Friday, September 29, 2006

They all had a single party by Teodoro Petkoff They all had a single party by Teodoro Petkoff in Tal Cual The only two political offers of the candidate of continuity which are truly new are those of his “unique party of the revolution” and his indefinite reelection. The rest is a broken record of eight years of failure. More of the same. In the case of the “unique party” one has to beware. It would seem to be an idea aimed to regroup the archipelago that surrounds the continuity candidate in a single block and, supposedly, unite it. In the “revolutionary” nest of cockroaches the proposal has awakened mistrust, fears and suspicions. Not only in the little ones, but even-or specially in- Chavez’ MVR, because it is thought, not without a reason, that the whole purpose is to liquidate diversity, not to accept small differences, internally among the supporters of the candidate of continuity, who from now on, he thinks, he could subject his co militants to an iron discipline, making them obey the only voice of command: his. “Commander in Chief, tell us what to do!” this is what they expect to hear from now on. But if among his supporters the idea is seeing with reserve, the rest of Venezuelans have even more reasons to be concerned. The dynamics of “unique parties” have led, in very well known historical cases, from the suppression of debate internally within the party to the suppression of political debate at a national scale. Once the unique organization is created, the next step was to declare him interpreter and custodian of the interests of the Nation and deny the right of existence to other political forces with the argument that, by definition, they would be representatives of the “enemy”, which for our case will be Yankee imperialism. From the “unique party of the revolution” we would go to the “unique party of the country”, that is, to a single party in the country. Much like it was in the former Soviet Union. In Nazi Germany, in fascist Italy, in Franco’s Spain and…in Fidel’s Cuba. Speculation? History is there and those that say, that those who do not learn from history are condemned to repeat it, are absolutely correct. 10:24:02 PM    comment []

Street Vendor Arbitrage in Venezuela Market forces can be very powerful indeed. As acknowledged by president Chávez a few nights ago in an interview, his Government has been using trial and error, looking for solutions to problems in the last eight years and while errors and mistakes have been made, he thinks that his Government now has the “bull by the horns”. Or so he thinks. The problem is that the Government seems to ignore market forces and creates distortions on top of distortions, which ignore the basic principles of economics and how human beings react to opportunities. When the Government created its supermarket network Mercal, it was supposed to be a way of delivering cheaper goods to the poor. Mercal could obviously sell goods cheaper than anyone. It paid no custom duty, it received all of the currency it wanted at the official rate of exchange, it was handled by military at all levels so it only had to pay labor for a reduced non-military workforce. Finally, it was not for profit and thus would pay no taxes. Later, the Government established price controls for certain foodstuffs and they applied to a large fraction of the products sold by Mercal. As inflation drove prices up, the Government allowed controlled prices to increase only slowly or not at all, creating a huge discrepancy between controlled prices and free market prices. Thus, the Government had to start subsidizing many of these products in order to keep prices down. For many products, it was or is impossible for local producers to even compete with Mercal subsidized prices. This has basically become a trap; foodstuff prices are up 19.9% since May so that in the face of the election, the Government does not want to approve any increase of controlled prices and has to spend more money on subsidizing these products. But market forces have now intervened in the form of the huge work force of street vendors, estimated to be 300,000 in Caracas alone. They simply go to Mercal, buy as much as they are allowed to and go and sell the products in the streets at market prices, thus creating what we can call “Street Vendor Arbitrage”. The differences are huge and so are the profits of the street vendors. A kilo of powdered milk, for example, that sells at Mercal for Bs. 4,700 (US$2.18 at the official rate of exchange) goes for Bs. 15,000 (US$ 6.97) from the street vendors, wheat flower, Bs. 1000 at Mercal goes for Bs. 2,500 in the streets, sugar Bs. 740 at Mercal, Bs. 3,000 in the streets and so on. Of course, you can’t always find all the products at either Mercal or informal markets, with sugar, milk and some vegetables being in short supply regularly. The Government’s solution to this problem is typical: Next week a decree will be issued prohibiting the sale of Mercal products by anyone but Mercal vendors and the National Guard will receive instructions to begin inspecting street vendors and allowing the guards to confiscate the goods from anyone trying to sell Mercal products. Of course, all this will just give more work to the National Guard, which in turn is likely to charge a fee not to bother street vendors directly from the vendors or the street vendors will create an early warning communications system that will allow them to run or hide their products anytime the National Guards comes nearby. What’s next? Undercover cops to supervise the corruption of the National Guard? Who will supervise them? 7:45:50 PM    comment []