“It’s not just bathroom tissue that’s lacking: In recent months, food items such as cooking oil and powdered milk have nearly disappeared from store shelves. But even after a decade of price controls, foreign-exchange restrictions, runaway inflation, currency devaluations, blackouts and takeovers of more than 1,000 companies or their assets, the government still claims the private sector is at fault for the deficiency in consumer staples. The Manpa asset grab came a week after Maduro introduced the new regulatory committee, which will address product hoarding and other abuses that he blames for missing goods.” — Bloomberg, on toilet paper shortages in Venezuela
Archive for the 'LatinAmerica' Category
They say that “[a] tipping point was reached in 2012, when average manufacturing costs in Mexico, adjusted for productivity, dropped below those of China.” In other words, rising real wages for Chinese manufacturing workers mean that unit labor costs in Mexico are now just as low. Meanwhile, thanks to NAFTA and geography, it’s much cheaper to export American natural gas to Mexico than to ship it to Asia through LNG ports. So right now “electricity costs are around 4 percent lower in Mexico than in China, for example, while the average price of industrial natural gas is 63 percent lower.” Add to that the fact that Mexico has an advantageous location in terms of shipping products to American and Canadian consumers and the logic looks pretty compelling—Mexico is going to be the factory location of choice for many companies.
The New York Times writes:
Venezuela is one of the world’s top oil producers at a time of soaring energy prices, yet shortages of staples like milk, meat and toilet paper are a chronic part of life here, often turning grocery shopping into a hit or miss proposition.
Some residents arrange their calendars around the once-a-week deliveries made to government-subsidized stores like this one, lining up before dawn to buy a single frozen chicken before the stock runs out. Or a couple of bags of flour. Or a bottle of cooking oil.
The shortages affect both the poor and the well-off, in surprising ways. A supermarket in the upscale La Castellana neighborhood recently had plenty of chicken and cheese — even quail eggs — but not a single roll of toilet paper. Only a few bags of coffee remained on a bottom shelf.
Asked where a shopper could get milk on a day when that, too, was out of stock, a manager said with sarcasm, “At Chávez’s house.”
At the heart of the debate is President Hugo Chávez’s socialist-inspired government, which imposes strict price controls that are intended to make a range of foods and other goods more affordable for the poor. They are often the very products that are the hardest to find.
Maybe this is why you don’t see lefties singing the Hugo Chavez praise anymore? Is it time yet for a little “I Told You So”?
In case you missed it:
Raul Castro was named first secretary of Cuba’s Communist Party on Tuesday, with his aging brother Fidel not included in the leadership for the first time since the party’s creation 46 years ago….
The Congress also approved 300 economic proposals, though details have still not emerged. Apparently included in the measures was a recommendation to legalize the buying and selling of private property, which has been heavily restricted since the revolution.
Also on the table was a proposal to eventually eliminate the monthly ration book, which provides Cubans with a basic basket of heavily subsidized food and other goods. Other measures envision providing seed capital for would-be entrepreneurs and eliminating the island’s unique dual-currency system.
The Party Congress does not have the power to enact the changes into law, but the suggestions are expected to be acted upon quickly by the National Assembly over the coming days and weeks.
This is on top of the proposed reduction in government workers. Encouraging news.
An economics professor at UCSD explains:
Over the last three decades, Mexico has aggressively reformed its economy, opening to foreign trade and investment, achieving fiscal discipline, and privatizing state-owned enterprises. Despite these efforts, the country’s economic growth has been lackluster, trailing that of many other developing nations. In this paper, I review arguments for why Mexico hasn’t sustained higher rates of economic growth. The most prominent suggest that some combination of poorly functioning credit markets, distortions in the supply of non-traded inputs, and perverse incentives for informality creates a drag on productivity growth. These are factors internal to Mexico. One possible external factor is that the country has the bad luck of exporting goods that China sells, rather than goods that China buys. I assess evidence from recent literature on these arguments and suggest directions for future research.
Link via Freakonomics blog here.
Update: Steve Sailor has more.
In recent years, Texas has been all but closed off, and so is California. It’s created a funnel, so you’ve got an increased flow of illegal immigrants into Arizona. Phoenix, and Tucson to a lesser degree, have become the unwanted recipients of a lot of narco traffic and a tremendous increase in the amount of violence. Arizona also has a changing demography, so that you have a lot of Midwesterners flooding in—retirees, snowbirds, displaced unemployed people who have no history with the region. And you’ve got a division in the state between southern Arizona, a heavily Hispanic area, and the rest of the state, including Mesa, Tempe, Phoenix and Flagstaff, which historically had few Mexicans. And there’s an ethnic dimension to the crisis that’s powerful, real and historic. Combine those several factors and you create the conditions for conflict. You understand why Anglo Arizonans resent current conditions without in any way supporting their actions.
Full interview can be found here.
