Regarding an income in dollars, I dare say 100% of Venezuelans would say:

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And though I agree with all of you, I can’t help but wonder about the impact.

We’d be earning close to the same salary we make today, but in greens. If, for example, you earn minimum wage at Bs.S. 4,500, that would come to little under $30 (at Dicom exchange rate of 150 Bs.S./USD). A person can hardly make ends meet with $30, and even if every member in a family of four worked, $120 still comes up short. All of this considering the current price of basic services and gas, which are ridiculously low when compared to international prices.

But why would companies keep on paying the same salaries if they could charge in dollars?

But why would companies keep on paying the same salaries if they could charge in dollars?

Well, for starters, 45% of Venezuelan local industrial companies are producing at less than 20% of their installed capacities, and 37% at less that 40%. And though prices could be set and charged in dollars, price regulations and all other microeconomic constraints for private investment are still in force. Hence, it’ll take some time for companies to increase their production levels and start paying competitive salaries.

As if this weren’t enough (and it should be), at least 70% of our GDP consists of non-tradable services and we have to import most of our intermediate and final goods, which means companies will need a good number of dollars to stock local markets. With the current Venezuelan Investment Law still enforced, international investors won’t be tempted to bring their greenbacks in and over 90% of dollars coming into the country would still be thanks to PDVSA (and whatever parafiscal pot the Maduro government might still have lying around). I dare add: a few, highly risk tolerant investors, might still want to come in to take advantage of lower prices, but sums won’t be game-changing investment.

We all want to earn dollars, but we shouldn’t sell this as the newest silver.

So, even if Venezuelans earn in dollars, it won’t shield them from shortages.

What I mean is that getting a paycheck in dollars will only be saving Venezuelans from the commission of cambistas needed to turn bolivars into a stronger currency, since companies won’t be able to pay better salaries with Venezuela’s local productivity as it is today.

We all want to earn dollars, but we shouldn’t sell this as the newest silver bullet when, by itself, isn’t.

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  1. 1. I find the Venezuelan expression “international prices” very interesting. Why not just say “market price” instead?

    2. The bolivar currency should disappear and the country should switch to dollars or Euros. It is the currency exchange that has fueled probably half of the corruption sine 2002.

    • Gasoline is taxed very differently from one jurisdiction to another. So gasoline prices at the pump often have little to do with any Market.

      Farmers are still subsidized either for not growing crops or destroying them so there goes your market over there.

      Technology and pharmaceuticals certainly in the US of A benefit from taxpayer financed research and development. So there goes your market over there.

      The stock market is being pumped up by Buy Backs financed by subsidies and in many cases zero to taxation. So there goes your Market over there.

        • Nonsense. Capitalism (not “the market”) is perfect and has worked every time it has been used. As opposed to Socialism, which is parasitic and destroys.

          • Capitalism was used better and was more perfect in the 19th Century, in my view.

            When the socialists got involved they started forcing children to stay home, and limiting hours of work. Kids became unproductive parasites, just eating food and going to school (Prussian school?). Hand-out lovers. The markets were taking care of everything before that, as they should.

            Yes, capitalism has worked every time it has been used. There has never been a parasitic capitalist or a capitalist that destroys. None. The market is Immaculate, Perfect, and Infallible. Everything else is socialism, parasitism and destruction.

          • You do know that the actual use of the word Capitalism didn’t exist until Marx needed a word to be the pejorative counterbalance to his perfect, Utopian scheme? Indeed, the term was rarely if ever used, until Marx/Engel used it about 2600 times in his tome Das Kapital.

            So if you are looking at failures, I suggest you find at least ONE success story (philosophical/economic/political) when it comes to Marx and his theoretical baby, Socialism.

            Just one.

            (The acolytes of Marx cannot help themselves when they insist that all of the wonders of the current work ethos come courtesy of long suffering Communist activists, such as the 40 hour week and vacations.)

        • Those prices do not include externalized costs. i.e. the costs that are borne by neither the buyer, nor the seller. In that way, the market price of oil is in fact a heavily subsidized price.

    • Re “market prices”: When the government (in marxism the elite ruling class) owns everything and commands every aspect of the economy, there is no true market — i.e. a voluntary quid pro quo. Consider gasoline: no rational price can be determined as every aspect of production is dictated and manipulated. Why should Venezolanos pay world market price for fuel produced in-country; why shouldn’t they pay less, why shouldn’t they pay more than world price; why should they pay anything at all? Nobody can answer those questions because without a free market there is no price, only a government fee.

      Since everything under marxism is inherently politicized you have to add in the political layer to pricing, getting further from any actual market.

