[Social_Critic]

They may get paid 25 cents on the dollar. A nice haircut they fully deserve.

[Soulflytribe]

The bourgeoisie is in charge in Mexico, Chile and Colombia and they have little reason to sabotage and cripple the economy. Venezuela is tryna get in the track to build socialism, so the bourgeoisie has every incentive to act as wreckers, profiteers and saboteurs.

Now everything makes sense. Haha!
Klasswar is PoFo's new stand-up comedian.

[lucky]

Mr Maduro said government inspectors had found goods that were overpriced by as much as 1,000%.

He said a small air-conditioning unit was selling for 36,000 bolivars ($5,730) at Daka, while the same unit cost 7,000 bolivars ($1,113) in state shops.

Mr. Maduro: simply by taking this information from you, I can easily tell that your state shops must have not been selling at 7,000 to all buyers, or else nobody would have paid 36,000 at the competition.

Judging from the past experience of Eastern Europe implementing similar policies under the Soviet rule, I would guess that the state shop was selling at 7,000 for some small group of privileged or lucky shoppers and at ∞ bolivars (i.e. not selling at all) for everybody else, who then went to Daka to buy at the cheaper price of 36,000 instead.

[Magnetonium]

Mr. Maduro: simply by taking this information from you, I can easily tell that your state shops must have not been selling at 7,000 to all buyers, or else nobody would have paid 36,000 at the competition.

Judging from the past experience of Eastern Europe implementing similar policies under the Soviet rule, I would guess that the state shop was selling at 7,000 for some small group of privileged or lucky shoppers and at ∞ bolivars (i.e. not selling at all) for everybody else, who then went to Daka to buy at the cheaper price of 36,000 instead.

Goods were always very scarce in Soviet Union, unless you had money and were well connected. Then you could get anything. Like for example with my parents in Soviet Union who had trouble finding tickets to Canada anywhere - they were not available to an average citizen. Luckily my parents by a miracle ran into some well-connected people and they ended up in Canada. But an average citizen would have to work hard to find the same items. In a way the situation in Venezuela's shops today is reminiscent of the communist ones, and seizing overpriced shops will not fix this problem. Pirate methods of seizing private enterprise is simply another way government is robbing people to make the poor citizens feel a bit better about themselves, i.e. we are poor, and now the people with money are as poor as us. Populist measures that will sure work well with pro-Maduro voters.

[Social_Critic]

Rei Murasame: As you can see the Venezuelan regime has evolved over the years, and today we see it in its final degenerate phases. Because I had been living in Venezuela and had seen some of the shenanigans close up I could map out the gradual descent into chaos and eventual violence.

What I didn't see was the way Chavez would die, and Maduro's selection as the chosen heir. Maduro has always been known as a loyal follower, a yes man who lacked brains (it was common knowledge his wife Cilia, who is a lawyer and a bit older carried the pants in that household). But the Cubans must have convinced Chavez to put Maduro in because Maduro was a fairly dumb character and they could steer him.

And it's clear they are steering him. What seems to be happening is a band of ex Chavistas known as cubazuelans who are lined up with Maduro, and many other chavista factions wiggling as they see their movement led by what is clearly a very incompetent leadership. Beyond the sheer lawlessness of their actions they are moving to create their brownshirts and are militarizing everything. Today the military, which used to be in their barracks, is called upon to help loot stores, arrest civilians, and take over factories and buildings as Maduro dictates. This militarist approach up derives from his Cuban handlers' background. They were raised in a dictatorship where there is no rule of law, and there's no logic to many government actions. And I know you will scream but they seem to take over businesses quite often to hand them over to their preferred oligarchs. So this is really morphing into corporatism and what I call Neo fascism. These guys aren't real communists.

[Rei Murasame]

If the government were to take consumer electronics businesses from one set of private owners and gives them to another set of private owners, market prices could still be established. But the thread title says "Venezuela's government seizes electronic goods shops".

If you are telling me that their plan is to basically invite another company to take it over, then I'd retract my previous post in this topic.

