Some –isms are still alive and kicking

I recently read an article published in The Daily Journal by a frequent contributor to these pages, Michael Rowan. I do not know Mr. Rowan, but I often envy his capacity for analysis and of expression. The article in question was titled “An End to the Age of Isms”, and it contained a few phrases which compel me to reply.

Specifically, Mr. Rowan wrote: “Yet there are still pockets of resistance to market democracy in the world. There are the nationalists who believe in protectionism and are afraid of globalization, ..... . In those places, one finds the old media, propaganda, hierarchies and also, deeply entrenched poverty. That is their tragedy. The world has passed them by ... . What work is freedom. Freedom in the market .... . For those with the responsibility of writing a new Constitution for Venezuela, this is the truth which can set them, and their country, free at last.”

I cannot agree more with the concept of freedom as expounded by Mr. Rowan in his article. However, when he attempts to segment or divide the world into right and wrong, into those that behave and those that sin, I have no other option as a Venezuelan but to cry “Foul”.

I do not believe there is any reason to, either directly or indirectly, label Venezuela as a country of protectionists afraid of globalization. On the contrary, Venezuela’s borders, both commercial as well as cultural, are among the most permeable and open in the world.

There are no limits as to what goods and services can be imported into the country. On top of this, the limited duties imposed are more than often not even paid at the ports of entry. In addition, few could question the eagerness and openness with which Venezuelans accept any type of external influence.

Champagne is charged a duty of 26%, quasi-monopolistic services such as those of international auditors and law firms are marketed with ease, patent and intellectual property right agreements are applied quickly, as in the case of laboratories, and finally, our early morning radio broadcasts allow us to hear all types of debate about matters typical of the globalized world such as oral sex.

What does Venezuela obtain in return for this extraordinarily good behavior as a citizen of the globalized world?

We know very well that the worth of something is what the consumer is willing to ultimately pay for it. Today, for each 100 units a European consumer pays for a tank of gasoline, the producer of the latter receives 10 units, the distributor 5 units and the taxman of the country it is pumped in receives 85 units. The fact that the taxman receives 85 units and the producer only 10 units means they are applying an effective commercial duty or tax of 850%. The experts, very able at managing the percentages in order to defend their interests, frequently refer to taxes on oil as being “only 85%” and never as a duty on the product. 

If, for example, we were talking about a Mercedes Benz which goes for US$ 100,000, I am sure Daimler Benz would not be talking about “only 85%” if this sale would be broken down into a sales commission of US$ 5,000, a payment to the manufacturer of US$ 10,000 and a transfer to the taxman of US$ 85,000.

It is not true that prices of oil are low, since for the consumer the prices have never been as high. Our only problem as a producing nation is that on the income side, we have never received less. The taxmen in the consumer nations receive more, a lot more, income from each barrel of oil commercialized than the producer of the same.

This is what Venezuela got. A system of free trade that only pays it a meager 10% of the value of the non-renewable asset that it liquidates. Just like any Little Red Riding Hood, we readily swallow the stories about the freedom of markets when in reality they hide the evil, bad wolf of protectionism, environmentalism and fiscalism, three “isms” that are very much alive and kicking, thank you!

I agree in no uncertain terms with Mr. Rowan that the Constituent Assembly has much work to do, but in my wish list I have not included his recommendations with regards to increased global aperture. My rather long wish list includes, for example, ensuring that the citizens of the country can access adequate information pertaining to the government’s management of its affairs, more effective limitations on new public indebtedness and finally (something inspired by Mr. Rowan) the banning of ingenuousness as a basis for our commercial policies.

https://petropolitan.blogspot.com/1999/04/some-isms-are-still-alive-and-kicking.html

If I were president (II)

In yesterday’s installment I mentioned the fact that the first thing I must receive in order to responsibly comply with my presidential obligations are certain special powers. Supposing I actually received these powers, I then began to list some of the concrete measures as an example of what I would do during the first 100 days of my term in some specific areas of concern. Here are some more.

Education: A single, all encompassing data base must be put together, identifying each and every active teacher on a school-by-school basis. These teachers will immediately receive an increase in pay and an additional fixed percentage of the payroll amount will be awarded each school to cover administrative expenses. Evidence of false information will result in the immediate suspension (for lying, aiding or abetting) of all the teachers of that particular school. All others that are unduly receiving pay without working from the Ministry of Education will be awarded eternal vacations without pay.

Reduction of public spending: In order to rationalize public spending, as similar strategy as the one above will be implemented. All personnel that are to be dismissed will be paid the equivalent of three month’s salary and all other severance payments will be paid in the form of negotiable Public Sector Restoion Bonds (PSRB). The value of these bonds will increase in the measure that restoration of the public sector is successful.

Infrastructure: All savings from the restructuring process will be invested, after covering fiscal deficits over 3% of GNP, in infrastructure projects, such as energy and water for Margarita and Zulia and a truly nationwide railway system.

Housing: The Central Bank must immediately make available through the private banking system, a credit facility to the tune of US$ 2 billion aimed at issuing long term loans in US$ and fixed rates for acquisition of housing.

Foreign investment: Foreign capital investments will be regulated in order to minimize damage caused by short term capital flight (i.e., the Mexico syndrome). Other countries in Latin America have such regulations in place.

Economic diversification: The oil sector does not create employment. Venezuela’s commercial policies must be renegotiated to achieve the equilibrium of our trade balance in terms of employment generation and not balance in monetary terms as it stands now. An annual budget will be allotted to allow for the protection of certain sectors of the economy, specifically agriculture. Cover under this scheme will be allocated to those sectors within agriculture that we can be competitive in without excessive costs (i.e. rice rather than apples).

Petroleum/Petrochemicals: PDVSA will continue to manage the development of our petroleum industry. However, a special Office of the Petroleum Ombudsman (OPO) will be created. This will allow the common citizen to get closer and to increase his knowledge and control of what is the country’s principal asset. The members of this office will be elected at random from among a list of candidates that have been carefully screened, have complied with some basic requirements and have been presented as such by the Venezuelan people. The Office will be initially asked to analyze why the industry is spending its precious resources in rebuilding a slew of gas stations. In the same sense, I would like to insure that our petrochemical industry is not just reopening Sidor’s covered grave with its new investments.

Taxes/Duties: There will be no more value added tax (VAT) as long as the country continues to perceive significant income from oil. Customs at our ports will be handed over to the private sector management. This will ensure that income that should reach government accounts does not continue to feed unscrupulous individual pockets.

Superfluous functions: Until the State begins to perfectly comply with its responsibilities in fundamental areas such as education, health and security, all other superfluous functions will be suspended. For example: if the local stock market really needs a regulatory entity such as the National Security and Exchange Commission, the market must cover the costs incurred. Today, it is preferable to stamp each issue with the words “Beware – Not Regulated” than to create the false illusion that some control is imposed, and in some instances, actually abet fraud through simple omission.

Day 100 – Evaluation: If my team and I are not able to successfully implement our government’s plans, we must resign and convene new elections. Remember, I have initially made a promise to resign without pension and without a seat as Senator for life in order to avoid a) further degeneration of the stature of the office of the President and b) wasting another four years and nine months of this poor country’s destiny.