Neoliberalism's Way-Venezuela's Right Choice?

 

Amidst a turbulent economic climate, Venezuela faces a significant funding gap of US$ 17.670 million for essential public services. Additionally, substantial capital expenditure is required to bolster the country's energy infrastructure, encompassing the oil, electricity, and hydropower sectors.

 

Venezuela's current political climate, characterized by limited democratic participation, presents a challenge determination of what economic policies to follow. While the country grapples with the erosion of institutions, rising inequality, and capital concentration, the Venezuelan opposition is debating its economic approach. This debate centers on two main options:

 

1.     Neoliberalism: This entails market liberalization, reduced government intervention, and privatization of state-owned assets.

2.     State Capitalism with Neoliberal Features: This model would involve a more prominent role for the state in the economy, alongside some market-oriented reforms.

 

The Venezuelan opposition views the International Monetary Fund (IMF) and the World Bank, multilateral financial institutions, as potential partners in achieving macroeconomic stabilization. These institutions could offer development loans and provide guidance on fiscal, trade, investment, and labor policies.

 

The loan conditions likely stipulate a reduction in state control over the economy, manifested through decentralization of power and streamlined business regulations. This would pave the way for increased trade openness, characterized by minimal tariff barriers facilitating the free flow of goods and capital across national borders. Additionally, the terms might advocate for a tax shift, lowering business taxes while potentially raising consumption taxes. This approach could lead to a rationalization of the public sector workforce, potentially resulting in a leaner social safety net encompassing social security, education, and healthcare.

 

There appears to be a contradiction within the Venezuelan opposition's economic stance. While they advocate for free-market principles, neoliberalism itself depends on a capable state to establish and enforce market-oriented institutions and regulations as professor Jon Kofas stated in his book: Neoliberalism, Inequality, And Authoritarianism.

 

Furthermore, the proposal to weaken the state structure to empower the private sector raises concerns. A private sector reliant on substantial government handouts, even in the form of reduced regulations and privatized services, might struggle to achieve long-term sustainable growth.

This approach could also lead to practices associated with crony capitalism, such as corporate welfare, bailouts, and the prioritization of corporate interests in domestic and foreign policy decisions.

 

An economic development plan opposed to domestic deregulation and international trade liberalization can create an environment conducive to fostering nascent domestic capitalism through import substitution industrialization (ISI). The initial phase will involve establishing a robust industrial base, communication infrastructure, and a well-developed education system.

 

To attract foreign direct investment (FDI) and foreign capital, streamlining bureaucratic procedures and establishing a clear legal framework are crucial. However, the core of the industrial structure should be a strong domestic foundation comprised of a significant number of small and medium-sized enterprises (SMEs). These SMEs can be nurtured through government subsidies and facilitated access to bank credit.

 

The plan outlines a land reform initiative that promotes the transition from state-owned land to private ownership by smallholder farmers. This aims to incentivize agricultural production and increase overall output. However, it's crucial to couple this with support programs for these new landowners.

 

While import substitution industrialization (ISI) can be a driver of initial industrialization, strict economic regulations can hinder long-term growth. A more balanced approach might involve promoting agricultural productivity alongside trade liberalization and investment in human capital.

 

Attracting foreign direct investment (FDI) from multinational corporations (MNCs) can play a role in fostering a skilled labor force through technology transfer and knowledge sharing. This can contribute to a more competitive domestic industry in the long run.

 

The plan should prioritize establishing a credible and stable national currency. This can be complemented by financial instruments such as concessional loans to stimulate economic activity.

 

Professor Jon Kofas highlights the contrasting approaches taken towards post-war economic development. Countries like Western Europe, Japan, South Korea, and Taiwan pursued developmentalist policies with a focus on import substitution. This strategy aimed to build domestic industries and reduce reliance on imports. In contrast, many developing nations in Latin America and Africa undertook structural adjustment programs encouraged by the IMF and World Bank. These programs often emphasized macroeconomic stabilization, trade liberalization, and reduced government intervention.

 

Kofas argues that the United States provided greater financial assistance for reconstruction and industrialization to some countries, like those in Western Europe and East Asia, compared to others in Latin America and Africa. This difference may have influenced their economic development paths.

 

It's important to note that the IMF and World Bank's policies have evolved over time, and the extent to which they prioritized austerity measures can vary by country and circumstance. Additionally, the relationship between military spending and economic development is complex.

America's Downfall

Before making an analysis of America’s downfall, I can sum up in this phrase: “free lunch for the poor, and taxes for the rich.” It resumes the idea of an interventionist and statist state, which under the premise of looking for welfare of its citizens distorts all the economic apparatus. 

