Hyperinflation in Venezuela - merchants are weighing, not counting, currency


#1

Originally published at: http://boingboing.net/2016/11/29/hyperinflation-in-venezuela.html


#2

So, late state Capitalism then?


#3

Aren’t we at End Stage Capitalism yet?


#4

Venezuela isn’t capitalist. I wouldn’t exactly call them socialist either… Crony Tyranny, maybe? Pretty much all trade in many industries is controlled by the government. Most businesses are “nationalized”, by which I mean Maduro just announces they now belong to the government, in the same way he has announced that the legislative body is no longer allowed to pass laws and that no one needs to worry about pesky elections.


#5

Chavez had absolutely perfect timing. He ran his little strongman command economy on piles of oil money and charisma, and then just as the oil money was starting to dry up he passed away peacefully.

Maduro has none of his Chavizmo but has been trying to run it as if he did. He’s also been trying to run it as if they still had tons of oil money to pay for all the price controls. Since there are other countries and currencies it just made the problem worse as partly described here - if you cap the price of something worth $10 at $2, that’s a huge opportunity for people in the govt who can capture them and sell them for $8 next door.


#6

Well, that was tongue in cheek. People like to point out how horrible capitalism is, but, you know, other systems have bad sides too.

Though the word “socialist” means different things. None of the “socialism” proposed in the US is actually about nationalizing businesses.

When people do talk about true communism and socialism - where the governement is running industry, I generally think it is a bad thing because that means both the government who makes the rules, and the entity that pays you for work is the same thing. So they make all the rules and aren’t beholden to anything.

As much as capitalism is fraught with abuse, at least the law makers are separate and can create systems of over sight.


#7

Yknow who else weighs currency rather than counting it? The redemption booth at the nickel games arcade. There’s a really amusing connection to be drawn there, but right now I lack the wit to make it funny.


#8

I think this is one of the things that can happen after late-stage-capitalism.

Pre Chavez was the extremely unequal plutocratic oligarchy oil-state, which gave good lives to 20% of the population and squalor to the rest. That was replaced by a left-authoritarian oil-state which put the squeeze on the 20% for the 80%, but its economic system collapsed pretty quickly (as it usually does).

Never liked Chavez myself. Those press conferences he gave: terrifying. But the blame really lies with the previous regime and its supporters. Its the inequality stupid. Fix it or eventually enough people will be willing to burn it all down.

I had a lot more hope for Lula De Silva. And, hmm. Reading up on it a bit it sounds like that actually worked out ok so far, though his party seems headed for jail for extreme corruption, so we’ll have to see how it goes over the next ten years. But the country apparently has done well. Dramatic expansion of the middle class, etc. Provided they come out of the corruption crisis intact (meaning the nation, not his party) it will have successfully switched to a lower inequality mode.


#9

It’s a personality cult that lost its personality three years ago but left all the fiscal incompetence, command-economy heavy-handedness, and cronyism in place. Give the President-elect of the U.S. two terms with GOP control of Congress and we’ll be at a similar place in 2024 if not sooner.

For others who aren’t familiar, this Planet Money podcast provides a basic explainer on what happened in Venezuela.


#10

Well, I think one of the big problems with capitalism is that this division doesn’t happen well enough in practice. Even where you don’t have laws literally being written by the people they regulate and rubber stamped by politicians, you still have too much influence from people who are well off in the system. In capitalism money is power, and you can’t just ignore power.

The biggest problem with communism is that it seems to always come with a cult of personality around the leader, and decisions being made by one person who thinks a lot of themself (alright, alright, himself) instead of based on actual evidence. Being in the good books of the leader is power.

In short, the problem with everything is that people are shit.


#11

I know I keep saying this , but government control and nationalisation does not mean socialism. Anarcho-syndicalists do not believe in government or nationalisation, but they are socialist, while the Liberal Government during WWI nationalised UK industries (including the breweries and pubs in the city where I grew up) without being socialist.

I agree with you about the issues around government nationalisation, which is why I support the idea of workers co-operatives over that.


#12

That chick is hawt…


#13

Yes, any system is pretty much going to eventually have an elite group that manipulates the system. I can’t think of a single example where this doesn’t happen eventually. Any other system is going to have the same issues, though perhaps in different forms.


#14

I have a friend who rants about Marxists (had a field day with Castro dying) who likes to point to Venuzuela as, in his mind, an example of a Marxist state. Sigh.


#15

I remember a story my father told me, about a man he saw in the street weeping next to a pile of marks shortly before WWII. He had been carrying them in a wheelbarrow, and when he stopped to take a rest, someone stole the wheelbarrow.


#16

Yeah, this article is vaguely misleading. I’m not sure if it’s done purposefully or not. It left out that whole part where Chavez seized entire swaths of the economy, instituted ludicrous price controls, and stomped out the opposition and Constitutional limits.

Fixing prices in defiance of real-world economics and staffing nationalized industries with your inexperienced party cronies probably did more to wreck the country of Venezuela than the fluctuation of oil prices.


#17

Yup. Glad to see the price of oil mentioned here. It often gets ignored, yet can explain so much about what’s going on in Venezuela, Nigeria, Saudi, Russia and other states that rely too heavily on a petro economy.


#18

Having been raised in Venezuela and left around the time Chavez came to power i am inclined to disagree.The cost of life was extremely low in Venezuela. Someone that wasn’t well off had easy access to cheap local food, goods were affordable, and healthcare and education were relatively cheap as well.

On another note but related: My mom is traveling to Venezuela at the end of December since my grandma is very ill. It’s something that my mom needs to do but i’m not thrilled at the thought of anyone going there ]: she was there earlier this year too and i can vouch for people having to carry ridiculous amounts of bills that aren’t worth much. Generally people prefer to pay with a debit or credit card instead, however recently there’s been news that thieves have been carrying point of sale machines and have been forcing people to swipe their cards at gunpoint. So there’s that…


#19

It looks like all parties are basically going to jail. The government that ousted Dilma Roussef (Lula’s political heir) with a shady parliamentarian procedure, already lost several ministers to corruption charges (I think 4 at the last count), and had to pass a special law to literally keep the new acting President (as well as tons of MPs) from going to jail. If anything, they are more corrupt than Lula’s bunch. The problem seems to be that honest politicians are very rare in Brazil, for a number of reasons; as an Italian, I can feel that particular pain very well.

But yeah, overall Lula and Dilma did improve the lives of millions of Brazilians, which is why they will likely get right back into power at the next election if they can come up with a clean leader.


#20

Completely man made problem. Chavez fixed the value of Bolivars to Dollars, in a country where very little is manufactured (thanks to the oil curse, why bother making something when you can import it). Which was fine when oil prices were high. But when oil prices tanked, but the fixed conversion continued. If you are an importer you need gov;'t permission to convert to US dollars, many of them gave up. But people quickly gamed the system, which is why you had empty airliners flying out of Venezuela with all the seats paid for, because even after paying for the flight in US dollars they still made money.

Planet Money on NPR had a good podcast about it.