of years, sometimes preferring to live as derelicts in Bucaramanga rather than spend another day struggling in the country? Bloomberg just weighed in with its newest update of the Misery Index, showing that our dear nation just won a triple crown of massive, humanitarian-crisis-inducing economic disaster.

The Misery Index is a simplified macroeconomic indicator, developed by the late Arthur Okun. Simplicity is its virtue, as well as its downfall. All it does is add together two key variables: the inflation rate (other things equal, rising prices lead to reduced purchasing power) and the unemployment rate (which is directly related with all key measures of welfare).

By consistently posting the highest inflation rates in the globe, Venezuela has now won the dubious title of World’s Most Miserable Country three years running. Inflation dynamics got out of control amid the crash in oil prices of 2014, which led to frenzied money-printing (dignified via the the IOUS that PDVSA issues the Central Bank.)

The part I like the most about the Bloomberg methodology is that, instead on relying on official backward-looking statistics (which can be either outdated, manipulated or just completely non-existent), the inflation and unemployment figures are an average of a broad survey that includes inflation and unemployment forecasts from Wall Street research firms, local consultancies, ratings agencies, IGOs such as the IMF and the World Bank, etc. This ensures a greater degree of reliability on the figures and a lesser chance of biases in either direction. Besides, I just love when a reputed news agency backed by the global professional community puts newspeak-blurting communist pigs to shame.

Based on the consensus forecast of 492% inflation and 7.8% unemployment, our misery index is sixteen times more miserable than the second most miserable misery-hole’s. 

The lower reaches of the Bloomberg index are populated by a bunch of rogues, each with different reasons for its misery.

Uruguay has met some headwinds on its transition away from subsidy-fueled populism. Brazil is struggling to pull out from its worst economic crisis in decades. Spain is renowned for its high structural unemployment, even though it’s currently at seven-year lows. Turkey’s economy is faring poorly amid President Erdogan’s power grab. Greece is, well, doing so bad that Telesur can’t help but feel sorry for them. Argentina is in an uphill battle to turn around its economy. And South Africa sits at a crossroads between the need for structural reform and breaking down to populist nationalism.

None of these comes anywhere near to to dreaming of having a chance of challenging the undisputed world champion and #1 seed, Venezuela: based on the consensus forecast of 492% inflation and 7.8% unemployment, our misery index is sixteen times more miserable than the second most miserable misery-hole’s. 

Venezuela’s reading is off the chart. Like actually off the chart: they had to put us on our own, otherwise you’d barely have been able to see the bars for the 2nd through 10th miserable countries:

We are quickly reaching to the point when Venezuela stops being known for its oil, beauty pageants, baseball and MUNs. Nowadays it seems that Misery Porn is our main (and only) claim to national pride. Oh, and that stupid skier everybody seems to be talking about is making me miserable as heck. But I digress.

But it’s not just the bottom of the pack that should interest us, it’s the top as well. Market-driven economies run by accountable technocrats know how to strike the right balance in the trade-off between inflation and unemployment. They do so through rules-based, dynamically-consistent fiscal and monetary policies and inclusive institutions.

Not every government on that list is a democracy, but every government on that list has an economic and monetary policy frameworks put in place by people who know wtf they’re doing: they don’t spend money they don’t have or print money out of control, and are successful in making sure all economic actors are playing by the book (including the governments themselves) usually tend to show both low inflation and unemployment. There’s a few outliers, such as Thailand, which show unusually low scores on the Misery Index due to unique ways of calculating the unemployment rate.

 

14 COMMENTS

  1. Inflation and unemployment are just 2, insufficient factors to measure any “misery index”. Misleading too.

    What a gross over-simplification!

    To begin with, inflation is somewhat quantifiable, but unemployment is much harder to measure, especially in 3rd world countries, where informal jobs are everywhere.

    Then you have a multitude of other factors to evaluate the “misery” or welfare of any country. Too many to enumerate, yet important. Healthcare, crime, pollution, corruption, freedom or dictatorship, parks, beaches, public services, education……………………………………

    Inflation and unemployment… you gotta be kiddin’.

    • It’s the typical ranking from people that spend too much time behind desks and too little in contact with the real world.

      France as miserable as Russia; Italy as the 13th most miserable country in the world; El Salvador as a less miserable country than Germany etc. etc. hehe.

      The ranking could still be useful somehow because the two variable it uses are important, but the title “misery index” just make it sound it’s politically biased/stupid.

      Anyway, I guess this is what they call “post-truth world”.

