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Forums - Politics Discussion - Half the Venezuelan economy has disappeared

Leadified said:
Hiku said:

This is pretty much entirely Maduro's fault for refusing to adjust their economy's dependence on oil after the oil crash in 2014. Instead he chose to have only his friends and allies benefit from the economy, while regular people are suffering in inhumane ways.

Chavez probably shouldn't have made them as dependent on oil in the first place, but there was room for adjustments.

Chavez did not make them dependent on oil because Venezuela has already been dependent on oil since the 1970s. His mistake was that during a pretty long oil boom he was not able to develop the country economically so it could sustain his welfare policies.

By dependent on oil, I was referring to how Chavez rigged the economy in various ways where their oil would be a fail safe in case it became unsustainable. The price of key items like food and medicine were reduced to below the cost of production, and he restricted the access to dollars and fixed the exchange rate.
When it would become unprofitable for Venezuelan companies to produce their own products, the government could import them from abroad using oil money, which would give them a window to adjust.
However, as oil prices began to fall in 2014, that plan became much less effective.



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Venezuelan Monthly Minimum Wage Falls to Under One Dollar a Month

According to the website DolarToday, which tracks the real value of the Venezuelan bolívar against the U.S. dollar, the basic minimum wage of 248,000 bolivares is now worth just $0.95, equivalent to a shocking 0.59 cents ($ 0.0059) an hour.

Amid years of lavish spending under the late president Hugo Chávez and catastrophic economic mismanagement by his successor Maduro, rates of inflation are now the highest in the world, with the International Monetary Fund (IMF) predicting that it will reach 13,000 percent in 2018.

https://dolartoday.com/calculadora/



Nem said:
outlawauron said:

Yes, the American who lead the world in every economic category surely do not understand anything about the economy. Just a bunch of ignorant fat dudes who just happen to make more money than everyone else.

Funny that you say fat, because the US has one if not the highest fat index in the world.

I was just going all out on the stereotypes since that's all you were dealing with.



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RolStoppable said:
I suppose this is the consequence of socialism.

Thats exactly what it is.



RolStoppable said:
I suppose this is the consequence of socialism.

This.

It makes no sense to say that this is the result of oil.  West Texas Crude is back above $65.00/barrel right now, but I suspect the situation for the Venezuelans will continue to deteriorate at an accelerated rate.  That's because socialism empowers and protects the top 0.000001% and uses mind control and propaganda to turn the rest of the population into zombies who have no idea how corrupt their political leaders are or what kind of potential they have as a nation if only they had their basic freedoms.  I am sure if you look at the homes of Venezuela's elite class, they live like royalty, it's the rest of the population who starve in poverty and are tricked into believing that government wealth "redistribution" is their only hope when in fact the taxes are really just government wealth expropriation.

It's really not that different than these Democrat strongholds in places like California whose political leaders live in homes that look like palace's while their electorate live in some of the most impoverished conditions in the country and only see their situation grow worse each year.



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Illusion said:
RolStoppable said:
I suppose this is the consequence of socialism.

This.

It makes no sense to say that this is the result of oil.  West Texas Crude is back above $65.00/barrel right now, but I suspect the situation for the Venezuelans will continue to deteriorate at an accelerated rate.  That's because socialism empowers and protects the top 0.000001% and uses mind control and propaganda to turn the rest of the population into zombies who have no idea how corrupt their political leaders are or what kind of potential they have as a nation if only they had their basic freedoms.  I am sure if you look at the homes of Venezuela's elite class, they live like royalty, it's the rest of the population who starve in poverty and are tricked into believing that government wealth "redistribution" is their only hope when in fact the taxes are really just government wealth expropriation.

It's really not that different than these Democrat strongholds in places like California whose political leaders live in homes that look like palace's while their electorate live in some of the most impoverished conditions in the country and only see their situation grow worse each year.

Exactly.  It's pretty sad when you see some of these neighborhoods, especially in urban areas, where the quality of living is very low.  The people that live there keep crying out for help, but they continue to feed on the same hateful rhetoric thrown out by the same politicians they blindly keep voting in.  And they wonder why nothing improves.



Vincoletto said:

This guy knows things.

I would just add that I dont know if we can really say that Europe follows the Keynesian model all the time, ar if they accept it as they mantra. I think in a sense they float between Keynes and Freidman, depending on the era, level of debt, crisis etc. Btw I dont believe Keynes model is self sustaining in the long run and it can have several other impacts in the economy, specially for poor countries like in latin america.

I think first you need to get rich, then you can start spreading the wellfare. In Latam we try do distribute the money that we dont even have.

You're right, I wouldn't say that the entire EU is Keynesian. If you compare, let's say, France and Netherlands, they are quite different.

As you said, I think a Keynesian model works better when your country already is developed enough. It also needs a low level of corruption, something that depends on the increase of the education standards of the general public (once again, the country has to be developed). So, it is adequate to solve the inequality issues that rise when a country grows.

I also believe that Keynesian approaches works well when you have a situation where the market itself creates a problem due to speculation. The 1929 crisis was followed by increased regulations to give a new direction and it worked.

