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The economic depression
Picture by: Courtesy
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Published: Monday, July 16, 2018
In the economic literature, it says An economy is in recession when the level of economic activity, measured by the gross domestic product (GDP), decreases for two consecutive quarters. The Venezuelan economy has five years where GDP has steadily declined to such an extent that the size of the Venezuelan economy is now half what it was in 2012.
What Venezuela suffers is not the traditional recession to which All economies are exposed cyclically, so it is more appropriate to speak of economic depression that corresponds to a situation of secular decline in the level of production and therefore income. From the economic point of view, to reduce production, the incomes of workers and employers decrease in an equivalent way, although this decline is not symmetrical and the working class usually suffers the most pressure when economies stagnate. or
An economy like Venezuela that has accumulated five years of decline has not only affected its size, but also the medium-term growth opportunities. This is because there are economic activities that no longer exist and others that survive but are severely affected. For example, one can cite the case of the automotive industry which, with all its inefficiencies, had its factories, its skilled workforce and a respectable network of suppliers. This industry has disappeared.
Another case is that of construction. With the law on rent regulation and price control, the builders have left everything Venezuela and the machines and capacities they left in the country are used for the construction of luxury houses or commercial buildings, all traded in foreign currency. . The same thing happens with the electricity industry, which has suffered a significant production loss that is reflected in the limited ability to meet the reduced demand. This sector was a kind of experimental field and today the result is the destruction of the electrical system despite the billions of dollars spent and it ended up in the pockets of the corrupt, some inmates and others. persecuted.
Perhaps where it is most disturbing, the loss of productive capabilities is in the oil. Between 1998 and 2018, Venezuelan oil production declined by 55% and short-term prospects for further declines. In the cases mentioned, there is one element that can not be omitted and that is the loss of skilled labor. Salaries are so low that few are willing to enter the job market and those who are looking for other opportunities. Similarly, the spirit of enterprise has been lost, drowned by so many regulations and hostility from the bureaucracy. All this reflects a substantial decline in potential output of the Venezuelan economy; that is to say in the maximum production capacity that can be obtained by fully utilizing the factors of production.
Those who wanted socialism, then have what Venezuelan way to socialism of the twenty-first century actually means. We are facing the rubble of a country that we have the duty to recover. Let's do it, we have what.
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