“In testimony before Congressmen Eliot Engel and Connie Mack at the House Western Hemisphere Subcommittee, Enriquez sounded the alarm. Citing the return of the old dictator’s behavior of the 1980s, Enriquez described how Ortega is manipulating the courts, the constitution, and the National Assembly to maintain his control of the country and a growing share of its economy. Hugo Chavez’s favorite ally in Central America is steadily enriching himself and his cronies at the expense of his fellow Nicaraguans. Meanwhile, Ortega’s ties to Venezuela’s Chavez, Iran’s Mahmoud Ahmadinejad, and his historic ties to the Castros and a now-resurgent Moscow should give pause to U.S. policy makers. This was the message Enriquez took to numerous policy makers, not only in the Congress, but also at the White House, the State Department, and in interviews with Voice of America and AP, among others.”– Gardner Peckham, blogging at the AEI Blog
Given by Harvard’s economic historian Jeffrey Williamson:
Most analysts of the modern Latin American economy hold to a pessimistic belief in historical persistence — they believe that Latin America has always had very high levels of inequality, suggesting it will be hard for modern social policy to create a more egalitarian society. This paper argues that this conclusion is not supported by what little evidence we have. The persistence view is based on an historical literature which has made little or no effort to be comparative. Modern analysts see a more unequal Latin America compared with Asia and the rich post-industrial nations and then assume that this must always have been true. Indeed, some have argued that high inequality appeared very early in the post-conquest Americas, and that this fact supported rent-seeking and anti-growth institutions which help explain the disappointing growth performance we observe there even today. This paper argues to the contrary. Compared with the rest of the world, inequality was not high in pre-conquest 1491, nor was it high in the postconquest decades following 1492. Indeed, it was not even high in the mid-19th century just prior Latin America’s belle époque. It only became high thereafter. Historical persistence in Latin American inequality is a myth.
Link via Tyler Cowen who posts a link to the full article here.
Mexican President Felipe Calderon is doing his part in fighting teachers unions corruption:
Tens of thousands of teachers are blocking highways and seizing government buildings across Mexico to protest a federal education reform ending their longtime practice of selling their jobs or giving them to their children.
In central Morelos state, where opposition is centered, about 20,000 teachers have been on strike for more than 50 days. Though a few thousand children study in cantinas and makeshift classrooms, nearly 500,000 others have yet to start the school year.
Since the strike erupted in Morelos in late August, protests have spread to at least a dozen other states and are threatening to go nationwide. In Baja California, about 700 teachers in Tijuana lay down on the world’s busiest border crossing and blocked San Diego-bound traffic for hours. In Mexico City, protesters set up a sprawling tent city near the federal Education Secretariat, which oversees the country’s public education system.
At the heart of the conflict is the “Alliance for Quality Education,” a national plan to professionalize teachers and hold them accountable for their students’ performances. The plan was ratified in May by Mexican President Felipe Calderon and Elba Esther Gordillo, the leader of the country’s 1.6 million-member National Education Workers Union, and sent to Mexico’s 31 state governments and Federal District for approval.
Mexico teachers unions are another example of how teachers unions look out for their own self interest first, regardless of its affects on the students and teaching quality. The full article can be found here.
Wondering what he has been up to? The New York Times keeps us informed:
President Hugo Chávez is using his decree powers to enact a set of socialist-inspired measures that seem based on a package of constitutional changes that voters rejected last year. His actions open a new stage of confrontation between his government and the political opposition.
Some of the laws significantly increase Mr. Chávez’s power. For instance, one law allows him to name regional political leaders who would have separate budgets, which could help him offset possible victories by opposition candidates in state and municipal elections scheduled for November.
Mr. Chávez is also trying to assert greater control over the armed forces through a decree creating militias, a new military branch he has pushed for.
Reigniting private property concerns, another law allows his government to “occupy and temporarily operate” private companies not in compliance with bookkeeping rules.
The set of decrees stops short of removing term limits for Mr. Chávez, which was one of the most polarizing measures in the package voters rejected in December. But more than a dozen of the laws are strikingly similar to items included in the failed constitutional overhaul, angering the president’s critics.
The full article can be found here.
Every time I read something on Hugo Chavez I am reminded of Hayek’s book, The Road To Serfdom and this quote from Cato:
“Since the collapse of the Soviet empire, many defenders of socialism have argued that dictators, including Mao, Stalin, and Pol Pot, were aberrations; they took Marx’s ideas in the wrong direction. They claim that nationalization of the means of production (call it communism, socialism, or Marxism) and democracy can be compatible. In The Road to Serfdom, Hayek showed that it cannot. Some 50 years later, Hayek’s argument holds. Every socialist regime tends toward authoritarianism of some sort. Chavez reminds us of the anti-democratic nature of socialism. As such, he is turning into a major embarrassment for many on the Left who supported him. Unfortunately, what the proponents of socialism again and again fail to realize is that it is the message, not the messenger, that is embarrassing”.
