An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Monday, December 7, 2015
Left Defeated in Venezuela Legislative Elections
Should have made sure there was always enough toilet paper.
Venezuela's President Nicolas Maduro admits election defeat as opposition win majority of seats https://t.co/qvvEckq799
He probably got in there on the low oil prices back in '99 Ryan, now oil is crashed again and it shifts to whoever is the opposition...
imo they should just focus on the domestic basics and stop bitching about low oil prices in USD terms.... being left wing they could use co-ops, etc... if oil goes back up in USD terms some day then great for their real terms of trade but they cant hitch their wagon to the USDs they get from oil without expecting implosions when the price drops in USDs...
Actually, a contributing factor in Chavez's rise was the fact that the previous government planned to raise taxes on oil, at the pump (Venezuela's prices had long been the lowest anywhere). Chavez kept domestic prices low and encouraged Dutch disease -- hence the lack of toilet paper etc. What this does show is that Maduro and company still have some democratic inclinations, or it may be that they correctly judged that any attempt to falsify results would have led to their violent overthrow. Let us hope that their can be some accomodation between legislators and the executive.
And it proves that democracy is alive and well in Venezuela under the Left in spite of all the screaming from the Right about suppression of the opposition, election fraud, etc.
Let's see now the Right does. Once the Right gains power, there will be a witch hunt of the Left and that this will be the last free election until after the next revolution.
You know how thats going to go they will propose selling off some resource rights to and then use the USD balances provided to buy some more Brawny toilet paper from the Koch industries people..
It's shaping up to be a neoliberal onslaught everywhere because the "left" are a bunch of pussies, led by Europe and the USA. The oligarchs must be popping the champagne corks now. Liberalism is collapsing wholesale. Just one more thing left to happen and that is the ascendance of Hillary Clinton to the presidency.
Joe no reason they cant do a 'generic' personal care products producer under some sort of lefty 'co-op' type institutional structure...
Look at the guy doing "Dollar Shave Club" taking on Gilette and the other big boys on price.. plenty of excess margin to go after there for a co-op in personal care products...
I would even bet they could get the equipment FREE in North America if they agreed to move it out themselves and ship it to Venezuela....
Will the new Government get rid of that stupid $ peg? If they don't won't be any change. According to info I have that around 50% of imports get sold over the border in Colombia in USD so arbitraging the official & black market $ rates so feeding inflation.
Resource exporters are in the grip of the resource owners. You have the agri business in Argentina and the Petro industry elsewhere.
Imagine a corporate EU with the actual government as Greece.
Because the government thinks it needs the resource provider to 'fund' things nothing ever gets better.
If you take a currency zone view, you'd quickly realise that the majority of the resource industry is outside your currency zone. To get it back in you have to tax it!
Snark aside, seriously though, why is the economic orthodoxy so dead-set against autarky?
Possible reasons I can think of are: 1. An economically independent country has less need to exploit foreign cheap labor, thus bettering the position of domestic workers. Also less need on exports, so not as much reason to keep domestic wages down if you're not dependent on exporting... Gotta keep those workers in their place, thus all the stories about efficiency being the reason against autarky. So the people at the top can take more of the profits. 2. Or, (perhaps I'm giving them too much credit), they actually know that currency issuers can't run out of munnie, so you gotta put a constraint on government by making it dependent on real terms of trade. Can't let government actually work too well, always gotta have unemployment as a threat, keep them workers in line.
Either way, keep the workers in their place and let the profits flow to those at the top.
Snark aside, seriously though, why is the economic orthodoxy so dead-set against autarky?
Neoliberalism = Neo-imperialism + neocolonialism.
Free markets, free trade, and free capital flow are just tools in this game the imperial core plays with the periphery.
The veneer is nicer than the previous period of imperialism and colonialism, but the same game is the same underneath the veneer. Leaders of countries that decided not to play or to opt out get targets pointed on them and the game shifts to regime change.