  2. It is the currency exchange that has fueled probably half of the corruption sine 2002….

    Which explains exactly why the currency exchange system will continue. When an ex body guard for Chavez can make at least $1 billion in currency exchange related bribes, those currency manipulations will continue. Once the bribe has been paid there is no risk…pofits are a certainty.

    • Estimates of the embezzlement range from 300 billion dollars to nearly a trillion dollars. The cases in Florida are scratching the surface but stool pigeons are singing like canaries and God knows where all this ends. One thing for certain this money rightly belongs to the people of Venezuela.

      Low balling it at 300 billion and assuming for argument’s sake that half of that could be recovered and not stolen again by the way, there’d be a whole lot more per capita than the Marshall Plan. Imagine 500, 700, 900, billion dollars recovered.

  3. Remember, currency is just the tool. If you are getting paid in dollars, it is a convenience. The fact that you are getting paid $30 per month instead of 18,000 BsS is better, in that the dollar conserves its value… the problem is the economy.

    You will always find someone who will trade something of value (food, water, medicine, time/talent, etc) for a dollar. Not so much for an increasingly useless BsS.

    • This would seem to define China and Russia pretty well at the moment.

      Would be nice to thank Iran for coming to Venezuela’s defense from these villainous usurpers.

  4. Of course, it isn’t just “earning dollars”, it’s the amount of dollars/their purchasing power, which requires a massive economic makeover/investment from outside, which requires a massive political/laws makeover.

    • The article is well done: short and to the point, with backup from capacity utilization. There’s also loss to theft and rip-offs, but probably less than 10%. Non-government theft, that is. The “expropriations” are what free market capitalists call theft, and are injurious to production, especially if inventories are depleted (such as taking over the meat production and distribution, to slaughter herds and give them away for Christmas).

      The Colombian peso and Brazilian real are also viable currencies, maybe easier to get than dollars. The article addresses what might be called “organic” or “not fiscally induced inflation” (just the balance of supply and demand for goods), as the relevant factor. That can be approximated by price increases in foreign currencies. The good news is that there is plenty of room for capacity utilization, increasing supply. Debbie Downer has something to add … [shut up, Deb!].

      Just for comparison, the mid-range U.S. expenditures for food are about 10% of income for a “consumer unit” of about 2.5 (dependent children included). I didn’t check to see what is included as “food”, but it does not include alcoholic beverages. My guess is that in Venezuela, a substantially higher percentage of income goes towards food.

      • Perhaps 1000% (maybe an exaggeration, but not by much) of the typical Venezuelan family’s income would go for food. Point is, a list of Venezuela’s economic dislocations/capacity under-utilization/foreign currency scarcity is useless without wholesale over-haul of of the political/economic/legal framework/institutions.

        • Oh, I definitely concur, and suggest the IMF or an accounting firm carefully allocate and stringently audit a gradual return of the alleged $600,000,000,000 pilfered. Put the exiled TSJ in, assert the National Assembly as interim executive, and exert some diplomacy to begin the overhaul. Beyond that, I should not go, but repudiation of the regime’s asset sales and debt might figure in, and a team of economists carefully tempered by acute political reality to avoid unrest. Guarantees of safety of private capital is something I see as a priority: the nice thing about a Private Works Program is that the government doesn’t have to put up any funding, just guarantee the safety. Let domestic producers negotiate their terms with foreign capital and even a) allocate government funds towards restitution of previously seized domestic property as adjudicated by TSJ or AN, but audited, and b) priority expedite importation of parts, supplies, etc. to private economic sectors. (I didn’t mean for my post to be taken as any disagreement with your point.)

          • Public policy created and exaggerated every problem in Vz, so yes, just change public policy, right? But without changing the culture, in a few years Vz will be worse than now.

          • Davy – “Private Works Program” was facetious for “no government involvement” other than to guarantee private property. Pretty much all my posts have been against any government ownership or participation in production. I don’t see where you derive that “activist government” inflection to what I said. Opening up free markets and returning stolen property is nowhere near socialist public policy.

          • Davy Jones – I thought you were being sarcastic when you said “Public policy created and exaggerated every problem in Vz, so yes, just change public policy, right?”

            I may be misunderstanding you, but it occurs to me that “change the entire culture” isn’t an accurate objective. Not picking a fight here, just asking for clarification. Most people follow orders. All through history, most people follow orders – even the most dingbat insane orders. In a free market democratic capital-for-production society, you still have quasi-criminal people who will abuse freedom. In the U.S. the Antitrust Division of the Department of Justice busts monopolies, and the Federal Trade Commission approves or disapproves mergers.