“Free trade with Colombia can’t have anything to do with loss of US jobs: Colombia’s exports already enter the US duty-free. Rather, the Free Trade Agreement would reduce remaining Colombian barriers to imports from the US….It is hard to escape the conclusion that the only reason Congressmen are opposing the Colombian free trade agreement is to pander to ill-informed American public opinon. ” –Jeff Frankel, professor of economics at Harvard University
It looks like they are making the problem worse:
Candidates rebuked for attacks on Nafta
Mexico and Canada on Wednesday voiced concern about calls by Barack Obama and Hillary Clinton to renegotiate the North American Free Trade Agreement, as the Democratic presidential hopefuls compete to adopt the most sceptical stance towards free trade ahead of next week’s Ohio primary election.
In a televised debate on Tuesday night, Mr Obama and Mrs Clinton both threatened to pull out of Nafta if elected president unless Canada and Mexico agreed to strengthen labour and environmental standards.
Arturo Sarukhan, Mexico’s ambassador to the US, told the Financial Times that the US, Canada and Mexico had all benefited from Nafta and warned against reopening negotiations.
“Mexico does not support reopening Nafta,” he said. “It would be like throwing a monkey wrench into the engine of North American competitiveness.”
Mexican diplomats believe a renegotiation could resurrect the commercial disputes and barriers to trade that the agreement itself was designed to overcome.
Jim Flaherty, Canada’s finance minister, also expressed “concern” about the remarks by the Democratic candidates.
“Nafta is a tremendous benefit to Americans and perhaps the [candidates] have not had the opportunity to familiarise themselves with the benefit to Americans and the American economy of Nafta,” he said.
The full article from the Financial Times can be found here.
Tufts professor Daniel Drezner comments: “I’ve said it before and I will say it again: Democrats cannot simultaneously talk about improving America’s standing abroad while acting like a belligerent unilateralist when it comes to trade policy.”
Update: The economist has more.
“Gustavo Vega, director of the Center for International Studies at the prestigious Colegio de Mexico in Mexico City, said that while NAFTA has helped create more jobs for Mexicans, it has not helped create enough of them. Still, had it not been for passage of the North American Free Trade Agreement in 1993, Mexico would have suffered a much-greater financial crisis after its economy crashed in December 1994, he said. “It helped us to recover from the crisis sooner rather than later,” Vega told the Center for U.S.-Mexican Studies at the University of California San Diego on Tuesday.” — San Diego Union Tribune
A must see for anybody interested in Latin America.
“In fact, for the malcontents of Hollywood, academia, and the catwalks, Chávez is an ideal ally. Just as the sympathetic foreigners whom Lenin called “useful idiots” once supported Russia abroad, their modern equivalents provide the Venezuelan president with legitimacy, attention, and good photographs. He, in turn, helps them overcome the frustration John Reed once felt—the frustration of living in an annoyingly unrevolutionary country where people have to change things by law. For all his brilliance, Reed could not bring socialism to America. For all his wealth, fame, media access, and Hollywood power, Sean Penn cannot oust George W. Bush. But by showing up in the company of Chávez, he can at least get a lot more attention for his opinions. As for Venezuelan politics, or the Venezuelan people, they don’t matter at all. The country is simply playing a role filled in the past by Russia, Cuba, and Nicaragua—a role to which it is, at the moment, uniquely suited”. –
Historian Victor Davis Hanson makes an interesting comment:
One final thought here. Why would deported illegal alien and activist Elvira Arellano, who according to the LA Times, “symbolized inhumane treatment of migrants to some,” wish to return to the US?
News reports suggested she does in petitioning the Mexican government for a diplomatic visa. Surely she might prefer either to bring her children to Mexico, or file citizenship papers to become an American. My sense is that she desperately wants to stay in the US and not Mexico and the reasons are more than just economics.
In my own observations, why do Mexicans come to El Norte? Not as said just for the money. Much of it is dignity. Despite the slurs, the US, especially its popular culture, treats aliens far better than does the Mexican government its own.
How? At our own government offices, clerks are respectful regardless of status. The average American doesn’t much care about class or diction. There is a meritocracy here absent in Mexico. But most importantly things work. In Mexico, the conditions of daily power, water, sewer, etc make life hard, and the future bleak. Police here often can’t ask the immigration status of those detained, in Mexico the arrested must pay bribes or face worse. So there is a sort of Orwellian doublespeak here, reminiscent of the Middle East: a desire to be a part of America, and when that proves impossible or difficult, then abstract furor or tantrums at the idea and policy of the United States—suggesting the root cause is desire for an alien culture, heightened by feelings of want, envy, jealousy, rejections, and feelings of inadequacy, all masked by chauvinism and ethnic triumphalism.
The full post can be found here.