Esperanza

At first glance it seems like a reasonably decent airport. Then after a while you notice the dilapidation, the inoperative urinal, the broken floor tiles. A surprisingly pretty Immigration Agent waves me over, inspects my documents, asks a few questions in passable English and allows me into the country. I retrieve my bag and then pass both the bag and the carry-on through the x-ray machine just before the the exit.

This is my first trip to Caracas and I was not without anxiety given the tumultuous events of the last few weeks. I had been invited to come and lecture at a meeting. A giant screen in the airport lobby displays unending scenes of tribute to the departed leader. The termperature is comfortable but the exposed air conditioning vents are not controlling the humidity well.

It turned out that the person who I expected to pick me up never made the trip to Venezuela. I called him and he told me that a driver was indeed on the way and should be there already. Within ten minutes I located him holding a hand-made sign that read “Jhon…”

The twenty minutes or so ride to the Eurobuilding hotel downtown wound its way up the side of the mountain over roads much in need of repair. Chavez’ image is ubiquitous. The Eurobuilding Hotel is attractive but not world class. The staff is very polite and helpful. The bath/shower has dark marks on its floor and if you grab the towel rack a little too tightly one of the cross bars will fall out. There is free wireless internet and there are more than 100 channels on the TV and there are even American shows with Spanish subtitles. A complete lack of English speaking television is one of the best ways to create the feeling of cultural isolation, something I’d experienced in South Korea. The pool and the palm trees cannot hide a basic truth.

Venezuela is a mess.

CARACAS, Venezuela (AP) — Venezuela’s government announced Friday that it is devaluing the country’s currency, a long-anticipated change expected to push up prices in the heavily import-reliant economy.

Officials said the fixed exchange rate is changing from 4.30 bolivars to the dollar to 6.30 bolivars to the dollar.

The devaluation had been widely expected by analysts in recent months, though experts had been unsure about whether the government would act while President Hugo Chavez remained out of sight in Cuba recovering from cancer surgery.

It was the first devaluation to be announced by Chavez’s government since 2010, and it pushed up the price of the dollar against the bolivar by 46.5 percent.

By boosting the bolivar value of Venezuela’s dollar-denominated oil sales, the change is expected to help ease a difficult budget outlook for the government, which has turned increasingly to borrowing to meet its spending obligations.

But analysts said the move would not be sufficient to end the government’s budget woes or balance the exchange rate with an overvalued currency. Economists predicted higher inflation and a likely continuation of shortages of some staple foods, such as cornmeal, chicken and sugar.

Sean Penn idolized Hugo Chavez and there’s more of that over at Salon.

Likewise, in a United States whose poverty rate is skyrocketing, are there any lessons to be learned from Venezuela’s policies that so rapidly reduced poverty?

And in a United States that has become more unequal than many Latin American nations, are there any constructive lessons to be learned from Chavez’s grand experiment with more aggressive redistribution?

Aggressive redistribution indeed- at a very high cost.

The concentration of power under President Hugo Chávez has taken a heavy toll on human rights in Venezuela, Human Rights Watch said in a report released today.

The 133-page report, “Tightening the Grip: Concentration and Abuse of Power in Chávez’s Venezuela”, documents how the accumulation of power in the executive and the erosion of human rights protections have allowed the Chávez government to intimidate, censor, and prosecute critics and perceived opponents in a wide range of cases involving the judiciary, the media, and civil society.

“For years, President Chávez and his followers have been building a system in which the government has free rein to threaten and punish Venezuelans who interfere with their political agenda,” said José Miguel Vivanco, Americas director at Human Rights Watch. “Today that system is firmly entrenched, and the risks for judges, journalists, and rights defenders are greater than they’ve ever been under Chávez.”

Redistribution may have elevated some out of poverty but it will be a short-lived gain:

A spending spree that almost tripled the fiscal deficit last year helped Chavez, 58, win a third six-year term. The devaluation can help narrow the budget deficit by increasing the amount of bolivars the government receives from oil exports. Yet the move also threatens to accelerate annual inflation that reached 22 percent in January.