The reason that Putin is being demonize is because he said nuts to that and is going for greater self-sufficiency. The West is helping him along with sanctions. As Putin said, without sanctions it would have been difficult politically and economically. Sanctions constituted suspension of free trade.
Imperialism means that the more powerful tell the less powerful what to do and what not to do. The chain of comment runs from the imperial center, the US at present, through the core, out to the periphery.
Colonialism means that the periphery supplies resources and cheap labor to the core, as provided markets for the core.
Neo just means that it is done in a gentler fashion, like taxes replaced confiscation.
The Black Hole of the developed West specially urban centres and the top of the income share population would collapse without 'free trade' and massive imports of raw goods.
For capitalism to survive in places like Europe autarky is not an option. You can ask anyone old enough in Europe that lived in authoritarian regimes over periods of autarky, funny enough Cuba managed itself much better on average than those regimes under similar circumstances.
Tom consider all of these "-isms" are over-systematizing...
someone prone to cognitive systemization might look at it this way but there is no "system design document for neo-liberals" like the ISIS thing you posted up via Escobar...
there is no "system design document for neo-liberals"
Of course there is. It's conventional economics as represented by the players at the top. Pretty much "Chicago School" even though a number of them are not associated with UChi.
Basically there was marginalism, then Keynesianism as a chief rival, then Samuelsonianism, and now Friedmanism, along with Beckerism, Barroism, etc.
Everyone that takes econ learns the neoliberal world view in Econ 101, both in US high schools and colleges.
Hayek laid it out philosophically as well as economically. The Road to Serfdom is a popularization of the neoliberal world view. Maggie Thatcher held it up in Parliament and said, TINA. Sums it up.
Milton Friedman also philosophically as well as economically in Free to Choose and Capitalism and Freedom.
The basis is competition in "free markets, free trade, and free capital flow" as a necessary and sufficient condition for growth, which is identified as prosperity regardless of distribution. Because natural spontaneous order.
Until recently even bringing up distribution was to invite marginalization if not shaming and shunning. The natural order that arises spontaneously is asymmetrical based on merit and just deserts. "Get over it."
The antithesis is John Kenneth Galbraith's The Good Society, making the case of the role of government and public purpose in a managed economy based on the welfare of the society rather than rational pursuit of a max u by individuals. Bernie is making a case for this politically\, which the media is either ignoring, mocking or misreporting. But that is "Keynesianism."
A lot of it chimes with Neil's points about the Currency Zone.
It was a poorly managed curry zone.It had a fixed exchange rate and poor demand for the domestic Currency.
Also I'm not sure if subsidised petrol was helpful.
I read elsewher that land reform,dramaticallystunted the productive capacity of beef production and other Ag goods.
They should of ditched land reform and pursued a land value tax,which would addressed the equity issue,created a strong demand for domestic Currency. And protected the productive capacity in the economy of the farmers etc.(as well as preventing property bubbles and promoting land use efficiency/no hoarding)
@Matt- I can't find it right now,but i think Iread somewhere that the gov did get involved in domestic production(i guess they didn'tdo it right or enough)
First Argentina and now venezuela .
I must study this and understand why exactly Chavez/maduro failed.and what policies they should have pursued instead.
Tom contrast that with OPEC, which Venezuela is a member of...
You can actually go to an opec building in Switzerland , you can't go to the "neoliberal building" in Chicago...
Those institutions are teaching economic principles which are manifestly false but they are not teaching "neo liberalism 101"....
OPEC is a real thing neoliberalism is NOT a real thing...
"Neoliberalism" is a systematized cognitive concept constructed in the minds of people opposed to a certain set of manifestly false economic theoretical principles or manifestly false economic theoretical laws...
So if you go after "neoliberalism" to defeat it you'll never be successful as it doesn't exist except in the minds of those opposed to it...
