Photo: El Estímulo

Among the many reactions to the deranged economic announcements made by Nicolás Maduro, there’s a line of thought I find deeply disturbing: the “progressive” wing of the opposition accuses Maduro of being a neoliberal, comparing him to former president Carlos Andrés Pérez and his 1989 reforms. You’d expect this from Rafael Ramírez and other disgruntled chavistas, not from people who have suffered the disastrous consequences of 20 years of chavismo.

I don’t know if this is just political opportunism or plain ignorance, but the fact that political leaders in 2018 Venezuela are still using this rhetoric of necessary economy as something evil against the people speaks volumes about why chavismo came into power. The idea that resources are finite or the concept of opportunity costs are just lost on complete factions of the opposition.

The idea that resources are finite or the concept of opportunity costs are just lost on complete factions of the opposition.

In 1989, Venezuela faced a looming balance payment crisis, international reserves were $300 million only and there were less than a month of imports. Carlos Andrés Pérez received a country on the verge a bankruptcy, saddled by suicidal foreign exchange controls, money-losing state-owned companies, price controls and regressive subsidies. The only way to solve this, the only moral answer to years of fiscal irresponsibility (in many ways started by Pérez himself during his first term, and perfected under Jaime Lusinchi) were painful economic reforms.

Pérez appointed a young cabinet of highly-educated non-politicians. Although criticized at the time, it was necessary to end the perverse currency controls and privatize money-losing racetracks and state-owned airlines that only made international flights. At the time, many intellectuals and political actors from the left denounced the reforms as “neoliberal,” a term derived from the Washington Consensus.

The Washington Consensus is a set of orthodox economic policies—such as avoiding large fiscal deficits, setting a competitive exchange rate, privatization of State enterprises and keeping competitive interest rates—laid out in 1989, by English economist John Williamson, which shouldn’t be controversial to anyone who has endured 20 years of chavismo. Many interest groups boycotted the reforms and Venezuela was never able to modernize its economic model.

At the time, many intellectuals and political actors from the left denounced the reforms as “neoliberal,” a term derived from  the Washington Consensus.

Looking back, it’s fair to criticize the disastrous communication strategy and the lack of political savvy by the new ministers. But questioning the morals of the reformsor their necessityis just chicanery at this point. Precisely the fact that Venezuela was never able to carry the reforms to achieve macroeconomic stability is one of the culprits of chavismo.

If only we were experiencing a sensible economic “neoliberal” reform carried out by our brightest technocrats, Maduro’s paquetazo could work. What we have is a murderous dictatorship composed of ill-prepared criminals trying to enact incoherent reforms that include a staggering increase in money supply not supported by any cut in public spending, while setting price controls for essential foods and arresting managers for not complying with them.

This is not an attempt to finally enact fiscal sanity or liberal policies; it’s a desperate attempt by criminal doofuses to solve a problem they’ll never understand, with vulnerable Venezuelans again paying the consequences of the economic illiteracy and opportunism of its elites.

Caracas Chronicles is 100% reader-supported. Support independent Venezuelan journalism by making a donation.

34 COMMENTS

  1. “…the “progressive” wing of the opposition accuses Maduro of being a neoliberal, comparing him to former president Carlos Andrés Pérez and his 1989 reforms. You’d expect this from Rafael Ramírez and other disgruntled chavistas, not from people who have suffered the disastrous consequences of 20 years of chavismo.”

    Is there a non progressive wing of the opposition? Who is it?

  2. I think it’s absolutely necessary to understand that today’s moral, economical and political debacle is directly attributable to the corrupt, evil and mind numbing stupidity of most Venezuelan political leaders from 1989 to date. For Venezuela to evolve from this apocalyptic scenario a profound restructuring of the whole political profession must be done; from prohibiting by law most traditional politicians from the past four decades from working in a public office ever again to creating a constitutional amendment prohibiting all communist and socialist parties to exist in Venezuela’s political arena. So much has to be done…

  3. El Nacional published an account to the effect that a) the regime will pay the differential between the 30 sovereigns and the 1,800 sovereigns (i.e. the minimum wage) to employees who register on the “Patriot’s Page” with their carnet de la patria, and b) that the government is extending this courtesy to employers as a loan for which it expects cash payment.

    There are two things here I do not understand: 1) how many workers actually work for one minimum wage, as opposed to 30 minimum wages, and 2) does the regime actually expect employers to reimburse it for the payments they promise to make to employees electronic accounts?

    • Gringo, before the pay hike to BsS1800, there were many making minimum wage (store cashiers, the ones filling up the shelves, many secretaries, construction workers, cleaning people, etc.). Now, after the pay raise there will be many moremaking only minimum wage. Many employees at the IVIC research institute were making no much more than 10x min wage, and these are professionals in fields like math, physics, etc.

      • Now these people will probably be making less than 10x min. At this point, they have not yet been notified what their new salaries will be.

