http://www.bloomberg.com/news/articles/2015-02-18/venezuela-goes-from-bling-to-blat-as-oil-wealth-squandered Venezuela Squanders Its Oil Wealth (Bloomberg) -- By packing bags for $1 a day and with tips at a Caracas supermarket, Luis has managed to save up for a Japanese sports motorbike. His secret? Getting hold of scarce food before it hits the shelves. Luis offers preferential access to detergent, milk and sugar to his clientele of about 100 diplomats at a Centro Madeirense shop in the south of the capital. In return, they offer him occasional work as a handyman or courier and loan him money during dry patches. “Times are tough. We have to spin to survive,” Luis, 30, said in an interview in Caracas last month. “We have to be creative with the opportunities at hand to make ends meet.” Price controls have emptied stores of most goods, while the world’s highest inflation has pushed what is available beyond the means of most Venezuelans. To make ends meet, they exploit the perks of their jobs to trade goods and services informally, mirroring networks that developed amid the scarcities in the former Soviet Union and came to be known as “blat.” The prevalence and spread of such small-scale graft shows the failure of President Nicolas Maduro’s strategy of expropriation, arrests and inspections to boost production and end shortages, said Anabella Abadi, a public policy analyst at Caracas-based ODH Grupo Consultor. “State intervention at all levels of economic activity is driving employers out of business, slashing the number and quality of formal jobs,” Abadi said by telephone from Caracas Feb. 12. “This is pushing Venezuelans to the informal activities authorities set out to eradicate in the first place.” ‘Economic War’ Maduro has blamed the shortages on the “economic war” waged against him by capitalists with U.S. aid and has seized shops and jailed their owners to force down prices. Luis doesn’t feel like part of a global conspiracy. The minimum monthly wage of 5,600 bolivars ($32 on a new exchange market created last week) is close to useless, forcing people like him to supplement their incomes, said Luis, who asked not to use his last name for fear of government reprisals. He sells scarce products at regulated prices to his friends, distancing himself from the black market re-sellers known as “buhoneros” who are blamed by the government for the shortages. Instead, he benefits from grateful customers’ favors later on. “The use of personal contacts to get things done is a prominent feature of Socialist societies,” said Alena Ledeneva, a political scientist at University College London and author of a 1998 book “Russia’s Economy of Favours.” “In an economy of shortage, if you got a job, you got something to trade.” Blat Economy Maduro’s ban on firing means most Venezuelans can join the “blat” economy. The country had 5.5 percent unemployment in December, the lowest in South America, according to the National Institute of Statistics. A bank employee can fast-track a credit card application and an airline office worker can help reserve a ticket. “This can be seen in practically all formal positions in Venezuela that have power to facilitate a bureaucratic errand or secure a product,” said Abadi. It is a far cry from the oil boom of the early 2000s, when social programs were pulling millions out of poverty and generous dollar allowances subsidized foreign shopping trips for the middle class. Spending sprees in Miami by Venezuelans had earned them the nickname “give me two” in the local shops. Getting Worse A 50 percent decline in oil prices in the past seven months has slashed the amount of dollars available to Maduro to import basic goods. Shortages of everything from medicine to beef reached record levels this year, with hundreds of people lining up outside supermarkets and pharmacies. Gross domestic product will contract 7 percent in 2015, the biggest decline in Latin America, according to the International Monetary Fund. The South American country’s benchmark bonds reached a 17-year low of about 35 cents on the dollar last month, before a rebound in oil prices and a partial relaxation of currency controls helped them recover to about 43 cents on Tuesday. The government on Feb. 12 allowed the bolivar to weaken 69 percent against the dollar in the first day of trading on a new, alternative currency market. Meanwhile, the government has said it is taking action to protect regulated products imported at a stronger preferential exchange rate from hoarding by big companies. In the past month inspectors have seized retailers and sent troops to smash down warehouse doors and uncover hidden stocks. ‘Only Way’ “This is our only way to effectively combat the speculative actions causing so much anxiety to our people,” Congress head Diosdado Cabello told state television Feb. 2 in front of corn flour stacked at an expropriated supermarket warehouse. “This food will now be sold to the people at fair prices” in state shops. Those in the “blat” economy don’t see themselves as criminals waging war on the government, said Ledeneva. “These people see what they are doing as friendship, loyalty -- not as corruption,” she said. “When you’re the one benefiting, you don’t see it as dishonest.” Alejandro, 32, keeps a shelf stacked with heart pills, antibiotics and cancer drugs reserved for friends in the back of his pharmacy in the town of Los Teques on the outskirts of Caracas. His store front display is nearly empty. “All day long I get calls from friends, acquaintances, friends of friends. I have a list of people I save things for,” said Alejandro, who also asked not to use his last name. Price controls mean he makes a maximum margin of two bolivars (about 1 cent) on every box of regulated medicine. “It’s not even worth selling it. Better to save it for friends.” After the last delivery, Alejandro said he traded antibiotics for shampoo and toilet paper with a mini-market owner next door. “This is the way everything functions here these days: I help them out, they help me.”