Not really, like you can defeat "conservatism" or "progressivism". Yes, you cannot KILL ideas, but you can make them irrelevant, though in the distant future they may come back because you can never kill them completely, because they are ideas. Feudalism (by this or other names) is not a great thing nowadays in the West but is slowly making a comeback (via neoliberal crappification of society), even if there is no such thing as "Institute for Feudalism".
Neoliberalism is an abstract concept to designate the DOMINANT economic policy, whereas in the past it wasn't even relevant, just like other concepts have been made irrelevant or relevant in the past. So you can attack "neoliberalism", replacing people in charge driven by those ideas with people driven by other ideas.
Claiming that "neoliberalism" is not a thing is precisely the first line of defence of the neoliberal status quo, as it makes the whole thing TINA.
Like Freedman said "inflation is always a monetary issue" or wtf... this is manifestly a false statement (Bloomberg Commodity Index at 13 year low...) so attack that...
Just writing up stuff attacking 'neo-liberals' isnt going to do anything those people dont even know what you are talking about... if I went up to one of my right friends and said "hey! youre a neoliberal!" they would counter "no I'm not I'm a conservative!"...
That's being attacked all the time AFAIK, it has been debunked already by post-keynesian academics repeatedly. Did not change anything, because it's just ideology masquerading as economic knowledge. They will just re-tune a bit this model or that model, add an other assumption or axiom and voilà all fixed because they don't operate on the scientific method. They just don't care if it's true or not, it's how they want the world to work (dishonesty, ego, conspiracy or outright foulness, I let you pick the reason, is not really important).
The battle is political-ideological, as long as they get to frame 'reality' (what is TINA and what isn't, what is "serious" and isn't), nothing will change. Most people don't understand/care/acknowledge the technicalities, so is a social battle for dominant memes, when under pressure the politicians a few decades back some thinkers capitalized on giving a new narrative and explanation to 'reality' that was marketed as such, the same has to happen again.
Nothing will change until there is an other crisis, because only then we will be forced to change our modus operandi and thinking (social memes). The danger is that the new crappification normal becomes the permanent crisis and then we will slowly slide into new feudalism with no chance of reframing the issues. It's all about who gets to frame the issues IMO, I identify neoliberalism because it gets to focus on certain framming while other 'ideologies' get to focus on different frames.
An approach to economics and social studies in which control of economic factors is shifted from the public sector to the private sector. Drawing upon principles of neoclassical economics, neoliberalism suggests that governments reduce deficit spending, limit subsidies, reform tax law to broaden the tax base, remove fixed exchange rates, open up markets to trade by limiting protectionism, privatize state-run businesses, allow private property and back deregulation.
Hugo just rolled over in his grave. If Alive, he would have Maduro's head.
ReplyDeleteHe probably got in there on the low oil prices back in '99 Ryan, now oil is crashed again and it shifts to whoever is the opposition...
ReplyDeleteimo they should just focus on the domestic basics and stop bitching about low oil prices in USD terms.... being left wing they could use co-ops, etc... if oil goes back up in USD terms some day then great for their real terms of trade but they cant hitch their wagon to the USDs they get from oil without expecting implosions when the price drops in USDs...
Just more USD zombie munnie morons imo....
time for the revolutionary dictatorship of the proletariat.
ReplyDeleteLooks like they got "wiped"
ReplyDeleteActually, a contributing factor in Chavez's rise was the fact that the previous government planned to raise taxes on oil, at the pump (Venezuela's prices had long been the lowest anywhere). Chavez kept domestic prices low and encouraged Dutch disease -- hence the lack of toilet paper etc. What this does show is that Maduro and company still have some democratic inclinations, or it may be that they correctly judged that any attempt to falsify results would have led to their violent overthrow. Let us hope that their can be some accomodation between legislators and the executive.
ReplyDeleteAnd it proves that democracy is alive and well in Venezuela under the Left in spite of all the screaming from the Right about suppression of the opposition, election fraud, etc.