[Beren]

Maduro has just destroyed the Venezuelan economy. As soon as you make it impossible for prices to be determined by anyone, then that is the end.

Although Maduro may be incompetent, any kind of socialist economy (and society) should be built on a massive economic and material base developed and built during capitalist times, otherwise it fails anyway. Since Venezuelan socialism (or whatever it is) wasn't built like that, it's doomed to fail, no matter what. Even Chavez himself wouldn't be able to keep it standing much longer.

[Social_Critic]

For an update, the local press reports many stores are refusing to open today. Mobs have surrounded larger stores and are clamoring for their opening. A chavista agency official told the unruly crowd at one store he would guarantee a 30 % reduction.

Meanwhile I heard from a friend who owns a store and he says he cancelled all purchase orders, has the place locked down, told his workers to stay home, and is now trying to buy dollars in the black market to get as much cash as possible and leave the country. The back market rate is at 65 bolivars per dollar. Official remains at 6.3.

I will be posting a comment called "the Daka looting" in a separate post. It's by a communist author writing about this ongoing situation.

[Rainbow Crow]

Taking imported goods from one domestic actor and giving them to another wouldn't keep the imports coming in. There is more to it than just prices.

[Soulflytribe]

If the government were to take consumer electronics businesses from one set of private owners and gives them to another set of private owners (...) If you are telling me that their plan is to basically invite another company to take it over, then I'd retract my previous post in this topic.

Legal uncertainty inhibits economic activity. The "new owners" would invest very little (if investing at all) because they would never know when lunatic Maduro is going to chop their heads off and expropriate their property.

[Rei Murasame]

Well, yes, obviously it would have to be done in an organised way and with air of policy certainty to it. Instead, what happened was the equivalent of the leader of a country getting up on TV and asking citizens to go down to town and loot Currys and PC World.

You guys cannot be too surprised that I think this is an enormously bad idea.

And furthermore, why on earth does Maduro care about a consumer electronics store? What'll he develop an interest in next, a mobile phone shop? It's absurd.

[Social_Critic]

And furthermore, why on earth does Maduro care about a consumer electronics store? What'll he develop an interest in next, a mobile phone shop? It's absurd.

Maduro announced yesterday they were extending the price controls to everything. They also announced they were closing down or blocking all websites mentioning the black market rate. The rate right now is 61, the official rate is 6,3. Arbitraging these rats is the national sport.

[wat0n]

Would you post a news source about this, S_C?

[Social_Critic]

Would you post a news source about this, S_C?

Here's an English source, a leftist paper from the UK


http://www.theguardian.com/world/2013/n ... -inflation


With apologies to forum rules regarding the use of foreign languages:

http://internacional.elpais.com/interna ... 74867.html


http://www.eluniversal.com/caracas/1311 ... -de-los-te

http://www.eluniversal.com/economia/fis ... a-economia

Also a critique in Spanish I already posted written by a communist economist (Dieterich):


http://www.aporrea.org/actualidad/a176653.html

Finally, a discussion about the economy bt the devil himself



http://devilsexcrement.com/2013/11/10/i ... venezuela/

[KlassWar]

Well, yes, obviously it would have to be done in an organised way and with air of policy certainty to it. Instead, what happened was the equivalent of the leader of a country getting up on TV and asking citizens to go down to town and loot Currys and PC World.

The rule of law is bourgeois: Authorizing the public and open looting of a class enemy is an almost exercise in class power, an almost Sorelian expression of class violence. Why loot them under cover of law and jumping through all sorts of pointless bourgeois legal bullshit instead of just the people fucking loot them, which is much simpler, more empowering and with greater symbolism?

Allowing class enemies to be looted is publicly announcing that you don't give a shit about their so-called property rights, nor should anybody be expected to. That's beautiful, and tryna make it official just detracts from it.

[Rei Murasame]

There are two problems with that.

