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Venezuela: Coping With Controls
| Article
# : |
13589 |
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Section : |
CURRENT ISSUES
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| Issue
Date : |
4 / 1988 |
1,097 Words |
| Author
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Vladimir Chelminski
Vladimir Chelminski is executive director of the Caracas
Chamber of Commerce and the author of Inflacion y Pobreza an
America Latina (Inflation and Poverty in Latin America). |
At the end of this year Venezuelans will elect a successor to Jaime Lusinchi. It will be, essentially, a choice between the Social Democrat Carlos Andres Perez and the Christian-Socialist Eduardo Fernandez.
The problems the new president will have to face have never existed before in Venezuela. Inflation has practically wiped out the vigorous middle class that came into being during the decades of the fifties, sixties, and seventies. What remains of the great petroleum boom of 1974-1983 is a very rich class and a very poor class. An official bureaucracy of more than one million persons governs a population of six million. A tangled jungle of laws is choking free enterprise and does not respect the most elemental rights of private property. There are exceedingly high taxes for those in the production sector, compounded by the "tax" of inflation, which in 1986 stood at 40.3 percent, almost double the previous record in 1980.
Labor demagoguery, probably the principal factor in the Venezuelan economic debacle, threatens to grow and transform this country into a replica of Argentina. In 1974, then-President Andres Perez--now a candidate in the December presidential election--thought it legal and economically viable to set all workers' salaries, including those in the private sector. That measure was paid for by inflation, and the supposed beneficiaries in effect gained nothing at all. The next legal salary increase for all workers occurred in 1979, the first year of Luis Herrera's presidency. A similar move was taken in 1984, the first year of Jaime Lusinchi's term. There has been an obligatory pay raise every year since, which has multiplied
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