Friday, March 23, 2007

The Times comes undone 

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 eocnomics 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 propogand 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 though, I'm not sure they had much to begin with.


Tuesday, March 20, 2007

At least some people can add 

Sort of pressed for time tonight so I'll only be able to set the record straight on one bit of BS making the rounds recently.

I've read in several newspapers, on some opposition blogs (yeah, I know), and even in the comments section here - this government just gives handouts to people, not jobs; this is a "jobless" boom; more and more people work in the informal economy; and any jobs that are being created are government jobs.

BS, BS, and more BS.

I could probably go to the appropriate government web-site and add up all the numbers to debunk that non-sense. But seeing as I'm busy I'll take the easy way out and just rip off the numbers from someone else who did all the leg work - Merril Lynch.

From their analysis of the Venezuelan economy:

Note the employment numbers in Table One. They give the number from 2003 and 2006 and note how they've changed. Lets also note that as the first year, 2003 was a deep depression, any growth certainly would have happened between 2004 and 2006 so that these numbers on job growth are really for a three year period of time.

So just quickly; formal sector private employment has gone UP by 791,000 jobs, informal sector has gone DOWN by 254,000 jobs, and government jobs have increased by 466,000.

Lets take a second and digest this. This is more than 1.2 MILLION new formal sector jobs in three years or about 400,000 per year. That is a fantastic number by Venezuelan standards and far outstrips the number Venezuela needs to employ young people entering the labor force.

Lets also note this huge growth in jobs has allowed many people working in the informal sector to get formal jobs that are better as they pay official wages and have benefits. That is why the informal sector jobs have gone down while the formal sector has grown.

Net job growth (informal and formal) is still over a million jobs or about 333,000 per year.

Most importantly 791,000 PRIVATE FORMAL SECTOR jobs have been created, or about 250,000 per year. In other words, in spite of all the non-sense and outright lies the private sector job market is doing great. [BTW, for some real fun, read the narrative from Merril Lynch next to the table - they can add up the numbers but then can't make sense of them to save their lives!]

So just to recap:

Hundreds of thousands of formal private sector jobs have been created over the past few years.

Hundreds of thousands informal jobs have disappeared, almost certainly in response to the boom in the formal sector.

The Venezuelan job market is doing great. The opposition's credibility; that isn't doing so great. But the numbers don't lie. That must be why the opposition has been avoiding them like the plague for the past couple of years.


Monday, March 19, 2007

Rolling right along 

Another week, another massive public works project initiated. Last week it was Caracas's turn again as another suburban rail line began contruction. This time it was the Guarena Guatire rail line that runs east from Caracas. Its beginning was certainly low key:

But the project is anything but small. Connecting with the Caracas metro it will run east, as usual over valleys and through tunnels, for 41 kilometers. It is expected that it will serve 125,000 daily riders when operational. Oh yeah, it costs a cool $3 billion dollars and will take about six years to complete (I sure hope it is finished before the next presidential election).

With this the Caracas has three major rail lines under construction. The other two are the number 5 subway line and the second phase of the train to Los Teques. This doesn't even count the construction of the remaining metro stations on the number three line extension and the MetroCable gondala system that will reach up the mountain sides where Caracas's poorer residents often live. Caracas's massive and varied public transportion system is sure starting to cometogether.

It is in part these massive public works projects that must be helping Venezuela outperform its oil exporting peers in economic growth:

Lastly, it was pointed out today that the the millions of energy saving light bulbs being installed throughout Venezuela are saving the country 850 Megawatts over power consumption.

Massive public works started, an economy outperforming its oil exporting peers, and Venezuelas green energy saving policies starting to pay dividends - not bad for one days news.


Sunday, March 18, 2007

Oil Wars apologizes 

Remember the post I did a few weeks ago pointing out how food consumption in Venezuela was up 9% last year?

Uhhhhhh, I don’t know how to say this, but I was wrong. That is right, it appears that number isn’t even close to reality. This is more than embarrassing for a blog that prides itself on getting numbers right, but that number is off by close to 100%.

In point of fact, according to the opposition polling and economic analysis firm Datanalisis, food consumption was up a “spectacular” [Datanalisis’s term, not mine] 16% last year. That is right, a full 16%!!!

Clearly, the conclusion I drew that Venezuelans would turn into pre-diabetic blobs can’t possibly be right. At 9% maybe they would have been “pre-diabetic”. But at 16% you skip the “pre” and go right to “diabetic”. Truth be told, after noting how chubby Chavez himself appeared in the Barbra Walters interview I suspected as much. Given these Datanalisis numbers Venezuela is clearly facing a true public health emergency.

Further food consumption was not the only thing that boomed last year. Overall consumption was up 18%. It was pointed out that this was an all time record for Venezuela with the previous consumption increase record being 15%.

Oh, and by the way - consumption is up another 8% so far this year


The opposite side of the oil boom coin 

If you have the right government, such as Venezuela, the current oil boom can do great things for your country.

However, an oil boom is no guarentee of anything. Witness, the fate of the U.S. puppet regime in Iraq. In spite of huge oil revenues plus tens of billions from their puppet masters in in Washington they have done little to improve the lives of Iraqis. Witness some of the statistics presented in the New York Times today:

Lets see, monthly civilian deaths doubled in three years, household fuel supplies down, electricity production down (remember, in Venezuela it has increased 40% over the same period!), a third of the workforce unemployed, GDP growing an anemic 4%, and double digit inflation. Sure doesn't look like things are getting better for your average Iraqi. [Of course, there is some cause for optomism as the insurgents are getting better at killing U.S. troops and shooting down helicopters but that is in spite of what the puppet government does, not because of it]

Here is some more data:

Note how electric production has stayed flat over the past 4 years. The level of ineptness is simply amazing. Also, note more than 12% of the population are refugees, either internal and external. In fact with 1.5 million Iraqis fleeing the country it as if the entire city of Valencia packed up and left Venezuela.

Lastly, note that in spite of all the propoganda there are FAR more attacks against U.S. troops than there are against civilians. Clearly, Iraqis want the U.S. out of their country. Given how poorly the puppet government has faired at bringing any sort of improvement to their lives I am not surprised.

Hopefully some day soon Iraqis will be free of foriegn occupation and be able to choose a government that cares about bettering their lives more than supporting ethnic cleansing.


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