        • Got it, and thank you for the explanation. I had thought/hoped that most would have been making 30 minimums, or $30 a month (I still pick up pennies in the parking lot, but mostly out of curiosity or habit, and one dollar literally won’t get me ten blocks to the supermarket and back). If the “math error” story is true, then perhaps the 1,800 will be reduced. In the days of communist China, the per capita GDP was $400 a year, a very sad bit of trivia illustrating the condition of Venezuela.

          • Gringo, nice to know you are picking up the pennies I toss out onto the street when ever I get them in change. It just gives me a warm feeling of knowing I am creating abit of luck for my fellow man.

            As the saying goes….

            “Find a penny, pick it up. All day long, you’ll have good luck.

            Just gives me a warm feeling of providing another a lucky day

  4. …the government is extending this courtesy to employers as a loan for which it expects cash payment.
    ——
    This sounds like a mob loan. What’s the vig? What if you can’t pay back the sum? And what form of payment is accepted? Petros? B’s?

    He said: “…it’s a desperate attempt by criminal doofuses to solve a problem they’ll never understand.”

    What I can’t understand is the first thing about how any of this can possibly work? Since the lion’s share of goods have to be imported (what, like 95%??), and no foreign manufacturer would dream of accepting Petros and or Bs as payment, and since the government is in the hole to the tune of 150 billion….

    I’m confused as hell about this.

    • Juan,
      You’re not confused. This is an unworkable scheme.
      The regime is playing a shell game that is going to multiply their destructive force on the economy.
      Cargill announced in 2016 that the company would no longer sell to the Venezuelan regime. The announcement that Cargill has agreed to sell at the regime’s preset prices is meaningless.
      I am in awe that the people aren’t rioting in the streets and that Miraflores hasn’t been burnt down.

      • I wonder if what Cargill “agreed to” was to sell at prices expressed in USD, and the regime used its imaginary new and forever Forex rate of 6M Bs (based on the magical petro) in making the announcement?

        Not that it matters. The can issue all the play money that they want, but without real money, they cannot import. And without exports (oil) they cannot raise real money, except through remittances, and those will mostly go through the black market.

    • Funny how the minimum wage thing hits the poorest, hardest. Obviously, the more skilled people will be kept on, if possible, even if the doctors end up cleaning the toilets and the physicists sweeping the floors. That’s socialism for you: reduce the “upper classes” to doing the “callouses-on-hands” work! Then they’ll learn what it is to be a slave! That will show them who’s boss! And in the meantime, the poorest are crushed out of existence, cannon fodder that has served its purpose.

      Marie Antoinette is notorious for saying, “Let them eat cake.” Marie Antoinette was an Austrian Princess, imported to France, a porcelain royal trophy thrust into the limelight, and her statement was more a question, than a derision. Her role was petticoats, not politics, not economics, and the extent of her involvement in managing those things probably did not go further than telling the maids where to clean. The girl was beautiful, but apparently the quintessential dumb blonde. She literally was not aware, did not make the connection, that the poor did not have cake to eat. (How could anyone so badly manage an economy? That would be inconceivable! No cake? OMG!) She thought it was a temporary disruption in the bread supply. By contrast, the regime knows damn well what’s going on with the poorest, and their reply is: “Let them eat garbage.” At least Marie Antoinette was a class act.

  5. Why is CC loathe to say the “opposition” names unmentionable, next to Ramirez’s? Just call them out for the complicit chavistas they are, includng fucking Ramos Allup and Capriles and Falcon and Rosales and the others? Including opportunistic Fucking FRod.

    The few true opposition have been derided and humiliated and forced to flee. Those that might have been able to bring Venezuela back from the shit show brink of disaster will never be given a chance because, well they aren’t chavistas. CC could have brought their names to light.. good try César.. you were so close to getting this right. Maybe someday CC will have a change in editor to drive a message that will improve the lives of Venezuelans and stem the flood of refugees.. myabe..

    • Maybe Cesar is censored by his editors at the Arepa who are Falsonistas? I know Cesar knows who they are. Hey Cesar, just give us a bullet list of these scum.

      BTW good article!

  6. Thank you, Cesar. Your article is a breath of fresh air, and is the kind if introspection that is sorely needed if Vz is ever to understand and recover from the Chavez nightmare.

    Unfortunately, you are telling the progressive intellectual elites things they wish not to hear, and are approaching the line where you will enrage them to the point where they will respond, not with coherent rebuttal, but with condescension, insults and name-calling.

  7. CAP ran a desingenious campaign. He appealed to the memory of his profligate petro-spending administration of 73-78. The people voted for him to bring back the good times of the 70s. He pulled a bait and switch by imposing orthodox economic measures on the country, and the country exploded.