    • Then how would you measure it? In the simplest of examples of the usefulness of the misery index, you can also come up with a GDP for a country, but have you ever wondered exactly how that number is calculated? Can anyone find a flaw in it? (Of course they can.) Even in things easily quantifiable such as temperature on any given day, you also have to take into account humidity, wind, barometric pressure, and the location of the individual. What happens to the best of those “temperature comfort indexes” when the A/C goes out? When the person has a fever?

      Would you say Venezuela is not miserable?

      • OF COURSE Venezuela is miserable and a total mess. But spare me the stupid, 2-step index retarded mathematics..

        Again, you get a decent picture of a country’s situation looking at multiple aspects:

        Economic numbers, sure, growth of the economy, imports vs. exports, real purchasing power (rather than just ‘unemployment’ ) – cuantos sueldos minimos por arepa – how many people cannot afford to go to the beach for the Carnavales.. I’ll buy that.

        Then, what do they eat? Lomito meat or cheap arepas? How many meals a day?

        Crime: Murders per capita? Off the charts. Not in the stupid “inemployment-inflation misery chart.. – Yet, that’s a big reason the country is a mess, and why we all got the hell outta there asap.

        Healthcare? Lamentable, if available.

        Etc..

        Again, this article is wayyyyyyyyyyyyyyyyyy oversimplistic. And ‘Arthur Okun’ is a dummy.

    • informal jobs = unemployment from a legal point of view

      Buhoneros, as street vendors are widely known in Venezuela, are from a pragmatic point of view, illegal and parasitic people who “work” outside the law, regardless of what the chavista laws actually make easier to work on a legal way or not.

      And the article speaks about “misery” from the economic point of view.

      Venezuela’s population is now about 85% of “pelabolas”, wether you like it or not.

    • Like it or not, the the Misery Index has been around for decades. I don’t hear anybody claiming that it is the be-all and end-all for measuring well being of a country. It is, as they say, a “quick and dirty” measurement: “expedient and effective but not without flaws or unwanted side effects.”
      It places Venezuela at the “top.” Any disagreement with that?

  2. It is remarkable that there is not more unrest in Venezuela given your economic conditions, regardless of the accuracy of the misery index. The same is true for Cuba, although there the economy has been lousy since at least the fall of the Soviet Union. Can anyone think of any right wing governed countries where there was a similar lack of unrest over extended periods of economic distress.

    • It isn’t that there is no unrest… But, the unrest has been deflected and defused repeatedly. There have been no shortage of opportunities, but the Opposition has always backed away from them. Why? That is the BIG question.

  3. Что делать? Cuando Venezuela, rica y bella, se desintegra, ¿qué hace uno? Что делать, когда миллионы плачут и когда умирает ваша мать? De qué hacer, cuando millones están llorando, y cuando su esta muriendo la madre? Es que…Что делать? Ojala que yo era fuerte…pero, ¿qué hay que hacer?
    ¡Dios mío, no sé qué hacer!

  4. How can one calculate the unemployment rate for a country where much of the labor force have jobs, but are paid almost nothing due to inflation or other forms of default?

  5. Interesting article an critics…i think in Venezuela we are going to be a model of what’s you don’t have to do rule a country…sorry for that…

  6. Arguably, there are numerous countries in the world even more miserable than our beloved Venezuela. Haiti comes to mind, as many other African nations, where people are even hungrier and die early of many diseases. Thus, this ‘misery index – with just 2 clumsy parameters – is CRAP.

  7. Now people keep talking about ‘wrong policies’ the wrong ‘chavista model’.. socialism..

    Nonsense. The only reason Venezuela is a disaster is because of Galactic Corruption, no rules, no police, no jail. At all levels, almost everyone is into some scam, stealing left and right, everywhere, not just the filthy ‘government’. Very few produce anything, but most Steal, or participate in some scam.

    That’s how you bankrupt a nation.

    Even the Venezuelans that still dare to live there know how to run things. They could be ‘adept’, even efficient. But all the conditions conduce to “ineptitude” — Theft and corruption, that is.

  8. […] Even though wage rises are no reason for pride in the rest of the world , on Sunday Nicolás boasted the thirty-seventh wage hike of the chavista era, the fifteenth of his tenure and the third in 2017. The minimum wage goes from Bs. 40,638 to Bs. 65,020 and the food stamps go from Bs. 108,000 to Bs. 135,000, increasing the overall salary (salario integral) to Bs. 200,021, out of which merely 33% is the actual wage (the figure used to calculate social benefits, bonuses and holidays) and an astonishing 67% is for Cestatickets (food stamps), a regressive, humiliating “benefit.” If the cumulative inflation rate from January to March is 75%, a factual wage rise of barely 34.5% is ineffectual against inflation, the meltdown of people’s purchasing power and without depreciation, the country’s tax situation is a tragedy, so the State depends solely on the Central Bank’s money-printing, with consequences we know all too well. […]

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