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True story.
Yesterday morning I met a young women, a university student. Tuition is free in Venezuela, so she does not have to worry about that. But both her parents were dismissed from their jobs in a state enterprise for declining to join pro-Chavez demonstrations. Their pensions were cancelled. They earn their living from odd jobs, from spending down savings accumulated in the good years, and from occasional remittances from relatives abroad. The student subsists on a government stipend – one of the advances of Chavez’s so-called revolution.
The stipend is 240 bolivars a month, the bolivar being the local currency unit. After the talk, I was taken to lunch at a nice but unluxurious restaurant in the central business district. The bill for 3 people: 300 bolivars.
Talk about a “war on the middle class.” Partly by design, partly by Ubu Rex incompetence, Chavez is immiserating Venezuela’s salaried professionals. Inflation runs at perhaps 40% per year. The poor are partly protected from the effects of inflation by Chavez’s “socialist markets”: big sheds in the barrios where rice and beans are sold at subsidized prices. The supply is unreliable, the lines can be long, people sometimes go hungry, but they don’t quite starve. But those who earned what used to be a comfortable living have tumbled over the edge. Their salaries have been frozen in nominal terms – are plunging in real terms – and their savings are being confiscated through the workings of inflation.
Just this past week, the bolivar was devalued from 2.15 to the dollar to 4.3. The market rate is closer to 6. Anyone who holds bolivars is getting poorer by the day. Everybody senses that the inflation is accelerating. It’s a crime to hold dollars in more than trivial quantities, assuming you can possibly get them. The salaried professionals you meet are well turned out, especially the women, but they are looking a little threadbare. If their cars break down, they cannot be repaired. And when a dollar-holder offers to buy lunch: they eat like people who don’t know when they will have their next full meal.
blowtorch_bob // Jan 24, 2010 at 2:24 am
Chavez’s War on the Middle Class…what about the war on the middle class in the good old US of A where membership is dwindling faster than Amazon rainforest.
blowtorch_bob // Jan 24, 2010 at 2:30 am
“The poor are partly protected from the effects of inflation by Chavez’s “socialist markets”: big sheds in the barrios where rice and beans are sold at subsidized prices. The supply is unreliable, the lines can be long, people sometimes go hungry, but they don’t quite starve…”
Of course, if half of the world’s population were to suddenly find themselves in this situation they’d think they died and gone to heaven.
We have to remember David that most people on planet earth are not members of the middle class.