Stupid prices

/ December 12, 2013
Distortioland indeed

Distortioland indeed

Here you have two items: a chocolate bar, and a box of over-the-counter painkillers.

One of these items costs BsF 4.5, about 60 US cents at the official rate, and about 7 cents at the black market rate. The other item costs BsF 50, about 8 dollars at the official rate, and about 83 cents at the black market rate.

Can you guess which is which?

Cand you imagine what this level of distortions does to salaries? TO companies thinking of investing? To consumers shopping around for the best bargains?

There is an economic war, alright. But it’s not the war chavistas claim, and it’s not a war against capitalism either. It’s a war against the pricing mechanism, against the very idea of allocating resources.

In a nutshell, prices have stopped meaning anything in Venezuela, other than letting you know how screwed up our economy is. They don’t indicate value – they are a measure of our distortions.

#PaisDeLocos

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40 thoughts on “Stupid prices”

  1. OT: http://el-carabobeno.com/portada/articulo/72107/quotdespojo-de-teatro-municipal-y-plaza-monumental-va-contra-la-constitucinquot
    The Parque Recreacional Sur was a major source of money for Valencia and almost the only place where the Southern half of the city had some recreational services for the over half a million inhabitants of that area. Its loss is huge. I saw this coming but it seems it’s only now, that Cocchiola is in Venezuela and Maduro did it that Cocchiola is going to react.

    This and Capriles either dishonesty or stupidity in not coming clear with petrol prices make me worried. The regime is going as dirty as it can as fast as it gets, but our leaders are going as predictable as possible, as clueless as possible.

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  2. ¿Por qué el artículo está escrito en inglés? Será que es para un público extranjero (al cual poco le importa lo que pase en Venezuela) y no para el Venezolano?. Porque el venezolano común y silvestre no entiende inglés.

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    • Because someone has to explain Venezuela to foreigners.

      Incidently, English also decreases the frequency of “escuaca”, “chabestia” and “maburro” in the comments section.

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    • Es cierto, el blog debería estar escrito en el idioma indígeno de nuestras tierras: Caribe. La versión norteamericana pudiese estar escrita en Navajo o quizás en azteca.
      Seamos coherentes. Un poquito de sentido comun, por favor.
      Por cierto, como se dice “sindéresis” en timoto-cuica?

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      • Bueno: a decir verdad, el caribe no es un idioma, sino una subfamilia o familia de idiomas, como la itálica (que incluye al castellano, al francés y al rumano).
        El yukpa es al pemón como el portugués al rumano. Y el warao – que no es caribe o arawaco u otra cosa sino warao- es a cualquiera de estos como el castellano al turco.

        Los habitantes de Tacarigua podían entender a los primos caribes de Caracas, pero no era fácil…y para ellos los de Guayana, también caribes, hablaban casi como francés.
        Si un habitante de Tacarigua llegaba a Morrocoy no entendía UN CARAJO: por allí hablaban caquetío, que era un idioma arawaco, como el wayúu actual. Es, como dije, como si un castellano tratase de hablar con un turco.
        Estos no entendían a los guamos de Guárico y mucho menos a los otomacos, los “come-tierra” de Apure-Barinas, que eran odiados a muerte por los caribes y tenían su propia familia de idiomas. El peor insulto que le podías hacer a uno de los grupos caribes era “otomaco”…pensar que la parte de los antepasados de Chávez que eran de origen no europeo probablemente eran otomacos y no caribes. Y los timococuicas hablan idiomas de otra familia lingüística y los de Lara eran jirajaras y vainas parecidas (guayones, ayamanes, etc). Así que era más fácil para un castellano entenderse en Roma o París, incluso en la germánica Amberes, que para un indio de Tacarigua en Barquisimeto o Boconó.

        Cuando Nikolaus Federmann llegó con los suyos a Venezuela hacia 1529 y en 1530 decidieron buscar el Dorado por primera vez metiéndose por lo que hoy es Falcón, Yaracuy, Lara, Portuguesa, tuvieron que hacer uso a veces de una fila de hasta cuatro intérpretes.

        Pero ahora, como dijo un grupo de raperos “antifascistas” a Chávez poco antes de este morir, nosotros hablamos venezolano y no español (y supongo que quien diga lo contrario es un fascista traidor de la patria).

