[Eauz]

Rei, if you find it impossible to understand the point of the article, there is no need to discuss the additional fluff added to it.

Eauz, whether one finds the petit-bourgeois praxis immoral is missing the point in analysing this situation. What kind of message does this send foreign investors, credit-lenders and financiers? If Venezuela wants to be taken seriously on a global scale, they are going to have to stop this cataclysmic 'economic war'.

So, it's all good and fine when we subsidize importers through socialism, but when they turn around and gauge the price, we're irrational to expect change?

Wow, so many defenders of socialism for capitalists. I guess since we've sold ourselves off to the neoliberal philosophy, it would not make sense to bite the hand that feeds us, right?

[Eauz]

Exactly. Exactly, how are they going to build socialism atop a ruin that they refuse to develop? This whole thing makes no sense. Building socialism in Venezuela should have been so easy, yet they've just fucked it up completely because they turned Marxism into a dogma instead of a theory.

Well, in a vacuum, sure it would be easy, but then again, we don't live in one, right?

[Husky]

Zimbabwe tried to bite the hand that fed them as they realized they didn't own their own mines and farms. The result - they use the U.S dollar today, essentially being at the whim of another country's plans entirely.

Pragmatism > irrationality

[Rei Murasame]

Wow, so many defenders of socialism for capitalists. I guess since we've sold ourselves off to the neoliberal philosophy, it would not make sense to bite the hand that feeds us, right?

It's just long term thinking. Obviously we are not living in a vacuum, and that is precisely why people need to judge between different types of compromising. For example, did the Communist Party of Vietnam 'sell itself off to the neoliberal philosophy', or did it 'reiterate its commitment to building socialism by adapting to the present circumstances'?

I think it's the latter. Why can't the Venezuelans and their supporters realise this?

[Eauz]

I see. So you're telling me that it's best to stay the course and not say anything? Before Chavez, Venezuela stayed the course and conditions were much worse than they are today. Crime and inflation are major increases, while all the other key indicators have improved.

http://www.theguardian.com/news/datablo ... ction-data

Again, back to the topic, why are we subsidising the capitalist and then they cry that they can't gauge the population? Why do you support this?

[Rei Murasame]

Why do you think that they are gouging? They are just making money, like they are supposed to do. Also, isn't the whole purpose of this stage supposed to be to create the circumstances where capital accumulation inside the country will happen? That is supposed to happen, right?

It baffles me that you guys are complaining about the national petite-bourgeoisie making money inside the country, when that is precisely what they are supposed to be doing in the first place.

[Husky]

Venezuela's inflation is essentially caused by stringent currency controls (in an attempt to prevent capital flight) which lead to a series of currency devaluations, disrupting the economy.

I just want to make a key point. Keep in mind oil exports account for 95% of exports and 50% of GDP.

Oil is down to $93/ barrel again (largely off the back of expanded US output, and falling oil consumption across developed countries). Prices could fall further in coming months if sanctions on Iran are dropped. There is a high probability of pressure on Venezuelan government finances and on the currency, irrespective of government policy.

That said, best practice should be adopted. Price controls on tradeable goods won't work - they just stop markets from clearing, cause queues, cause looting, reduce production volumes and destroy wealth. Reducing inflation will probably require the government reducing its budget deficit (pulling demand fiscally), alongside the central bank raising interest rates. It's up to the government what balance it wants to hit between high inflation, budget cuts, tax rises and interest rate hikes. There is no perfect world here.

Amidst all of the above, effort must be pursued to raise *growth* in the economy. That means reforming law to attract foreign direct investment. That means negotiating free trade with the EU (as Chile did; and Brazil is doing) and with the US. That means rebalancing government spending away from wages & current consumption, and instead towards higher volumes of capital spending and growth-boosting infrastructure investments. That means reducing the burden of bureaucracy on the domestic economy, making it far easier to do business. That means: **don't** put merchants, retailers or entrepreneurs in prison.

It's pretty easy stuff to comprehend: don't bite the hand that feeds you unless you can find another hand to feed you. Eauz, how can you justify the deterioration of economic conditions with abstract dogma?