• The first is that is that if you tell the citizens that they can just a loot a store and that the law enforcement will not stop them from doing that, then they'll be able to keep doing it, since no one will be in charge to tell them when to stop. Hence why you can expect that mobs will be forming around every small shopkeeper soon, because there is no policy, and no force in place to stop the mob.
  
  
• The second is that having nationalisation and price controls for the commanding heights of the economy, is not supposed to involve telling retail stores what price they can or cannot set on products that they are selling. Because that's crazy.

The additional weirdness in all of this is that the thing which Maduro was allegedly upset about, was the fact that the store in question was selling items that were priced much higher than those that existed in the government controlled shops. This is a bizarre reason to attack a competitor. If the competitor's price is too high, then what's the problem? There is no problem.

Just run an advertisement saying, "Our stuff costs less, come to our shops instead". The wonders of market logic!

[Social_Critic]

The additional weirdness in all of this is that the thing which Maduro was allegedly upset about, was the fact that the store in question was selling items that were priced much higher than those that existed in the government controlled shops. This is a bizarre reason to attack a competitor. If the competitor's price is too high, then what's the problem? There is no problem.

Just run an advertisement saying, "Our stuff costs less, come to our shops instead". The wonders of market logic!

The Daka affair is a bit strange because Daka was owned by Arabs close to the regime. These guys showed up in town and set up shop with subsidized currency. Their prices allowed them huge profits.

The Daka clan opened a large store in Panama, and are there right now (got word from a Venezuelan living there). So maybe Maduro was going after an unfaithful mafia? The play could be made to let these guys generate huge profits and deposit a chunk of the cash in government official hands. I also heard the Vicepresident Arreaza had broken with Chavez' daughter and he is partners with a different Arab clan (they own IVOO). I'm just speculating but I read Maduro's wife Cilia is pissed off at Chavez' daughter over a real estate dispute, so maybe Cilia told Maduro to put a hit on Daka to show she's partial to Arreaza and IVOO. Hell it could be this is all about two chavista queens fighting over a house! And then it got out of hand and Maduro and the Cubans decided to ride it to the end?

[Rei Murasame]

The Daka affair is a bit strange because Daka was owned by Arabs close to the regime. These guys showed up in town and set up shop with subsidized currency.

Arabs from which specific country? Why is the PSUV allowing foreigners to run around in the retail sector in the first place?

[Social_Critic]

Arabs from which specific country? Why is the PSUV allowing foreigners to run around in the retail sector in the first place?

The family which owns Daka is from Syria.

I think there's a bit of confusion on your part. Over the last 15 years Chavez had been carrying out a plan to destroy private enterprise in Venezuela. This he did via nationalizations, and by choking to death certain sectors by rendering them unable to compete with imports.

To make imports very cheap he had foreign exchange controls which made the bolivar a very strong currency. Thus the entities able to exchange their bolivars for dollars at the artificial price had a tremendous advantage. Local producers were slapped with taxes, regulations, controls, and very restrictive labour laws. This meant they could not compete with imports.

Chavez also gave construction contracts and business to companies from abroad, or to newly arrived immigrant clans. These people were treated very well, and usually became attached to sponsoring government officials who shared the spoils. Many are Arabs from Lebanon, Syria, Palestine, etc.

So the corruption was actually very well organized and Chavez was on his way to replacing the native business class which had opposed him with those natives who played along (and there were many who became rich doing business with the government while greasing the right PSUV politicians). And he also had these newly arrived clans, which became very prominent in the Arab community.

I happen to know one of these Arab Syrian families and so I heard the gossip and met some of these players at social functions at the club (I lived in a very upper class area so we all used the same three clubs and ran into each other at the local deli and so on).

I keep getting information Maduro moved on this because he got tipped off Daka was making a lot of extra cash leveraging their connections. And right now Maduro is in a bind, he's short of cash and there are acute food shortages, so I imagine this was a quick and harsh reaction to punish the mafias allied with these particular Arab families. But the Daka family had already taken a bunch of their profits and moved on to Panama. So the guys they arrested were local guys who were just store managers.

