
In a Venezuela Ravaged by Inflation, ‘a Race for Survival’ - DoreenMichele
https://www.nytimes.com/2017/12/02/world/americas/venezuela-nicholas-maduro-inflation-hyperinflation.html
======
sctb
Many of the comments in this thread violate this guideline:

> _Eschew flamebait. Don 't introduce flamewar topics unless you have
> something genuinely new to say. Avoid unrelated controversies and generic
> tangents._

This is particularly difficult to avoid on these controversial topics, but we
have to try because the quality of the discussion when we do this is way below
what this site exists for.

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

------
nopinsight
A key contributing factor appears to be the _capability_ to produce. The
handout system in Venezuela had destroyed a large portion of that capability
and thus when its _stock_ of wealth in the form of oil becomes less valuable,
the disaster ensues.

Well-managed capitalism is much more efficient than socialism in inducing
people and organizations to develop and upgrade their production capabilities.
One of its unfortunate side effects is much larger inequality than socialism.
Still, history has shown that over the long run, capitalism tends to be better
even for the poor. Most poor people in the US still live better than many
average people in certain countries (Example: a small fraction of people in
India own a car; many poor people in the States do).

On the other hand, pure capitalism is clearly _not_ the most efficient system
because it perpetuates the status quo, suffers from negative externalities,
and underdevelops certain resources, especially those that require a long lead
time and mostly yield social rather than private benefits. Prime examples
include public infrastructure and talents born in underprivileged families.

Capitalism that works well should maintain these two components that resemble
socialism:

1) Long-term public investment to develop shared infrastructure, production
capabilities, and talents, and

2) Redistribution to alleviate people from poverty trap and allow people to
help themselves and become a contributing member to the community

------
indubitable
I hate to also add to the cliche, but I think the description of one of the
pictures in this article really emphasizes that perhaps it's not just a
cliche: _" Over 100 people lined up in Caracas to purchase price-controlled
chicken. Chicken is highly sought after, yet very difficult to find for sale
at affordable prices in Venezuela."_ Chickens are absurdly easy to farm.
They're basically meat grass. Put them in a fenced area so they don't run
away, and they pretty much take care of themselves. It doesn't have to a big
area. And they grow just about as fast as weeds - growing naturally from egg
to butcher time in 3-6 months depending on breed.

What is preventing, or perhaps more likely - disincentivizing, people of even
moderate means from doing this? It would be a trivial way to add a substantial
side income that would simultaneously help out countless people, again as this
article emphasizes. I never gave much weight to the stories or failed social
systems, but this does seem to be very much a recurring pattern. Venezuela is
obviously far from an ideal example, but reality itself is also hardly ideal.
If we end up with these sort of collapses when systems are less than ideal --
then that alone is sufficient reason to doubt their viability.

~~~
friedButter
>What is preventing, or perhaps more likely - disincentivizing, people of even
moderate means from doing this?

Its more of a lack of incentive than disincentive. When making profit is
essentially outlawed (
[https://www.theguardian.com/world/2013/nov/15/venezuela-
army...](https://www.theguardian.com/world/2013/nov/15/venezuela-army-occupy-
shops-profiteering) ), what would motivate people to work and generate stuff?

------
BjoernKW
Whenever socialism goes awry there’s this True Scotsman argument: “Well,
that’s not true socialism.”

According to those standards there probably hasn’t been a true socialist
society or state yet.

The often mentioned Nordic model isn’t socialism by any narrow definition
because it still involves free market capitalism and private ownership of the
means of production.

~~~
dwaltrip
Well, clearly, there is something going on very differently in the European
socialist democracies, at the very least.

Hmm, I just did a quick google search... this Quora question [1] seems to have
some consensus that Venezuela is actually closer to a dictatorship that has
some socialist aspects and some capitalist aspects.

I don't know many details about the Venezuela situation, so I can't say too
much more at this time.

