Venezuelan President proposes new measures to stop inflation

Venezuela’s President, Nicolás Maduro. Photo by Xinhua News Agency.

The president of Venezuela, Nicolas Maduro, tries to legally end and eradicate inflation in the country. This aims to ban and even use judicial force to end the massive price increase experienced by the Venezuelan market. The president even encourages people and opts for a popular revolt and looting establishments that, in a country with a strong social crisis and a very weak economic program, raise prices of food and basic resources offered in their stores. These establishments are facing 30 years in prison for this massive price increase, even if the origin of this surprising inflation does not come from here.

The causes are varied and its origin dates back from the political and economic agenda of the deceased former president Hugo Chavez. One of the many reasons is that the government has given business to people and workers that, instead of producing, they appropriate the benefits achieved and the Capital allegedly invested. But the main cause is an economic model that has failed due to the insistent control by the President of the economy and public life in Venezuela.

The new plan of the government  to deal with this situation is similar to the adopted  in 2007 by the President of Zimbabwe, Robert Mugabe, who tried to decree down inflation when prices took 15 hours to double in that southern African nation. 48 hours after the Central Bank of Venezuela reported that in the month of October, prices increased by 5% over the previous month (total inflation in the year: +54%) the trustee decided to take action.

Inflation rates in Venezuela since 2000.

Inflation rates in Venezuela since February 2013. By Trading Economics.

What is the solution proposed by the government? The president says he “wants to protect the people of bourgeois parasites, profiteers and looters” and accuses them of raising prices without justification, as well as a try to harm the country and his government.

Maduro called special legislative powers to Congress, in order to create laws that determine “minimum and maximum margins of profit” on all goods and domestic services. The state will take the contol of all prices of both goods and services and will aim to reduce these prices. Maduro says that this hard “price control campaign” will be extended to all types of establishments, such as the textile, automotive and food sector. For now the government has sent both inspectors  soldiers to many chains and stores to control speculative prices. The people’s reaction has been mixed, both for and against. Since the announcement of the discount of appliance stores, thousands of people have rebelled trying to take advantage of these discounts, which has risen this inflation. In cities like Valencia there were detected lynchings, looting of shops and clashes between citizens. The opposition accuses Maduro of forming chaos instead of defending the poor and denounced that economic problems are due to excessive state control, the persecution of the private sector, corruption and the failure of domestic firms. The general perception is that neither mature nor the opposition leader, Enrique Capriles, are favored by this situation.



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