The dynamic of macroeconomic populism

Authors:
José Alberto López Rafaschieri and Luis Alberto López Rafaschieri
www.morochos.net

Allende, Peron and Chavez are examples of this. Each time a populist government comes to power in Latin America, the economic scenario is quite similar: The regime begins a crazy monetary policy, printing money in excessive quantities and generating spectacular rates of economic growth in the medium term. The first few years everything is going well and the finance ministers of these governments believe they are the makers of something unprecedented in human history, so they compliment each other due to the revolution's achievements.

But time passes and the wild printing of money begins to cause side effects. This stage is characterized by an uncontrolled increase in the general price level, a serious budget deficit and an economy in recession or very slow growth. In this hangover, the massive electoral spending is insufficient to stimulate consumption because of the neglect of the real economy, while hyperinflation makes commodities become unaffordable. Then, everything degenerates in maxi-devaluations to balance the public accounts, a drop in domestic production due to the low private investment -driven away by the grim scenario- and desperate governmental controls that attempt to stop the disaster.

Therein comes the inevitable, the economy plunges into a deep recession until things return to some sense of normalcy after traumatic macroeconomic adjustments. Then start again, repeating the process over and over till the revolution and the currency can withstand.

---

Related articles:

• Hyper-inflationary Statism
• Double-dip recession, Stiglitz's third mistake
• Socialist dictatorship vs. capitalist hegemony

Poll for Venezuela's Parliamentary election

Authors:
Luis Alberto López Rafaschieri and José Alberto López Rafaschieri
www.morochos.net

The shortage of basic commodities, the national electricity crisis, the out of control crime, the long socialist recession, the endless corruption scandals, the Cuban colonization of Venezuela, the inflation of 30%, the attacks on private property and the eleven consecutive years in power are the main factors leading to the Chavez's current low approval ratings -close to 40%-.

Unfortunately, popularity and votes are not always the same, much less in a country governed with anti-democratic schemes such as Venezuela. When dealing with any election, chavismo relies on unfair practices that tarnish the image of the procedure, as the abuse of public institutions, the use of public resources to finance the PSUV's campaign, intimidation and voting processes that leave much to be desired due to their questionable transparency. Tricks that distort any electoral event and we think increase in more than 10% the real votes of Chavez's party. So we do not believe that chavismo will lose the majority of the National Assembly in September.

But although we do not expect a change of command in the Venezuelan Congress, we do believe that the reasons set forth above have adversely affected Chavez, so it seems very likely a change in the percentage of votes the parties would get. This should be the second hardest election Chavez had faced so far and it is probable that he will obtain the second lowest percentage of votes for his political project since 1999.

To put it in numbers, chavistas should obtain a 53% of the total votes counted, a figure that, in spite of giving them a majority in Parliament, would mean a substantial weakening of Chavez's electoral power.

---

Related articles:

• Polls for Venezuela's legislative election
• Expectation for Brazil's presidential election
• Interview: Chavez or democracy?