Monday, February 23, 2015

Why is the regime jailing private enterprise owners (and this blogger at risk).

There is a very simple answer for that: the regime needs a scapegoat that pays with its hardcore, Luddite, take no hostage, resentful base. The question would be more interesting if worded differently: why does it pay to jail a few business owners?

The answer to this question is a little bit longer but not very complicated. The reason can be found in 40 years of populism light followed by 15 of populism hard. In a country that has been told that "we are rich" and that the problem is that "wealth is not redistributed as it should" you do create a sense of entitlement that can easily be turned against private enterprise. I remember as a kid how COPEI used the term acaparadeco in the 1973 campaign against Carlos Andres Perez first election. Acaparadeco is a play on words with acaparador (hoarder) and adeco (follower of AD political party). The message was clear, seedy business allied with Adecos to make the people suffer scarcities. As you can see, chavismo has invented NOTHING, just strung it out to the limit.

To this you must add that a lot in the business system of Venezuela were only in there for the money, amassing in a hurry what they could to run away to Miami or somewhere to live the grand life. That this pattern is repeated and magnified under chavismo with its bolibourgoeis, or that many business people are decent, socially conscious folks (the Polar people, to name one) does not matter. In the deep recesses of the hoi polloi mindset there is a certain like of the private enterprise as the lone reliable provider of jobs and goods but a deep resentment of the owners. That dissociation has always existed, with more or less intensity, and no government has ever tried to limit it as for populism such beliefs are a political godsend.

What differentiates chavismo from a past attitude that probably dates from colonial times is that as an extreme populist and commie inspired system the regime has a special vindictiveness against private enterprise owners and even more against those that make the regime look particularly bad or incompetent. The harassment of giant agribusiness Polar is a text book case, forcing Lorenzo Mendoza, its chairman, to challenge the regime to concede administration of its nationalized mills so he would put them to produce. Suddenly the regime stopped its attacks for a while but they are back at it.

The two recent public cases are the owners of Farmatodo and Dia a Dia. Both chains had managed to reach popular sectors and be successful there while the distribution of medicine and food through the state system of Mercal and PDVAL was failing more and more.  Dia a Dia was a supermarket specializing in popular areas, small stores, no storage area to avoid crime. It had a limited and fast rotating inventory and was thoroughly monitored by the regime. Hence, that Dia a Dia provided reasonable service so close to the chavista electoral base was just too much. Dia a Dia had to go, its inventory seized and his managers sent to jail for gouging, speculation, hoarding and what not.

Farmatodo is not as clear cut a case as it does not go deep into popular areas. But it is close and it had become in a way the fancy store where lower middle class go to get a treat. Farmatodo was a first world experience in Venezuela, clean, neat, organized, usually well stacked. All social classes could shop there together getting from shampoo to medicine. Since there is major scarcity of shampoo, soap and other persona hygiene products, someone had to pay the political costs. Owners and management were summoned to a store on a week end. They complied freely and ended up in jail anyway. Never mind that a few weeks earlier Farmatodo had agreed to cooperate with the regime by putting organized rationing and finger printing machines per regime's wishes.

Since then things have not improved. I am privy to information that I cannot reveal because I cannot harm the parties, and I could place myself at risk. But I know of the people that have been arrested for questioning at their exit from Miraflores Palace after a meeting that they attended after summoning.

I know of a given minister, a particularly vulgar and uncouth general, who revels at these meetings at Miraflores threatening his "guests" of "ponerle los ganchos a la salida", arrest the guest at the door has he has already done. In these meetings the regime demands but offers no concession, no dollars to pay the debt, no price increase to stop the losses that food and medicine producers are forced to accept because of price control. But I also know that in some smaller meetings some of the business owners have challenged the military chair (it is almost invariably a military) to expropriate them once and for all, that they do not care but will start selling at whatever price they need to sell. And in at least one case I know of they did get a price increase, albeit insufficient.

I have also been told to pack an overnight bag and have a safe haven for a couple of nights if I need to do so. Now, even though I was told that in all seriousness I am not complying. First, even if associate in a food business we are low on the priorities of the regime at this time. Also, I am more likely to get arrested for this blog rather than any commercial activities. But I have been told and this by itself reflect the mood of the country as well as possible.