[Rei Murasame]

I don't agree that there is any particular need to negotiate any free trade deals with these people, that would only lead to disaster. Coming into compliance with the European Union guidelines for 'free trade' as it is right now, would simply wreck Venezuela's development because it would open them up to European companies buying out all of their utilities and services in the longrun.

The oil exports should be used to develop Venezuelan industry, but that does not require any kind of free trade deal to be signed. The presently-existing barrier to trade is precisely what is needed to spur the development of domestic industry, if the state would just invest in it.

[Husky]

The problem sources are more nuanced than posters here are prepared to recognize. The oil companies (read: US) invested their capital to drill for the heavy crude prevalent there, that requires technically specialized approaches to extract and refine. When oil prices rose, the oil companies tried to keep to the "old prices" for royalty payments, keeping the increases for themselves as windfall profits. Venezuela then nationalized the oil assets. The US companies in turn removed the Texans with their specialized knowledge and the wells jammed with the hardened heavy crude. All this caused very bitter feelings that remain to this day.

Venezuela has refinery capacity, that allows it to be a player in finished products including gasoline and especially diesel. Diesel sells for seven cents a US Gallon retail, but you have to be Venezuelan to buy it. The seven cents is roughly the cost of extraction, without inclusion of refining costs. the result is that Venezuelan fishing boats and cargo ships are competitive, as their major costs would otherwise be fuel. It also has historically allowed Mr. Chavez to embarrass Washington by donating free heating oil to the US Northeast for the poor, something that Washington cannot seem to come to grips with (and that, like Snowden, deeply embarrasses the politicians and bureaucrats).

Venezuela can resole its food and milk shortages by importing from the US farm belt, and re-selling to all food stores and distributors, for further re-sale into the market at market prices, where the prices are stable by the availability of unlimited supplies at fixed prices from the import board, but political stubbornness seems to preclude that. It can issue a "living payment," essentially a US-style eared-income credit, and let the public spend as it chooses, forcing merchants to compete for customers. By setting the prices at levels that allow for local farmers and dairy to compete and sell into the same markets, you can develop import substitution. Fixed prices for farm products is socialistic, perhaps, but widely done in Western societies, including Canada (where you sell grain to the Canadian Wheat Board), the US (the "farm bill"), Germany, France,... And you develop parallel industries by setting "we buy all you can produce" markets for lumber, cement, cattle, various fruits, and then using that lumber and cement as components in new construction of needed goods including ports, housing, and rail.

[lucky]

Authorities say unscrupulous companies have been hiking prices of electronics and other goods more than 1,000 percent.

In other words, the authorities have managed to disrupt the supply of goods so badly that their market price has skyrocketed.

The socialist leader, who won a vote to replace the late Hugo Chavez in April, said his government was preparing new regulations to limit businesses' profits to between 15 percent and 30 percent.

Depending on what this means exactly, this price regulation will likely constrict supply further, creating even bigger shortages on everything. Expect huge lines for a severely limited supply of government-rationed goods.

[Eauz]

Why do you think that they are gouging?

Read the article, I'm not going to tell you.

I'm not going to get into whether or not Venezuela is in economic turmoil or not, since that is not what the OP was about and I've not seen a definitive essay written on whether this is true or not. On topic, as we can see, the importers are being provided a subsidy on their products whom then turn around and increase the price 200% - 1000%, another sign of biting the hand that feeds it. No one told these importers that they have to import products into Venezuela. Do you really feel bad for the importers now who are getting raided? As for making money for the country, I agree with Rei that this is a problem that was created by the fact that Venezuela has a market-oriented economy. It's even in the article:

Every time the bourgeoisie raised prices, Hugo Chávez would respond by raising salaries. Now the government does not have funds to respond with this bonapartist tactic which leaves all social classes with something. It has to transfer wealth in another way.

I just don't understand why you justify defending the importers who receive forms of socialism, which allows them to turn around and increase the price X% to cushion their profits. The bourgeoisie is part to blame for the increase in inflation (supply of money in the economy, not the cost of a hot dog each year). I'm not sure what type of world either Husky or Rei lives in that rationalises the idea that the victims are the ones who have received major subsidies for years.

