Caracas Chronicles

Spanish journal ABC leaked a fun little chavista document that paints a true portrait of the dire state of the economy. From reading it carefully, I have an idea of who wrote it. I was also told from a trustworthy source that it is a legitimate proposal currently making the rounds inside chavismo.

ABC focused its story on the most alarming aspects: warnings of scarcity, inflation, and a real danger of social unrest. However, I think what’s most interesting is what it proposes.

The document has a bunch of crazy stuff in there. It idealizes the Communal Councils’ ability to provide public services in a productive manner, and it thinks Venezuela has a chance to get right what the USSR, with its massive amounts of human capital, couldn’t. It also thinks the tax burden on Venezuela’s private sector is low, which it is not.

But there is also a genuine concern over the roadblocks currently hampering Venezuela’s productivity, along with some proposals that I (man bites dog!) wouldn’t necessarily disagree with.

Among other things, it proposes:

1. Raising the price of gas, decreasing the subsidy … which it curently values at US$ 24 billion, or 6% of GDP.
2. Reconciling with the private sector, and even (gasp!) forgiving them.
3. Investing heavily in public transportation.
4. Macroeconomic policies that foster public and private investment.
5. Providing state-owned companies with the incentives to become productive, a la Chinese or Spanish cooperatives.
6. A floating exchange rate.

Oh , the heresy. I wonder what radical chavistas will think of it …