Wednesday, January 19, 2011

The Other Side of Venezuela: America

Everyone told me not to go to Venezuela. Backpackers told me: “Skip it, it’s not worth it. Caracas is the worst city in the world. Go to Merida instead,” I went to Merida, a tourist town near the border with Colombia and wasn’t impressed. Colombians exclaimed: “Why would you want to go to Venezuela? Say ‘hi’ to Hugo Chavéz for me.” To tell you the truth, I wanted to go to Caracas and because of that exact reason, to find out about Hugo Chavéz. During college, I took a class called “Media Power in Latin America.” While learning about Venezuela’s forms of media communication, our teacher asked us to read a book which was slightly chavista (pro-Chavéz) to balance out the blatantly anti-Chavéz American media. The result? My friends and I became huge fans. Here was this radically left president criticizing Bush, calling out the U.S. for its erroneous foreign policy, supposedly redistributing oil wealth from the rich to the poor, and sending military out to educate the illiterate inhabitants in the countryside. How could a liberal not support him? Yet, liberals all over Latin America constantly criticize him. I took this class in 2007. I know things have changed since then. During the past few years I’ve been dying of curiosity about: a. what Venezuelans think of Chavéz b. the truth about Chavéz. By no means do I understand the complexity of Venezuelan politics after a mere week in Venezuela, but I did learn a great deal. Here is the other side of Venezuelan politics:

Politically speaking, the U.S. and Venezuela appear to sit on opposite sides of the spectrum. American politics are middle-right while Venezuelan ones are extreme left. The U.S. declares itself a capitalist nation while Venezuela deems itself a socialist one. Barack Obama is a democratic president while Hugo Chávez is a populist one. The more time I spent in Venezuela however, the more I became convinced that Venezuela is a mini-America. As my friends from Caracas put it, “Venezuela is America without rules.”

Let me clear up some myths. Venezuela is not a communist country nor is it a 100% socialist country. It is socialist in the sense that since Chávez became president in 1998, the economy has been moving in the direction of state control. The federal government initially expropriated the petroleum industry. Since then, it has taken control of several other industries including comestibles and banking. On the up side, the government’s actions redistributed the country’s oil wealth, which was controlled by 2-3% of the population. However, my friends explained to me that it had the nasty side effect of creating a new class, the nouveau riche, i.e. the government employees in control of the oil.

Venezuela is not a socialist country, although it has been moving increasingly in that direction. It has substantial capitalist activities. Nonetheless, signs all over the country champion the benefits of socialism stating productivity gains supposedly achieved by socialist means and featuring pictures of hearts with the words, “Hecho en socialismo” (“Made in socialism”). They appeared to me as blatant efforts to inculcate the people into a political doctrine. Even in China I never saw a sign declaring, “Communism is the way to go” (of course, if it existed I wouldn’t have been able to read it).

My friends view socialism as a myth. During the past eight years, despite the government’s claims of helping the poor, the low-income class has widened. One reason is the sky high rate of inflation. Officially, it is 27% per year! Unofficially, it could be much closer to 150%! I felt the impact of inflation on my wallet the one week I was in Venezuela as the official exchange rate of the bolívar fuerte to the dollar is 4.5 to 1 while the black market exchange rate is 8 to 1. As I had no cash with me, I was forced to take out money from the ATM at the official rate. The problem is that throughout the country prices are based on the black market rate. How the average Venezuelan could afford food confounded me. My friend explained that liquidity, the cash flow, is high. An enormous quantity of cash flows through the hands of Venezuelans. A large percentage of the money derives from black market activities.

That brings us to reason number two for the worsening economic situation of the population. While the government has created a number of programs targeting poverty, it has done little to ensure that the poor are recipients of these programs. One example is the creation of socialist stores that sell staples at lower prices. There are no restrictions on who can shop at these stores. A middle-class Venezuelan could buy goods there and then could resell them for 300% more in another location. Venezuelans constantly earn and spend large amounts of cash while retaining hardly any earnings as savings. In order to consider a business profitable in Venezuela, it must have a 100% profit margin, minimum!

My friend conjectured that were it not for the country’s oil wealth, Venezuela would have the same boat as Haiti. Five years ago, the bolívar was worth three times the Colombian peso. Now the situation is the reverse. While Colombia has progressed in the last ten years, because of investments in infrastructure, investments in health and education, expansions of security forces, and increases in economic production, in Venezuela things have worsened. Colombia’s coffee industry and tourism industry generate large economic gains. Venezuela, in contrast, produces absolutely nothing because the focus is entirely on oil extraction. The third largest income-generating industry in the world is the arms industry of which the U.S. is the number one producer. The first two income-generating industries are the petroleum industry and badly-administrated petroleum industry. These statistics imply that more money flows into Venezuela annually than the U.S.!

Accordingly, middle-class Venezuelans can afford to travel to other countries and buy luxury goods such as personal computers and specialized cameras. Being in Venezuela reminded me constantly of life in the U.S. Food products in the supermarkets were American, the clothes people wore were American, and the attitudes of the people seemed to me American. The restrictions on traveling to certain countries that Venezuelans are now starting to face reminded me of the obligatory visas for Americans and Canadians only that arose during Bush’s presidency. Unlike other countries in South America where motorcycles are the norm, the streets of Caracas are flooded with cars. I haven’t seen traffic like that since leaving the U.S. It’s easy for even a low-income person to own a car in Venezuela when gas is only 0.10 bolívares ($0.05) per liter. That’s $0.20 for a gallon of gas! A person can fill the eight-cylinder tank of their sports car or Hummer for less money than it costs to buy a 600-mL bottle of water. Presidents can only raise the price of gas at the cost of their presidency. I remember that until five years ago, gas used to be cheap in the U.S. as well because of government subsidies.

Venezuela at the end of the day, despite the socialist propaganda, appears to me a reflection of the U.S. The U.S. gets rich off of wars and selling arms, Venezuela makes money from oil. American politicians act in the name of spreading democracy and freedom throughout the world; Venezuelan politicians take steps to advance the cause of socialism and equality throughout the world. Middle-class Venezuelans have their own laptops, drive their own cars everywhere, eat at Wendy’s, travel, and grab bags of Doritos from the 24-hour pharmacy at 2 AM in the morning. So do middle-class Americans. How different really are Venezuelans and Americans?

23% increase in production of Café Fama since the government took control of the company. In the heart it says "Made in socialism"

Diana Industries, monthly record of tons produced

Socialist arepas

Milk made in socialism

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