We’ll get started with this week’s chapter of Venezuela : Down The Rabbit Hole, “Control Freaks” in a moment but first let’s take a look at the situation regarding the effort to recall Nicolas Maduro. Last week the supporters of the recall effort petitioned the TSJ (Venezuela Supreme Court) to review the rules/schedule for the signature collection laid out by the CNE (electoral council).If you remember, due to the compressed time frame (12 hours) and reduced official locations the supporters would need to process five signatures per minute at each location for the entire time available. No word was issued by the TSJ…hmmm…

 So, what’s the deal? Has this been done before? Well,yes…and no. When Chavez rewrote the constitution he made provisions for a recall and there was an attempt to recall him in 2004. Still in the early years of his tenure with his popularity riding high due to his many Missions (social programs), which had not yet begun to fail, It was pretty much a foregone conclusion the recall would fail but the Chavistas took no chances. The CNE added requirements not listed previously and then when the supporters of the recall complied the CNE invalidated a lot of the signatures.

 After all the hoops had been jumped through the recall was allowed to go forward with one key condition added. Chavez requested, and was granted, access to the signature list so the Chavistas could review who had signed. Anybody could see this coming. The list was mysteriously leaked to the public (can you say “plausible deniability”?) and the recall effort failed to get enough votes. Strangely enough, thousands of people on the list were fired from government jobs and access to government benefits was denied. That said, the vote tally was probably legitimate.

 In 2016 there was a recall effort to oust Nicolas Maduro who has never been a popular president (dictator). That effort was cut short when the recall was halted due to concerns over identity theft. It was never restarted. In short…No Recall.

 Now here we are.The conditions to gather the required signatures set up by the CNE made this effort mathematically impossible. Remember, this is Maduro’s “new CNE” with two “opposition members” which is meaningless since the five person board is still controlled by the Chavistas, hence the ridiculous signature requirements. Add to that the head of PSUV (Chavistas), Diosdado Cabello, saying Maduro would have the right to see the list just like Chavez did (which led to all the firings). As you might expect, the supporters of the recall effort were unable to gather enough signatures and the CNE has said there will be no popular vote. Can’t take any chances with that 13% approval rating. In short…No Recall.

 Morningstar reports opposition leader Juan Guaido has called for supporters to take to the streets in February. Good luck with that.

 Now for some good news. BNN Bloomberg reports that Yummy, the delivery app developed in Venezuela, is expanding into Ecuador and Panama. Nice to see something working out for someone in Venezuela. FYI, this article was just before BNN Bloomberg reported the recall had failed. In V-land it’s always good news / bad news.

 And in the “no surprise” category we have the UK Government advising against all but essential travel in Venezuela with “NO TRAVEL” in border areas.

 Then we have more from VP Delcy Rodriguez at the UN Human Rights Council in Geneva. Prensa Latina tells us that according to Delcy, “Compared to the private healthcare of capitalist systems our public model has been a success managing the pandemic…criminal blockade…US government trying to artificially create an humanitarian crisis.”

 And who’s buying into the Chavista version of advances in Human Rights? Telesur (government media) reports the HR advances made by the Maduro regime are recognized by Nicaragua, Nigeria,Iran, and even Saudi Arabia among others. I think women are now allowed to drive cars in Saudi Arabia. I’m not sure but I think so.

 Telesur also reports Maduro has established a “Truth Commission” regarding colonialism. He’s already called for Spain to apologize.

 So…let’s head Down The Rabbit Hole…

 Chapter 5 / Control Freaks

 If there is anything that can match the failure rate of socialism it’s price controls. They simply never work…anywhere.I don’t know about you but when I hear “this time will be different” I know failure is assured. It’s never different. When the housing bubble was questioned in 2007 we heard it as well as when we questioned the tech bubble in 1999 and in so many other instances. I believe “this time will be different” about as much as I believe, as Ronald Regan famously referred to, “I’m from the government and I’m here to help.”

 Note : The next few paragraphs pertain to something I talked about last week in TFT when someone had the audacity to ask if the US should consider price controls on food and gasoline. I apologize for the repetition but it really is the perfect example of what happens with the ham-handed nature of price controls.

 A few years ago, when Venezuela was going through yet another bout of food shortages, one of the things that were abundantly available were eggs. Cholesterol concerns aside, it’s hard to worry too much about cholesterol when you’re starving, eggs are an excellent source of protein. It’s not like the people were clamoring for the government to do something about egg prices in particular. While they weren’t particularly cheap they weren’t prohibitively expensive either and they were plentiful. Seems like a good balance of relevant factors. Well, we can’t have that now can we?

 At that time Maduro, who has never enjoyed anything close to a positive approval rating (remember he’s currently at 13%) felt he needed to do something to boost his popularity. Since he ruled by decree due to the emergency powers he granted himself he needed no approval and could impose any conditions he wanted. If you were looking for a good example of the ideas you get when there is no one in the cabinet with an understanding of economics and the president has no understanding of business or economics this is a good one.

 When Maduro went to bed the price of a flat of 30 eggs was 1,200 bolivares and the cost was 800. In the morning he announced that he was going to lower the price and stressed that he came up with this idea himself and no greedy capitalist could influence him. He was doing this for the people of Venezuela! Effective immediately the price of a flat of eggs. including those already in stores, would be 400 bolivares. Viva La Revolucion!!

 I’m sure you already know what’s coming.The retailers, with no other choice, sold off what they had in stock, took the hit, and didn’t order anymore eggs.The wholesalers and producers weren’t interested in doing business at a loss either as no subsidies were announced. Almost overnight eggs disappeared from stores.It did, however, add another item to the inventory for the “bachaqueros” as the black marketers were called.

 The producers produced less but commanded a higher price. Those that could afford it paid the higher price charged by the bachequeros so they were OK. The wholesalers and retailers redirected their efforts so, after taking the initial financial hit, they were OK. As is so often the case with “Socialismo” those hurt the most are those it’s supposedly trying to help.

 This is just one of many examples of failed price controls during the Chavismo era. Strangely enough,no matter how many times it fails to produce the desired outcome, they keep coming back to the well of price controls. The reason, it sounds good and plays into the ideology. They can always fall back on the excuse the socialists always trot out there. It would have worked if not for those greedy capitalists.

 More tomorrow….