Saturday, January 03, 2015

There are reasonable options but no one cares


To follow up this post I wrote about the "productivity problem" and the "fiscal problem" of Venezuela.

With the objective of being ever so helpful and dodging the bullet on me always a critic, I am offering for this starting year a few things that could be done to temper somehow the economic crisis in Venezuela (1). I am, of course, perfectly aware that the regime will probably not come close to a single one, and that the opposition would not dare to state clearly what should be done. Sigh....

Thus I am writing from ground zero, from the perspective of someone with a small business that thinks at ways he could improve his production, hire people, etc...    Not being a big time economist I am allowing myself anyway to say that my opinion is relevant and that if people like me were heard a little bit more by economists maybe things would not be so bad. But I am digressing.

To tackle this subject let me state that in the current crisis there are several distinct problems, the main ones being:

- difficulty to produce anything
- fiscal crisis
- oil revenue crisis recently added
- astronomical corruption
- political impossibility to form any "grand coalition" to take some measures because too many of the potential partners have economic privileges that they are unwilling to compromise.

The last three ones have been the bulk of this blog posts in recent weeks. There is no point for me discussing them again now. I will limit myself to the first two items, productivity problem and fiscal crisis in two coming separate posts. Stayed tuned over the week end.

Just to close this intro, of the last three ones the last one is the worst. If there were political will, if there were some kind of coalition, corruption could be tamed to a manageable level and good administration could avoid the worst effects of oil price drop. But opposition has embarked on a sterile quarrel between supporters of "la salida" and the others, between those who benefit indirectly from the regime and want "peace" and those who legitimately have lost patience. The regime is worse off, diied between corrupt, narco military, radicals and what not. What is worrisome is that the radical wing seems in the upswing and folks like "Marea Roja" are calling for control of Polar, a folly that will bring us instantly to Cuban levels of survival.  Not only consensus is impossible inside each camp, but the possibility of consensus across the line is remoter.


1) I need not remind the gentle reader that as blogger that will never run for elective office in Venezuela, who is out of contact with any of the political parties that have a chance to reach power and could appoint him to something, never mind the strong likelihood that I would reject the offer, there is no point for me to suggest things that should be done. If you wish to read people offering radical "solutions", you have Twitter for that. Still, when I feel it appropriate to remind the gentle reader that there are options I do not mind writing them down, like I am starting to do today.


  1. Island Canuck12:26 PM

    Also as a small business owner our biggest pproblem is setting prices.

    We work on future delivery - anywhere from 1 to 4 months or more.
    The easy solution would be to pick a price based on trends for 3 month delivery.
    The problem with that is the people are paying with today's incomes & would balk at a 30% higher price now for delivery during Semana Santa in late March.

    Even though we have been increasing prices in line with my esimate of inflation (2014 was approx. 120%) the problem of delivering at unkown cost levels 3 months from now is a daunting task. The last quarter (Oct. to Dec.) we broke even so we worked for basic subsistence - not the general idea.

    I think I'm going to go ahead & raise the Bolivar prices 30% & see what happens. If there is no business then so be it.

  2. Anonymous12:52 PM

    Daniel, I have to thank you for your writing and your thoughts. As a dirty foreigner my companies operations here were expropriated long ago (May 2009) and I am still here trying to clean up the mess and working with the lawyers detailing the facts to ensure that at some point in the future a legitimate government compensates us. To date we have received nothing for more then $ 45 million in assets of which all have been destroyed (who knew you had to change oil on engines and otherwise do basic preventative maintenance, certainly not the military morons the chavernment to run our operations).

    I am now about wrapped up and it is time to get out of Dodge. I have met many wonderful people here and I will worry constantly about their health and survival. I was working with my company in Africa in Liberia when it blew up and I know what happens when there is no food or opportunity and the pot boils over. The results for everyone can be horrendous and I do not wish that on the criminals in charge as the innocent are the ones that suffer the most. Unfortunately, there are too many criminals in charge in Venezuela and too much self interest and as a result, I fear the worst.

    Caracas Canadian

  3. Daniel, your assessment of the situation is correct, but you left us readers hungry to see what your reasonable options are. Maybe you should have put the "I" in the title so that everyone would know that this is the first of a series...

    1. Just you wait. It is still holidays until January 6 in Venezuela.


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