News & Politics

The Venezuelan Economy Is in the Very Best of Hands

Venezuela's President Nicolas Maduro, right, speaks with Vice President Jorge Arreaza upon their arrival to the National Pantheon for 185th anniversary of the death of independence hero Simon Bolivar in Caracas, Venezuela, Thursday, Dec. 17, 2015. (AP Photo/Fernando Llano)

Just because Hugo Chavez is dead doesn’t mean that the government of Venezuela is going to go all rational on us and start behaving like a normal, grown-up nation. Chavez had his conspiracy theories to be sure, most of them involving the CIA or U.S. plots against him, or against the economy.

But now, the granddaddy of all Venezuela conspiracy theories — the “economic war.” Yes, the U.S. is partly to blame, says President Nicolas Maduro. But the real villains are greedy capitalists hell-bent on making huge profits.

To combat this scourge, Maduro has tapped a total economic ignoramus for the position of economy czar. But he can spout “economic war” conspiracy theories like a summa cum laude.

Luis Salas, a sociologist by trade, has been named vice president for the economy. What Salas lacks in expertise, he makes up for with bat guano crazy ideas.

For instance: Did you know that Venezuela’s 200% inflation rate “doesn’t exist”? Salas knows.


Essays written by Salas describe scarcity and spiraling prices as the result of exploitation by businesses rather than government policy, offering an academic underpinning to the “economic war” explanation that Maduro uses to describe the current malaise of recession, runaway prices and widespread product shortages.

“Inflation does not exist in real life,” he wrote in a 2015 pamphlet called “22 Keys to Understanding the Economic War.” “When a person goes to a shop and finds that prices have gone up, they are not in the presence of ‘inflation.'”

Salas has argued against the idea that excessive printing of money causes inflation – an almost universally accepted tenet of macroeconomics. He insists prices rise primarily because corporations seek excessive profit margins.

The appointment of Salas appears to signal a break with the Socialist Party’s promises for market-friendly reforms last year, which ended in aborted efforts to liberalize cumbersome currency controls.

His designation augurs a further tightening of state controls in a country where supermarket lines routinely stretch for blocks and looming debt payments have left investors increasingly concerned about default.

Maduro last year said inflation would reach 85 percent in 2015 but the central bank has not published monthly figures since the start of last year. Unofficial private estimates now put the figure close to 200 percent.

Angry voters handed the Socialist Party a thundering defeat in last month’s legislative elections, giving the opposition coalition a two-thirds majority in Congress.

Salas will supervise newly-appointed Finance Minister Rodolfo Medina, a respected economics professor who has shown few signs of the overtly political approach favored by Salas.

While many describe Medina as a competent technocrat, he is not seen as having the leadership to push forward a politically complicated overhaul of economic policy.

The socialist inmates have taken over the asylum and there’s nothing anyone can do about it.

If the economic crisis weren’t bad enough, how about a constitutional crisis for good measure? The opposition won an overwhelming victory in the vote to elect the National Assembly, but the lame duck Assembly appointed a dozen Maduro loyalists to the Supreme Court who promptly invalidated the election of an entire state leaving several opposition members in limbo.

So on the first day of the Assembly session this week, the speaker ordered the removal of all portraits of Hugo Chavez and then swore in the members whose election was put into question.

Maduro is making ominous noises, referring to the Assembly as “illegitimate.” A serious clash is coming between the Assembly and the president and the ensuing crisis will only serve to muddy the waters further.

With default looming, Venezuela’s economy may melt down altogether. If it does, you can bet Maduro and the socialists will blame the “greedy” capitalist businessmen and not their own stupidity for the disaster.