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Runaway capitalism makes its way in Venezuela


A new neoliberal reality arises in the midst of Chavismo due to the use of the dollar, the relaxation of State controls and the rapprochement of the United States

Adriana drives at dawn through the streets of downtown Caracas.

Get customers through the Yummy app, the Venezuelan Uber.

For a few months this was the best-kept secret in the local microeconomy: demand was soaring, and on a good night an awake worker could earn around $60.

Then word spread and many people put their car to work.

Now the day yields about 30, 40 if it is a lucky day.

Adriana's client takes out a 20 bill to pay for the trip, which is worth 17. She pretends to look for change in the glove compartment, but they both know very well how this is going to end.

"What a pity, I don't have any change."

Thanks for everything.


And he flies away with the extra three dollars.

Low-denomination bills are scarce in the runaway capitalism that is making its way these days in Venezuela.

You only think about money.

Everyday life is shaped like a green ticket.

The country, through Chavismo, has gone from applying the Bolivarian socialist revolution without any success to an opening process with the fire seal of liberalism.

The phenomenon has generated the mirage of an economic recovery.

Gone are the iron controls.

Until recently, Venezuelans hid dollars because it was a crime to obtain them outside of state surveillance.

You had to stand in line for hours to buy rationed food at regulated prices and bolívares, the local currency, were scarce.

The panorama now is different.

The use of the dollar as a recurring currency, the lifting of price controls and tariff-free imports have changed the reality in which Venezuelans have tried to survive until now.

The economy —explains Luis Vicente León, economist and president of the Datanalisis pollster— rebels against the established order faster than societies themselves.

“What happens in Venezuela, as before in China or Russia, is that people have sought imaginative solutions to state control and interventionism.

When the government has had problems due to sanctions and isolation, it has begun to understand that riding this surfboard that society had built was more of a solution than a problem.

And he got up."

That was exactly what happened with the dollar, which went from being persecuted and demonized to being a guarantor of a certain stability.

The dollar already circulates in almost 70% of commercial transactions, according to some economic firms, and in the midst of a distorted economy it has also been infected by inflation.

More and more dollars are needed to buy the same thing.

Ecoanalítica points out that in 2021 the US currency lost 50% of its purchasing power in Venezuela and this year it is forecast to lose another slice.

The life in dollars in which those who can take refuge also becomes more expensive and prices are camouflaged in an amount without denomination, sometimes accompanied by the abbreviation Ref, of reference.

The price of imitation shoes brought in containers without paying taxes in a store in a shopping center is listed on a billboard as Ref 30, that is, 30 dollars.

A woman shows bolivars and US currency that she received from a customer as payment at her store, in Caracas, Venezuela. Ariana Cubillos (AP)

No one knows how many hours the Venezuelan loses every time he has to open his wallet.

Each minimal transaction implies a mental operation of a few minutes to evaluate if the exchange rate used by the business suits him, which varies according to the currency with which he is going to pay and the convenience;

if you must pay the extra tax because you only have dollars and for a few months its use has been taxed;

if it will be necessary to round up because there are not enough coins or bills of low denomination for the change (as in the case of the driver Adriana);

or if you have no choice but to pay more for a product because it only brings devalued bolivars.

In the convoluted Venezuelan economy, everything ends up being more expensive.

The scenes in Caracas to pay anything look like something out of a Marx Brothers comedy.

One morning in Caracas, for example, a woman with a dollar bill turns to a stranger in line to pay for parking that costs 5 bolivars, a few cents more than the value of a dollar at the official rate.

The stranger with bolivars on his card pays her fee and hers and keeps the dollar that he appreciates the most.

She thus avoids paying 3% more for the Tax on Large Financial Transactions (what is large or minimal is obviously irrelevant).

Paying for a parking lot is quite an odyssey.

The sui generis capitalism that the country now practices has created a bubble of spending and redistribution in which some four million people live, especially in Caracas.

It is an island of consumption in the midst of a very precarious economy.

The traffic in the capital is once again as hellish as that of any other large Latin American city, when before, due to the lack of gasoline, the roads had been emptied.

Entrepreneurs open nightclubs, restaurants, supermarkets, shops and pharmacies.

International singers come again to hold concerts.

Prices are distorted.

The trendy club, Bar Caracas, has a price list identical to that of New York nightclubs.

It doesn't matter, it fills up from Wednesday to Sunday.

That bar is on the terrace of a five-star hotel, the Tamanaco,

where businessmen of different nationalities stay who have put the news from Venezuela in their Google alerts to find out everything that is happening.

They have a feeling that if they get there on time, before house prices or businesses recover in value, they will be able to do a good deal.

A large part of the population has been left out of this parallel economy.

A recent study by the consulting firm Think Anova has delved into the distribution of income in the new Venezuela of the bubbles: “The income of the poorest 30% of the population fell or remained stagnant between 2020 and 2021, despite the fact that the average income of the economy increased 65% during that period.

In relative terms, only the richest 10% of the population improved their position in the distribution.

This ratifies that the results obtained unequivocally worsen the distribution of income in Venezuela”.

In between the two extremes, the middle class has tightened its belt, sometimes to the point of disappearing or staggering into poverty.

Ida Febres is 31 years old, she is a social communicator and she assures that today she is better than she was a few years ago because she no longer has to chase food, but what she earns does not allow her to have any savings.

“Now I have more income because I work too much,” she says.