    As Mr. Cunto wrote a couple of weeks ago in Prodavinci, Chavismo is the ultimate virulent expression of a reactionary rentist Venezuela, in which Caldera’s administration was a previous step.

    I arrived to Venezuela as a child in 1978 and got educated in what is considered elite Venezuelan schools, and even there I perceived a sense of entitlement. “Venezuela was an important and rich country because it had oil”, from Geografia Economica de quinto a~no. Politicians preached that this wealth, to which you were entitled, was coming your way, so vote for me!

    Rentism is the opium of Venezuela. As long as the oil prices were high, the governments could spread the wealth around, even if unfairly and certainly ineffectively and give many the taste of the rentist high.

    And now rentist junkies, namely Chavistas, are going to have to hit rock bottom and declare:

    V. Do you reject Rentism?
    R. I do.
    V. And all his works?
    R. I do.
    V. And all his empty promises?
    R. I do.

    Or wait for death in squalor.

    • Yes! And not only do they have to purge the Devil from their souls, they have to open the door to Jesus. And that might be the hardest part of all.

    • Rock bottom. Everyone has a different rock bottom.

      Some flee when they reach theirs. (My family). Venezuela wasn’t worth it to them and they had alternatives.

      Some will reach rock bottom and die.

      Some will fight. Though I doubt it.

      I think most are content to wallow in misery.

    • “He pulled a bait and switch by imposing orthodox economic measures on the country, and the country exploded. ”

      The country was blown off by the ENCHUFADOS THAT DIDN’T WANT TO LOSE THEIR PARASITIC PRIVILEGES.

      The “people alone” WILL NEVER, EVER, DO ANYTHING BY ITSELF, they were DIRECTED by those who wanted to oust the goverment, namely, the marxist communist cuban garbage and their traitor collaborators in the 89.

      The “care’mierdazo” was a COUP against CAP.

  8. Great article and perhaps in a subsequent report you can put some meat on the bones. What economic policies do the progressive wing of the opposition advocate, same as the Chavistas? Who among the noteable opposition members can be described as a progressive and finally am I correct that as to economic policies that Quico would not be a progressive. Thanks for any help.

  9. As I understand it, Professor Williamson distinguished what he called the “Washington Consensus” from “neoliberalism”; that is, what he considered more extreme forms of market fundamentalism.

    Throwing around either term is basically meaningless unless we know what specific policies the speaker is talking about and being critical of. The links don’t tell us. If there are no specifics, then it’s just sloganeering.

  10. Are you still with that rubbish that shaviztas really want to fix the turd they crapped on Venezuela’s economy?

    What the hell, THAT is the reason Venezuela hasn’t get rid of chavizmo yet, because there’s still those who think that “they’re being incompetent”.

    Guys, the red paquetazo is aimed at DESTROYING the small and medium enterprises that remain in Venezuela to strengthen the control of the enchufado monopolies.

    ////////////////

    ¿Todavía siguen con esa pendejada de que los chaviztas en verdad quieren acomodar las cagadas que pusieron en la economía de Venezuela?

    No joda, por eso ES que no se ha podido salir del chavizmo todavía, porque aún hay quienes piensan que “es que no lo están haciendo bien”.

    Niños, el paquetazo rojo está dirigido a DESTRUIR las PYMES que quedan en Venezuela para fortalecer el control de los monopolios de los enchufados.

  11. They are grossly incompetent !! their caricature ideogical conceits also make them think stupid ideas and do stupid things , they are highly corrupt (despite the presumed purity of their ideological pretentions) , but above all things they are delusional ……., !! they talk a lot about their’ ideology’ but deep down inside they are a mix of incoherent mongrel motivations , many of them quite raw and primitive ……can anyone think that their obsession with total power is inspired by their ‘communist’ ideals , thats just rethorical cosmetics ….., think about Maduro a purportedly cuban trained ideologue going to an Indian holy man to bathe in the breath of his sanctity !! Sometimes I ve had access to people who knew how they thought about things from the inside , and most of the time they are very clumsy and crass in dealing with problems. They could have accomplished all of their ‘ideological’ goals without having to destroy the country and earn the loathing of most Venezuelans …..!! they just couldnt !!

  12. The problem with Venezuela?

    Very simple.

    The ratio of communist versus non communist people is quite high, compared to that of the United States, Germany, England, Australia, Japan, South Korea, Canada, etc…

    When you have too many communists and potential communists, it is difficult to get out of an economy cesspit. That is the problem with South America, actually.

    They would be better with monarquies that respect private property, just like the Middle East countries.

    You want destruction?

    Just give them democracy.

    Sorry about this, but it is the truth

  13. Venezuela was far from ever being great. So can you make it great again? 1989? Are you nuts? If you want to you need to compare to CAP I. Which is useless too. He nationalized everything and big piñata party started there. By 1989, I had gone 10 years already.

LEAVE A REPLY

Please enter your comment!
Please enter your name here