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Venezuela: Cheap Television Sets For All!
solareagle writes "Venezuelan President Maduro has declared war on 'bourgeois parasites' by taking over Daka, an electronics retailer similar to Best Buy. USA Today reports, 'National guardsmen, some of whom had assault rifles, were positioned around outlets of [Daka] ... Maduro has ordered to lower prices or face prosecution. Thousands of people lined up at the Daka stores hoping for a bargain after the government forced the companies to charge "fair" prices. "I want a Sony plasma television for the house," said Amanda Lisboa, 34, a business administrator who waited seven hours outside a Caracas store ... "It's going to be so cheap!" "This is for the good of the nation," Maduro said, referring to the military's occupation of Daka. "Leave nothing on the shelves, nothing in the warehouses Let nothing remain in stock!" Maduro said his seizures are the 'tip of the iceberg' and that other stores would be next if they did not comply with his orders.'"
The important phrase here is official rate. The bolivar is bullshit, and everybody knows it. That's why it trades at 10 times as many per dollar as the official exchange rate. Venezuela doesn't make televisions. They're imported, and the people who do make them price them in yen, RenMinBi, or Won, or perhaps dollars. The people who sell them are likely to want hard currency to pay for them. So the price in bolivars looks nuts. This is what happens when you peg an artificial exchange rate, folks.
There's a profit to bringing in illegal drugs, as there's a market for the drugs that isn't state-regulated and when state-seized, are destroyed rather than sold.
By contrast, since companies, importers, what have you, expect to and need to make money on their importation of products, this grab will show that there's no good in above-board importing into that country. If they can seize and sell electronics, they can seize and sell anything . It's not safe to do legitimate business in Venezuela anymore.
What I expect to happen is that grey-market and black-market importers will smuggle products in, sell them for considerably more money than they should even go for legitimately, and attempt to hide their revenue, indeed much like drug smugglers do here.
Do not look into laser with remaining eye.
at least not sane ones
You may indulge some high-minded socialist fantasy, but the millions of muppets your side takes its support from are exactly this kind of feral animal, and you know it.
If anyone knows the background on this
Election coming up. Maduro is buying votes.
Maw! Fire up the karma burner!
Crime is already very high, Caracas is the murder capital of the world last I checked.
https://en.wikipedia.org/wiki/Caracas#Crime
Hello from Australia.
Minimum wage here is $16.37 AUD ($15.23 USD).
Seems pretty prosperous.
It's enough if you exchange the Venezuelan currency to dollars at the official exchange rate. Of course only a complete fool would exchange dollars for bolivars at the official exchange rate. If you do at the rate people who actually do have dollars will agree to, then the store is only getting like 10% of what they paid for the electronics.
I also don't think Ayn Rand was talking about Venezuela, or that most of her detractors would support a government take over of Best Buy, but you know, shades of grey and all that.
Have you even read Atlas Shrugged? Venezuela might not have been mentioned, but Mexico was nationalizing everything in the story, later followed by America passing the "Fair Share Directive" leading to "Directive 10-289" which locks the entire workforce into their current jobs and at their current pay, and demands that they consume exactly as much as they did the previous year. Thats a government takeover of everything.
"His name was James Damore."
Venezuela sells oil to the world and receives US dollars in exchange. Dollars are NOT freely available for the common citizen. They are granted through much bureaucratic processes (institutions named CADIVI, SICAD and so on). Foreign exchange controls have set an official rate of 6,3 BsF per 1 US dollar, which are hardly obtainable as previously mentioned. A black market that widely operates outside the foreign exchange controls have set the price at around almost TEN times that amount (60,00 BsF as of today). Since Venezuela's inflation rates are going through the roof, people want to protect their money by obtaining dollars instead. Small businesses have imported goods using black market dollars [again, dollars are seldom available to the common folk], thus having to inflate prices ten times to protect their investments. This workaround upset the government and a crackdown ensued. Thus, many of these businesses are forced to sell at ludicrously low prices and subsequently shut down for good. Protip: there's a hefty election day in less than a month. With a raging food shortage that has been going on for many months, this was seen as a populist move to turn the balance back on their favour at the expense of dozens of legit businesses that got caught in this loop. Greetings from warm, sunny, and recently HDMI'zed Venezuela.
Free-market/Austrian economics predicts that inflationary expansion of fiat currency inevitably results in government implementation of price controls. We are just conditioned to see the Venezuelan version as ridiculous whereas the 'Murican version is far, far more damaging.
