This week Peruvian journalist Jaime Bayly made a video that went viral on social media, which includes a spectacular editorial, in which he serves up a devastating tragicomic presentation of the dictator (at this point categorizing him as a dictator would be a compliment) Nicolás Maduro. Faced with such unusual delirium, Bayly has problems of expression. We do not know where to start, or what words to choose to plot the delirious recommendations and suggestions of the disciple of Hugo Chávez. The same thing that is happening to me now…the difficult task of describing the indescribable.
Just a few days ago, Maduro had already doomed to death the new national currency, from which he had removed five zeros. On that occasion, and as a show of ridiculous power, the impromptu despot said he had “10 times more bills than necessary” to flood the Venezuelan economy, as if this were something moderately virtuous. But, although it seems impossible, Maduro has outdone even this. After the Bolivarian “monetary reconversion”, now comes the “magic” Chavista invention: the policy of “zero kills zero” with the fixation of “all prices.”
Before his colleagues and the television cameras, Maduro said that he discovered “a magic formula through study and debate…it’s something we are creating, what we’re doing now in Venezuela, for the first time it’s being done in the economic history of the world. We are writing new history of the economy,” said the president of the Venezuelan tragedy. Essentially, Maduro thinks that he discovered a new conceptual theoretical framework, that by magic, (as he himself said) is going to solve the hyperinflation, the shortages, and the total economic disaster of the country.
In addition to blaming the private sector for the tragedy that Chavismo holds solely responsible, Maduro has given himself the luxury of advancing some aspects of his master plan, unprecedented in the history of humanity, and his diligent studies in economics:
“Based on international standards and the anchoring of all prices to the petro…I am going to anchor the international prices via the petro, prices, and I have already anchored wages and income.”
Confused? To the reader who does not clearly understand the masterpiece of Chavista monetary policy after reading this article, I regretfully inform you that this is a word for word transcription of Maduro’s “new economic theory” whereby he rewrites “economic history.”
But beyond what little we understand of the official babble, at least we can examine some concrete issues, which also reveal the absurdity, contradictions, and ignorance of the president.
The Chavista leader, faced with the disastrous fall in purchasing power of salaries in Venezuela, “anchored” to the petro means anchoring the minimum monthly salary. To begin with, we must distinguish between legitimate cryptocurrencies such as Bitcoin, which are characterized by decentralization and freedom, and Chavista state-sponsored pseudo-subscription. In the case of the petro, beyond the international price of oil, we are talking about a state-controlled currency. This is incongruous.
The raison d’etre of alternative virtual currencies is precisely to avoid control of the government bureaucracy. When the government of the country with the world’s greatest current economic crisis claims a magical cryptocurrency solution, we should be very skeptical. The discrepancy between other cryptos and the petro is readily apparent. Rather than ushering in a new era of freedom, the petro is the latest pathetic, transparent, and laughable ploy on the part of the Chavista monster: the government has already ordered all the banks to take the petro as a unit of account.
But let’s fast-forward to an imaginary case where the petro works. The concept of “anchoring” of “wages” and “income” to any currency reveals that the president of Venezuela does not have the faintest idea of what a price is. Although it sounds paradoxical, the most stable prices are the freest prices. If there is not free movement of supply and demand, in reality there is no “price”, there is an arbitrary administrative solution.
Although Maduro has decided, in his “magical” way, to increase the minimum wage 34 times over, under the auspices of the new currency, what really determines wages in a country is the capitalization of the economy. When a country decides to arbitrarily increase the minimum wage, the only thing it gets is unregistered informal work (at lower wages), or an increase in unemployment. It happens since the world is the world and the magic solutions of Chavismo will not change things.
Ludwig von Mises wrote, almost a century ago, that when the socialists violats property, at the same time they silence the signals of prices. And that is the Achilles heel that caused, causes, and will cause failure in every socialist experiment. The lack of coordination of an economy without prices generates a terrible allocation of resources. If Venezuela needs something now, it is to proceed down a path in the opposite direction to that posed by its president. If Maduro persists with the delirious plan that he has just presented, it will only aggravate the very serious situation that the Venezuelan people are going through.