She works in the audiovisual area for a company abroad and in Caracas she is recording everything for which she is hired: events, podcasts, plays.

Her working day is more than 16 hours a day.

She recently started taking a neighbor's daughter to school.

All jobs are few.

The dark circles in her eyes show how early she gets up to have extra money.

For her, the cost of having a bit of peace of mind is hiring private medical insurance for herself and her parents, since the public health crisis is something that has not changed in Venezuela but rather worsens.

That's why she works too much, gets into debt, cuts down on food and entertainment expenses and fills up with subsidized gasoline even though she has to stand in line or have to go early in the morning to fill up the tank.

“I think that when they were young my parents worked for goals such as buying a house, a car and starting a family.

I can't have those goals now, mine are smaller."

Pedestrians pass in front of a poster that shows the prices of the product in bolívares, in Caracas, Venezuela.Ariana Cubillos (AP)

sustain growth

With the small economic rebound, the country's industrial sector is operating at 28% of its capacity and in the first quarter of this year it has continued to record growth in production and sales, according to data handled by Conindustria, the union that two decades ago gathered to 12,700 companies and now only 2,200.

“We want growth to be sustainable and for that we have to recover the purchasing power of Venezuelans and employment.

That is synonymous with recovery," says Luigi Pisella, president of Conindustria and footwear manufacturer, one of the most contracted sectors in the midst of an invasion of imitation and low-quality shoes that have entered the country with the tariff benefits that it has given the Government to import.

"To understand that 28% of the installed capacity in which we are, we can compare ourselves with Colombia that has 80%, Brazil with 82% and even with Argentina that with high inflation and a crisis and operates at 75% of its capacity", says the businessman.

It is also explained by the factories that work just a few months a year, close and liquidate their personnel.

Only 53.8% of people of working age in Venezuela have a job, the lowest activity rate in the entire region.

"We still have a long way to go to reach the point of equilibrium, at least, where we neither win nor lose," points out the industrialist.

With this production capacity, however, the industrial sector can supply half of the market, due to the drastic reduction that the economy has suffered.

And they do so even with self-sufficiency of energy in more than half of the operating industries, since failures in public services are also a hindrance to production.

“It will take the economic miracle of growing at 10% a year for 20 years to get the economy back to the size it was in 2012.”

Pisella highlights a recent change —just a few weeks ago— in economic policy that “is on the right track”.

A total of 1,260 products from a list of 4,465 were finally removed from the tariff exemptions that make it more expensive to buy what is made in Venezuela.

This has been a repeated request to the Government on behalf of the country's diminished business community, which has now materialized.

This import subsidy has flooded shops with imported items of all kinds, which makes it impossible for the Venezuelan industry to compete, since it does have to pay all taxes.

But against them continue the fiscal voracity that affects those who produce in Venezuela and the lack of access to bank credit, which the Government has almost completely eliminated to artificially contain inflation and anchor the price of the dollar.

Economic opening, political closure

This transformation of the economy towards greater openness has occurred, paradoxically, in the midst of the encirclement of Nicolás Maduro with the sanctions of different levels that the United States, the European Union, Panama, Switzerland and Canada have applied as punishment for the authoritarian drift that he is experiencing. the country, which also led to its economic ruin with an 80% reduction in GDP in eight years and the migration of 6.1 million Venezuelans.

As has happened in other nations under sanctions, Chavismo has accommodated itself.

Ties with the United States, which was the main buyer of oil and a natural ally, were severed.

The new friends were Iran, Turkey, Russia and China.

With them, they tried to avoid the most accurate blow that Washington gave as of 2019: the impossibility of freely selling oil on the world market, which forces geopolitical triangulations and large discounts on crude oil.

The president of the United States, Joe Bide, to counteract the energy crisis derived from Russia's war in Ukraine, has again approached Venezuela and has made several concessions that have relaxed the tense relations between the two countries.

The possibility that the sanctions will be completely lifted seems strong, although American diplomacy is trapped in its support for the interim government of Juan Guaidó.

If these sanctions remain without effect, the Government could have more income, increase wages and this implies an increase in consumption that starts the chain of economic growth.

Growth of 5 to 10% is expected, not insignificant numbers in any economy, but insufficient in Venezuela.

At that rate, the nation would need decades before reaching its pre-Chavismo levels.

Maduro has opened his economy as he could.

He has met with businessmen, has announced the sale of shares of the bankrupt state companies for investment, but has also put together an opposition to his measure and maintains controls over civic life.

In Caracas one can do business, become a millionaire if one wants and can, but one cannot do politics.

The persecution of dissidence continues and a law to limit international cooperation that supports NGOs that defend victims of human rights violations is under discussion in the Parliament that controls Chavismo.

An elderly woman was recently arrested for making a joke on Tik Tok about Maduro's death and there are still more than 200 political prisoners.

After years of political friction, the opposition that was seeking a change of government has ended up cornered by its own mistakes and the repressive machinery of Chavismo.

But there is still a lever of pressure at the negotiating table in Mexico and precisely in the sanctions, which this week has rekindled expectations.

Ida, who spends all day on the street looking to make money, says that the government has won by surviving all these years of struggle.

“No one cares about politics, all those died.

People got used to the fact that we will live with the same government, some will call it a dictatorship.

But you can't lose your life on that, we all have a lot to do."

Children play with Venezuelan bolívar bills. FEDERICO PARRA (AFP)

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Source: elparis

All news articles on 2022-05-23

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