No Inflation Taxation without Representation
It's enough if you exchange the Venezuelan currency to dollars at the official exchange rate. Of course only a complete fool would exchange dollars for bolivars at the official exchange rate. If you do at the rate people who actually do have dollars will agree to, then the store is only getting like 10% of what they paid for the electronics.
No, you didn't read the story. Importers specifically said they could not purchase replacements of the TVs Washers/Dryers at the official exchange rates.
Importers complain that there is such a shortage of dollars they are having to buy them on the black market to import inventory at a good price. If they were to charge clients based on obtaining the dollars at the official rate, they say they would make no profit.
If you buy on the black market with dollars, you can get a washer/dryer cost $650, which is about what you would pay in the states shopping at the low end devices at Lowes or Sears. But at the official exchange rate, re-sellers can't survive.
So, the importers will simply not import. It really is that simple.
Its a political ploy by a party facing an election, and the currency will be devalued shortly after the election is held. For all the oil money Venezuela makes, they have never gotten a grasp of basic economics. If they want a command economy, they are going to have to start manufacturing their own goods, because nobody will sell to their importers at dictated prices.
Sig Battery depleted. Reverting to safe mode.
Except Australia could be doing better, in particular the poor. Here's a quick recap of studies by Stossel on minimum wage in Australia. I also recommend you check out the Roy Morgan polls and studies regarding unemployment and under-employment in Australia.
Quote:
In a 2004 study published in the Australian Economic Review, economist Andrew Leigh looked at what happened after Western Australia increased its minimum wage compared to the rest of Australia.
He found: "Relative to the rest of Australia, the [percentage of people employed] in Western Australia fell following each of six [minimum wage] rises." (Study here [1], update here [2].)
Another Australian economist, John Humphrey, summarizes [3] the findings this way:
"[Leigh found] that for each 1 percent increase in the minimum wage we can expect... [to lose] 96,000 jobs" in Australia.
[1] http://andrewleigh.org/pdf/Minimum%20Wages%20(AER).pdf
[2] http://andrewleigh.org/pdf/Minimum_wages_reply.pdf
[3] http://www.abc.net.au/unleashed/4064106.html
These comments are mine; I do not speak for my employer.
Yes and as stupid as it sounds. This will work for a short while. Every person of means is probably desperately trying to leave. Once the "bargains" are gone, there will be no more product. Price controls drive growth into the ground and set the stage to inflation when they are released. Next comes wage control, then shortages, rise in crime (fueled by black markets), persecution of the wealthy, then hollowing out the middle class, and finally riots and needless death.
But that should not be happening in a country with a highly marketable commodity (oil). The nationalization of the oil industry has not been able to maintain previous levels after US and Dutch oil techs were driven out of the country, and production has fallen off by a quarter, and exports fallen off by half since Chavez came to power.
Nationalization has been a major fiasco.
Venezuela depends on the United States to buy 40 percent of its exports because US Gulf of Mexico refineries were designed to process low-quality Venezuelan and Mexican crudes that most refineries around the world cannot easily handle. But in recent years, the United States has been replacing its imports of Latin American crudes with oil from Canadian oil sands fields, which is similarly heavy.
American imports of Venezuelan oil have declined to just under a million barrels a day, from 1.7 million barrels a day in 1997, according to the Energy Department. And while Venezuelan exports of oil are in decline, its dependency on American refineries for refined petroleum products has grown to nearly 200,000 barrels a day because of several recent Venezuelan refinery accidents.
And those (nationalized) refineries aren't going to be fixed by Big Oil. Fool them once. They have a long memory.
Sig Battery depleted. Reverting to safe mode.
I live in Caracas. Parent is utter and complete bullshit. NO media in Venezuela is owned by foreign companies, and certainly not by US ones. Actually, the government owns more than half of all media companies, and constantly threatens privately-owned media with closure if they don't toe the official line. That is a threat that they've actually followed thru with more than once. Look it up yourself if you don't believe me. Parent is a Maduro shill or worse.
Many fell for Chávez et al.'s socialist act, especially since out there you don't have enough tidbits to glean and see their true colors: authoritarian, bald-faced liars, sore losers, sectarian... It's all been a gradual power grab with "boiled frog" written all over it.
