The Venezuelan Government Saves Christmas
Christmas is a huge deal in Venezuela. The rainy season begins to dim, and the overwhelming tropical heat gets a tad more tolerable in December. Special meals (hallacas) and special music (gaitas) announce the arrival of the holiday season. And this year, the holidays come with an extra dollop of populism, courtesy of the government’s ...
Christmas is a huge deal in Venezuela. The rainy season begins to dim, and the overwhelming tropical heat gets a tad more tolerable in December. Special meals (hallacas) and special music (gaitas) announce the arrival of the holiday season. And this year, the holidays come with an extra dollop of populism, courtesy of the government’s scheme to import toys and specialty foods and sell them at bargain prices.
The program, unsurprisingly named "Happy Christmas Plan 2014," is the government’s response to Venezuela’s acute shortages. For months, basic items have been missing from store shelves — toilet paper, medicines, and even deodorant have all disappeared at one point or another. Faced with the real possibility of scarcity playing Scrooge this holiday season, the government has decided to intervene by directly importing many of the sought-after items and selling them directly at subsidized prices, cutting out the middlemen.
The government is focusing on six broad categories: toys, clothing, appliances, food, shoes, and hardware. Aside from selling the goods directly at military installations and government supermarkets, the government has also started inspecting private vendors of these items to make sure their shelves are stocked and that they’re adhering strictly to pricing regulations. In order to regulate the purchase of the items, the government is restricting sales by fingerprinting customers.
Initial reports on the plan are mixed. While the government claims that people are "happy" about being able to buy toys and other goods at cheap prices, the opposition claims customers have to stand in line for hours just to get their hands on a few cheap items.
Those lucky enough to scoop up the cheap, imported goods are predictably ecstatic. The news website El Venezolano recently quoted a resident of a poor Caracas neighborhood who was thrilled to buy two Barbie dolls at a government price of $2.50 each, a fraction of the market cost. And while we rejoice for the children receiving these gifts, the idea that a country whose foreign reserves recently hit historic lows should spend its currency subsidizing Barbie dolls is a tough sell. In fact, foreign holders of Venezuelan debt have already decided to punish Venezuela with astronomical interest rates.
In spite of the web of controls, the black market for these goods is thriving. There are numerous reports of street vendors purchasing the goods and reselling them at higher prices, and the government has been reluctant to crack down and risk the political costs.
In fact, a study by local pollster Datanálisis reveals that a majority of the people standing in line to purchase goods at regulated prices claim to be "working." They are looking to resell the merchandise, standing in line for someone else for a fee, or else waiting to sell their spot in line to another person.
The "Happy Christmas Plan 2014" epitomizes both the strengths and contradictions of Venezuela’s socialist government. It is a blatant attempt at populism and using public resources for partisan reasons. These days, the stores selling the government’s Christmas goods feature prominently in chavista propaganda. Yet the inherent contradiction of a government promoting "socialism" and decrying "consumerist culture" while selling bikes at a subsidized price is overwhelming.
A year ago, Venezuela held local elections that many expected the government to lose. A few weeks before the elections, Maduro ordered the military to force open the doors of appliance stores and allow customers to purchase goods at bargain prices. "Let no shelf remain stocked, everything empty!" declared the president on national TV. The incident was a game changer in the election, and the government won comfortably.
This year, the government does not face elections, but it is clearly hoping the Christmas plan will reverse its plummeting poll numbers.
It is too soon to tell what political consequences the plan will have. However, oil prices are plummeting, the economy is in a recession, and the government is facing a severe fiscal crisis. The government’s ability to engage in large-scale populist giveaways may be coming to an end.
Venezuelans should be aware of this. Populist giveaways may mean a "happy" Christmas this year, but if current economic trends hold, it may be the last happy one for some time to come.