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Venezuela’s Store Owners to the Firing Squad

By: Trino Márquez - Nov 26, 2013, 9:51 am

EspañolIn a nationwide radio and television appearance on November 8, President Nicolás Maduro of Venezuela accused appliance retail managers of hoarding merchandise and speculating on prices. Maduro held them responsible of being part of an “economic war” against him and promoting the skyrocketing inflation affecting that sector. He also accused them of taking dollars to buy imported goods at the official exchange rate (Bsf. 6.30 per dollar) and instead selling them on the black market, where they trades ten times higher.

After demonizing store managers and setting the scene, Maduro unilaterally and illegally ordered a confiscatory 50-70 percent reduction on the prices of goods. That mandate was coupled with another one, equally threatening: “Leave nothing on the shelves.” Many private companies had paid aguinaldos (a statutory Christmas bonus) on that same day, so people had money in their pockets.

The combination of this measure and Maduro’s mandate triggered national pandemonium. The next day, an angry mob looted a Daka store — one of the major Venezuelan appliance chains — in Valencia, capital city of Carabobo state, and took away most of the merchandise: flat-screen TVs, audio equipment, microwaves.

http://youtu.be/hmUDvPRO7nA

At the same time, the main stores in Caracas and other cities of the province were surrounded by crowds seeking to tap into Maduro’s arbitrary decision. In some areas of the capital city and several inland cities, emotions ran high when the rushing buyers were unable to obtain their desired products or found they had run out, after a long wait. The Guardia Nacional Bolivariana prevented an outbreak of violence, even though some of their members also attended the feast.

Since Maduro’s cry, Venezuela has been living amidst frenzy. The atmosphere of distrust, instability, and polarization has deepened, and a large segment of the population feels as if they have plunged into a pressure cooker, waiting to explode.

Upcoming Elections and Maduro’s Decline

Maduro’s coercive decision derives from a fundamental weakness: most polls have revealed the continuous and unstoppable erosion of his image. And this is causing a detrimental impact on mayoral and council candidates towards the municipal elections, to be held on December 8.

A significant portion of the country, particularly the poorest sectors, blames him for the inflationary spiral and for doing nothing to stop it. Cornered by the price escalation and internal volatility, he has taken a well-trodden path for communists: he defined his enemy — in this case, store managers — slandered them, and directed his attacks without mercy.

The entire communications apparatus of the regime is now focused on affirming Maduro’s dictatorial decision. Through his populist, demagogic, and short-sighted measure, he intends to make up lost ground and prevent the ruling party from suffering a humiliating defeat in the nearing elections.

The government applied this method, unsuccessfully, in past mayoral and gubernatorial elections, when refrigerators, stoves, fans, and other appliances were distributed across what were considered key electoral areas. However, their candidates eventually lost that election anyway. This was in 2008 in the Sucre municipality of Caracas, where the ruling party’s candidate, Jesse Chacón, lost by a wide margin to the opposition candidate, Carlos Ocariz, who had no money to give away.

Any examination of inflation in the appliance sector from the economic perspective, reveals that price escalation in 2013 is undeniable. However, this is the necessary consequence of the disastrous and unjustifiable currency controls imposed by the government a decade ago. The regime has failed in its attempts to apply currency distribution instruments, with agencies like the Comisión de Administración de Divisas and the Sistema Complementario de Administración de Divisas, and auctions. Such mechanisms have proved insufficient, forcing businessmen to turn to the black market to purchase goods and replenish their stock. Businessmen are not the culprits, rather the victims of the inflation caused by the government’s control and intervention.

Venezuela Towards the Abyss

Most governments worldwide make continuous efforts to set up a legal framework that guarantees property rights, achieves stable macroeconomic variables, allows balanced budgets, and keeps economic activity within a transparent environment. A rule-of-law state, based on a respectable judicial apparatus as well as clear rules for all the stakeholders involved, is crucial to attract both local and foreign investors.

Similarly, stability and confidence are considered essential values in most countries, but it turns out that the Venezuelan Chavistas have decided to go against history. They have ignored and trampled upon the articles of the Constitution and the Code of Commerce, which guarantee private property and freedom to undertake any legal economic activity. However, even with their tangled web of laws, regulations, and agencies schemed up by the regime, to harass merchants and industrial producers over fifteen years, Maduro’s remains insecure. So he turns to measures that create confusion and increase judicial uncertainty. The Institute for the Defense of People’s Access to Goods and Services (Indepabis) and the “Fair Prices Law” are part of that framework.

The intense attack against store managers — who pay taxes and keep large payrolls — by Maduro’s goons will further emphasize the atmosphere of hostility against private investment. Inflation, shortages, and currency devaluation are sure to worsen, and we shall have to wait a long time before the emptied shelves are filled again.

Maduro is leading Venezuela into the abyss.

Trino Márquez Trino Márquez

Doctor of social science, professor at the Central University of Venezuela, and academic director of Cedice-Libertad. Follow him on Twitter @trinomarquezc.