In Latin America, is hard to think about wellfare when the countries are still relatively poor. I wouldn't say that Brazil has enough money to really provide free education and health. The Keynesian approach also fails due to high corruption. I do think that a more Liberal, Austrian, approach would work better. A smaller state would result in less corruption. We need less regulation, less bureaucracy and a simplified tax system.

One misconception people have about Brazil is that taxes are sky high. Surprisingly, they aren't. Pretty much on the OCDE average. The issue is that we have high indirect taxes (products) and low direct taxes (inheritance, property, income). If you look at the income tax in Europe, it's waaaay higher. The problem is that direct taxes are good: rich people pay more. It's not enough to make them "not-rich", they just contribute more. The indirect taxes affect the poor. In Brazil, someone that gets minimum wage loses almost 33% of the salary to taxes. Someone that gets 10 or 15 minimum wages loses around 20% tops. It's basically a reverse Robin Hood. It's also necessary to feed the "wellfare" state, even if public health is terrible and the only part of public education that works are the universities, that are actually used more by rich people (reverse Robin Hood strikes again).

On top of that, the tax system is overly complicated. A company does not have to pay a single tax or just a few. It's literally dozens or hundreds of small taxes, creating a massive bureaucracy. Big companies deal with it, since they have an entire department to do the accountant job. But small entrepreneurs frequently suffer a lot and end up going out of business. Stuff like the Individual Micro-entrepreneur and the National Simple program helped a lot, but we still can do much better.



Nautilus said:

Thats what happens when you basically hand over and let a dictator, a stupid one at that, rule the country.

To be fair the population has done everything they can to get him removed but... well he has the army (and corruption) on his side so... seems like the only way he is getting out of that position is in a body bag...



torok said:
Vincoletto said:

This guy knows things.

I would just add that I dont know if we can really say that Europe follows the Keynesian model all the time, ar if they accept it as they mantra. I think in a sense they float between Keynes and Freidman, depending on the era, level of debt, crisis etc. Btw I dont believe Keynes model is self sustaining in the long run and it can have several other impacts in the economy, specially for poor countries like in latin america.

I think first you need to get rich, then you can start spreading the wellfare. In Latam we try do distribute the money that we dont even have.

You're right, I wouldn't say that the entire EU is Keynesian. If you compare, let's say, France and Netherlands, they are quite different.

As you said, I think a Keynesian model works better when your country already is developed enough. It also needs a low level of corruption, something that depends on the increase of the education standards of the general public (once again, the country has to be developed). So, it is adequate to solve the inequality issues that rise when a country grows.

I also believe that Keynesian approaches works well when you have a situation where the market itself creates a problem due to speculation. The 1929 crisis was followed by increased regulations to give a new direction and it worked.

In Latin America, is hard to think about wellfare when the countries are still relatively poor. I wouldn't say that Brazil has enough money to really provide free education and health. The Keynesian approach also fails due to high corruption. I do think that a more Liberal, Austrian, approach would work better. A smaller state would result in less corruption. We need less regulation, less bureaucracy and a simplified tax system.

One misconception people have about Brazil is that taxes are sky high. Surprisingly, they aren't. Pretty much on the OCDE average. The issue is that we have high indirect taxes (products) and low direct taxes (inheritance, property, income). If you look at the income tax in Europe, it's waaaay higher. The problem is that direct taxes are good: rich people pay more. It's not enough to make them "not-rich", they just contribute more. The indirect taxes affect the poor. In Brazil, someone that gets minimum wage loses almost 33% of the salary to taxes. Someone that gets 10 or 15 minimum wages loses around 20% tops. It's basically a reverse Robin Hood. It's also necessary to feed the "wellfare" state, even if public health is terrible and the only part of public education that works are the universities, that are actually used more by rich people (reverse Robin Hood strikes again).

On top of that, the tax system is overly complicated. A company does not have to pay a single tax or just a few. It's literally dozens or hundreds of small taxes, creating a massive bureaucracy. Big companies deal with it, since they have an entire department to do the accountant job. But small entrepreneurs frequently suffer a lot and end up going out of business. Stuff like the Individual Micro-entrepreneur and the National Simple program helped a lot, but we still can do much better.

Yep. Agree with everything you say. Maybe one day our leaders, or our people, will wake up. Probably not. I just gave up hope.



estebxx said:
Nautilus said:

Thats what happens when you basically hand over and let a dictator, a stupid one at that, rule the country.

To be fair the population has done everything they can to get him removed but... well he has the army (and corruption) on his side so... seems like the only way he is getting out of that position is in a body bag...

Well, it was the population that thought what Chavez was promising would be better. That thought blaming someone else for your own misery was a good idea. Population loved to go into socialism, at least for the first 10 years. They thought it was a good idea to change the constitution and give more power to the leaders. It is really sad, and I know it is harsh to say it, but population is just feeling the effects of their own choices. Maduro still had a huge amount of follower that believes his lies and will surely vote for him in the next "elections".

The country will eventually recover after a lot of time. But this will all happen again, and again. It is Latin Americas curse. Its like Dark Souls, a neverending circle.