- By Juan Cristóbal NagelJuan Cristóbal Nagel is a professor of economics at the Universidad de los Andes in Santiago, Chile, editor of Caracas Chronicles, and co-author of the book Blogging the Revolution.
Last Thursday, an annual Venezuelan ritual took place. Venezuelans of every social class and all sides of the political spectrum sat down to watch and comment on the Miss Venezuela, the country’s national beauty pageant. As a Venezuelan expatriate, I find it hard to take the whole thing seriously. As an analyst, though, I have to find a way to explain it.
Putting the obvious, snarky comments aside ("We Venezuelans are vain and sexist" would be the knee-jerk explanation), it’s worth pointing out that the pageant is one of the few remaining places where Venezuelans can watch honest competition and hard work play themselves out. Beauty queens go through months of rigorous training, and in the end the competition is deemed fair, with the outcome based (mostly) on merit alone.
This is a rare occurrence in revolutionary Venezuela, since chavismo has done its best to extinguish Venezuelans’ work ethic.
The notion of work ethic — grossly defined as the idea that, on average, the harder you work and the more productive you become, the further you will go — is a hard sell in Venezuela. In a country where taxes literally spout from the ground, and where generous public spending allows for goods like gasoline to be practically free, there is little incentive to be productive. This may reflect what academics term the "natural resource curse."
Chavismo took this shortcoming and exacerbated it. Its policies and laws view competing on merit as a "bourgeois," capitalist idea, contrary to the Twenty-First-Century Socialism it espouses.
Take, for example, the nation’s banking sector. Venezuelan banks have few branches, and most customers usually have to wait for hours for the simplest of transactions.
Before Chávez came to power, Venezuelan banks competed for their customers. Now, the government sets everything. It fixes the interest rates they charge. It decides how to allocate their loan portfolio by forcing banks to loan X percent of their deposits to Y industry. It forces banks to act as middlemen for its bizarre foreign exchange policies, and it sets the guidelines through which banks must comply with all of these aspects.
The end result is that banks simply have no incentive to compete. The only time they do "compete" is when the government decides who gets to purchase government bonds. Even then, "competition" is just a byword for "political lobbying," as the allocation of bonds is not done via an auction but, rather, assigned discreetly to banks whose owners are on good terms with the governing clique.
When it comes to the military, the situation is similar. Before Chávez, military promotions were decided on a fixed set of criteria — courses taken, awards obtained, etc. Of course the process was politicized, but it was not unheard of for non-political military men to ascend to the top of their ranks.
After Chávez centralized all decisions on military promotions in the office of the president, all of this changed. Merit-based competition inside the military has completely disappeared. Instead, the president promotes the people who show the most loyalty to him, his party, and his policies.
Venezuela’s labor regulations are a prime example of how the government has declared war on hard work. Instead of rewarding productivity, it forbids companies from firing inefficient workers. It also sets limits on overtime. The end result is that private companies frequently complain that their workers simply do not show up for work — and they can’t do anything about it.
There isn’t an industry or sector in Venezuela that isn’t hampered by overbearing government regulations, whether they are price controls, labor rigidities (as outlined above), or foreign-exchange restrictions. The result is a society that expends most of its energy on schemes for getting rich quick.
Venezuelans waste countless hours looking to take advantage of the opportunities in the country’s dual exchange-rate system. By traveling overseas, they can access cheap dollars they can then sell at seven times their value in the black market. This practice, colloquially known as the "raspaíto," has become one of the main growth industries in Venezuela. Everyone, from the country’s millions of informal street vendors to the businessmen making billions off juicy government contracts to provide electrical plants, seems to be exploiting opportunities to seek arbitrage that have flourished under the government’s policies.
Venezuelans are not lazy. People there work very hard, as witnessed by the massive traffic jams one encounters in Caracas at six in the morning. But it seems their hard work is not geared towards being productive, but to dealing with, and trying to take advantage of, the country’s socialist policies. This means the link between hard work and reward is broken.
This week, President Nicolás Maduro asked for special powers to "fight corruption." It’s ironic, given how the corruption of Venezuelans’ values is part of his movement’s legacy.