We can empathize with the proletariat of Venezuela as the failed attempts at Marxism by the bourgeois have utterly engulfed the nation and have enslaved the citizenry to a hellish life for the most part. Sir Thomas More was surely read by Maduro and the likes, as it was thought of as a guide for the masses, but not the “one percenters.” How ironic. The economy of More is of particular interest.
Markets are nothing more than supply houses where everyone is free to go and take what he needs without payment. There is no private property among the citizenry and they have no money. The citizens are educated to despise jewels, precious metals and the like. This re-education plays better in Caracas than in West Palm Beach. The ultimate philosophical condition is based upon nature. This was a popular tenant with Hitler as well. This leads to the belief that a life pattern must accord with the dictates of nature, since nature prompts people to seek pleasure, pleasure is regarded as the goal of life. There is little pleasure in Venezuela today.
Let us turn our attention to the economic impact of the recent devaluation of the Venezuelan currency, one of the largest of its kind in history, effectively reducing the value by 95 percent. The hope is that this will temporarily stymie the run-away inflation that can only be considered staggering beyond belief.
Prices are currently rising at an annualized rate of 108,000 percent, according to Bloomberg’s Café con Leche index. Again, according to Bloomberg, the official rate for the currency will go from about 285,000 per dollar to 6 million, a shock that officials tried to partly offset by raising the minimum wage 3,500 percent to the equivalent of just $30 a month. This makes the average Venezuelan worker envious of the American fast-food worker needing a $15 minimum wage to exist. The irony is that this move will likely lead to more inflation. Is that voodoo economics?
One must remember that just as his predecessor Hugo Chavez, the darling of the American left, Madura’s only real concern is staying in power. It took death to get Chavez out. If you think that Madura is living like the masses, think again. While Javier is making $30 a month pumping gas, Madura, the ostensibly caring socialist man of the people, is sipping Opus One and consumed with fear of his execution. Goes with the territory.
In what may be the light that allows socialism to exist, the advent of crypto currency may be the Holy Grail. In what is the first such maneuver of its kind, the Petro, the name given to the crypto currency, is backed by crude oil and its price will fluctuate in the market in a manner similar to Bitcoin. As with Bitcoin, there is a finite number of coins, thus capping its value and essentially eliminating any nominal chance of inflation.
This is too early in its genesis to see an outcome, but if successful, look for this to be a model for utopian societies to come. Venezuela it boasting the fact that the International Monetary Fund is not standing in its way. Oh, contraire, it is the IMF that will not put its toes in this diphtheria puddle filled with worthless bolivar. As with Greece, the IMF will come in and take control of a sovereign nation, as no such entity has ever defaulted on a loan from the organization. Venezuela should be so lucky to have the IMF express interest. This will not happen.
Just as when the West discovered oil reserves in the Middle East, the hapless Venezuelan’s too sat on oil wealth. They now have no funding for plant and equipment to process crude in a profitable manner. When your economy is a one trick pony, you don’t have a lot of options when the horse goes down. From President Luis Herrera Campins in the 80’s, to Chavez and through Madura in the present, nothing has changed.
Let’s drive the point home. Madura and his military, like all socialist societies, take what they need, and give nothing to the people. According to Bloomberg, top ranking generals have been handed the keys to ministries, the state-run oil company and the lucrative business of food imports. Myriad exchange rates created juicy arbitrage opportunities that enriched many close associates of the state.
This will continue until the next rag-tag regime ousts Madura et al. and assumes power. I just wonder what part of this wonderful experience that is Venezuela is lost on the likes of Sanders, Warren, and that young ignorant potential congresswoman from New York. My guess would be, “this could never happen in the United States.” Guess again.