Rigid price controls, coupled with strict controls over the movement of food from one place to another, can break down society’s ability to feed itself.
It’s a lethal combination. Put them together with enough political repression and the result can be famine.
In Ukraine, in the 1930s, the combination of policies that made it impossible for farmers to produce enough, together with brutal soviet internal controls that choked off the flow of food to famine areas left millions dead.
Two decades later in China, the toll was in the tens of millions.
These kinds of engineered famines can be enormously effective methods of population control. Both the Soviet and the Chinese Communist regimes managed to solidify their grip on power for decades to come via the expedient of starving out foci of opposition. Nobody should take this stuff lightly. And I don’t.
But could Venezuela really be facing this kind of manufactured famine?
Not for now.
And why not?
For one reason only: thousands upon thousands of ordinary Venezuelans are working full time to subvert the authoritarian regime’s insane, possibly famine-inducing control system.
They may not think of themselves in those terms – surely they don’t – but the effect of what they do is to reconstitute, against enormous odds, the only mechanism we know for for fully matching demand to supply.
Taking real risks, day in and day out, they’re fighting the Control Regime with the only weapon likely to defeat it: economic rationality.
Nobody had to give them a university course for them to develop the basic common sense that tells you if you have something people are willing to pay ten for and the government says you can only sell it for one, then the right thing to do is to tell the government to fuck right off.
Bachaqueros make markets because they know what Merentes will not, cannot accept: the thing that brings demand and supply together is price. Nothing else. Mess with the price mechanism and supply will not, cannot match demand.
They know scarcity is to price controls what smoke is to a bonfire: not one possible outcome among many, but an iron-clad certainty, guaranteed by the nature of the thing itself. They know wishing for “price controls” to just work, without any of the noxious shortages, is every bit as fatuous as wishing for a bonfire without smoke.
What black markets do is re-establish (partially, imperfectly, with high risk premiums), the price mechanism: only possible mechanism for fully supplying markets in those rare situations when power has lost its mind and declared, by administrative dictum, that that mechanism is not permissible.
We don’t often think of “Bachaqueros” in these terms. A shocking number of even opposition minded people have bought into the government discourse demonizing them. Few stop to think where Venezuela would really be if the government’s fantasy could be delivered and black-market food sales could be stamped out. Chavismo naively believes that driving bachaqueo out of business would somehow result in fully supplied markets – an economic non-sequitur that could, if pursued with enough vigor, result in a real catastrophe.
The reality, I’m afraid, is different: without guerrilla capitalists, Venezuela wouldn’t be a modern Valhalla. It would be Ukraine in the 1930s.
In fact, to slur the only people now standing between us and total collapse in the distribution system with a term of abuse like “bachaqueros” is to internalize the regime’s twisted ideology. What they are, really, is guerrilla capitalists: and they’re our last line of defense against the complete breakdown of society’s ability to feed itself.
Only in the very rare occassions when the exercise of state brutality has been allowed absolutely free rein, when state violence has been encouraged without any kind of holds, has it been possible eliminate these outbreaks of guerrilla capitalism. In those cases, the outcome has always and uniformly been the one outcome economic theory foresees: mass starvation.
Put that on your goddamn jumpsuit, Mayor Lacava.
74 thoughts on “In Defense of Guerrilla Capitalism”
Not to speak ill of their capitalist clout, but bachaqueros are opportunists that don’t really add to the supply. As such pretty much useless intermediaries in this “capitalist” guerrilla war (they are of course very useful emblems of the ineptness of government policy). What you really want is *smugglers*, both of currency and goods.
Hmmm, should also add of course that massive breakdown of lawful behaviour (exhibit Z: bachaqueros) has its upsides when the law is crippling the country.
Nah, sorry, you didn’t get it.
Market forces are not always simple to decipher, for instance the flow of goods depends on the accessibility of markets. There are bachaqueros/smugglers along the border with Colombia that smuggle *into Colombia*. It’s evidently cheaper to smuggle stuff into Colombia than supply other markets in Venezuela suffering from scarcity (mind you, I realize that this effect is perhaps just a trickle). Bachaqueo perhaps lubricates exchange and removes some of the inefficiencies caused by centralized planning. It puts money in the right hands to encourage supply. In principle bachaqueros make new markets accessible by providing goods at rational prices and therefore providing an attractive marketplace for suppliers. But there are some arguments against bachaqueo as cure-all. If suppliers can’t access the black markets efficiently because of all the crazy currency and import controls, then all the bachaqueros/resellers in the world ain’t gonna help you none.
