Thursday, November 16, 2000
Tuesday, October 03, 2000
The OPEC that I want to see
Tuesday, July 18, 2000
Our economic policy suffering of complex
Protectionism, without a doubt, creates economic distortions, which means that its implementation must be continually subjected to an intelligent, creative and disciplined effort in order to reduce such distortions.
In Venezuela, an immense part of the professional elites have become “the Buddha” of protectionism; Hence today, when we find ourselves in a state of economic emergency, which requires a certain protectionism, there is a risk that it will be implemented by the least experienced.
Protectionism, whether we like it or not, managed to generate an important industrial base in the country through the import substitution policy. However, as it came to present a large accumulation of inefficiencies, the rulers in power, instead of making the corrections that, although not easy, were necessary, succumbed to the siren song of commercial opening and proceeded to burn the bridges. or to sell the sofa, destroying the little institutional capacity that existed to administer protectionism.
I have frequently argued that Venezuela seems to suffer many times from the same complex of an insecure teenager, who when he enters a party with mud on his nose, breaks down emotionally due to the certainty that everyone is watching him – when, as we well know, that never happens since everyone is busy with their own muds.
Only the existence of a complex like the one described could justify both the excessive desire to seek applause and international acceptance, as well as the presence of several of the true phenomena of misinterpreted economic orthodoxy, which have led us to the regrettable economic situation that we live currently. Below, I would like to comment on some of those orthodox phenomena that I have detected:
Commercial opening. The process of trade opening itself was carried out with all zeal and fanaticism, however, no effort was made to ensure that the country's efforts were duly rewarded; Evidence of this was that while Venezuela lowered its tariffs, the world increased those applied in a discriminatory manner to petroleum derivatives. On the other hand, it should be noted that this process began without taking into account the reality of the country, to such a degree. that the economic sectors were almost never consulted, nor informed regarding the transition or adjustment periods to be implemented. Perhaps part of the blame lay with the economic sectors themselves by ignoring the ongoing process and letting Fedecámaras represent them, knowing that Fedecámaras does not represent anyone, except its own leaders.
Fiscal policy. At the most inopportune moment of all, in the midst of the initial phase of an economic recession, the country decided to satisfy the demands of multilateral entities for fiscal balance and launched the introduction of VAT (or its substitutes, whatever they were called), with the aggravating factor, furthermore, of abandoning the function of seeking a better distribution of income, via the income tax.
Financial regulations. Banking, in addition to promoting savings, offering reasonable returns and certainty of recovery, must fulfill the functions of supporting economic growth and democratizing access to capital. In terms of banking regulation, it would seem that the country has forgotten these last two functions, accepting, without blinking, the Basel regulations, much more appropriate for the banking of an already developed country than for ours. There is nothing wrong with being a developing country, what is wrong is believing that by simply adopting different positions, you can reach another level of maturity – like a little girl who borrows her mother's lipstick to feel grown up.
Exchange policy. Without going into discussing it in detail, the truth is that in exchange matters, during the last four years, rates have been allowed to evolve in a way that threatens local productive economic activity to such a degree that its justification can only be attributable to mental health problems. Sometimes, I even think I hear our central bankers addressing their colleagues saying, "whatever it is, we will kill inflation in Venezuela, even if we have to kill the Venezuelan."
Foreign investment. In few cases is the complex, to which I referred initially, as clearly drawn as in that of foreign investments. The ones that make the most noise in this globalized world are, above all, those investment funds that represent short-term capital – swallow capital – that fly through the skies in search of opportunities to speculate. In the face of such investors, the country has bowed, offering them restrictive monetary policies with absurd differentials, to the point of having ignored the needs of our national investors or our true foreign investors, which are those companies that ensure employment with their physical presence in Venezuela.
I would not hesitate to decree strong protection measures – such as immediately closing the border to imported vehicles – of course, such a measure should be done in accordance with Colombia, given that it is currently our only and true business partner. By the way, on occasions I have suggested applying to the import of vehicles a tariff equivalent to that applied to gasoline in their countries of origin and that would mean, for example, in the case of the Mercedes Benz from Germany, a tariff of more than 400%.
I, on the other hand, would tremble at the thought of implementing protectionist measures, without counting on the knowledge of many of those who do know about the dangers of protection. To them, I beg you, even temporarily, to abandon your doubts and/or intellectual complexes and lend your shoulder to a country that needs it. (I promise you that I am not going to tell anyone, especially those multilateral entities – where perhaps in the future you will apply for a job – for whom protectionism and everything that smacks of that, is fo, fo and fo.)
PetropolitanFinance for Development
Thursday, March 30, 2000
Human genetics made inhuman
As of this moment, all I have read about the mapping of human genes has been so upsetting that it only brings to mind the title of the musical Stop the World, I Want to Get Off. I am very far from making my mind up about this difficult issue, but I need to share some of my initial concerns with as many people as possible.
A report cited in Reuters from the Daily Telegraph, London, indicates that “the government plans to allow insurance companies to use DNA testing to assess whether people are at risk of inheriting serious illness and should pay higher premiums.”
I believe strongly in the importance of the market as a means for the distribution of resources in society. However, I also believe that the benefits of development should accrue to all, not leaving any behind. What we now seem to be able to accomplish with research on the human genome multiplies manifold the difficulties of harmonizing these two previously contradicting objectives.
For instance, it would be great if genetics allowed the insurance companies to decide who will pay lower premiums, that is, those with less risk of developing serious illness. However, who will be responsible for those declared genetically second-class citizens, who will be forced to pay double or triple the premium, or who will ultimately be turned down altogether?
This problem is not limited to insurance. Reuters also reported on a conference to be held in mid-April in the United Kingdom in which “Genetic testing of children and testing for physical and social characteristics, as well as medical traits, would be high on the agenda.” Does this imply the possibility that even access to the university will some day be determined in part by genetic analysis?
What would parents who today limit their background search to asking their children who their friends’ parents are do tomorrow? Would they be obliged to ask about their genetic charts? The potential for discrimination is great, and would only reinforce the motivations of overly twisted Darwinists.
This genetic investigation might also represent a serious commercial threat for those countries that are not participating in this area. One of the companies racing to use information from gene mapping to make profits declared that it had hooked up with a center to find genes associated with breast cancer. If the efforts of this company are successful, it will be sitting on a patentable product and would be in a position to become a monopolist in a market with very inelastic demand. Can rationality be guaranteed within the openly declared and not unreasonable intention to obtain profit from the venture?
Many countries have signed commercial agreements that obligate them to respect patents to the extent of having to collaborate with other countries and punish unlawful use of protected discoveries. In the future, advancements in genetic science may force the revision of these accords, to decide whether they are still valid or whether, on the other hand and for the good of the common citizen, they should just look the other way.
What to do? It is very hard to say. Today, and just out of practical considerations, I limit myself to suggesting that all insurance companies design a plan which obligates them to issue policies for all of those who undertake a genetic examination. This policy should cover the negative impact and consequence that could arise from anyone getting access to such information.
I know this is only a Band-Aid, but what else can I do? I am not among those that resign and lie down to cry, even though this matter actually would justify just that.
From The Daily Journal, Caracas, March 2000
From Voice and Noise, Booksurge 2006
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