What happened was that when Maduro gave his speech to "empty the shelves" people took him at his word and started looting. And some of the looters were National Guard. So many merchants closed down and many are refusing to open because they got roaming crowds waiting to get in.

In Venezuela the high crime leads to stores being armored with thick steel bars and many barriers, so it's kind of hard to get inside unless the owner opens. I'll get on the news sources I have to see what I can pick up directly from the ground, but I can tell you now at least one friend who owns a store left it shut and left the country. I can't imagine how he got the ticket because all the flights are sold out.

[Social_Critic]

Moré background information on corruption and the ongoing political crisis


President Nicolas Maduro seeks to rule Venezuela by decree


DAVID USBORNE Wednesday 09 October 2013

Political tensions are back to near boiling point in Venezuela as the National Assembly in Caracas began debating a request by President Nicolas Maduro for emergency powers to restore order to a chaotic economy and tackle corruption


“The government would have to come in with tanks and rifles if they want to apply this enabling law,” said Henrique Capriles, the opposition leader and Miranda state governor. “This law that he wants is in order to distract the people from their problems. Decree powers will not help the government be successful.”

The Assembly has five days to debate the request, which must be approved by a three-fifths majority. The ruling coalition is one vote short of that threshold and Mr Capriles is asking that the opposition hold firm. “Maduro and his gang will be remembered as presiding over the most corrupt period in the history of Venezuela,” Mr Capriles said.

Mr Maduro, the chosen successor to Hugo Chavez, who died from an undisclosed form of cancer in March, narrowly beat Mr Capriles in elections in April and vowed to continue his mentor’s socialist revolution. However, economic conditions have deteriorated, with the official inflation rate now exceeding 45 per cent and basic goods – from toilet paper to communion wine – frequently running out.

Nor has there been any improvement in ties with the US, as some had hoped after the passing of Mr Chavez. Mr Maduro recently expelled America’s top envoy, howling “Yankees go home!” in a televised speech and “Out of Venezuela!”

When 1.3 tonnes of cocaine were recently found on an Air France jet from Caracas to Paris he contended it was an American-led conspiracy.

Addressing Congress to repeated interruptions from supporters, Mr Maduro, a one-time bus driver, asserted his need for special powers for 12 months to crack down on corruption and accused Venezuela’s private sector of undermining his government. “Not a single day in these last five months has there been a reprieve, so that this administration can govern successfully,” he said. “Enough of the sabotage.”

Venezuela, the most oil-rich country in the world, emerged from the Chavez era almost split over his legacy. But after beating Mr Capriles by a sliver, Mr Maduro has increasingly been mocked by his critics as a shadow of the man he replaced. Ordinary Venezuelans, meanwhile, have been beset by economic disruptions, including shortages of food basics and ever more frequent power cuts.

Last month, Mr Maduro sent the army into a toilet paper production plant and said supermarket shelves were empty because Venezuelans eat too much. Meanwhile, the country suffers the highest murder rate of any Latin American country. If he is granted special powers, Mr Maduro may begin by modifying strict currency controls that have led to an exploding black market in American dollars.

Note: to obtain the required 2/3 majority the regime has been reducing opposition numbers by having them indicted. They dropped from the chamber rolls a lady who was accused of irregular dollar payments to a rock band several years ago, when she was working for a chavista municipal administration (some opposition leaders and assembly members are former Chavistas who changed sides over time as they realized the government was mostly about theft and surrender to Cuban forces). Therefore, if everybody votes along party lines Maduro will assume both presidential and legislative powers. The National Assembly seems ready to put itself out of business.

Note 2: the black market rate is slightly above 60 bolivars per USD as of today. The official rate is 6.3 bolivars per dollar. Foreign reserves are down to the lowest level in many years, and liquid reserves are down to less than $800 million. For a country which imports almost everything due to the destruction of national production the current situation is clearly unsustainable. The question many ask is whether this will end in civil war and how the different factions will line up in such a fight.