            In my opinion, passage of laws and their subsequent enforcement would accomplish the objectives behind the phrase “changing the culture”. Which is why I keep suggesting that recovered embezzled funds be returned to Venezuela only under strictly audited conditions imposed by the IMF and/or other authority.

            Laws are part of a culture, it seems to me. Definitions could be argued. Is it mothers and families that determine culture according to customs, or is culture determined by prevalence of laws? Kind of weird to bring anthropology into this, but I think all cultures have laws of some sort, written or not. Chicken and egg, maybe.

            Do laws determine cultures, or do cultures determine laws? In the instance of Venezuela, it seems clear that many laws have been broken by the regime – voting laws, for example. So wouldn’t law enforcement come before cultural change, and beyond that, would law enforcement change the bad habits which have been permitted to degrade the culture?

            There’s a lot of culture that does not break any laws and that is not detrimental at all: the distinct dress, music, art, manners, expressions, love of the beach, that characterize Venezuelans.

  5. Of course earnings in dollars won’t shield you from shortages, but the point of a dollar income in Venezuela has never been to keep up with the minimum wage (as something as close to slavery and menial tasks as PTC’s can net you more than that in two weeks).

    The point for los de a pie is to have a strong currency that won’t depreciate faster than you can say “Patria socialista o muerte” so you can save, bring your own stuff from abroad (did you know a kilo of Harina Pan is 3 times more expensive here in Vz than in the US? Same goes for almost anything really), or flee to Peru. Or all of the above.

    The article made a point, but missed the bigger picture by far.

    • There doesn’t appear to be a silver bullet to fix Venezuela’s socioeconomic ills, not even a magazine full of silver bullets. Time to back in the cement trucks and start over.

      • Any “help” sent the way of Venezuela will be for nothing if there isn’t a cultural shift. Too many Venezuelans are enamored with Chavismo.

        I grew up in rural South Dakota before moving to Minnesota. We lived between two Indian reservations (Pine Ridge and Rosebud) and believe me when I say that no matter how much money is thrown at the problems infecting these reservations (alcohol, meth, lack of aspiration), nothing would change. BECAUSE THE VAST MAJORITY DON’T WANT CHANGE. What might have been a proud warrior culture 150 year ago is now a culture of despair. It is utterly horrific. Give them money, and instead of cleaning up their lives, they become wealthier drunks and meth addicts who hate The White Devil even more.

        Almost everything I read/hear about Venezuela leads me to believe that the same is going on there. Fix the Venezuelan economy, and 15 years from now they will vote in the next generation of Chavistas under the guise that the previous Chavist regime “didn’t do it right”. And El Pueblo will believe it. More free shit for doing nothing but voting for more free shit.

        I think a hard lesson needs to be learned in the hardest of ways. Which is frightening.

        • Sadly, I believe you are correct.
          Our capacity for greed/envy is much more than our ability to learn any lessons from the past 20 years.

          • What truly is beginning to amaze me is the capacity to find some fault in any plan and discard it, finding additional reasons for hopelessness. Example: “If God had meant man to fly, He would have given him wings.”

            Take an engineering approach: when you encounter a problem, you do not run away from it; you move the problem. Thomas Edison is reputed to have tried 3,000 filaments for a light bulb (most failed immediately), and still the light bulb has been remarkably improved. Alfred Nobel totally flattened his wooden laboratory with a flask of nitroglycerine, before he realized the secret of dynamite (by deducing a solution from a subsequent accident). It’s a very funny photo, a group of smart men scratching their heads over the remains of a lab scattered over a couple of thousand square feet, no roof, no walls, no table or chairs, just a whole lot of scraps for firewood.

          • @Gringo: Some people get an idea in their head and it is with them forever.

            I have relatives* who insist that no matter how hard you try, or how hard you work, there is some fat, old, bald dude in a three-piece suit sitting in a smoke-filled, wood-paneled room smoking a cigar and quaffing brandy who won’t let them succeed. “So why bother?” these lazy fucks say… they haven’t made an honest effort at anything since they were 11 years old.

            These relatives are American citizens by birth, who can come up with 101 reasons why my Venezuelan uncles (concrete/cement) and my Venezuelan wife (physician) were “allowed” to become success stories… God forbid it was self sacrifice or extra effort.


            *I’d pay top dollar to send these pricks to Venezuela with nothing more than the clothes on their back. Within days they’d be crying like pussies.

  6. Seems the author missed a couple points regarding dollarisation. The dictatorship cannot print $US, let’s ignore likey counterfeiting for the moment. Having to deal with real money would make many transactions more transparent, especially if fraudulent, like national and local budgets. Product prices would stabilize to international pricing, with gouging more obvious, maybe creating something new in Venezuela called competition, maybe even improved efficiency. And more than 50% of corruption would likely be eliminated with loss of cambiaristas opportunities. Maybe then el pueblo could focus on why shortages continue.