If bachaqueo was really making a difference there would right now be suppliers, such as smugglers, bringing goods into the country. Bachaqueo might make the market somewhat more efficient, it arguably puts some of the money in the right hands, those of the entrepreneurial capitalists, but it doesn’t significantly increase the dollar supply. Government regulation creates inefficiencies in the allocation of dollars, of which supply of discounted goods exploited by bachaqueros may be an example. But bachaqueo just creates new winners and losers, and the losers (in the short run) are the people who hoped to get cheap goods at bicentenario. The real problem is the lack of supply/imports due to the lack of dollars, which in addition to the low price of oil is probably due to embezzled money being funneled into foreign accounts and the productive capacity of the country having been severely compromised, and bachaqueo is like a bandaid on that hemorrhaging mofu, to borrow one of your surgical analogies. The real question right now (one of a long list) is how are dollars being allocated including where are the dollars needed to supply goods to enable local production.
I believe you may be complicating the main point: bachaqueros help IMPROVE the rational allocation of economically desirable goods. There are many complicating factors after this fundamental point, especially in present-day Venezuela.
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Sure, but if I understood correctly the post brings up bachaqueros as potential agents against famine, which is far from the truth. Perhaps the idea is more that bachaqueros are rational agents and as such an irritant of the (*) ideologically minded regime. Or that, even though the bachaqueros are criminals (same as misusing food stamps would be criminal in the USA) and counter the governments (*) attempt to feed the poor masses, the (*) government is caught in a wonderfully ironic mess of its own making and we can hardly find the bachaqueros to blame for stealing bread for their families like Jean Valjean.
What is a regular merchant? Someone who puts goods from place A to place B, adding what to the supply? Transport, Storage.
What is a smuggler? A merchant dealing with something illegal, or through illegal means.
What is a Bachaquero? A merchant that obtains something at an irrationaly low price and then sells it at a rational price, the value he or she adds to the product is Time, the time locating and obtaiing the product. No lines, no market tour.
I completely agree with you. People that work do not have time for queues, people with no work can do that, then charge for the time the spent there, plus transportation, sunburn, etc.
If you use that perspective , there are three things which bachaqueros can offer their customers :
1. the chance of avoiding the time and bother of looking for , finding and queueing to buy what they sell .
2. the uncertainty of not finding what youre looking for despite looking for it in different places .
This of course has a very high price which some people are willing to pay .
There is of course the extra cost to others of doing longer queues and not being able to find what they were looking for because the bachaqueros got there first (sometimes by bribing officials or supermarket employees) .
I dont see the comparison with the kulaks who were not in the business of trading clandestinely with prohibited goods they purchased from others , but in the business of producing those goods by themselves.
The comparison I find is a tad exagerated !!
They don’t add to the supply, but they do add (A LOT) to distribution and economic equilibrium
BTW, indirectly it might motivates production
Great post. WSJ does not disagree.
Miguel’s arepa index in the WSJ, haha, great stuff!
Bachaqueros may improve the distribution system but they do little to improve production or am I missing something?
That’s like saying a street corner drug dealer in the U.S. “does little to improve cocaine production…”
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I disagree. Polar has to sell its pasta, for example, at a fixed price may not be sufficient to pay the costs. The bachaquero sells that very same pasta at a much higher price but Polar do not get a dime of that extra margin. Does Polar have an incentive to produce more because of the job the bachaquero is doing?
Your drug dealer promotes demand which, in turn, stimulates production. I fail to see how reselling products already in the market, but in insufficient supply to satisfy demand, stimulates production of such products domestically or abroad. That’s why your equating the former with the latter doesn’t make sense to me. I’m willing to learn, though, so please give it a shot.
Agree 99%. Government corruption creates inefficiencies. Bachaqueo puts money into potential importers hands, part of the idea that these guys reinvest in the country rather than funneling their wins into savings accounts abroad. But they still have to deal with the big wall represented by import and currency controls.
If the US government had a near-monopoly on the supply of cocaine, sold cocaine at discounted prices, and required complicated permits, and corner dealers supplied themselves by getting cheap cocaine from the government, then the analogy would work. But there are smugglers and the USA is awash in wealth.
Smugglers don’t pay taxes, so they are parasites for the countries.