There is indeed an economic war waged, and I can guarantee that it has come from the regime and it is directed at defenseless people like my colleagues and me. We have no weapons and the judicial system is stacked against us from corrupt judges to regulations that these days cannot be met no matter how hard one tries. We are thus great fodder for the regime continued need for bread and circus. More circus these days...


  1. Charly3:27 PM

    Very depressing to read, likely even more depressing to write. Back 35 years ago on my first trip to Brazil, a local friend told me: we Latinos are corrupt and our military are the most corrupt of them all. This is too generalized but when it comes to politicians and the military, I agree wholeheartedly with my friend. On the other hand, I have utmost respect for those who in the face of all odds are fighting to save their businesses from the talons of the Bolivarian vultures.

  2. Anonymous7:20 PM

    I noticed that the only two shop signboards visible in Patricia Janiot's “La Venezuela del Siglo XXI” were the Farmatodo and Dia Dia ones. Is it just a coincidence?

    1. Could be. I'll watch it again.

    2. Anonymous3:17 AM

      Patricia Janiot is no a journalism. She is biased, During the Honduran political crisis she did a lot of damage to our democracy and our country. What do you expect from CNN. Watch FOX.

  3. Anonymous7:35 PM

    I agree that "40 years of populism light" are in part responsible of the current situation. I would also add the populist and business unfriendly attitude, which are deeply embedded in the Catholic culture (capitalism and entrepreneurship are "Calvinistic"), and the fact the most of the Venezuelan elite was "only in there for the money", and did not care about investing in education for the future generations of Venezuelans.

  4. Anonymous7:38 PM

    I do worry for you Daniel. There was just a period when you didn't post anything and I was concerned they had taken you away. With the recent capital the government just raised, they may be able to stay in power for a little longer, but it seems as if the inevitable is coming in the next 12-24 months. And as you've said, the inevitable might get ugly fast.

  5. Charles Lemos7:17 AM

    A very good post. I'll add that unlike the rest of the major LATAM countries, Venezuela was a late comer to ISI (Import Substitution Industrialization) which in the rest of the continent was generally the norm by 1930s. Venezuela had oil so imports could be bought. It was only in the 1970s that Venezuela embraced ISI. The iron and petroleum industries were nationalized in 1974–75, and the electrical generating industry was also a state enterprise. The government operated the salt and match industries; set the prices of pharmaceuticals, petroleum products, milk, meat, and other consumer goods and services.

    But the industrialization period in Latin America which began in the 1870s and was in full swing in most of the continent in the 1950s was delayed in Venezuela. Between 1950 and 1968, the annual average growth for industrial production in Latin America was six percent. In Venezuela, it was under four percent. Only after 1970 did Venezuela really seek to create a manufacturing base. Polar was founded in 1941. Compare that to Bavaria (beer) of Colombia which dates to 1886 or Postobón (soft drinks) which dates to 1904.

  6. "We are thus great fodder for the regime continued need for bread and circus." You could see the joy in the live audience when Maduro announced that Ledezma would pay for his "crimes."

  7. "forcing Lorenzo Mendoza, its chairman, to challenge the regime to concede administration of its nationalized mills so he would put them to produce."

    He should walk away from his company. Harsh, yes, but it seems the only solution for Venezuela, as was done in "Atlas Shrugged" ( Do as Henry Bowman did, later.) And he will end up in a gulag, but that would happen any way under the regime there. And this is happening in the US, albeit slower

  8. Anonymous3:03 AM

    Is this a repeat of the Kulaks?

  9. Anonymous6:38 AM

    Another reason for the Dia a Dia takeover, the founder is a smart, educated Venezuelan who lives in Boston. This person did not have to return to Venezuela to found Dia a Dia. He had plenty going for himself abroad. But he invested during the worst period and in the heart of chavismo as you mention. Did he do it out of patrotic duty because he hung himself out to dry. One good deed does not deserve another in Bolivarian Venezuela.


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