Friday, June 13, 2008

This will really solve the problem - NOT. 

On Wednesday Chavez announced his new economic package that was meant as a response to Venezuela's slowing economy.

As we've seen the main culprits in undermining the Venezuelan economy are a horribly out of line exchange rate, the government spending billions buying up existing industry rather than investing in new industry, and cutting back on bank lending in a futile effort to stem inflation.

So what does Chavez do to rectify the situation? Simple, he cuts taxes!! You can watch him here:

Haz click en cualquier video para verlo
Puedes ver otros en radiomundial.com.ve

Once again, there is so much stupidity here it is hard to know where to begin.

First, he makes it sound like the government has so much money that it can easily afford to cut back on taxes. Really?!?!? That would be news to the millions who live in slums with no paved streets, no piped water, no sidewalks, no electricity... nor any other government services. Let me tell you stomping through foot deep mud trying to get from someones home to the nearest paved road isn't exactly fun and the people who have to do it every day would be a little perplexed at the notion that the government is overflowing with money.

Chavez then falsely touts this tax reduction on the rich as a anti-inflationary measure. Really? Taxes are inflationary and cutting them reduces inflation?!?!?!? Hell, I never heard even Reagan or Bush come up with that one. Then he talks about some taxes being regressive - maybe, but one on financial transactions when only maybe the top half of your society ever deals with banks sure isn't regressive.

This one goes straight to the bottom line of those who have the most. That is probably why we haven't seen this many rich people standing and cheering in Miraflores since ... you know when.

Oh, ok, there were other measures. He is going to set up a industrial development fund which Venezuela will contribute $500 million to (when it is expected to get $75 BILLION from oil revenue this year so this will be less than 1% of the oil income). Who knows, maybe that will nudge manufacturing growth up to a full 2%!!

Then he says importers of some goods won't have to fill out all the lousy CADIVI forms and wait on line. That is another one sure to have them jumping up and down.

In sum, while Venezuela faces some very serious economic problems, Chavez in weaving, and bobbing, and ducking for hours about the economy managed to never mention a single one of them. That takes real talent! A lesser person might by mistake at least touch upon one of the real problems.

I guess this is what happens when you spend most of your adult life trying to get power with little thought as to what you will do when you get it.


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