Down with the trade barriers! Smugglers don’t pay import tariffs which in my book amounts to practicing free trade, a good thing according to many economists. Do you favor protectionism? Then you are in agreement with most chavistas. If the border with Colombia and Brazil were thrown wide open the government would collapse in a fortnight, just like East Germany fell (ok, I exaggerate).
When I read “…fuck right off” I thought “this must have been written by F. Toro”. I scrolled up and I was right. Those words didn’t make me swoon like a damsel. I know your style, your blogger’s philosophy… and that’s OK with me but if you want to turn this into a The Economist of Venezuela, both of them will have to change soon. Transforming the arbitrage that you can see every day in not-so-heroic places like stock markets into the activity that will save the people of Venezuela is also way too much for any serious publication.
That was the role of Dag Rannarskjold in Ayn Rand´s Atlas Shrugged , I concur with Francisco, bad is good…
One of the more galling things about the Lacava Doctrine (I can’t believe I just wrote that) is how dehumanizing his language is. Every time he tweets about “bachaqueros,” he calls them “la plaga,” “los delincuentes,” “los bandidos,” etc. Completely outrageous stuff, particularly coming from the mayor of Venezuela’s cocaine trafficking hub.
It’s just the chavista usual language.
Hatred inducing language.
Juan, again, I ask, when you say you went to school with Lacava, you mean he studied (gasp!) Economics at UCAB????
“The reality, I’m afraid, is different: without guerrilla capitalists, Venezuela wouldn’t be a modern Valhalla. It would be Ukraine in the 1930s.”
Ridiculous hyperbole. So without these bachaqueros we’d have millions already starved to death?
Also, how do you know there were not bachaqueros in Ukraine or China? If there was scarcity and price controls I can bet there were
Well they just got shot, though.
In the second decade of the U.S.S.R., bachaqueros were called “Nepmen”, referring to those who used the freedoms in Lenin’s New Economic Policy, NEP, to enrich themselves. Buying cheap and selling dear was an important part of it. When Comrade Lenin died, Comrade Stalin decided that Nepmen should be vilified, as part of his plan to “deepen” the revolution.
After a period of vilification, deportations to Siberia began, but as Francisco says, eventually the remedy was shooting.
It seems that we are already in the vilification period
Most accounts say Stalin chose to demonize the Nepmen and the kulaks because their economic success, coupled with hunger among the rest of the people, threw in doubt the validity of the revolution itself. You can’t have a sainted Comrade Lenin if the whole revolution was a mistake.
“Well they just got shot, though.”
Well, more like “The ones NOT in some regime’s fat ass’s payroll just got shot.”
I don’t get how bachaqueros would avoid a famine. If there is not enough food some people will die anyway. The only difference they make is that with bachaqueros the richest don’t die, without them death is distributed evenly between classes.
What am I getting wrong?
Excellent post, Francisco. But, Andres has a point in that the bachaqueros are not increasing supply. Producers are still limited by the price controls.
Price controls and property stealing created the scarcity that made bachaquero mafia possible to exist.
Exactly. Arbitrage does not increase supply; it thrives on the imperfections of the market. Not blaming the bachaqueros is one thing (they are the byproduct of an imperfect market, not their creators); but expecting them to solve the shortages is quite another.
That being said, it is unreasonable to expect politicians to take their side. People will blame the middleman, unless you can demonstrate that those same middlemen are bringing in goods that would not be available otherwise. Speculators always look bad, even if they didn’t create the conditions that make speculation possible.
Quico, I am more than willing to admit bachaqueros create jobs (as middlemen), and they solve one part of the equation: how much am I willing to pay for not standing in line. So yes, they are guerrilla capitalists, and you are right, they are the smoke of a bone fire. No argument there.
Bu sorry, they are not avoiding a Ukraine like situation. Not unless they buy directly from the producers (big ones like Polar or small producers), otherwise they do nothing for improving the supply side of the equation.
Moreover, if I can’t afford their prices, well, forget about it: they are competing with me, paying the exact same amount as I am (minus the new risk premiums), and from my point of view siphoning away from me products that I need. Each bachaquero in line in front of me decreases the chance that there will anything left for me to buy when my turn arrives.
So don’t expect any political party to defend them. Unless you have a bachaquero in your family, the chances are that you despise them even when having to buy from them.
“…bachaqueros create jobs…”
They don’t create jobs, standing in a line is not a job, “hacer bulto” and stop other people from buying is not a job.