[1] [https://www.quora.com/Is-Venezuela-a-socialist-or-
communist-...](https://www.quora.com/Is-Venezuela-a-socialist-or-communist-
country)

~~~
BjoernKW
One definition of communism or socialism in its more extreme varieties is that
the state becomes the only remaining capitalist. So, having some capitalist
aspects doesn't necessarily preclude socialism.

Every real-world implementation of socialism (in the true sense of the word,
not the Nordic / social democracy kind of system) to this day seems to either
have had some features of a dictatorship right from the start or devolved into
a dictatorship over time.

The only instance of socialism I can think of where this wasn't the case is
the Allende government in Chile and that unfortunately didn't last long enough
(less than 3 years) to see how it would've evolved in the long run.

------
EGreg
_“Something so simple as taking money out of a bank machine or buying a coffee
or taking a taxi has become a race for survival,” Mr. Sandoval said._

How much of this race to the ATM etc. would be a problem if the money supply
was digital and everyone could use their phone to make purchases.

I would like to propose a thought experiment and solicit opinions on whether
situations like this can be mitigated by using a LOCAL digital (crypto)
currency.

Suppose the prices are marked up constantly but there is also a constant
increase in the money supply available to the public.

A user of an app could choose to view the prices in their preferred currency
(eg dollars) while using the underlying currency so everything would seem more
stable.

Then it becomes an engineering problem of storing the amounts as two integers:
1. The number of cents 2. The power of 10 to which to raise the price.

I would love to get feedback on the following: how to get the new money into
the hands of the people?

What if there was a system that automatically calculated eg the median amount
people spent on food, and issued (a percent of) that amount the next day as
Basic Income to everyone in ther account?

Automatically issuing Basic Income based on Local CPI would organically allow
people to prioritize necessities such as food before other transactions.

Of course, unilateral issuance of money by the government (eg to pay debt)
would rob people of the savings power in that currency. But they could buy non
perishable assets as investments and a store of value, including bitcoin.

Under such a system, the currency would then still be usable as a medium of
exchange, which can be decoupled from its role as a store of value.

However, if the newly issued money was solely issued to pay the foreign debt,
it would not be available for the local population to use. This is the real
problem with austerity. The currency is devalued on global markets, making
imported goods more and more expensive. Runaway inflation is exponential.

The government would have to BALANCE printing money to satisfy foreign
interests with issuing money to its own citizens (eg as UBI to all citizens -
which even Ron Paul himself suggested as a better alternative to bailing out
the banks).

In other words for every X amount you print to satisfy foreign debts you issue
2X to your own citizens, so they can still buy necessities.

This is not ideal -- but it does allow a country to soften the blow of
austerity. Incurring such debts is the underlying problem. They should just
default, like Iceland. And issue a new currency to all their people. They
still keep paying their debts, even as the price of oil plummeted and they do
not have enough real assets to back their foreign promises anymore.

By defaulting on their debts, they can once again get control of their own
money supply, which is probably far more valuable to each citizen than the
country's credit rating -- paying debts on the verge of bankruptcy isn't doing
any of the citizens any favors.

That's the real mistake of the Maduro government in my opinion.

Disclaimer: my company is building a technology to power all the things I said
for communities -- doesn't have to be countries. Cities like Detroit or even a
remote unbanked village in Africa should be able to have their own local
currency and run their own monetary policy, and hopefully using DIRECT
democracy rather than representative democracy which can lead to stuff like
this. Much of the economic analysis and fundamentals should be automated and
available to every citizen, making them informed enough to choose what they
want to do, instead of watching their leaders mess it up.

PS: Why is this being downvoted? Do we just have to say "socialism -- so bad
-- sigh" and move on without any substantive analysis of possible real
solutions to existing problems?

~~~
gaius
_Then the prices would be marked up constantly but there also would be a
constant increase in the money supply_

This is called (hyper)inflation. They already have that, no new app required.

~~~
EGreg
You're describing the problem, not the solution.

If all people have to run to the ATM faster than they take a piss so they can
buy food then making payments digital is an immediate improvement.

But that's just the first part. Did you read the part about issuing 2X the
amount of currency to your own people for every X you issue to pay back
foreign interests?

I want substantive feedback on my UBI proposal!

~~~
gaius
That's again inflationary - because each unit of currency is worth less.

Money is not wealth, its a token of exchange _for_ wealth. Your proposal is
akin to educating a country by "issuing" degree certificates at a certain
rate, completely ignoring if anyone is learning anything.

~~~
EGreg
I didn't argue that it _wasn 't inflationary_. Right at the outset I described
inflation.

Did you actually read the rest of my post? I asked about something completely
different.

You seem to be saying people who don't have enough money at a given moment
should starve. The difference with your example of degree certificates is that
they are not basic necessities needed for survival.

~~~
gaius
_You seem to be saying people who don 't have enough money at a given moment
should starve_

No, I'm saying that if the food (wealth) doesn't exist, no amount of money
(tokens) can buy it. You are postulating that the problem is lack if tokens.

------
tudorw
"The US has a long and bloody history of meddling in Latin America's affairs"

[http://www.independent.co.uk/news/world/americas/cia-
venezue...](http://www.independent.co.uk/news/world/americas/cia-venezuela-
crisis-government-mike-pompeo-helping-install-new-remarks-a7859771.html)

------
seibelj
When the solution to every problem is more government, more redistribution,
and higher taxes, this is the inevitable result. A tragedy caused 100% by
politics

~~~
gaius
It takes a special kind of talent to impoverish countries as blessed with
natural resources as Venezuela and Argentina.

~~~
rayiner
Not really. Most resource-rich countries are terribly governed. Google “the
resource curse.”

~~~
thesmallestcat
Argentina isn't even resource-rich, it's just large. Great for ranching, few
mineral or energy resources. And it's not exactly a secret that petro states
like Venezuela have fallen on hard times in the past decade.