ReplyDeleteLet's see now the Right does. Once the Right gains power, there will be a witch hunt of the Left and that this will be the last free election until after the next revolution.
"Let's see now the Right does."
ReplyDeleteYou know how thats going to go they will propose selling off some resource rights to and then use the USD balances provided to buy some more Brawny toilet paper from the Koch industries people..
It's shaping up to be a neoliberal onslaught everywhere because the "left" are a bunch of pussies, led by Europe and the USA. The oligarchs must be popping the champagne corks now. Liberalism is collapsing wholesale. Just one more thing left to happen and that is the ascendance of Hillary Clinton to the presidency.
ReplyDeleteWhat's wrong with autarky again? Run your own damn toilet paper factory and who gives a shit about your real terms of trade.
ReplyDeleteJoe no reason they cant do a 'generic' personal care products producer under some sort of lefty 'co-op' type institutional structure...
ReplyDeleteLook at the guy doing "Dollar Shave Club" taking on Gilette and the other big boys on price.. plenty of excess margin to go after there for a co-op in personal care products...
I would even bet they could get the equipment FREE in North America if they agreed to move it out themselves and ship it to Venezuela....
But incompetence strikes again....
Will the new Government get rid of that stupid $ peg? If they don't won't be any change.
ReplyDeleteAccording to info I have that around 50% of imports get sold over the border in Colombia in USD so arbitraging the official & black market $ rates so feeding inflation.
Andy both sides down there in actual love with USD balances imo... probably get the peg on steroids now...
ReplyDeleteResource exporters are in the grip of the resource owners. You have the agri business in Argentina and the Petro industry elsewhere.
ReplyDeleteImagine a corporate EU with the actual government as Greece.
Because the government thinks it needs the resource provider to 'fund' things nothing ever gets better.
If you take a currency zone view, you'd quickly realise that the majority of the resource industry is outside your currency zone. To get it back in you have to tax it!
Snark aside, seriously though, why is the economic orthodoxy so dead-set against autarky?
ReplyDeletePossible reasons I can think of are:
1. An economically independent country has less need to exploit foreign cheap labor, thus bettering the position of domestic workers. Also less need on exports, so not as much reason to keep domestic wages down if you're not dependent on exporting... Gotta keep those workers in their place, thus all the stories about efficiency being the reason against autarky. So the people at the top can take more of the profits.
2. Or, (perhaps I'm giving them too much credit), they actually know that currency issuers can't run out of munnie, so you gotta put a constraint on government by making it dependent on real terms of trade. Can't let government actually work too well, always gotta have unemployment as a threat, keep them workers in line.
Either way, keep the workers in their place and let the profits flow to those at the top.
Probably Matt, that of course doesn't solve the problem so just more of the same but giving the poor even more of a kicking.
ReplyDeleteReminds me of a football chant Neil.
ReplyDelete"You don't know what you're doing"
They are totally clueless or on the take.
They're (both) clueless.... no evidence to the contrary...
ReplyDeleteCorruption is only something the little people do Matt for the rich & powerful it's business.
ReplyDeleteidk Andy imo the management/administration of most institutions is at an all time low...
ReplyDeleteThat's true Matt, hardly surprising when everything is about targets. Targets get gamed, some amazing BS I come across day to day.
ReplyDeleteSnark aside, seriously though, why is the economic orthodoxy so dead-set against autarky?
ReplyDeleteNeoliberalism = Neo-imperialism + neocolonialism.
Free markets, free trade, and free capital flow are just tools in this game the imperial core plays with the periphery.
The veneer is nicer than the previous period of imperialism and colonialism, but the same game is the same underneath the veneer. Leaders of countries that decided not to play or to opt out get targets pointed on them and the game shifts to regime change.
The reason that Putin is being demonize is because he said nuts to that and is going for greater self-sufficiency. The West is helping him along with sanctions. As Putin said, without sanctions it would have been difficult politically and economically. Sanctions constituted suspension of free trade.
