Monday, January 16, 2006

Opposition Candidates II: Economic ideas from Petkoff's interview So far, nobody has taken up my invitation to write in favor or against any of the opposition candidates. The article by Mayobre below remains the only contribution to understanding what the opposition is offering. Yesterday, Teodoro Petkoff had an interview in El Universal, I will list his thoughts on economic matters (which people have asked about) to try to get the ball rolling again. I have tried to remove as much as possible the criticism to the Chavez Government so that they are ideas that stand on their own and can be discussed as such. I will do the same as opposition candidates give interviews or speak in the next few months on matters of substance. The highlights of the interview in terms of economic opinions: --It is evident that the roots of poverty are sunk in the high volumes of unemployment and sub employment that we have in the country. The sources of employment arise from investment and for there to be investments, public or private, there has to be a Government with the determination to invest in plans and projects that lead to the creation of jobs. --A great plan of public works on the matter of infrastructure is absolutely necessary. --You have to favor, with macroeconomic and institutional policies, a climate that would attract private investment because, at the end of the day, the first employer of the country is the private sector. --A foreign exchange policy that permanently maintains the Bolivar overvalued favors what happened last year: US$ 25 billion in imports and there is no formal private or cooperative sector that can resist the weight of such competition. --There has to be a policy for the construction of housing to attack both the topic of the housing shortage and create employment. --You can not continue punishing the people with a VAT of 14% and it is absolutely necessary to eliminate the debit tax to all financial transaction, which can not be justified due to the magnitude of the oil income. --It is a shame that in seven years this Government has not been able to create a new social security system, that has an absolute priority in the immediate future. 9:45:59 PM    comment []

Barreto will decree a freeze in housing prices The Mayor of the Metropolitan area of Caracas Juan Barreto said this weekend that he would issue a decree freezing housing prices and would propose to the National Assembly a Bill for the regulation of the price of housing. According to Barreto, people are renovating old buildings and making improvements in order to sell them for more (Sic). He said that people who build luxury housing should be forced to build cheap housing too. Well, the ignorant revolution marches on! Last year they created a Law to finance housing at preferential rates that were real negative, that they thought would solve the problem and nothing happened. Of course, the limitations were so many and the price that could be afforded with the maximum established in the law were such, that the whole thing has done little to spur housing cosntruction. (There were so many regulations that the Government took a long time issuing the "regulations" within the law, which further limited the impact of the Bill) But rather than invent more hairbrained schemes, the Mayor should take a basic economic course and realize that this is a problem of supply and demand and the Chavez Government is responsible for most of the problem. Below, I have updated the graph of the housing built yearly for the last fifteen years, using data from the Construction Chamber of Commerce. As you can see, the last seven years have been an absolute disaster. It is absolutely remarkable that EACH and ALL of the last seven years has been worse than any of the previous eight, not one year has it been a better year than in any of the Carlos Andres Perez or Caldera years. And those were not precisely great Governments of our history! But they seem to get reivindicated more and more with the lack of accomplishments of the Chavez administration. Venezuela has an estimated decifit of 1.7 million housing units. With numbers like those of the graph above, the deficit has grown under Chavez, whose inability to articulate any form of housing program is yet another failure of his incompetent and inefficient administration. 2:09:18 PM    comment []