  7. For a long time it was argued that dollarization would not solve problems there. I believe then as I do now that that was not exactly the correct approach for why dollarization would not work. Dollarization would have helped when it was capable of improving the situation but that door has closed.

    the problem with performing dollarization today is that there is no upside to propping up a failed regime.

    There’s not much benefit to the average worker to get paid in dollars when the government can just snatch it away as they see fit.

    The economy is under such pressure and corruption that there is no point in pretending that a different form of payment would fix any of this.

    it’s like putting a Band-Aid on a patient who needs open heart surgery. you’re only fixing the problems that surface not the root cause.

  8. Dollarize or don’t, I no longer care. Venezuela has sold her sole to Cuba, Russia, and China. I am just a dumb-ass right-wing Yank who for twenty years has heard nothing but vituperation from the country, so; not my problem.

    Besides my ideas would be along the lines of Milton Friedman, Ronald Reagan and Margaret Thatcher, who have earned the everlasting hate of the lefties, since they dared to prove them wrong when the lefties were predicting the, “end of Western Civilization as we know it today.” So, why waste my time?

    Come to think of it, why do we not hear from the great European intellectuals in these matters, like the famous Alfredo Serrano Mancilla? Certainly there must be some common-sense ideas from a “Progressive” heavy-thinker somewhere? How about Clifton Ross? Or our own Quico?

    No, the lefties seem to have no ideas. They come up with tortured explanations why Venezuela should not be used as an example of socialism. And they fear that the collapse of yet another socialist system might lead to fascism in nearby countries. With no ideas of their own they will sneer at, and ridicule, anyone proposing a solution that smacks of individuality, personal responsibility and freedom (Yes. We know the type! The idiots are always talking about Chile!).

    I got the message.

    • Head over to The consensus among those still drinking the Kool-Aid seems to be,

      “Chavismo might have made a shithole out of Venezuela. But, it is OUR revolutionary shithole.”

      They don’t care about Venezuela. They care about the revolution. If Venezuela has to sink into an abyss because The Revolution has failed… well… that’s OK. Countries and people come and go. But it is the Revolution that matters.

  9. Dollarizing Ecuador worked well, but will not happen in Kleptozuela for the same reason other obvious reforms don’t happen, massive corruption with exchange controls and countles other filthy financial ruses.

    You’d have to remove tge Chavista crooks by force and then dollarize and make other macro-economic changes, in that order. Then foreign investment might start to come in.

    • Dollarization was a quick win every time it has been used. Whether or not it can be made into a long-term win depends on the people’s willingness to change the policies that destroyed their own currency.

      • Agreed. Dollarization helps by taking away all the time wasted on keeping up with constant price rises, and makes transacting business quicker and easier. Those are significant benefits (they make the economy more efficient), but by themselves they don’t go to the root of the problem, i.e. bad government.

  10. Confirming @DAVYJONES: With true dollarization (most people mistakenly think ”prices in Dollar”) the central bank ceases to exist. Only the Treasury could mint coins for a profit. This is the solution but not in Whateverzuela. It has worked wonderfully in Ecuador, El Salvador, and Panama.

    Panama is just incredible, even with humongous Venezuelan immigration. And despite the left newscasts about the ”Panama Papers”, it is precisely that extra AML, Compliance & Governance that has made this country great again, particularly since Torrijos and his accomplices were all captured or eliminated.

    • Hopefully defacto dollarization / euroization / pesoization / cryptoization / whateverization* has already begun. The question is how ruthlessly will the enchufados oppose free forex and for how long. When nobody is working, it won’t matter how prices are denominated.

      *Sad to say that Monopoly-moneyization would now be an improvement over VES.

  11. First you have to change the corrupt Chavista government, a bunch of criminals. Even if they dollarize one day, (which they never will because it’s a huge juicy Mega Guiso,) the mess would continue as they continue to rob anything in sight

  12. The problem is not so much the revolution, rather that socialist revolutions want to control the economy, not simply influence the culture. Note that when the opposition took over the assembly, Maduro changed the rules so they had no dominion over the budget whatsoever.

    At this point, even if a coherent economic policy was installed, with so much debt coming due in the immediate future, no economy could flourish with so much money going out. That is, no economic policy will achieve a quick fix because the Chavistas mortgaged the countries future. Even if you could recover the majority of burgled monies, it’s already spoken for in the form of debts. You can titrate out that debt, but people are dreaming if they think it will be forgiven.