The thing with the socialists (anywhere) is that they always manage to blame their own economic and other failures on everyone else. That's actually another thing they have in common with Islamists.
That's what happens when you force people to rely on government or a religious institution rather than propping up education and rewarding hard work.
The Chavez cult of personality was a response to the covert efforts to overthrow the government by US supported plutocrats. In the Western hemisphere you are either all in with the US or all out opposed by the US. Once the course was set, Chavez had no option but to provide a welfare state for the masses to maintain the power of numbers against the moneyed elite. But, the welfare state was based on the one commodity Venezuela had, oil. International oil interest blacklisted their development and then prices were cut in half. They had no chance. It is bad, and the point of view of a capitalist skewed service report makes it worse. How's Norway doing?
Compared to Venezuela, they clearly didn't mismanage their massive oil production. They aren't exactly that socialist either. It's funny that you ask since I work for an E&P backed by Norwegian venture capitalists.
Why are you an apologist for socialist/fascist Muslims as they are all the same according to ATW? As an aside Norway is hurting, but it won't be that bad as they don't have to deal with coup attempts and economic sabotage. In addition because Norway was very first world before oil and they are pretty socialist they could plan to put their oil windfall into long term savings for the future (sovereign wealth fund) which they did and not have to feed poor people and teach them to read and provide them with basic health care, (waste for ATW and the WSJ,) all stuff the Venezuelan elite could give a crap about before Chavez. The prior Venezuelan governments (the golden years according to ATW and WSJ, I guess) did not tax the elite for these services, which is something ATW complains about when it comes to Greece. Go figure.
No, it wasn't. Chavez was a dictator, just like his less charismatic successor. Chavez already bought his way to power like that. They had plenty of chances, but never built a sustainable economy. Norway is doing just fine - it is a democracy and a free country. While taxes are high, it is in no way at all comparable to Venezuela - which is why it is doing fine.
Please stop making up lies. I never said anything like that. I already know you are dishonest scum, but I will call it out when you try it again. Your ridiculous black and white thinking about an "elite" vs. "the poor masses" is insanely ignorant. Simple doctors, lawyers, entrepreneurs are not an evil "elite" that oppresses the masses. Those people - understandably - left the country if and when they could. Chavez' ignorant politics led to a massive brain drain. They did not tax the elite for what? What am I supposedly complaining about? I can't even figure out what you are trying to say.
Here come the excuses. You screw up the economy that bad it's your own policies. Norway is doing fine. (Bloomberg) -- Norway’s economy grew more than estimated in the fourth quarter as exports and consumers supported an expansion in Scandinavia’s richest economy. http://www.bloomberg.com/news/artic...xpands-more-than-estimated-as-exports-advance
I know it bugs you that the poor majority outvoted the rest of the population. (Jimmy Carter of course is a communist since he found the elections valid)
Price controls and state control of industry have both been discredited a long time ago. It's amazing that such idiots can get into positions of power.
How do you know I am not poor? Your categorization of people in classes and your class warfare ideology are noted. How do you know I am not part of the "banking elite", whatever that is? Also, the "taxes to ship to German banks" - why would they have to be shipped? Maybe because the German banks, as trustees for German tax payers, had previously given money to Greece? How can you be so ignorant in your black and white thinking as to complain about "money being shipped to banks" but not think about whether the same or more money was shipped in the other direction first?
Just thought you guys should be exposed to something outside the Fox-WSJ-MSM consensus on Venezuela. ********* Why would the U.S. want Venezuela's government overthrown?[ There are straightforward principles and dynamics at work here. Washington wants to get rid of the Venezuelan government because it is independent of U.S. designs for the region and because Venezuela has the greatest proven oil reserves in the world and uses its oil revenue to improve the quality of ordinary lives. Venezuela remains a source of inspiration for social reform in a continent ravaged by an historically rapacious U.S. An Oxfam report once famously described the Sandinista revolution in Nicaragua as 'the threat of a good example'. That has been true in Venezuela since Hugo Chavez won his first election. The 'threat' of Venezuela is greater, of course, because it is not tiny and weak; it is rich and influential and regarded as such by China. The remarkable change in fortunes for millions of people in Latin America is at the heart of U.S. hostility. The U.S. has been the undeclared enemy of social progress in Latin America for two centuries. It doesn't matter who has been in the White House: Barack Obama or Teddy Roosevelt; the U.S. will not tolerate countries with governments and cultures that put the needs of their own people first and refuse to promote or succumb to U.S. demands and pressures. A reformist social democracy with a capitalist base - such as Venezuela - is not excused by the rulers of the world. What is inexcusable is Venezuela's political independence; only complete deference is acceptable http://venezuelanalysis.com/analysis/11215
remarkable change in fortunes? http://blogs.reuters.com/data-dive/2015/02/02/venezuelas-vanishing-economy/ remarkable change in fortunes indeed.
The US made them wreck their own economy by making them implement socialist ideas. Brilliant Koch brother plan.
the US has not imposed Cuban style embargos or significant ongoing trading sanctions against Venezuela despite the political feuds and other underhanded goings on. Venezuela's economic woe's are its own doing. Truly sad for all involved.
