Caracas Chronicles

Like so many Venezuela-watchers, I like to put up a hard-boiled, nothing-these-fuckers-can-say-can-surprise-me façade. Tengo mucho kilometraje, folks, I’ve seen it all. But some things even I’m not prepared for — nobody is.  Most of all, the truly unexpected: a reasonable policy proposal.

One of our mistakes has been indirect subsidies, because we subsidize products, but later on those products often don’t reach the people who need that subsidy, because others exploit that government subsidy for the poor to traffic and make more money. We want to start switching from indirect to direct subsidies. That’s why we’ve now decided to give a consumption card to the truly poorest, to give the product its price, according to its cost structure —there’s a law for that— that people can go and pay with their card, so what we give people we’ll give it directly, not to the product. We hope to hand out some 500,000 cards.

Un error de nosotros ha sido el subsidio indirecto, porque los productos los subsidiamos, pero después esos productos muchas veces no les llegan a quien necesita ese subsidio,  porque se aprovecha el subsidio del gobierno  para los más pobres para traficar y ganar más, nosotros queremos ir sustituyendo el subsidio indirecto, por un subsidio directo.   Por eso ahora hemos decidido darle una tarjeta de consumo de misiones a los más pobres de verdad, y darle al producto el precio que tiene el producto, según la estructura de costos, para eso hay una ley, y la gente va y lo paga con su tarjeta, lo que le vamos a aportar a la gente, lo vamos a aportar directamente, y no al producto. Esperamos entregar unas 500 mil tarjetas.

And just like that, in the space of 100 words, we find out that the government does know what it has to do to end shortages, end the lines, and protect the consumption of the most vulnerable at the same time.

It’s not the first time that we hear about a possible targetted debit-card for the poor — the government’s been talking about that for some months. But it is the first time that I, at any rate, hear a government spokesman present direct subsidies as a replacement for indirect subsidies. Hell, he announced it as policy.

The real question here is where our new tutor-to-all-the-ministers, Vladimir Padrino López, is on this question. I don’t for a second imagine he understands the actual economics involved. But military tutelage over the cabinet was never about VPL’s hidden policy-making talents, it was —I think— about breaking the policymaking logjam brought on by Maduro’s near-catatonic inability to make a damn decision.

A wholesale move away from controlled prices and towards direct transfers may be exactly the kind of bold policy move the military had come to despair of Maduro ever taking on his own. It wouldn’t address all our macroeconomic problems: inflation, for one, may just go on as usual. But it would address the most destructive, chaos-generating distortions. And it would put an end to shortages and lines.

Reasons to doubt? There are about seven million. In the same speech, Istúriz doubled-down on CLAPs, which makes no sense at all since in the presence of this policy, CLAPs would have no reason to exist. Istúriz still stresses that it will be a law —the law on fair prices— that would rule price setting, not the market. And 17 years of experience with these bichitos teach plainly that their sane ideas are not just rarely expressed but virtually never implemented.

In fact, in the absence of VPL’s strange appointment this week, I’d be minded to ignore the whole thing. But there’s a new ingredient in the stew: military tutelage, at the hands of a military elite that is in no mood to go down with the ship. That changes things.

The old blocking coalition of far-leftists and Alfredoserranistas looks much weaker than it did. Maduro has already signalled that he’s ready to hand off responsibility for economic policy making. Sound crazy? Sure. But crazier things have happened. Daily. For 17 years.