The Times Comes Undone Over Venezuela

Today the New York Times published an editorial critiqueing the economic policies of the Venezuela government and pointing out supposed flaws in them. It’s worth taking a look:

President Hugo Chávez of Venezuela had an especially good time baiting President Bush during their recent competing tours of Latin America. But demagoguery and showmanship will do nothing to solve Venezuela’s 20 percent inflation rate — now the highest in Latin America — and growing food shortages that are punishing the poor whose interests Mr. Chávez so loudly declaims.

Funny how they leave out that Venezuela also has the fastest growing economy in the Western Hemisphere, that real income is WAY up, and that food consumption was up 16% last year. I guess they were pressed for space and couldn’t fit those little factoids into their editorial.

Too bad they also left out the little fact that in the 10 years prior to Chavez coming to power only ONCE did inflation go below 30% and that year it was 29.9%. Maybe the editorial writers from the Times could benefit from this graph:

Venezuela’s biggest problem is that there is no one to question Mr. Chávez’s increasingly erratic decisions. The National Assembly has given him the power to rule by decree for 18 months. So instead of seriously addressing Venezuela’s serious problems, the showman has settled for more showmanship.

There are plenty of people who could question Chavez’s decisions. Thing is, when your standard of living is going way up, poverty is down, more than a million new jobs have been created, and massive new public works are sprouting like mushrooms after a rainfall why would you want to. A few months ago more than ten million Venezuelans had their chance to question President Chavez’s “erratic” decisions and they decided they wanted to keep Chavez and his “erratic” decisions. Hell, maybe the U.S. could use someone who would make “erratic” decisions like getting that country out of Iraq.

As Simon Romero reported in The Times, Venezuela’s currency, the bolívar, has lost about a fifth of its value since January. The government has now announced it will introduce a new “bolívar fuerte,” or strong bolívar — worth 1,000 old bolívar, or roughly 25 American cents. It is also reintroducing a coin known as the locha — to be worth one-eighth of a bolívar fuerte — which last circulated in the 1970s.

Wow, I must have missed some important news recently. The bolivar has lost 20% of its value since January. Venezuela has had 20% inflation in the past two months?

It didn’t. The New York Times is just revealing its ignorance of basic economics. What they are almost certainly referring to is the bolivar being down (on the black market) 20% against the dollar. That may be. But that does not mean the bolivar has lost 20% of its value. It would have only lost 20% of its value when purchasing things demoninated in dollars – ie, imports from the U.S., trips to Disneyland, etc. That much is true. But that is not what Venezuelans spend most of their money on. For the most part they buy housing (not demoninated in dollars and therefore unaffected), they go to doctors (Venezuelan doctors charge in bolivares, not dollars), they ride mass transit (they insist in exact change in Venezuelan currency), they take trips to Chichiriviche (hotels charge in bolivares), and on and on.

This is a very basic misconception regarding economics – that your currency going down against other currencies means your standard of living goes down by that amount. I once read a newspaper saying after a Mexican peso devaluation of 50% saying that Mexicans had their standard of living reduced by 50% overnight. Pure popycock. The person who wrote that needs to be sent for an Economics 101 class as do the editorial writers at the Times.

Further, one would think that the Times would know that when the Times critiques the economic policies of others they ought to take the trouble to get their own economics right. Otherwise they look foolish, as they do right now.

Government spending — fueled by the nation’s oil wealth — rose an extraordinary 48 percent last year, and is one of the main forces driving inflation. Private-sector investment, meanwhile, has weakened since Mr. Chávez decided to nationalize utility companies earlier this year.

Interesting, the New York Times has statistics on private investment over the past three months. Selfish bastards, why don’t they share them? I’d love to see them. Then again, maybe they are just making this assertion up. Yup, its probably the latter.

Price controls intended to help the poor buy food and hold down rising prices have led to a scarcity of staples like beef, chicken and milk. Threats to nationalize grocery stores and jail their owners — whom Mr. Chávez accuses of hoarding — have only made the situation worse.

We know food consumption is way up, both last year and so far this year. So what do they mean by scarcity? That the food is in peoples stomachs rather than sitting around on store shelves?

It seems people often say these things without thinking about what they are saying. The way the Times is formulating this is there is scarcity because people have so much buying power that all the food immediately sells out. Presumeably it would be better that people had less money and bought less food so that the stores could appear well stocked, even if that means people go hungry? By that reasoning when when millions were starving in Ethiopia there was no “scarcity” because the grocery stores in Addis Ababa were well stocked. And there is no scarcity of health care in the U.S. because anyone with money can walk into a doctors office and purchase whatever health care services they want – never mind that tens of millions have no access to health care.

Unfortunatley the Times only seems to care whether those who are fortunate to have lots of money are able to purchase whatever they want whenever they want. Whether or not important human needs are being met never seems to cross their minds. This way of thinking is what happens to people who spend years in university classrooms learning by rote so they can ace their exams but never stop to think if what they are being taught makes sense or accurately reflects the world around them. That is why my “back to school” comment above was tongue in cheek – I doubt they’d learn any more the second time around than they learned the first.

Venezuela still has billions of dollars in foreign currency reserves. And Mr. Chávez has used some of the oil wealth to push social programs — including for literacy and health clinics — to improve the lives of Venezuela’s poor. But we fear that any good is quickly being undone by the old strongman formula of cronyism, corruption and incompetence.

What slickly written propoganda we have here. “any good” – any good?!?! As if it is doubt, with the more than doubling of peoples real incomes, reduction of poverty and myriad of other accomplishments that Chavez has accomplished anything!! The past 8 years have been nothing but a huge waste and all this is a mirage.

“[B]eing quickly undone”?!?. Last time I checked consumption was still rising another 8% or more this year, the economy was growing by a similar amount.

Right now the only thing being undone is whatever is left of the Times editorial page credibility. On second thought, I’m not sure they had much to begin with.