The OP is pretty much a sob story about the petite-bourgeoisie being caught with their hand in the cookie jar way too often and rather than blame market-economics for this sudden problematic situation, they'll play victim and it provides excellent propaganda stories for the Western consumer to read. It's just the nature of the petite-bourgeoisie to run to the bourgeoisies when they are being threatened. The problem is, history has shown that many members of the petite-bourgeoisie end up being destroyed by the bourgeoisies. Get back to me when we have a REAL story.

[lucky]

the petite-bourgeoisie being caught with their hand in the cookie jar way too often and rather than blame market-economics for this sudden problematic situation, they'll play victim

Wait what? Did you actually mean "blame market economics", or perhaps "blame the market economy"?

It's hard to blame a field of study for running into trouble like this.

If it was a typo and you meant the latter: the phenomenon of governments looting stores is not normally considered a part of a "market economy".

[Eauz]

Did you actually mean "blame market economics"

Yes, this is correct. The last time I checked, Venezuela's economy was linked to market economics, just as it was pre-2000. I'm not suggesting that the philosophy has looting, but that it is a root cause that lead up this situation.

[Rainbow Crow]

It makes no sense because socialism makes no sense. How do you fight liberal capitalism and have flat screen TVs made through worldwide trade cooperation at the same time?

You don't

[Eauz]

Who's fighting liberal capitalism? I must have missed something.

[Eauz]

In other words, the authorities have managed to disrupt the supply of goods so badly that their market price has skyrocketed.

When you're a subsidised importer, why would you not disrupt the market price? This is part the fault of the importer involved in accepting these policies and then hiking the price up beyond the actual market price for it. So, in other words, Venezuelans are not only paying the subsidy to the companies, but they are also paying for the price of the product determined by the company. Double dipping?

[Husky]

For the inflation and shortages in Venezuela to subside, the Government would have to start publicly and summarily executing profiteers and speculators.

You seem to ignore a very simple fact: They are printing a lot of money, and this increase in the money supply isn't matched by an increase in the supply of goods and services. When people find their pockets full of money, they want to spend it. And when there aren't enough goods on the shelf to satisfy their demand, then of course prices rise.

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.

As we speak, Venezuelan shoppers are queuing outside seized stores trying to spend their rapidly depreciating currency, and the economy is marching steadily toward a dénouement when bolivars will be useful for little more than kindling. The stock exchange is down another 5 percentage points today and capital is going to flee from the country. Hyperinflation effectively wipes out the purchasing power of private and public savings, distorts the economy in favour of the hoarding of real assets, causes the monetary base (hard currency) to flee the country, and makes the afflicted area anathema to investment. But obviously you don't care about any of that, as long as you get to trample on some *evil* small business owners, everything's cool.

[Soulflytribe]

He is holding capital and liberalism at bay the best he can, he is doing it imperfectly and clumsily but that is all the international conditions will allow, those who advocate for the overthrow of the regime are the friends of international capital and liberalism.

Ha! How much capital do you think an owner of a small store with 1 to 5 employees has?

That bearded guy panicked when the military expropriated his store because that small store was probably everything he owned in this world. He cried as if they were expropriating his own residence, and it wouldn't be that surprising if he and his family were living on the floor above the store. Immigrants tend to do that.

Capitalists according to Goldberk:

[Regulatory Capture 1]

I'm I missing something here? If local Venezuelan businesses are borrowing money from the state in dollars to buy goods on the open market, with a tacit understanding of there being a 30% mark-up on these imported goods, which is not a shabby return, then they decide to implement a 200-1000% mark-up, IMO these businesses got what they deserved and I'm an unashamed capitalist. Predatory pay-day lending, monopolies and outright extortion has no place in society. A 200-1000% mark-up qualifies as outright extortion IMO. If said businesses are borrowing money on the open market and marking up goods at 200-1000%, then that is their prerogative and the free market will soon put them out of business and thus the state has no right to get involved.

[Husky]

The shortages, price gouging and corruption are stoked by Venezuela's foreign exchange controls. It's pretty simple really. Every aspect of Venezuela's economy depends on the distortion of the market provoked by the fixed exchange rate.