“…how much am I willing to pay for not standing in line…”
Which is a simple extortion by bachabasuras, much like those “alcabalas” or “peajes” created by malandros, where they charge people who goes by those points.
“Unless you have a bachaquero in your family, the chances are that you despise them even when having to buy from them.”
If I had one of those on my family, I would never stop taunting him about how he doesn’t have an actual job, and instead just goes standing on other people’s way, and he had to shut up and cope with it, because that’s the truth.
Truth be told, most bachabasuras are arrogant imbeciles who deserve to starve, you haven’t met an actual, dedicated bachabasura until they tell someone else in a line that “I might not buy what I want to buy, but I WILL HAVE THE PLEASURE OF WATCHING YOU NOT BUYING A FUCKING CRAP.”, it’s a very chaburro thought, that whole thing about “fuck everybody else but me, because if I don’t get what I want, the whole world might burn then.” way of thinking.
Much like marginals and chaburros, bachabasuras earned their bad reputation on pulse.
It is a job, any “Free market” would acknowledge it
That was a great post! That was a recital of basic Economics 101 concepts, the efficiency of the market moving products about while preventing total economic collapse. Good stuff. Really enjoyed reading that.
The problem that remains is that while a bachaquero becomes a secondary distributor and or store, the price for the commodity sold does not include any revenue to the manufacturer. The manufacturer has been remunerated at the controlled price at the original purchase point. The motivation for the bachaquero and consumer is clear, but what motivation remains for the manufacturer?
Exactly! How are they stopping us from dying of hunger if they are just redistributing, the supply of regulated food? It would be different if they had actually created some sort of artesanal, in-house, processing of corn to make harina pan which they’d sell more expensive than the retail value, money that’d be reinvested in their underground operations… but right now they’re not adding almost any value to the process. Yes, I understand they’re a consequence of the current situation and that it will only be fixed by allowing the free market to set prices, but they’re not more than middlemen which the only value they add is making huge senseless queues for you.
“How are they stopping us from dying of hunger if they are just redistributing, the supply of regulated food?”
They are not stopping any one, let alone millions of people, from dying of hunger. That’s why this whole post is way over the top.
Manufacturers are also other-manufacturer’s consumers. They don’t have time to stand in line, they NEED the “bachaqueo” in order to continue producing, their time is better spent on producing than standing in line.
Markets can be VERY complex, that’s why decentralization (free market) is A LOT more efficient.
Bachaqueo is a completely rational phenomenon product of scarcity and price controls. When you stand in line waiting for hours to buy something, losing hours of your time that you could spend working just for queuing has a very clear economic value, its the same criteria as when some people pay other to queue for them (many people did that for passports, middle class families paying their cleaning lady to queue for a whole night)
bachaquero is the new gestor.
Both created by chaburro’s idiotic overloaded bureaucratic useless controls.
Geez, so many thoughts. Bachaqueros are “guerilla capitalists”, are an inevitable result of Venezuela’s mistaken Communist price-controlled economic system, and perform a valid economic service in distributing goods to consumers unable to make lines due to full-time jobs or to living in non-urban/rural areas with difficult access to Govt. mostly urban price-controlled consumer goods distribution centers. I don’t believe they are preventing famine, for reasons expressed by others above, for they aren’t really increasing production/supply of price-controlled consumer goods, whose producers are forced to produce at a loss in many cases, and then only after receiving hard-fought/scarce hard currency imports. The difference between Venezuela and the Ukraine is that Venezuela still has some hard currency income with which to import basic goods to supply limited amounts to its relatively small population, whereas Communist Russia had to rely heavily on local production, whose producers would prefer to slaughter pigs, for example, to use as fertilizer rather than to sell them at a price-controlled loss. The real question is how much longer can Venezuela supply even limited amounts of scarce basic consumer goods to its population, given that it’s: 98% dependent on oil for foreign exchange; price/bbl currently is about $35 ($7 below WTI), and probably not going substantially up for some time, if it doesn’t decline further; production cost/bbl. of light-medium crude is around $15/bbl., and, worse yet, for Faja crude, around $65/bbl.; capacity for hard-currency further indebtedness is virtually zero, and it’s hard-currency debt service is high; foreign reserves at $17 bill. are probably overstated by several $billion, $1 billion if gold reserves were marked to market (and $2 billion more were gold to fall to $950/oz , as many predict), and several $billion more for the gold Chavez reportedly sent to Cuba on 2 Ven. FA transports soon after it arrived in Venezuela several years ago
I can’t recommend high enough Willie McKey’s excellent article about why we shouldn’t call informal vendors “bachaqueros”. http://prodavinci.com/blogs/a-usted-le-conviene-llamar-bachaquero-al-revendedor-de-productos-regulados-por-willy-mckey/ (in Spanish)
And until now I’ve never seen the first article stating “Why is convenient for the regime that people calls non-chavista people ‘escuálidos’?” or “Why is convenient for the regime to call every protest a coup?”