        Por eso es que estamos como estamos.

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        • Kepler,
          I found your post fascinating. I am a PhD student and would like to know more on the subject of the native linguistic families and their cultures. Is there any survey-like book that you would recommend?

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          • I gather you are Japanese and you also speak Spanish.
            Something really comprehensive? That’s hard. I am basing myself on a few sources.
            If you want to get a glimpse on language families and so on, you might want to surf a bit through the Ethnologue base – through language families or through countries (type in “Ethnologue Venezuela” and you will see languages spoken there and go through them)

            I think I have been the major contributor to Wikipedia Spanish in languages of Venezuela. You can see some of it here http://es.wikipedia.org/wiki/Idiomas_de_Venezuela
            and you can go from there to “idiomas caribes” or to the specific Carib or non Carib languages. I have some grammars of native American languages at home and a friend of mine is a French linguist who has been working for decades with native American languages in Venezuela and she gives me some more glimpses from there, also a Pemon acquaintance in Gran Sabana.

            There is an old, very general but nice book on linguistics written by the US American linguist Sapir, Languages. He does not discuss there South American languages but gives some views about how very different native American languages from North America can be. By the way: there are some common traits to languages such as Japanese, like the fact most use post-positions and not prepositions (called differently in Japanese), but they are really different even from Japanese.

            The story about the Welser I read from Nikolaus Federmann’s account on his first trip from Coro to the Llanos (1529-1530), which can be found on Google in the original in German (but it is a hard reading as it is a Southern German still not influenced by Luther’s version). I think there is a translation of it into Spanish but there must be other accounts. I also read some other books about that trip, putting relating his references to others’, but I guess that’s further one branch that goes away from linguistics.

            The thing about the Otomacos is described in Alexander von Humboldt’s Voyages in the Equinoctial Regions. You can find in his account a lot of information about native Americans back then, even though he writes about everything, including the temperature of every valley or the flora of every spot.

            You may find a post of mine of some interest:
            http://desarrollosostenibleparavenezuela.blogspot.be/2012/04/historia-venezolana-en-nuestros.html

            It shows that even today and even with very uncommon surnames from the electoral base in Venezuela of 2011 and even if almost no one in central areas of Venezuela have any real connection with a particular native American group, one can see the distribution of ethnic groups present in the country in 1500 through some surnames.

            Well, all this is OT. If you have another question, send an email.

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            • Ps.

              oops: “a major”, not “the major contributor”, and only referring to Wikipedia articles on native American languages in Venezuela and some stuff on pre-Independence history of Venezuela. I didn’t write the stuff about English or Italian in Venezuela in the “Idiomas de Venezuela” article , someone else did and I don’t get why they did that.

              We really don’t have one central reference book for the general public. That’s why I felt like writing a bit in Wikipedia. I think there was a book being planned to give more information on Venezuelan native American languages but I don’t know if it has been published yet. I saw some drafts and the data I could see didn’t go much deeper than what you can see from the Wikipedia articles on the different languages.

              For the very general structure of language links definitely the Ethnologue is a decent reference. It also helps with the terms: people use a lot of names for the same languages.
              Mind: linguists are not really sure about the relation of quite some languages to others because there has been little proper work on them or because they can find themselves in front of a Sprachbund.

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    • podemos hacer una version “ola ke ase” porqe creo que el venezolano común y silvestre mientras esta haciendo la cola par acomprar leche, papel, cafe…se pone a leer CC con los wifi publicos para el POEBLOH que tienen una velocidad más lenta que HAITI

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  3. Today I went to a conference on Venezuela here in Miami. Favorite speakers were Virginia Contreras and Edmond Saade. Edmond said his company was carrying out a poll during the days of the CaDakaso and that knowing the impact it would have, they decided to stop for a few days. When they resumed work, the results from the new batch of polls were dramatically opposite. He says his team was simply impressed how the government had been able to shift blame of economic hardships from the government to the private sector in matter of days. Then they found out that credit card lines issued by state banks were increased tenfold only days before the events.

    … Before the Cadakaso, his company was projecting the opposition would win the popular vote by 8 points.

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    • Well That was the DATos guy…before they had a good IR but was sold to AC Nielsen…and yes this year Nielsen got away from Venezuela..son if you don’t have a political survey company. or make some business with the government there is nothing else to do?

