[R-G] Louis Vuitton Socialism in Venezuela?

[Yoshie Furuhashi]

The unfortunate Louis Vuitton episode came at about the same time as
the news of removal of the price controls on long-life milk (cf
<http://montages.blogspot.com/2007/12/venezuelan-price-controls-in-danger.html>)
and shortly after the defeat of the Constitutional Reform.  The
beginning of December 2007 may be remembered as the time when
contradictions of resource populism in Venezuela became more visible
than before.  Chavistas will have to overcome them to stay in power
and further transform the nation.  But how? -- Yoshie

<http://montages.blogspot.com/2007/12/louis-vuitton-socialism-in-venezuela.html>
Louis Vuitton Socialism in Venezuela?

Venezuela's Interior Minister Pedro Carreño got caught criticizing
capitalism while sporting Gucci shoes and a Louis Vuitton tie:

Asked if it wasn't contradictory to criticize capitalism while
personally preferring imported luxuries, the minister stammered a bit
and finally said: "No es contradictorio, porque yo quisiera que
Venezuela produjera todo eso y entonces yo comprar todo lo que se
produzca aquí y no tener que importar el 95 por ciento de los rubros
que consumimos [It's not contradictory, for I would prefer Venezuela
to be producing all this, and then I could buy what's produced here
instead of having to import 95% of what we consume]" (Enrique Andrés
Pretel, "Ministro venezolano en apuros para defender socialismo de
Chávez," Reuters, 13 December 2007).

Unlike right-wingers, who are having a field day with this video, the
charge of hypocrisy does not interest me.1 Who can blame the minister
for wishing to wear nice clothes?

But a question may be still asked: does the minister know that his
European brand fashion items may not have been made by high-wage
European craftsmen but low-wage East Asian workers, the only thing
"European" about them being their prices?

     In fact, many luxury-brand items today are made on assembly lines
     in developing nations, where labor is vastly cheaper. I saw this
     firsthand when I visited a leather-goods factory in China, where
     women 18 to 26 years old earn $120 a month sewing and gluing
     together luxury-brand leather handbags, knapsacks, wallets and
     toiletry cases. One bag I watched them put together -- for a brand
     whose owners insist is manufactured only in Italy -- cost $120
     apiece to produce. That evening, I saw the same bag at a Hong
     Kong department store with a price tag of $1,200 -- a typical markup.
     (Dana Thomas, "Made in China on the Sly," New York Times,
     23 November 2007)

Then, there remains another question, suggested by the minister's
reply itself: is Venezuela making progress in overcoming the Dutch
disease (higher oil prices overvaluing the currency, making imports
comparatively cheaper and underdeveloping the domestic non-oil
production)? The import trends charted by Venezuela's National
Statistical Institute are not exactly encouraging.

Chart:
Value of Imports of Venezuela, 2000-2007

Productive investment in general is clearly lagging behind
consumption, and manufacturing is among the most shortchanged sectors
(Oil Wars' notes below are based on the Banco Central de Venezuela,
"El PIB aumentó 8,7% durante el tercer trimestre de 2007," 15 November
2007):

     The fastest growth was in communications at 24.3% followed by
     commerce at 18.4% and then transportation at 15.5%. The lagging
     sectors were manufacturing at 7.7% and construction at 4%. Note
     that both manufacturing and contruction were both slower than
     growth in the economy as a whole. Clearly the increasing
     overvaluation of the Venezuelan economy is stunting manufacturing
     growth and keeping it below what it should be.

     Interstingly the bank noted that agricultural production as been
     increasing at an average of 15% since 2005. So what shortages
     there are clearly result from increased demand not falling output.

     In more general numbers imports were up 30.9% (is this good or
     bad?), consumption by consumers is up 20.4% (I guess this makes
     for happy voters), and fixed capital investment is up 17.3% which the
     government attributes to increased imports of machinery. However,
     for some time now we have seen investment go way up while
     production seems to be increasing but at a much slower rate.
     ("Yawn," Oil Wars, 15 November 2007)

It looks like the day when the minister can buy at home everything he
can possibly want is far from close, and he is not personally setting
a good example of swadeshi for the rest of the nation to follow.

1 Some Venezuelan leftists, however, may not let the minister off the
hook so easily on the hypocrisy question:

     Y con una corbata Louis Vuitton y unos zapatos Gucci tú no puedes
     venir a decirme que estás poniendo los intereses colectivos por
     encima de los individuales, mucho menos si tu respuesta a las
     críticas es que en Venezuela "no se fabrican" corbatas ni zapatos...
     no me jodas, que en estos momentos tengo puestos unos zapatos
     venezolanos Vic Matic bien bonitos, que cuestan 120 mil bolívares y
     me han durado 2 años ya. [With a Louis Vuitton tie and Gucci shoes
     on, you can't come to tell me that you are putting collective interests
     above individual ones, much less if you respond to your critics by
     saying that ties and shoes are "not being manufactured" in Venezuela.
     Don't kid me. At this very moment I am wearing very pretty Vic Matic
     Venezuelan shoes, which cost me 120,000 bolivars and have lasted
     for the last two years] (Luigino Bracci Roa, "Pedro Carreño y la
     corbata Louis Vuitton, o cuando la oposición tiene toda la razón. . . ,"
     El espacio de Lubrio, 13 December 2007)

Is it time for Venezuelan officials to begin to emulate the sartorial
rectitude of their Iranian counterparts who still frown upon the
kravati?

But the worst news is not from the fashion department but the
department of government procurement: the Venezuelan government just
gave KBR a $57 million dollar contract to build an ammonia plant
("When Will They Put Their Money Where Their Mouths Are?" Oil Wars, 14
December 2007).

--
Yoshie
<http://montages.blogspot.com/>