“Not for now.”
You said it for yourself.
maburro’s trying to surf on the scarcity wave appealing to all sorts of stupid-inducing speeches, but one thing is a fact, carved in stone you’ll never be able to deny: chaburrismo CREATED and ENGINEERED today’s scarcity, it was a coldly calculated movement, the problem is, that it’s getting out of hand, they thought they could create the iron grip in a short time, and it’s taking more than they thought.
What is going to happen after 6D? maburro and his minions are waiting for the elections to pass so they can even think into implementing some infamous economic measures, which they have been doing by now, incase you haven’t noticed, like raising the prices on regulated goods by double periodically, but they are deathly afraid to take any serious measure, like an official devaluation, because they couldn’t keep lying on stuff like that, and lies are the prime support of chaburrismo.
chaburrismo’s problem, at its core is, the same one with all dictatorships, that they are a criminal mafia trying to stomp the population into submission, and they’ve been doing that quite well for now, they’ve held into power during 17 long, wasted years, and we’re seeing their newest instrument to control the population, the engineered scarcity, which created as a consequence the infamous mafia known as bachaqueros, or how I call them, bachabasuras.
Some people would argue “but they are only the consequence, not the cause, everything is to blame on the wrong policies”, and there’s where you are not completely right, sure, chaburro controls, along with property stealing were the best ideas that imbecile called giordani could come up with, but you can’t deny that said stupid controls and destruction of production could only lead to creating a monstrous monopoly mafia like this one today, where people is even banned from trading for that stuff unless they are part of the mafia.
You can call bachaqueros “capitalists” all you want, that won’t change the fact that they are not capitalists, but only tendrils in a gargantuan monstrosity, lashing against the rest of the people in the country.
In fact, bachabasuras are kinda the same as choros, in that they are disposable napkins for chaburrismo, they can screw with the people’s lives for a while (denying them the time to focus on the regime’s stupidity and thus can’t protest, because someone who’s starving won’t care about protest against the very regime that subjects that person to hunger), and then they can become scapegoats that no one would mourn, when they do the same they do with choros, they go and pick the ones that don’t belong to the red towering mafia hydra.
I can leave here a link to an article, stating how this very stuff happened in Allende’s Chile some years ago:
The best part on it was the paragraph that resumed how the people’s trust in Allende’s lies was crushed by his own stupid engineered famine:
“Todo terminó para Allende, cuando el trabajador se dio cuenta que luego de trabajar como un animal, debía vender su gallina a precio regulado, para que su vecino que no trabajaba se enriqueciera vendiéndolo a 10 veces el valor. Todo terminó para Allende, cuando el bachaquero se convirtió en casta, cuando centenares de miles de trabajadores pobres abandonaron sus actividades para dedicarse al mercado negro y aquel modelo terminó convertido en un sistema de explotación, del pobre, por el pobre.”
“Everything was finished for Allende, when the worker realized that after having worked like an animal, he had to sell his chickens at regulated prices, just to have his neighbor that didn’t worked come and become rich by selling the same chicken at ten times its price. Everything was finished for Allende, when the bachaquero became a caste, when hundreds of thousands of poor workers abandoned their activities to devote themselves to the black marked and that model ended becoming into an exploitation system, from the poor, by the poor.”
(Link to dolar neurasténicos because La Patilla’s been down for some time)
Repetitive post, recently discussed here.
Gotta love Bachaqueros, much like Dollar Today, nothing the Kleptomaniac Dictatorship can do about them.
I have heard the vegetable production (not price controlled) and consumption has increased in Venezuela as a result of the scarcity and prices of other products. The prices have increased like everything else, but the relative prices of vegetables vs. meats and grains are now more rational.
The Bachaqueros do nothing to solve the fundamental problem which is the lack of dollars to pay for the import of products needed to cover domestic consumption and to maintain the local industrys already much shrunken capacity to produce such products . Nor do they do anything to decrease the inflationary pressures which are making it so difficult for ordinary people to make ends meet .
