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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.
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.
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.
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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.
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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.
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.