America is being blood feed by Welfare State, where immigrants are no longer settlers, and these new incomers are looking for easy benefits granted by the State, and haven’t immigrated to come true the American dream. For this reason, it explains the fact of that seven out of ten Latin American voted for Obama in the 2012 election.

So, in part, the American dream of hard work and economic success have been replaced with Welfare State. Then, what America is cultivating for the future is people who repudiate work and are dissociated with the idea of work as generator of wealth.

Besides, America is sunk in higher taxes which affect profoundly income with distortion, the Government’s expenditure has no limits as the public debt, the Federal Reserve’s monetary police is based in huge expansion; and, on top of all this, there are numberless regulations for the free initiative, then companies and firms are strangled which prevents their expansion and curbs the new creation of employs.To evidence this, American government decides the number of the employer that companies or firms can have in their payrolls, and determines the kind of jobs that companies and firms can create according to the government’s regulations.

In conclusion, the government is the agent who set barriers to the companies and firms to produce, and it is the one element against work. So if an state doesn’t generate wealth through production, then this seeks it through high taxes and the issue of inorganic money through deficit. One consequence of this is that the high class, who are the owner of means of production, begins the search of stability and friendly financial conditions in other countries, because the stuck of the economy can lead to social disturbances.

To prevent America’s downfall is needed to unhook the American citizens from the magical thought that has impoverished the Latin American nations, and return to the former principles: hard work, economic success mirrored in the market, and no government’s intervention. 

In case that a Democratic candidate gains the presidential elections, then the American have a secure passage to the path of turning United States of America into United States of Latin American, so another hellhole country.

The Dis Unite States Of America

If you think that you know what happen with the economic political chaos of the Century 21th, this new book of Julio Camino is certainly not for you. But if, on the contrary, you have doubts, questions and concerns, rather than elaborated opinions, or if you are not very sure about them, this book is for you. Especially if you want to learn about what is going on in the USA and some parts of the world: what is happening and why? Generally, in the United States, upon hearing the word "secession", most people think of Abraham Lincoln, the "deep South" and the Civil War. But there are currently other secessionist movements gaining strength in the U.S., and not only in the South, but in the entire territory, because the same "Big Government" federal emerged from the War of Secession, has gone out of control, causing many States huge frustration and discontent. Along these pages you will find something that you need, even if you are not very conscious of what is missing: information, good information from not well-known but truthful and liable authors. Download it on: THE DIS UNITE STATES OF AMERICA Or buy it in paperback from: THE DIS UNITE STATES OF AMERICA

The Third Way

Before defining the Third Way or what it is considered to be by his author, it is convenient to state what the Third Way is not, and put forward the argument that criticizes some principles of Anthony Giddens upon such a theory.

First, the Third Way is not a technocratic project tainted with utopian feature nuance, nor a politic and ideological new direction in the search for a new place in politics for the emerging social sectors that want to have a position in the political scenario.

Secondly, it is not an empty concept –without a real sense, nor a coined expression by Giddens –which has been adopted by the left to adhere just itself to right-centre wing.

Thirdly, it is not defined either as Giddens does as a programme of modernity on economy, political system and the state of welfare. Neither does the Third Way in its postulates seek for a renovation of public institutions.

The Third Way does not linger on what is accepted from what is denied. It is not the best of the economy of market –productivity – neither is it the reward of social democracy –a distributive system.

Upon the postulates of the Third Way by Giddens, some of them are unthinkable practical and utopian ones.

The first one: “New politics or a second wave of democratisation.” In a sense: “the people are consulted.” As this theoretical postulate lingers on a fundamental element of democracy that the majority governs, so public opinion should be counted. However, this cannot be done by abolishing the traditional democratic institutions and replacing them for such units of public debate for referendum. This one as another is a medium through which is conveyed the interests of people, so that it can be manipulated. And, it is prone to be under pressure in a major degree in the latter than the former.

Just have a glimpse of some Latin American countries where the rotted traditional institutions have been replaced for referendum and an emerging new leader, who becomes a Messiah, uses it for his own political benefit.

The second one: “New relationship between State, Market and civil society.”

The role of the state is to have due participation according to the moment. And, this should be assured by some rules that would be applied –independently its nature– on the circumstance.

A relationship between the state and civil society should be on the terms of one that defines a judicial, legislative and executive frame, where civil society can act.

Finally, upon the market, the state should encourage the private entrepreneur who is a principal factor in the economy, but it should regulate this when it is out of the equilibrium point.