Imperialism means that the more powerful tell the less powerful what to do and what not to do. The chain of comment runs from the imperial center, the US at present, through the core, out to the periphery.
ReplyDeleteColonialism means that the periphery supplies resources and cheap labor to the core, as provided markets for the core.
Neo just means that it is done in a gentler fashion, like taxes replaced confiscation.
The Black Hole of the developed West specially urban centres and the top of the income share population would collapse without 'free trade' and massive imports of raw goods.
ReplyDeleteFor capitalism to survive in places like Europe autarky is not an option. You can ask anyone old enough in Europe that lived in authoritarian regimes over periods of autarky, funny enough Cuba managed itself much better on average than those regimes under similar circumstances.
Tom consider all of these "-isms" are over-systematizing...
ReplyDeletesomeone prone to cognitive systemization might look at it this way but there is no "system design document for neo-liberals" like the ISIS thing you posted up via Escobar...
there is no "system design document for neo-liberals"
ReplyDeleteOf course there is. It's conventional economics as represented by the players at the top. Pretty much "Chicago School" even though a number of them are not associated with UChi.
Basically there was marginalism, then Keynesianism as a chief rival, then Samuelsonianism, and now Friedmanism, along with Beckerism, Barroism, etc.
Everyone that takes econ learns the neoliberal world view in Econ 101, both in US high schools and colleges.
Hayek laid it out philosophically as well as economically. The Road to Serfdom is a popularization of the neoliberal world view. Maggie Thatcher held it up in Parliament and said, TINA. Sums it up.
Milton Friedman also philosophically as well as economically in Free to Choose and Capitalism and Freedom.
The basis is competition in "free markets, free trade, and free capital flow" as a necessary and sufficient condition for growth, which is identified as prosperity regardless of distribution. Because natural spontaneous order.
Until recently even bringing up distribution was to invite marginalization if not shaming and shunning. The natural order that arises spontaneously is asymmetrical based on merit and just deserts. "Get over it."
The antithesis is John Kenneth Galbraith's The Good Society, making the case of the role of government and public purpose in a managed economy based on the welfare of the society rather than rational pursuit of a max u by individuals. Bernie is making a case for this politically\, which the media is either ignoring, mocking or misreporting. But that is "Keynesianism."
This is the best analysis I can find on
ReplyDeletehttp://venezuelanalysis.com/analysis/11716
"the roots of the current situation in Venezuela"
A lot of it chimes with Neil's points about the Currency Zone.
It was a poorly managed curry zone.It had a fixed exchange rate and poor demand for the domestic Currency.
Also I'm not sure if subsidised petrol was helpful.
I read elsewher that land reform,dramaticallystunted the productive capacity of beef production and other Ag goods.
They should of ditched land reform and pursued a land value tax,which would addressed the equity issue,created a strong demand for domestic Currency. And protected the productive capacity in the economy of the farmers etc.(as well as preventing property bubbles and promoting land use efficiency/no hoarding)
@Matt- I can't find it right now,but i think Iread somewhere that the gov did get involved in domestic production(i guess they didn'tdo it right or enough)
First Argentina and now venezuela .
I must study this and understand why exactly Chavez/maduro failed.and what policies they should have pursued instead.
Viva Chavez Sigue La Revolution
*we must
ReplyDelete*we must
ReplyDeleteI was thinking the same thing. It's not only the Left but also the situation of different countries, cultures, histories, etc.
General theories have to be adapted to special cases.specifics of special cases.
In every case the first question has to be how to get from here (current situation) to there (goal) in a series of practical steps.
Utopian designs are useless in that they say little or nothing about implementation.
They had twenty years to get from here to there. The tortoise failed to finish the race.
