21st Century Bolivarian Capitalism

 We’ll head Down The Rabbit Hole in a minute to finish up “The Card”  but first…Chavez billed his new “Revolution” as “21st Century Bolivarian Socialism”. After wrecking the economy and the currency Maduro and his economically inept Chavistas have given us a very strange “21st Century Bolivarian Capitalism”. Check this out…

 While still maintaining his Socialist/Marxist rhetoric Maduro did an about face in a tacit admission of socialism’s economic failures. From our “Control Freaks” segment we know that price controls don’t work,never have,never will. Well,central planning of picking winners and losers hasn’t fared much better. Between 2017-2020 Venezuela lost 1,653 manufacturing companies. With all the lost production (even though every year Maduro assures us that a bold leap forward is just around the corner) the government wanted to help replace these items with imports to alleviate some of the shortages. He also finally allowed the use of dollars instead of the worthless bolivar (don’t even get me started on “el Petro”) to facilitate this. The problem was he just couldn’t help himself and felt the need to control imports through import tax controls.

 Maduro came up with a list of 2,500 items to replace lost production and gave them duty free status. They  also received preferential treatment on the VAT (value added tax). This would surely get imports to fill retailers empty shelves,right? Well,yes it did…but not without a downside. Although production has plummeted in Venezuela under Chavismo they do still produce some items. Well, many of those now have to more or less compete with themselves. A good example would be Kraft/Heinz products that are still produced in Venezuela. With no import duty and no VAT retailers can stock their shelves with imported Kraft/Heinz products for 40% less than the exact same item from domestic producers.And that’s just one of many examples.

 It’s good news for the retailers and has also created a new crop of middle man distributors that can buy products abroad and still sell them to retailers for less than the domestically produced products.Now don’t get me wrong here. I’m all for these middle man distributors making a buck if they can especially in an environment as economically challenging as Venezuela under Chavismo. The point is Maduro is punishing the few domestic producers left there after driving all the others out of the country,all while saying Venezuela needs to increase production…Huh? More on this tomorrow but before we get too deep in the economic weeds let’s head Down The Rabbit Hole…

 ….With most of the population,to use a kinder,gentler term,in a food insecurity situation (starvation?),this is a very effective means of control.Since the minimum wage is currently under two bucks a month another of the effective means are the bonuses the government puts out there.At Christmas it might be “The Baby Jesus Bonus”. Last year there was a “Mothers Day Bonus”. All these are distributed through “The Card”. The frequency of these is directly related to the government’s perception of the potential for unrest and the amounts,while seemingly substantial in bolivar terms,are usually about a buck or two in real money (dollars). It costs the government virtually nothing as the bonuses are created electronically out of thin air and what’s the downside anyway? A more devalued bolivar? (six more zeros due to be lopped off Oct 1st) A buck or two is a big deal when you only make two bucks a month so maybe you tow the government line.

 The May,2018 elections, widely condemned internationally as fraudulent for other reasons,also had a “Carnet” aspect. Politics in Venezuela have long been vote buying bonanzas. Recently,with the government in control of almost everything,you might get cement blocks if you were building a house or there were food give-aways. Now, with “The Card” vote buying is easy (and we see what the government really wanted to streamline). There is no attempt to disguise it. Outside each poll location the government puts Red Point Kiosks. (unconstitutional? the CNE and TSJ don’t seem to have a problem with it) As voters exit the polls they can register, through Carnet de la Patria, for a special Fatherland Prize.

 Any new government initiative is run through “The Card”. Government benefits and services may be billed as attempting to address a particular issue but they will only help those with “The Card”. They are also a useful tool for government owned businesses. They can send a list of names to their friendly neighborhood Chavista bureaucrat and find out whatever they care to know about their employees. With “The Card” every aspect of your life is a matter of public record. So far, the cards don’t have an RFID chip which enables location tracking. The only reason they lack this is because it was prohibitively expensive so they declined the option. (perhaps in “Carnet de la Patria 2.0”?)

 Summary : Under 21st Century Bolivarian Socialism nothing is ever as it seems or is proposed. The “Carnet de la Patria” was supposed to be a way to help the undocumented open bank accounts and vote. Strangely enough, they began exploring this when Chavez lost his first election,an effort to grant himself broader powers. (note: Maduro doesn’t bother with the vote.He just does whatever he cares to and has it ratified by the TSJ) It soon morphed into a government monitoring and control tool (can you say “mission creep”?), and a very effective one with over half the population enrolled. The good news is that the government couldn’t afford to buy the “enhanced Big Brother package” with RFID location tracking. They can’t pinpoint the exact location of card carriers….yet!!!

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