Our economic policy suffering of complex

Protectionism, without a doubt, creates economic distortions, which means that its implementation must be continually subjected to an intelligent, creative and disciplined effort in order to reduce such distortions.

In Venezuela, an immense part of the professional elites have become “the Buddha” of protectionism; Hence today, when we find ourselves in a state of economic emergency, which requires a certain protectionism, there is a risk that it will be implemented by the least experienced.

Protectionism, whether we like it or not, managed to generate an important industrial base in the country through the import substitution policy. However, as it came to present a large accumulation of inefficiencies, the rulers in power, instead of making the corrections that, although not easy, were necessary, succumbed to the siren song of commercial opening and proceeded to burn the bridges. or to sell the sofa, destroying the little institutional capacity that existed to administer protectionism.

I have frequently argued that Venezuela seems to suffer many times from the same complex of an insecure teenager, who when he enters a party with mud on his nose, breaks down emotionally due to the certainty that everyone is watching him – when, as we well know, that never happens since everyone is busy with their own muds.

Only the existence of a complex like the one described could justify both the excessive desire to seek applause and international acceptance, as well as the presence of several of the true phenomena of misinterpreted economic orthodoxy, which have led us to the regrettable economic situation that we live currently. Below, I would like to comment on some of those orthodox phenomena that I have detected:

Commercial opening. The process of trade opening itself was carried out with all zeal and fanaticism, however, no effort was made to ensure that the country's efforts were duly rewarded; Evidence of this was that while Venezuela lowered its tariffs, the world increased those applied in a discriminatory manner to petroleum derivatives. On the other hand, it should be noted that this process began without taking into account the reality of the country, to such a degree. that the economic sectors were almost never consulted, nor informed regarding the transition or adjustment periods to be implemented. Perhaps part of the blame lay with the economic sectors themselves by ignoring the ongoing process and letting Fedecámaras represent them, knowing that Fedecámaras does not represent anyone, except its own leaders.

Fiscal policy. At the most inopportune moment of all, in the midst of the initial phase of an economic recession, the country decided to satisfy the demands of multilateral entities for fiscal balance and launched the introduction of VAT (or its substitutes, whatever they were called), with the aggravating factor, furthermore, of abandoning the function of seeking a better distribution of income, via the income tax.

Financial regulations. Banking, in addition to promoting savings, offering reasonable returns and certainty of recovery, must fulfill the functions of supporting economic growth and democratizing access to capital. In terms of banking regulation, it would seem that the country has forgotten these last two functions, accepting, without blinking, the Basel regulations, much more appropriate for the banking of an already developed country than for ours. There is nothing wrong with being a developing country, what is wrong is believing that by simply adopting different positions, you can reach another level of maturity – like a little girl who borrows her mother's lipstick to feel grown up.

Exchange policy. Without going into discussing it in detail, the truth is that in exchange matters, during the last four years, rates have been allowed to evolve in a way that threatens local productive economic activity to such a degree that its justification can only be attributable to mental health problems. Sometimes, I even think I hear our central bankers addressing their colleagues saying, "whatever it is, we will kill inflation in Venezuela, even if we have to kill the Venezuelan."

Foreign investment. In few cases is the complex, to which I referred initially, as clearly drawn as in that of foreign investments. The ones that make the most noise in this globalized world are, above all, those investment funds that represent short-term capital – swallow capital – that fly through the skies in search of opportunities to speculate. In the face of such investors, the country has bowed, offering them restrictive monetary policies with absurd differentials, to the point of having ignored the needs of our national investors or our true foreign investors, which are those companies that ensure employment with their physical presence in Venezuela.

I would not hesitate to decree strong protection measures – such as immediately closing the border to imported vehicles – of course, such a measure should be done in accordance with Colombia, given that it is currently our only and true business partner. By the way, on occasions I have suggested applying to the import of vehicles a tariff equivalent to that applied to gasoline in their countries of origin and that would mean, for example, in the case of the Mercedes Benz from Germany, a tariff of more than 400%.

I, on the other hand, would tremble at the thought of implementing protectionist measures, without counting on the knowledge of many of those who do know about the dangers of protection. To them, I beg you, even temporarily, to abandon your doubts and/or intellectual complexes and lend your shoulder to a country that needs it. (I promise you that I am not going to tell anyone, especially those multilateral entities – where perhaps in the future you will apply for a job – for whom protectionism and everything that smacks of that, is fo, fo and fo.)

Petropolitan
Finance for Development