ReplyDeleteThe Trotskyist perspective:
ReplyDeletehttps://www.wsws.org/en/articles/2015/12/08/vene-d08.html
Tom contrast that with OPEC, which Venezuela is a member of...
ReplyDeleteYou can actually go to an opec building in Switzerland , you can't go to the "neoliberal building" in Chicago...
Those institutions are teaching economic principles which are manifestly false but they are not teaching "neo liberalism 101"....
OPEC is a real thing neoliberalism is NOT a real thing...
"Neoliberalism" is a systematized cognitive concept constructed in the minds of people opposed to a certain set of manifestly false economic theoretical principles or manifestly false economic theoretical laws...
So if you go after "neoliberalism" to defeat it you'll never be successful as it doesn't exist except in the minds of those opposed to it...
Not really, like you can defeat "conservatism" or "progressivism". Yes, you cannot KILL ideas, but you can make them irrelevant, though in the distant future they may come back because you can never kill them completely, because they are ideas. Feudalism (by this or other names) is not a great thing nowadays in the West but is slowly making a comeback (via neoliberal crappification of society), even if there is no such thing as "Institute for Feudalism".
ReplyDeleteNeoliberalism is an abstract concept to designate the DOMINANT economic policy, whereas in the past it wasn't even relevant, just like other concepts have been made irrelevant or relevant in the past. So you can attack "neoliberalism", replacing people in charge driven by those ideas with people driven by other ideas.
Claiming that "neoliberalism" is not a thing is precisely the first line of defence of the neoliberal status quo, as it makes the whole thing TINA.
Im saying attack the falsehoods directly...
ReplyDeleteLike Freedman said "inflation is always a monetary issue" or wtf... this is manifestly a false statement (Bloomberg Commodity Index at 13 year low...) so attack that...
Just writing up stuff attacking 'neo-liberals' isnt going to do anything those people dont even know what you are talking about... if I went up to one of my right friends and said "hey! youre a neoliberal!" they would counter "no I'm not I'm a conservative!"...
That's being attacked all the time AFAIK, it has been debunked already by post-keynesian academics repeatedly. Did not change anything, because it's just ideology masquerading as economic knowledge. They will just re-tune a bit this model or that model, add an other assumption or axiom and voilà all fixed because they don't operate on the scientific method. They just don't care if it's true or not, it's how they want the world to work (dishonesty, ego, conspiracy or outright foulness, I let you pick the reason, is not really important).
ReplyDeleteThe battle is political-ideological, as long as they get to frame 'reality' (what is TINA and what isn't, what is "serious" and isn't), nothing will change. Most people don't understand/care/acknowledge the technicalities, so is a social battle for dominant memes, when under pressure the politicians a few decades back some thinkers capitalized on giving a new narrative and explanation to 'reality' that was marketed as such, the same has to happen again.
Nothing will change until there is an other crisis, because only then we will be forced to change our modus operandi and thinking (social memes). The danger is that the new crappification normal becomes the permanent crisis and then we will slowly slide into new feudalism with no chance of reframing the issues. It's all about who gets to frame the issues IMO, I identify neoliberalism because it gets to focus on certain framming while other 'ideologies' get to focus on different frames.
Maybe think of it like "the war on Terror" where many on the left criticize that... iow they say you cant go to war against 'terror'...
ReplyDeleteSo to be non-hypocritical, you cant go to war against "neo-liberals"...
Left people complaining about neo-liberals is like complaining about terrorists ie doesnt do any good...
You could replace neo-liberalism with corporatism.
ReplyDeleteInvestopedia
ReplyDeleteDEFINITION of 'Neoliberalism'
An approach to economics and social studies in which control of economic factors is shifted from the public sector to the private sector. Drawing upon principles of neoclassical economics, neoliberalism suggests that governments reduce deficit spending, limit subsidies, reform tax law to broaden the tax base, remove fixed exchange rates, open up markets to trade by limiting protectionism, privatize state-run businesses, allow private property and back deregulation.