    No foreign powers want to get too involved with the clean up fearing they will be on the hook for some of the tab. Some very creative bail out will have to be arranged, but just as it happened here in the US after the banking shenanigans caused a melt down, the regular folk end up footing the bill. Basically, since the regular folk are now broke, their future earnings will effective be garnished to pay redress Chavismo’s economic blunders, titanic as they are. No one is skating on this one. There is no staring over with a fresh slate. The debts of the past will first have to be renegotiated and likely, a lot of it paid off.

    • “Note that when the opposition took over the assembly, Maduro changed the rules so they had no dominion over the budget whatsoever.”

      Maduro could do that, because El Pueblo voted for a Constitution that gave nearly omnipotent powers to a single person. That Maduro did what he did was seen coming a mile away. Was anyone surprised that he did what he did with the TSJ and the CNE after getting his ass handed to him in the AN elections of 2015?

      There is plenty of blame to go around. Starting with anyone who thinks its a good idea giving any one person unlimited powers.

  13. 😆 😂 🤣 “Venezuelan know that a Dollar income is not enough”
    Big LOL, this should be sent to Hollywood and ask to make a 🎥 movie and get an Oscar due to most stupid analysis.

    Reading at most reactions, every one forgets how happy Venezuelans were with the same ROE scheme from 2003 to 2010. The most recent scheme is as described like a variation of the same theme. Like a brief Beethoven piano studio to build a great Symphony.

    The happy days when you could get greenbacks at a ROE of 10 VEF/USD and re-sold them at 100 or 1000, making humongous profit. Nobody complained then (except me, the Company lost several hundred million dollars trying to get paid the Venezuelan excesses). The same indecency and dishonesty but many more could take advantage of.

    Now, they rationalize, explain, justify, blame, whine, etc.

    So now they are unhappy 😞 ☹️ 🙁

    Indecency power infinite

  14. Venezuelans on twitter and other social outlets seem more in uproar that some rice from Guyana found its way into CLAP program. Rice that no doubt was purchased through Panama or Mexico or other third party since Guyana haven’t exported any rice to Venezuela since 2015 when the Petrocaribe ended (We kick them out).Of course all of this can easily be found out through few minutes of research. Even more disturbing is the fact people are actually calling for that rice to be ban since its from Guyana. In our current situation really ?

  15. Can a claim be made to the companies that paid the bribes to return the excess amounts they were allowed to extract from the contracts in return for their bribes , can their contracts be annullled and any assets in their possesion impounded ??? Apparently quite of a few of these companies were Chinese suppliers and contractors …

    • Under the apparent current “doctrine” that honors a nation’s sovereignty (and thus the regime) it would appear to me that the AN (the legitimately elected on of 2015) had already announced that all agreements entered into by the regime will be declared null and void. And that would be honored internationally as sovereign right much more so than the current regime is internationally [dis]honored.

      • Lawyers have bad reputations to being with, Boies has no reputation at all these days, but this makes it worse. Talk about vultures. “No, no … let my explain your honor … the definition must be changed from ‘legal’ to ‘credibly permissible regardless of conduct’ within unestablished parameters.”

        As for the Venevision clip – it isn’t just they way they look. Those Venezuelan women are s-e-x-y in block capital letters. Como se menean! And those dresses! The eyes! (Mine, not theirs.) Brazilian girls give ’em a run for it, but the Venezuelan women are h-o-t! That’s one aspect of culture that should never be changed, only praised.

    • “Economists (including me) who have worked on this kind of problem for five decades have found that price bubbles surrounding intrinsically worthless assets must eventually burst.”

      Five decades? How about since the 16th century! Putting an arbitrary price on something and calling it valuable has always been fraught with peril. To put value onto “good intentions” is just as absurd.

  16. meanwhile the free dollar is actually trading at around 600BsS per dollar, so a month’s wage is reduced to $8, which is already insufficient to feed a family, so there is nothing to save anyway, it’d make sense for someone earning much more than that, however.

    Yesterday the gas from my 5 tones ac leaked, and it seems I’ll have to pay about 20000BsS to be able to replace (+ oil + “mano de obra”), so with that alone we are talking about 6 months of wage.

  17. The happy days when you could get greenbacks at a ROE of 10 VEF/USD and re-sold them at 100 or 1000, making humongous profit. Nobody complained then…


    Combine this with a leveraged, bull shit economic system and autocratic ruler dead set to stay the course and you have an unfixable situation, top to bottom. There’s always a way out, but I ain’t seeing it. My gut feeling is spinning economic and political theory over the top of such dysfunction is like trying to cure malaria by dancing.


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