It's the Economy, Stupid.

03 December 2007
At least 50.7% of the voters in Venezuela would rather not give their president dictatorial powers and a shot at life in office.

The "socialist paradise" bribe in the constitutional referendum was transparent: a 6-hour day and some worker's benefits in exchange for astonishing new powers for Chavez, including no term limit and an extension of the term from 6 to 7 years. The 7-year thing really bothered me. The only reason I can think for it is that, being a prime number, a 7-year term would put him out of step. At the times most other leaders would be sweating re-election he would have lots of elbow room.

But Chavez was out of step on the economy. The bribes were to be funded by oil exports, which are strongly linked to the dollar. With the dollar going down, there is enormous inflation pressure in oil-producing countries. Chavez' answer to that was price and currency controls. The official rate is 2,200-odd Bolivares to 1 Dollar, with tight limits on how much you can buy or sell. As of last week the black-market rate is over 5,000:1. To wish inflation away he put in price controls on basic foodstuffs, with the unsurprising result that there is less and less stuff on the shelves.

Just as Solidarity in Poland was partly fueled by the price of sausage, the NO campaign got boost from the scarcity of Doña Arepa. You can shut down the TV stations, you can shoot the protesters are arrest the "traitors", but you can't monkey with the price of milk.

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