~~~
gaius
There was once a saying "as rich as an Argentine"

------
friedButter
How can inflation be so rampant when the army enforces price control?
[https://www.theguardian.com/world/2013/nov/15/venezuela-
army...](https://www.theguardian.com/world/2013/nov/15/venezuela-army-occupy-
shops-profiteering)

~~~
greeneggs
The price controls can't be enforced everywhere, or trade would just move to
the black market. They are presumably only enforced on stores that are not
politically connected, and that are large enough to draw notice. When they are
forced to sell below cost, these stores won't stock anything, so the price
controls have no positive effect.

------
pingec
The situation seems very worrying. How can people from the outside help? What
is the situation with internet access over there? Are there any bloggers or
reporters who report frequently on the situation and struggles frequently?

------
yostrovs
The word "socialism" is missing from the article. The situation must be a
natural disaster.

~~~
cdancette
That's not socialism. That's a dictatorship and corruption.

~~~
gaius
How many socialist regimes need to end in "dictatorship and corruption" before
the world realises that the latter is the inevitable consequence of the
former?

~~~
RA_Fisher
Yep. Chavez started as a proletariat leader. I believe some liberal leaders
like Sean Penn publicly supported Chavez (? someone fact check me here).

~~~
thesmallestcat
Sean Penn is a movie actor, not a "liberal leader," what are you on?

~~~
dang
Commenting like this will get you banned here. If you want to keep commenting
on HN, please don't vandalize it, even when other comments are wrong and
annoying.

~~~
thesmallestcat
To be clear, and not that it necessarily makes it better, but I wasn't saying
"what [intoxicating substance] are you on", but "what are you on" as a British
turn of speech, meaning "what are you trying to say here?" I admit it's a bit
sharp, but bannable? In any case will be more careful.

[https://english.stackexchange.com/questions/8540/what-is-
wha...](https://english.stackexchange.com/questions/8540/what-is-what-are-you-
on-about-on-about)

------
tuna-piano
This whole situation is so sad, because it is 100% human caused. This is not a
natural disaster! Socialism does not work and it is not moral. Hundreds of
millions of people have died and suffered under this economic and governmental
system, and many more will die in Venezuela to re-learn this lesson.

And yet, even in the face of overwhelming evidence, the appeal of socialism
still somehow permeates to otherwise succesful countries.

Sure, the lines between Social Security+Medicare vs Denmark vs Venezuela
aren't so black+white, but it's clear to me that the desire to destroy
capitalism continues to be strong.

It is quite scary to me that people can be so delusional even with the
overwhelming evidence of the success of capitalism for the poor and the
absolute failure of socialism for everybody.

"Thanks Hugo Chavez for showing that the poor matter and wealth can be shared.
He made massive contributions to Venezuela & a very wide world."

-Leader of the Labour party in the UK[1]

"These days, the American dream is more apt to be realized in South America,
in places such as Ecuador, Venezuela and Argentina, where incomes are actually
more equal today"

-Bernie Sanders[2]

[1]
-[https://twitter.com/jeremycorbyn/status/309065744954580992](https://twitter.com/jeremycorbyn/status/309065744954580992)

[2] - [https://www.sanders.senate.gov/newsroom/must-read/close-
the-...](https://www.sanders.senate.gov/newsroom/must-read/close-the-gaps-
disparities-that-threaten-america)

~~~
cdancette
So you think that the huge inequalities we have today in developed countries
are a "huge success"? When the richest man in the world has 100B$, and yet 12%
of Americans live under the poverty line?

~~~
krona
The poverty rate as a percentage hasn't really changed since the mid 1960's,
so I'm not sure what your point is. I'd much rather be in poverty in 2017 than
in 1960.

~~~
rtpg
in the 60 years since 1960 we have somehow been unable to bring everyone out
of poverty despite the massive increase in productivity we've seen?

Meanwhile the gap between the richest and poorest person has grown immensely,
and real wages have stagnated for 30 years.

Sure, everyone has an iPhone, but there's a universe where everyone has an
iPhone and almost nobody is underwater. And we actively choose to not be in it
every time we subscribe to "our billionaire benefactor" theories.

~~~
Mary-Jane
Our legal definition of poverty is floating and generally translates to "the
bottom 30 percent", so of course we haven't seen a drop!

This definition is problematic, not just because it makes the people pointing
it out look like in-compassionate jerks, it obscures the real problems many
people in poverty have and makes their causes harder to understand and
address. It also gives many an excuse to dismiss the poor because, "the
government is giving iPhones to them; they're problems can't be that bad."

------
RubenSandwich
The amount of comments on this thread decrying 'socialism' with very pithy
comments is concerning. I guess the whole internet is infected with trolls
now, especially political ones...

~~~
jbm
I am actually a bit concerned with how this reached the top page with so many
low effort comments.

Regardless of whether it is the case that socialist policies are responsible
for this situation, it’s weird that there are a sudden upswing in the strange,
almost sneering style of comment that is littering the comment area.

I almost expect a list of Wikipedia links about Zimbabwe and other countries
to follow.

~~~
RubenSandwich
Agreed.

If governments are invested in changing opinions on other Internet forums, why
not here? These comments are very low quality and seem to me to be writen to
stir up political screaming matches, not actual debate.

~~~
mmirate
Well, then I'm still waiting for my paycheck from Uncle Sam. :)

