Thursday, July 03, 1997
During the last few years economic policy in Venezuela has given rise to some basic questions and issues that often go unnoticed or unanswered since many of them are so simple that they border on the infantile. When addressed, the answers frequently offered to these questions are similar to those we often give in desperation to our children when they overdo the question bit, that is, “because that’s the way it is” or “because I say so”!
I honestly believe that the future of our country depends to a high degree on the answers to some of these basic questions. Although I have studied in various countries, hold a post-graduate degree, and am a professional with lengthy experience in many areas related to the national economic scene, I will let my inner child roam and assume the role of that questioning boy for a brief moment.
There is firm consensus, both inside Venezuela as well as internationally, that our public administration has been basically inept, or more precisely, has been incredibly incapable of managing our resources. How can it be possible, then, that the Agenda Venezuela includes, as a fundamental element, a considerable increase in the income generated for the public sector, and more so, how can it be possible that the International Monetary Fund has recommended such increases?
Why, if the country had a positive trade balance which should have resulted in a stable currency, did we have to suffer through a mega-devaluation (which impoverishes the private sector and enriches the public sector) and how can it occur to anyone to call this “orthodox”?
In general terms, the last thing the economists would have recommended for a country submerged in a deep recession would be an increase in taxation. Why, then, have fiscal charges been increased in Venezuela, resulting in an even deeper recession and how can it occur to anyone to call this “orthodox”?
If there is a firm consensus, both inside Venezuela as well as internationally, that the future of the country is based fundamentally on a drastic reduction in the size of the public sector and that such policies have been applied by our self-proclaimed neoliberal planning ministers to whom they have become almost a religion, then why has the public sector grown in relation to the private sector, year after year after year?
Oil is, as is a Picasso painting, an easily liquidated asset. Why should we be so enchanted with the income created by the oil aperture if we have not yet been told what will be done with it and where it will be spent. A bit like selling your home without knowing beforehand where you will move to or what the cost of a new house will be.
For years we have accused the international banking community of deceiving us and having smothered us in devilish foreign debt. Why, then, are we now supposed to be pleased as punch that the foreign banks are again showing confidence in Venezuela and are going to increase lending in the country?
If after a few months of Agenda Venezuela, during which recession has deepened, the public sector has grown and no major inroads have been made on reforms corresponding to vital sectors such as the judiciary, health and education, then who does the International Monetary Fund work for when they congratulate the authorities on their performance and, in the same breath, insist on increasing gasoline prices?
We have always known that we are a society of rentiers based on our oil income, that while petroleum reserves last we will basically always be a society of rentiers and that most of our problems stem from the fact that we are simply inefficient rentiers. Why, then, do we insist on the search for an economic model based on the elimination of this society of rentiers instead of finding one that will insure that we become competent rentiers?
We know that the oil industry is not by itself a great employment generator. We also know that due to the overvalued exchange parity caused by this oil income it will always be difficult for labor intensive economic activities to remain competitive. Why do we insist on being so purist in the application of neoliberal policies, for example, in the establishment of toll charges for access to public parks, while we come close to fainting at the thought of offering a bit of support and protection to the greatest of our national parks called “agriculture”?
It would be easy for Dad to answer his children’s queries with a simple “go ask the economists” but then, what else can I, as an economist Dad, do?