And the third one: “A commitment with the entrepreneur.”

If a country’s decisions as well as its activities are based on the international sector it means the loss of democracy and the own national interest.

To have a real scenario of this principle, it is advisable to screen out Latin American society in which the higher classes, dominant but not leading ones and beneficiaries of the system by the political influences and alliances with foreign monopolies, are not interested in the development of their own country because this would imply the alteration of their supremacy; besides their profits would be in jeopardy.

The Third Way is the way as the state –in its main role of the head of the nation– deals with all the areas of the system. And, this way is just adjusted to the conditions of the moment.

The Third Way in the practice could be evidenced as El Partido Socialista Obrero Español had made the way for economic and social agents to go in a free-market economy coming from an autarchic and corporate economy. As in France, the Third Way is considered as the socialists update themselves having more Anglo-Saxon socialism rather than interventionist socialism.

But, one relevant example by the political system and complexity of the thought of the men in Asia, it is the case of China with respect to Taiwan.

Alberto Moreno Rojas, IV Seminario, “Los Partidos Terceravia y Socialismo y una Nueva Sociedad”, Ciudad de Mexico, Febrero del 2000.

Anthony Gidens, “La Tercera Via”, Ed. Taurus

Article part of the Notes from Through Existences.
https://payhip.com/b/zRI2

The Answer Lingers in Productivity

Nowadays some people argue on the reason for the critical situation of Europe in its economy, meanwhile others turn to study the factors that originated all this crisis in order to comprehend the chaotic economic condition.

An analyst having a reasonable level of intellect shouldn’t cast doubt over any other reason than the one linked to productivity, which turns to be uneven among the members of European Community. Before delving into the subject, it should be defined productivity as concept firstly.

Productivity by Alexander J. Field, The Concise Encyclopedia of Economics, gives this example if your bakery business buys flour and yeast, rents a shop and equipment, and pays for fuel, its contribution to GDP is not the sales price of the bread made, but the difference between gross revenues and purchased materials and services except hired labor. Your firm’s output is what you and your employees have added to the value of the materials and services purchased from other firms. He adds if you discover a way to rearrange your labor force and equipment so that production is more efficient, or discover a great new recipe for a loaf that is equally tasty but costs you less to bake, multifactor productivity in your firm may go up, increasing your output (value added) per hour even in the absence of any capital deepening.

Obviously this bakery would operate very different in any country member of the European Community. This is a revealing example the reason for the chaos that has been created.

According to Wikipedia, Productivity is a measure of the efficiency of production. Here it is possible to highlight that what determines the efficiency of production is human capital, and -some will argue that this is a key factor but not the only one- there could be others like technology.

However, this argument is refutable on terms of that it is not only the accessibility of the existent technology that a country whether might have or not; despite having a very high degree of technology but what determines its efficiency is the use of this and, there human capital comes along.

Wikipedia also says that Productivity is a ratio of what is produced to what is required to produce it. In Productivity by Alexander J. Field, The Concise Encyclopedia of Economics, the growth of productivity –output per unit of input- is the fundamental determinant of the growth of a country’s material standard of living.

This concept discloses the importance of labour productivity –which offers a dynamic measure of economic growth, competitiveness, and living standards. So if the labour productivity is rather variable from one country to another, no analyst or economist could expect to have the same indexes in both economies. One of the both will show clearly any increase or decrease in their numbers comparing with the other.

Here, two questions come along. If economies present enormous differences in their labour productivity how can these come together as one country in a community of members and even how could these countries associate them in a non-commercial barriers trade?

It is studied that human and social capitals together with competition have a significant impact on productivity growth. One paramount factor that exercises a determinant influence on human capital is culture –values and concepts with which a man is brought up, and which varies from one country to another. A relative example of disparate concepts from one country to another in Europe is the vision on work. For European southern countries this is appreciated as curse meanwhile for European northern ones work is the medium to create wealth and, therefore bring as result an increase in the growth of a country’s material standard of living.

In fact, we can find that EU’s GDP is shrinking as a proportion of world GDP. A deeper integration brings as consequence less competition among the member states, so the benefit is higher taxes and more regulation.

Therefore, it could be stated that for better job opportunities and higher quality education are need to improve labour productivity and boost growth, besides if the countries of a community don’t have the same vision about how wealth is created and their productivity index is uneven between them their union will have some countries bearing the burden of the less productive members and bringing chaos into their economies, plus don’t give any chance to those countries already in chaotic conditions take some rules on their own

America’s Supremacy: Immigration

In previous articles I attempted to analyse the causes for some countries still in the condition of underdevelopment in a global world, also such a reasoning tries to have understanding about this new tendency - which will help to develop in a better society – denominated The New Socialism of XXI Century; socialism that supposedly is not the same one as that of the last century. In the following lines, I will expose the reason for America is always in steps ahead from the rest of the world, which absolutely grants supremacy to the country.