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  4. speaking of prices, i am trying to buy a camioneta, new but no hay. i am trying to look at almost new and having a real challenge. they charge above the allowed price so they have you go to a certain place and hide to make sure you are not with the government. when you call to get info about the vehicle they ask, “how did you get my number?” dude, you published it in tucarro. paranoid and scared. they are asking 2-3,000,000 bfs for a vehicle they paid 650,000 bfs for less than a year ago.

    i have the money but cant find a vehicle, crazy

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    • Well, there is this old economic maxim that says that “the product of service that is not available, has an infinite price”.

      That’s the whole crux of the scarcity problem, the founding stone that the chavista government is unable to see, much less comprehend.

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  5. So if the government can succesfully transfer the blame on anyone but themselves and win elections, is this something that lasts forever? What happens first? People get pissed because the government is losing the “economic war” badly and all hell breaks loose, or people realize that there never was an “economic war” and they’ve been had for the last xx years?

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  6. Today I arrived in Bogotá and I decided to look at the currency prices in the exchange office in the arrivals area. The were buying 1 bolívar at 25 pesos and selling them at 50!

    For one, that’s an actual, proper, exchange office in an international airport (as opposed to the sophistication of a local in Cúcuta) that will actually change your bolívares. Secondly, it’s just bonkers that there’s such a difference between the buy and the sell rate.

    A little bit of maths, if one bolívar gets you 25 pesos, that means that if you give them a crisp BsF 100 bill, you’ll get 2500 pesos in return. That’s approx. USD 1.25, which gives a whooping 80 BsF/USD. (A bit less due to my rounding of the USD/COP rate, but it’s not less than 75).

    Meanwhile, if I walk up to them with a 2000 peso bill (a wee bit more than 1 USD), they’ll give me 40 BsF

    It’s too bad I was in a rush, I would’ve done it to take a before-after picture…

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  8. Managing a household in Venezuela under these conditions I would need the 800 mg atamel every week, but I would quickly have to revert to something stronger.

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  9. For starters my guess is the retail price of the bar in the USA is $1-2. So clearly something is wrong with the current precio if translated into dolares revolucionarios but at the black market dollar rate the price seems about right (stick around and wait for the fiscalizacion!)

    As for the headache pills, hard to say what those should cost. Generally speaking the drug market is crazy, in most countries there is a lot of regulation restricting competition and many products enjoy extended patent protection and monopoly power. One could argue all day about how medication should be priced. But I assume that this being generic stuff it should not cost so much anyway. Also, since the market rules the day no matter what chavistas have to say, I would assume that if the pharmas are still putting it on the shelves they must be making *some* profit, otherwise you wouldn’t find any pills around. So the magnitude of the distortion is not clear to me.

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    • Pfizer obviously isn’t making its profit in Venezuela for selling Atamel at those ridiculous regulated prices. It’s just a legally mandated loss lader; they charge more ‘realistic’ prices (ie., 10x or more) for the unregulated Atamel Forte version.

      For those who don’t know (and I’m pretty sure this is the point Nagel is trying to come across in this post) the prices for most over the counter medication have been frozen for 5 or 6 years; adding persistent double-digit inflation to the equation yields the ridiculous, out-of-touch nature of prices in a constantly increasing portion of the Venezuelan economy.

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  10. I, for one, don’t find it crazy at all. A simple, everyday painkiller should be far cheaper than an imported chocolate bar. This is one of the very very few instances in which Venezuelan pricing seems sane.

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      • There are medicines in Venezuela that have a price regulation that hasn’t changed since 2003. Some of them are regulated at 3 Bs. and cost 8 to produce. The pharmaceutical companies even out their profits by applying a very large margin to unregulated products to cover the losses.

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      • It’s a very small box of painkillers (12 count? 20 count?), the like of which are sold by the 500 in drugstores around the world for 8-12 bucks. 7 cents for 20 is not outrageous at all.

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  11. In Venezuela pharmaceutical products are priced either sky high or dirt cheap depending on whether they are regulated or not, I suppose the higher price of some products pays for the lower priced ones ( what is known as cross subsidization ) . More commonly the regulated product ceases to be available and you can only find high priced non regulated versions of the same product .

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