What they do is to: allow people who dont do queues and have enough money to buy the priciest stuff the capacity to buy thing they otherwise would be unable to buy. this at the cost of making the buying of regulated stuff more difficult and cumbersome for people who do queues and or dont have the money to pay for the priciest stuff .
They also give bachaqueros who belong to the less fortunate segment of the population a chance to make the money they need to survive the crisis which certainly a good thing.
So the Bachaquero phenomena is a mixed blessing , they allow for two good things and for a bad one , or put another way , at the same time they serve the needs of some and make things worse for others .
I balk at looking upon them as economic heroes , but also recognize that given our current circumstances they do make things easier for a part of the population .
“…they do make things easier for a part of the population ”
Only for themselves, everybody else can get screwed.
Again, it’s baffling the propensity to defend almost criminal behaviors that many venezuelans have.
Maybe your are right Ralph but Im trying to follow the hypothesis posed by some bloggers that there are people who cant or wont do queues and do have the money to buy things which are scarce at a high price , so at least for them bachaqueros are a good thing.
Nope, the fact that they can’t access the goods is because two factors: chaburro policies AND bachabasuras.
That’s the problem, you and some others staunchly insist that bachabasuras are not another factor that screws with the venezuelan’s life quality, just because the dictatorship put a couple of scapegoats into public shame, and because you don’t want to admit that you are being ripped off and that shouldn’t be, period, just like the person that has to pay a gestor to have some document made, because “he doesn’t have the time for lines”, when it’s the governments OBLIGATION to provide a FAST and CORRECT service.
People might be earning 50 millions monthly (50.000 in today’s over-weak bolos), which is considered being “fine” if you consider that said person’s earning about six minimum wages, but they DON’T have the aquisitive power that should correspond to that amount, because there exists this new caste, this newfanged class, that sucks more than two thirds of that person’s income just to aquire the most basic products that should exist in versions available for most of the population.
It’s not about the “capitalist against the people” nor “bachaqueros are our allies because the enemy of our enemy is our friend” (<- That, by the way, is the philosophy that follows putting any "impresentables" from the MUD), it's about "the exploitation of ALL working people, by the regime", most bachabasuras are folks hired by some regime enchufados to maintain their mafias.
"…people who cant.."
You said it, CAN'T, CAN NOT, because most of those people are doing some actual job instead of wasting their time lining up for buying stuff, and because the regime has forbidden them from even buying the product form another state and have it delivered by an actual courier (chaburro regime has forbidden to every courier service the transport of regulated goods, and guardia nazi will steal the products if they catch you on an alcabala) And because they CAN'T, then it's an extortion.
The regime has tried to organize a system whereby certain subsidized goods are made available to direct consumers , for their own consumption , not for its resale at a personal profit to those who purchase them
For the regime buying these mostly imported goods imply a heavy cost to its finances ( all ready battered by a very heavy fall in its oil revenues) and having it rechanneled for resale to secondary markets frustrates the reason that justifies the creation and operation of such system .
The system doenst operate very well , it has people going from queue to queue to different storesin different locations to find stapples they need but which random and unpredictable distribution ensure cannot be found or bought except by extraordinary and cumbersome effort or which even then can not be found at all .
While the principle that these goods should be bought only by direct consumers has a logic to it , the fact that the system works so badly has created an incentive for the creation of a secondary market where these goods are bought by goups of clandestine resellers to be made availabe at a heavy price to people who want to avoid the punishing routines that the system imposes on them or who simply cannot find in the system the goods that its supposed to offer everyone.
Certainly if the distribution system created by the regime operated more efficiently there would be no secondary market of resellers , at the same time the actions of organized group bachaqueros or resellers to corner the access of controlled price goods for their own benefit , by buying the collaboration of people inside the distribution chain and by flooding the queues with people who participate in their business makes the operation of the system even worse than it might be for those (the vast mayority of people) who try to acccess it the regular way , and buy things for their own direct consumption.
Thus the idea that bachaqueo is part of the problem and at the same time part of the solution to the inefficiencies of the regime’s distribution system , it does help compound the problem because absent their activities in the supermarkets subsidized goods would be more easily available to their ordinary purchasers , at the same time because the system is so inneficient by itself it helps people find things that otherwise they would not be ablle to find or only be able to find at great discomfrots and inconvenience to themselves. o course at a very heavy speculative price .