But you cannae change the laws o' economics, and the whole farce was teetering before Chávez died (officially on March 5, but his voice hadn't been heard since early December). Maduro's ineptitude as a statesman is more evident than Chávez's only because of his frequent blunders (Bush 43 shines by comparison), but the collapse was a matter of time:
* Local production of goods has waned, in good part because of ridiculous controls and destructive expropriation of businesses, increasing the demand for foreign goods and the currency to buy them.
* Venezuela barely exports anything beyond oil and some steel.
* The state oil company was run into the ground by bad management and direct social spending (by presidential mandate); even less dollars coming in.
Venezuela owes some $215bn (60% of GNP), and Maduro had to go in person to China to negotiate the latest $5bn loan. 12-month inflation is 54%, likely to increase as December rolls in. Nope, not looking good.
This post contains no rudeness or derision of any kind. All arguments are friendly. Terms and exclusions may apply.
But that should not be happening in a country with a highly marketable commodity (oil). The nationalization of the oil industry has not been able to maintain previous levels after US and Dutch oil techs were driven out of the country, and production has fallen off by a quarter, and exports fallen off by half since Chavez came to power.
Nationalization has been a major fiasco.
And those (nationalized) refineries aren't going to be fixed by Big Oil. Fool them once. They have a long memory.
Off by over 30 years, pal. The Venezuelan oil industry was nationalized in 1976, and it ran pretty well long after "US and Dutch oil techs were driven out of the country". The decline started in 2003, after Chavez fired en-masse those not loyal to his party. Chavez, not nationalization, ruined the oil industry.
And does the Australian minimum wage earner have twice the lifestyle of a US minimum wage worker? Does the number really matter or is it what the money buys? Look at all the Zimbabwean trillionaires. That country should be a paradise, right?
As for availability...
If they do succeed in adding 20 million new insured in the US, the problem is they aren't adding any new doctors, and some who are doctors are looking at getting out.
It will become harder to find a doctor for two reasons:
1. More people with health insurance = more people wanting to see a doctor, but no more doctors to go around.
2. Some percentage of doctors will simply stop taking insurance and go to cash only, further reducing the number of doctors who can see all these new "insured" people.
Full disclosure: My wife has been a doctor for 10 years, she's disgusted by the whole thing and is considering either leaving or going cash only.
Side note: The number of doctors is not based on "free market" anything, it is tightly controlled by the AMA (American Medical Association). Only current doctors can licence new doctors and only existing medical schools can licence new medical schools, they like it the way it is because it keeps doctor pay high.
Point being, he was saying the same essential thing originally. You misunderstood his post, then proceeded to write a fairly informative summation of the incentives, so honestly I was too confused on how to mod you. :)
If you want to talk about the Bible, you should read the Bible. If you want to talk about Atlas Shrugged, you should read Atlas Shrugged.
Liberals are so foolish they don't even recognize identity functions, I guess.
Many Americans and Europeans may have trouble with the idea of "official" and "real" exchange rates. You can go in to any bank and purchase or sell currency, you can trade larger amounts on foreign exchange markets. You find the price never varies much place to place at a given time, because you can always go elsewhere. If Citibank wants more for Euros than Deutsche Bank, well you can buy them from Deutsche Bank even if you are in America. The currencies truly float, their value against each other varying all the time based on trading.
This is not the case in a place with a fixed currency like Venezuela. The government says "You can buy X amount of our currency for Y amount of foreign currency," with the foreign currency usually being US Dollars. Ok, easy enough to understand, and generally the government is happy to sell you as much of their currency as you want at that rate. The problem is when you try to go the other way. The government won't buy their currency back and give you dollars. In and of itself that makes sense, governments generally sell their currency to other people, they don't buy it back, since they are the ones who generate and control it.
So you say ok, well I'll sell that currency on the foreign exchange markets. Ahh well here's where your problem comes in: Those markets don't value the currency the same as the government that sold it does. You have to give them a whole lot more of it to get the same amount of dollars (or other currency). So you have two rates: The real one and the official one. The real one being the rate things actually trade for on markets.
Well government who implement currency controls don't like this. That is why they are implementing currency controls, to try and fix prices (it doesn't work, but they are still trying). Hence they usually restrict or ban trading like this. That then of course leads to a black market, where things are even higher, since the people involved are skirting the law.
This is just the kind of thing that happens with fixed currencies/price controls. While it might seem to be workable internally, it doesn't work on a global scale since other countries don't value your currency the same and they don't sell goods directly in your currency.