            One aspect that many countries overlook, due to the fact of their underlined regionalism, or aversion or just simply not being in capacity of taking in, is Immigration.

            America owes its increasing specialization, the enhancement of its productive capacity and innovation to Immigrants. They allow American workers to boost their degree of specialization and become more productive –earning high wages. This is a key factor that produces as result supremacy above other nations. As the economist Giovanni Peri states in his research “Technological and scientific innovation is the acknowledged engine of United States economic growth and human talent is the main input in generating this growth.”

            In many countries a skilled immigrant is not considered on the terms of having not been a native-born, and he is catalogued as a disestablishing element in the opportunities for native professionals. This contra juxtaposes with Peri’s description “A team of engineers may have greater productively than an engineer working in isolation, implying that a foreign-born engineer may increase the productivity of native-born team members.”

            Although, it could be stated that immigration is harmful for the economy and society of a country, some papers have found out that immigration has a little adverse impact on natives.

            “Foreign-born workers complement rather than substitute for native-born workers because they have a different pattern of education and skills…” Diana Furchtgott-Roth, Director of the Hudson Institute’s Center for Employment Policy.

            In the United States, in the field of scientific innovation, the leaders are foreign students, skilled immigrants and doctorates in science and engineering. And, America supremacy is summed up in this “For every 100 international students who receive science or engineering Ph.D.’s from American university, the nation gains 62 future patent applications.” According to a study by Keith Maskus, an economist at the University of Colorado, Aaditya Mattoo, Lead Economist at the World Bank’s Development Economies Group, and Granaraj Chellaraj, a Consultant to the World Bank.

            The bottom line conclusion of their research is that “Reducing foreign students by tighter enforcement of visa restrains could reduce innovative activity significantly in the United States.”

            So those countries that restrain immigration are deprived of innovation. It is hard for them to attain a high level of advance and supremacy over other nations.

The Usual Mistakes in Small Business

     
  

   A difficult task is to identify all mistakes that could be made in a small business because of that these might pile up in numbers to the skies. Anyhow this article will attempt to point out some common ones.     

 At the time of setting up one small business, the idea for seemingly has matured in the new entrepreneur's head that the next step is to commercialise it; however the process of maturity hasn't reached the climax if it isn't identified the nature of the product. This is the first mistake when the new entrepreneur overlooks the fact of being dealing with a new product or just selling a one already in the market. Not having clear what kind of product is trading, his marketing strategy will be wrong at very beginning. It mustn't be designed the same marketing plan for a new product or that existent in the market. Anyhow, it is very common mistake to trade the same product as the others do with no any peculiar difference in price or service. Then for the customer, it means no a great deal to buy the same product from anyone in the market.

       A fatal omission for a small business -even a capital sin for corporations, it is not having done a market research on the product which is going to be traded or manufactured. If this research is overlooked, the manufacturer or trader doesn't know about any relation between the product and the market in terms of price, plan and promotion -what make a product saleable. So the business doesn't recognize the potential or real customers when it is unknown its market target.

       It is important to highlight the sort of business where family plays an important role. Family business.

       A family business is considered the Crown Jewel. Any advice that comes from outside is often regarded like vicious on account of that it hasn't welled up in the bosom of the family, though. No member of the family has expertise on the area on which the suggestion was made. So the wrong decisions are taken putting behind the good ones by this fact.

       One common mistake in a family business, it is not to difference what is family matter from business one –here is where money is tied down to heart. So all this creates entanglement in the daily operations of the business. Besides, one business is not the chance for the unemployed member of the family to get a job.

       About finances and administration of a small business, I should mention those mistakes for aping low-tax strategies of corporations, sometimes the new entrepreneur incurs costly procedures no proper for the size of his business -what could stifle his working capital to the worst. It is quite important to keep books adjusted to the real situation of the business. There shouldn't be a double accountancy, one for the taxes and the ideal for the eyes of the owner.

       Lastly, the owner of small business always considers the incomes of this his petit cash, so it can bring him into cash flow problems at the time of paying his liabilities.

       In the business world, where opportunities are challenging every day, the beginner will probably fail at the very start, but the real entrepreneur should be aware of his goals, the opportunities to achieve them and the direction to take, but, above all, what differences himself from the rest.