“There is surely going to be a political cost, which may weigh against the Chavistas and hence be viewed favorably from the markets if it shifts protest votes to the opposition,” Siobhan Morden, the head of Latin America fixed income strategy at Jefferies Group Inc. in New York, said in a note to clients.

And all that redistribution was leading to a collapse of the nation:

Heavy government spending has fueled rampant inflation, which averaged an annual 22% during Mr. Chávez’s tenure. Its anticapitalist rhetoric and broad state intervention into the economy have led to a dearth of investment. Gross fixed capital formation declined to 18% of gross domestic product in 2011, from 24% in 1999, according to the World Bank. Net inflows of foreign direct investment stood at 2.9% of GDP during that same year, his first in office, nearly double the 1.7% in 2011. Capital flight from Venezuela intensified as Mr. Chávez pursued more interventionist policies, including capital controls and a fixed official exchange rate that — if you can get it — offers dollars at a quarter of the exchange rate that the greenback fetches in the black market. Stock market capitalization of companies listed on the Caracas Stock Exchange has gone from a paltry 7.6% of GDP in 1999 to a minuscule 1.6%.

Chavez’s answer to rampant inflation was the institution of price caps.

Rather than pursue policies that might stimulate investment, the government’s response to shrinking productive capacity and high inflation has been price caps. The result? Shortages of food and other basic necessities, periodic electric brown- and blackouts, and far fewer jobs: the labor force participation rate has dropped from 52% to 46% in the Chávez era.

Chavez was clogging Venezuela’s arteries

In countries less blessed with natural resources, Mr. Chávez might have been forced to be more welcoming of private-sector investment. But Venezuela’s oil bounty permitted his pursuit of highly unorthodox policies and inefficient use of resources. Yet not without cost to its oil industry.

Venezuela’s oil production has fallen to around 2.5 million barrels a day from about 3.2 million, according to most industry estimates. Downstream refinery accidents have increased sharply amid a lack of investment and upkeep, with one last year at the Amuay complex proving among the most deadly the energy industry has seen. Energy-rich Venezuela has since been importing more fuels. Still, prices for the country’s crude have risen about 10-fold during Mr. Chávez’s time in office, enabling him to borrow and spend aggressively.

Crime is rampant:

It’s well known that inflation and basic necessity shortages hit the poor the hardest, as does crime, which has skyrocketed in Venezuela. According to InSight Crime, an American University-sponsored think tank in Washington DC, the country has seen a sharp rise in violence, “with murder rates doubling or tripling over a decade, according to different figures.” For the first time in several years, the government reported homicide data, noting over 16,000 murders last year. But the Venezuelan Observatory of Violence, a local non-government organization that tracks crime, put the number at nearly 21,700, for a national homicide rate of 73 per 100,000, more than double the 31 per 100,000 in Colombia, which is fighting two guerilla insurgencies.

Communities are gated- some are even double-gated. Federales park their vehicles and mainttain a 24 hour presence at every food and rest stop along the highway between dowtown and the airport.

The Venezuelan dollar has fallen to about sixteen cents US. I had breakfast with my host and his bill came to $425 VEB. Were I to pay for it with a US credit card it would have come to $67 US. For an omelette and coffee. Were we to exchange for US dollars and pay for it with those “dollar-doallrs” on the black market breakfast would have cost about 7 dollars US- not that it’s legal. Food is brutally expensive.

Chavez didn’t accomplish anything positive- he simply took from the rich and made the lower class the beneficiaries of his theft. He made the country poorer. He did nothing to grow the economy.

There are a few- desperately few- positives. A tankful of gas for a large car costs about 30 cents. The tip for the attendant costs more.

I really didn’t know what to expect from the working people and I left with nothing but admiration. They proved to be very warm, kind and generous. And each person with whom I spoke shared the same sentiment:

Hope

They are hoping that the demise of Chavez means a return to a meritocracy. They are hoping that once again one can do well by working hard. One cannot help but respect their spirit given Venezuela’s economic morass and their continued fear for their lives and the lives of their families. It’s very difficult to conduct business in Venezuela given the upheaval government regularly visits upon industries.

During the official two week mourning period the sale and consumption of alcohol was prohibited. Gratefully that ended 6 am on the day I arrived.