The conclusion is that bachaqueo is an ambivalent phenomena involving both the performance of a useful necessary economic function and an activity that worsens the inefficiencies of an already malfunctioning system . To look at the phenomena emphatizing only one or another of its intrinsic featues is to falsify its reality . its to misunderstand its essential nature.
No vale yo no creo! ism is going to continue hurting us. Toro writes that he believes Ukraine famine levels are not possible in Venezuela because, and does not provide IMO a reasoned argument.
Some use to believe venezuela no es cuba and the like and now 15 years later, we have a Comunist 2.0 regime in place.
People, cuba and its puppets are not going to go on tv one day and say ” thats it, we are calling it, we are a dictaroship, and you are a colony alright!”. no, they will continue to be de facto but will not call it explicitly.
…same with the famine consequences, The regime is done systematically all that it has needed to break down the private economy, scare off production and investment and fill the heads of the pueblo with hate and socialist propaganda. I fear my projection is not as benevolent as toro’s.
I have to second your assessment.
For the past 16 years I would reason that Chavismo would not cross this or that line. Castrismo was impossible to implement in Venezuela. Common! It is Venezuela! And yet, year after year, every line that seemed so extreme was crossed.
So reason tells me we are near the end of Chavismo, hasta donde! por Dios! But the trend is unmitigated in favor of ‘la profundizacion de la revolucion – mas bien estupidez – (even commie uncle thinks its estupidez now!).
Ultimately, it comes down to parboiling the opposition slowly out of Venezuela as Castro did in Cuba. Turn the heat enough but not too high as to make an explosion. In the meantime, your opposition evaporates and you are left with an intellectually anemic society that can no longer oppose its master, even when he is a decrepit and despicable old man.
While it’s true the goalposts have been moved several times throughout the years I believe our savior will be the internet. Never before have we been able to access all of human history in the palm of our hands.
Unfortunately, we internautas are not reaching the vast majority of the 80% D-E classes, who, even if we could, would mostly not understand the concepts we’re talking about–they will understand real hunger, however, and will, hopefully, respond viscerally (or by military proxy) when hunger reaches an as yet unreached level..
By no means am I implying that we must all reach scholar-level intellect in order to contribute in a positive manner, although it would be ideal. Maybe if people see change is possible in other parts of the world they’ll be less inclined to surrender.
Hunger definitely trumps knowledge though.
This post is right on the money (no pun intended).
Professor Walter Block wrote a book called “Defending The Undefendable” which explains economic theory for non-economists. It includes a brilliant chapter defending the role of the black-marketeer.
Google it. There are free downloads of the book here and there on the web, in PDF form and torrents.
Ironically, many (dare I say most?) Venezuelans would find more offense on being called guerrilla capitalist than bachaquero.
I love this perspective of the bachaquero problem, it strucks right in the nail in my opinion. Other freemarket believers must agree as well
For me, the issue is that they are essentially appropriating a social good and privatizing it for their benefit. That is the negative outcome. They are essentially free-riders profiting at the expense of the masses. I’m not going to argue that the attempt of the government to take a rivalrous good and attempt to make it public is correct; it isn’t and it is stupid…but that’s been covered ad nauseum.
As for value-add or incentivizing production others have mentioned, they do no such thing. Transportation is not considered a value-add, rather it is considered a waste. They do not add value, although it could be argued that they mitigate the waste of transportation/distribution channels, even if the other part of demand would be able to buy from the markets from which the bachaqueros take their goods. Likewise, whatever profit they take, none of it is returned to the producer; ergo the producer receives the same expense/revenue model they would be faced with regardless of whether the bachaquero exists. All the bachaquero does is take a good from one public distribution channel and put it into another, wherein he/she controls the price and quite effectively captures the consumer surplus that the government is too idiotic to allow the producers to utilize to maintain their business.
The only scenario in which any of this incentivizes production would be something wherein the direct distribution through the black market circumvents price controls allowing the producer to receive a higher return on their goods than pursuing the normative (and likely at an operational loss) production and distribution established by the government.
“Transportation is not considered a value-add”
Transportation is a very important,
no, essential economic activity.
Venezuela’s whole economy
is based on a product
that enables transportation.
Anyway that is not really
where bachaqueros add value.
they add value by saving
all the wasted time doing lines
and chasing products
from one supermarket to the next.
Some of them even deliver.
In that case transportation
IS part of the added value.
“appropriating a social good and privatizing it for their benefit.”
That is essentially what buying a product is.
