Print Edition - 2019-02-15 | Oped
Nothing can prepare your for life wth hyperinaflation
- Food shortages and an unrelenting surge in prices are overwheling Venezuelans
Feb 15, 2019-
I’d seen the black and white photos of German children using bundles of money as building blocks during the Weimar Republic. I’d read about the skyrocketing price of bread in Zimbabwe, and how people were carrying their cash in wheelbarrows. But nothing you read can prepare you for life with hyperinflation.In the Weimar Republic hyperinflation was largely the result of reparation: payments imposed on Germany after World War I. In Zimbabwe it was the result of Robert Mugabe’s land reform policy and the drop in food production and foreign investment that followed.
But in Venezuela it has been the result of two decades of gross economic mismanagement, profligate public spending, government debt despite a historic oil windfall, and epic corruption. What was once the most prosperous country in the region is now a man-made disaster.
As Venezuela’s political crisis reaches new heights and international pressure mounts against Nicolás Maduro, hyperinflation and the hunger it has sown could worsen. But they could also prove to be the force that hastens his exit from power. In the end, hyperinflation spares no one.
Inflation in Venezuela began to creep up slowly after Mr. Maduro rose to power in 2013. As a journalist, I began to report on how it, along with chronic food shortages, was one of the reasons life had become so hard in 2014.
Price controls meant that subsidised food disappeared from shelves. If and when you found cooking oil, corn flour or sugar, you could offset the cost of more expensive food by reselling the cheap goods in the black market or across the border. It became such a profitable business that a new job soon emerged. Bachaqueros, or ant-traders, would carry anything from soap to powdered milk to Colombia and make five times as much in a day as in a month at their formal jobs.
As shelves were bled dry in this scheme, Mr. Maduro blamed “economic warfare waged from abroad.” The government supporters that stood in mile-long queues outside food shops still believed him then.
By 2015, Venezuela had the worst inflation rate in the world. Some food items have never made it back on the shelves. Shop owners started using money-counting machines. People carried bags full of cash. By 2016, the inflation rate hit over 700 percent.
At the time, I interviewed Hugo Lugo, a collector of rare coins and old bills. At his numismatic shop, Mr. Lugo, a self-taught amateur historian, told me that what had begun as a hobby had become a painful reminder of the turn the country had taken. Next to rare bills used during the country’s best years—and now protected carefully by plastic vault-like envelopes—was a glass shelf where crinkled, more recent notes had been carelessly shoved. Printed less than three years before, he said, they were now worthless.
By late 2017, the inflation rate exceeded 50 percent a month. It was a turning point: economists signaled that we were officially in hyperinflation. Inflation is bad, but hyperinflation is a totally different game.
Hyperinflation hits the poorest the hardest. Venezuelans have reported losing on average 24 pounds in body weight. Nearly 90 percent now live in poverty. In the slums of Caracas, I visited mothers who have gone from reducing their children’s portions to having them skip meals altogether.
Marilyn Alma, a mother of three, had to give up custody of her eldest child because she can no longer feed him. One week, a dozen eggs cost Alba three days of wages; the next week, the cost doubles. Eggs, the cheapest source of protein, are now a distant dream for the vast majority of people. Ms. Alma, who had once been a staunch government supporter, told me, “Maduro betrayed this country.”
The professional class has also been affected. In middle-class neighborhoods large supermarkets previously stocked with imported goods are now half stocked with cheaper versions. Professionals can only afford two or three food items, and retirees often must leave behind products they can no longer afford. Their life savings and pensions are suddenly worthless.
Hyperinflation has also meant a brain drain. Young engineers or doctors are now working as waiters in Bogotá, Colombia, or as store clerks in Lima, Peru. “The worst part is that they send back money to help us,” Melani Delgado, whose two sons have left, told me recently as she fought back tears. A part-time dentist, Delgado said she could once afford to send her children to private university on her salary. Today remittances are fast becoming a lifeline for those left behind. “This government broke up the Venezuelan family and turned parents into parasites,” she said.
If you belong to the dwindling minority that has access to dollars, you can somewhat offset the rise in prices with the surge in the black-market exchange. You may be able to survive, but it’s impossible to plan for something that changes every day. To adapt to the destruction all around you.
For those with access to dollars, living with hyperinflation is demoralizing. At 6,000 bolívars (the equivalent of $2, or one third of the minimum monthly wage), a pound of butter is obscenely expensive. Paying $30 for a 17-ounce bottle of olive oil feels criminal. Today this bottle costs the equivalent of five times the minimum wage, but that’s likely to change tomorrow. “Beating the system” feels like you are eviscerating your country’s economy.
In a hyperinflationary economy, buying food becomes your one and only priority. But even for those in the business of selling food, hyperinflation is a losing game. Strict price controls mean that producing, distributing or commercializing food is either going to lead you to bankruptcy or if you sell at a profit, to jail.
“If people feel their salaries are evaporating, I feel the work of two generations of my family could vanish overnight,” the owner of a supermarket, who asked to remain anonymous, told me. Scores of executives, managers and employees in the food distribution business have been imprisoned on charges of price manipulation, hoarding food or conspiring against the government. Speaking to the media or even allowing journalists to film inside stores can also land you in jail.
A recent move to slash five zeros off the previous currency became obsolete within months. Venezuela now has two currencies simultaneously in circulation—the strong bolívar and the sovereign bolívar—both of which are worthless.
Venezuela’s economic collapse is fast becoming an international conflict. Mr. Maduro’s inability to tackle an economic crisis with rampant shortages of food and medicine has fueled a humanitarian crisis where hundreds of people, like Hugo Lugo the numismatic, have died of preventable diseases.
This humanitarian crisis, in turn, has led to the exodus of more than 3 million, like Ms. Delgado, the part-time dentist, who has since joined her sons abroad. It is the worst migration crisis the Americas has seen in this century and one that our neighbors can no longer resist.
While a growing number of countries condemn Mr. Maduro as illegitimate, the queues outside food shops or at the border only grow longer. More than 80 percent of Venezuelans want Mr. Maduro to resign. Like Ms. Alma, they blame him and no longer “economic warfare” for destroying the country. For Mr. Maduro, hyperinflation is the force that is rallying half the world and his entire country against him.
— © 2019 The New York Times
Published: 15-02-2019 11:34