Each time Chavez’ body is moved all businesses in the city are ordered closed so as not to impede travel of the remains and allow for more outpouring of grief.

All for a guy who managed to divert a reported $2 billion of the country’s money into his own pocket.

It can be good to be a socialist.

But golly, the people do have hope. Problem is, they might need more than that. Chavez’s handpicked successor, Nicholas Maduro, has an interesting outlook:

“Venezuela has sufficient foreign currency to guarantee that the economy functions,” Maduro said during a televised meeting yesterday after the measures were announced. Earlier in the day he said Venezuelans have to “do more with less.”

Maduro does have a plan:

Maduro said Venezuela may create a complimentary currency system in the future and that the creation of dollar bank accounts could help satisfy demand for greenbacks. He didn’t provide details.

Maduro opponent Henrique Carpriles had this to say about the devaluation:

Capriles criticized Vice President Nicolas Maduro’s handling of the situation. Maduro, who was named by Chavez as his preferred successor before undergoing cancer surgery Dec. 11, has taken on more responsibilities and a higher profile during the president’s nearly two-month absence.

“They give Mr. Maduro a little more time in charge and he finishes with the country,” Capriles said. “Look at the inflation in January, and now the devaluation.”

Maduro blamed Bush “speculators” :

Maduro said on television that the measure had been approved by Chavez. He said the change was necessary in response to a recent “speculative attacks” against the country’s currency.

Maduro’s preparation for becoming the leader of Venezuela consists of being a bus driver.

Venezuela will soon hold new elections but ominous clouds hover over the country once again. Maduro claims that there is a US-backed plot to assassinate Capriles:

CARACAS, March 17 (Reuters) – Venezuela’s acting president urged U.S. President Barack Obama to stop what he called a plot by the Pentagon and the Central Intelligence Agency to kill his opposition rival and trigger a coup ahead of an April 14 election.

Nicolas Maduro said the plan was to blame his opponent’s murder on the OPEC nation’s government and to “fill Venezuelans with hate” as they prepare to vote following the death of socialist leader Hugo Chavez.

The United States denied the claim. “We categorically reject allegations of U.S. government involvement in any plot to harm anyone in Venezuela,” State Department spokesman Patrick Ventrell said.

How convenient. Capriles could meet an early and tragic end and Maduro would blame Obama and the US. It’s classic Chavez. I can tell you that only the ignorant Chavezistas would believe it. Everyone else would know the truth.

On my day of departure I arrived at the airport at 5 am. I was given a pass by the Delta staff to enter the VIP lounge prior to the flight. The lounge never opened.

It was Sunday morning. There was a TV in the waiting area and the satellite signal was interrupted very few seconds, almost making it seem like a stop action movie. Playing on the screen before the gente asleep in their chairs was Sunday mass. Mercifully the sound was off. The priest seemed to split his worship service. He walked back and forth several times between the altar and a poster of Chavez. Jesus and Hugo shared the attention.

Chavez’ human rights record was miserable. He hid the growing disaster by expropriating foreign corporations and devaluing the currency. He made the poor somewhat better off by making making the rich poorer. He villified the wealthy. (Sound familiar?) Inflation is a red hot 22%. A recession is possible in 2013 another currency devaluation is likely in the offing. The Bolivar dollar has already been devalued five times in nine years. Replacing oil professionals with Chavez stooges has caused the production of Venezuela’s life blood to fall from 3.2 million barrels per day to 2.5 million.

The people of Venezuela have esperanza, but they’re also going to need some suerte.

And one last thing. Sean Penn is a damn idiot.

DrJohn

DrJohn has been a health care professional for more than 30 years. In addition to clinical practice he has done extensive research and has published widely with over 70 original articles and abstracts in the peer-reviewed literature. DrJohn is well known in his field and has lectured on every continent except for Antarctica. He has been married to the same wonderful lady for over 30 years and has three kids- two sons, both of whom are attorneys and one daughter on her way into the field of education.

DrJohn was brought up with the concept that one can do well if one is prepared to work hard but nothing in life is guaranteed.

Except for liberals being foolish.