“free-riders profiting at the expense of the masses”
and that is what commerce is.
Transportation is a very important,
no, essential economic activity.
By anyone who has ever run a supply chain or logistics or has pretty much done a value chain analysis. There is such a thing as a “time and place value”, but that’s more of an abstraction than actually adding value to a product. Transportation, in any kind of lean system, is a cost.
“appropriating a social good and privatizing it for their benefit.”
That is essentially what buying a product is.
No. That is buying and selling a private good where market forces dictate the price. In this instance, you have an extraordinarily constrained market wherein the government is essentially controlling the supply and trying to turn private goods into social/public goods. They fail, because of the nature of the product. This is a very important distinction…for all it appears that the bachaqueros are moving private goods between two intermediaries, they are not. That’s why I don’t think this is “capitalism” they are engaged in, but rather cheating their fellow countrymen.
Think of it this way, the difference between the deeply discounted prices in the stores and a fair market price due to the price controls have already been paid for by the people of Venezuela, only to have it then resold to them again at a much higher price. How? They’ve paid through the opportunity costs of stupid policies. All those billions of dollars wasted on free gasoline, useless military hardware, graft, crappy construction products that never finish, bankrupt and devastated hospitals, empty barrio adentro clinics that are not supplied and somewhat incompetently staffed, Petrocaribe, the billions that have flown out to Cuba and other ideological allies, and let us not forget the money pocketed by the corrupt chavistas such as the esteemed backup ambassador to the UN. The arroz con pollo in Venezuela is probably the most expensive on Earth.
“free-riders profiting at the expense of the masses”
and that is what commerce is.
That isn’t commerce, it is a transaction. Again, the difference in commerce is between two consensual parties moving private goods, more or less. In this case, the government is, both indirectly and directly, controlling the supply side and forcing producers to sell at or near an operating loss. This is why production has dried up in Venezuela. Not hoarding, not anything else. Producers are largely rational and look at the opportunity cost of production, which is far outweighed by pretty much everything else. The government is irrational, so they maintain stupid policies.
Imagine, if you will, a group of opportunistic citizens set up a toll booth on an appropriated (and importantly, existing) lane of autopista 1 that allowed people to bypass the traffic jams, and assume the government couldn’t stop them. Moreover, the people who couldn’t or wouldn’t pay them, are now constrained into fewer lanes. Would these fine upstanding citizens still be capitalists engaged in commerce?
“By anyone who has ever run a supply chain or logistics…”
that type of analysis is done from the
internal point of view of a company
and they focus on reducing the cost
But cost is not the value of a product
the value of a product comes
from what the consumer is willing
to pay for the product
and that changes depending on location
for instance the price of mango
in the Phillipines is 0.75 $/kg
take that mango to the US
and the price is 4.99 $/kg
take that same mango to Japan
and the price is 63 $/kg
It is the same mango
what changed is the location
and of course transportation
is what makes it possible
notice that the price difference
cannot be justified by
the cost of transportation
“a group of opportunistic citizens set up a toll booth on an appropriated (and importantly, existing) lane of autopista”
The basic difference between them and bachaqueros
is that the latter do not just appropriate something
they buy it and pay the asking price.
And they do not buy for themselves
they do it on behalf of their clients
who do have a right to get the product.
Their clients do not just get a product
they get the added value of not having to wait
or to chase the product around.
Lets invert the order of the transaction
Imagine someone needs to buy milk
but cannot or does not want to do the lines
so he hires someone to do it for him
what is the difference between that and
what a bachaquero does?
except for the order
it is the same transaction
consider this other story for instance:
that experience made her value (more)
the importance of bachaqueros
she pays them
not because she is being “cheated”
but because she founds valuable
“the difference between the deeply discounted prices in the stores and a fair market price due to the price controls have already been paid for by the people of Venezuela”
the difference is being paid by venezuelans
in the currency of time, wasted time.
or is being paid with black market prices
fortunately bachaqueros actually
make possible to have that option
many people would be in trouble
the products may seem cheap
but they are not,
they are extremely expensive
and whatever other prices they are paying
for the government’s incompetence
is just extra, not less.
Arguably bachaqueros are
not alleviating hunger right now
but when scarcity starts to get critical
and black market prices reach a certain level
they are going to be smuggling food
into the country for a change.
Bachaqueros will be selling
Harina Pan made in Colombia.
OT A hilarious piece, made me think of chavismo:
“The smart money’s on Isis destroying itself”
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