Tuesday, March 25, 2008

Why CADIVI is not a subsidy 

A subsidy by definition something that is sold below market value, but a true market value is never defined by a black market price, if this were the case then everybody would be growing pot and making cocaine. Organ donations would also spike through the roof. Now under the same reasoning CADIVI exists in order to restrain capital flight, but unlike the drug wars CADIVI has shown results in dramatically reducing capital flight, having gone from around 10 billion in international reserves to around 50-60 billion if you include all national dollar holdings.

If CADIVI did not exist -the same people that can only take out 5000-6000 dollars at most- would be getting away with their entire fortune in dollars. They are therefore forced to invest in Venezuela.

That said CADIVI is changing, in 07 and 08 it morphed into a imports barrier into itself. The allotment for internet purchases was reduced to a fraction, and they have begun calling up people to justify what they "purchased" 60,000 at a time, when you consider that only a fraction of these can certifiably prove they did actually purchased anything, and therefore not lose their future allotment, then this could disqualify a lot of people using it in the future and reduce imports even more. Whether fair or not it has become the only tool the govt is using to stop imports, the only way to reliably beat the system is to actually produce a good you can sell abroad.


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