They’re not rallying around the flag, they’re just standing in line

On Monday, in a bit of a surprise, Barack Obama signed an executive order that labelled Venezuela a an “unusual and extraordinary threat to the national security and foreign policy of the United States” as a legal condition for imposing sanctions on seven Venezuelan officials. Predictably, the Venezuelan government freaked out, calling the actions a grave attack on Venezuela and its sovereignty. Less predictably, many US media outlets ran the story from the perspective that this would provide a boost to president Nicolás Maduro.

A lot of this argument rests on the idea that Venezuelans are likely both to believe that this is an attack on Venezuela and not just officials accused of corruption and human rights abuses and to care. I’m not convinced of either of these things. For one, Maduro has spent most of his presidency, and in particular the last several months, blaming the US for just about everything. In fact, it was not even a month ago that his government “foiled” a US-backed coup, evidence for which he has announced was forthcoming on multiple, fruitless occasions. Maduro has blamed the US so consistently and baselessly for so long, that it’s unlikely that anyone that didn’t already believe him suddenly does just because seven bureaucrats who are either unknown or unloved lost their US visas.

Another argument is that this has strengthened his position by giving him a pretext to request a Ley Habilitante Antiimperialista, which would give him the power to rule by decree for six months. But this sounds like a bigger deal than it really is. Venezuela’s institutions have been hollowed out so much by this point that there are virtually no real checks on the president’s authority to act. More than anything, this is a vestigial impulse to provide a modicum of democratic cover to the government’s authoritarianism. In a country where the president brags on television about his personal role in bringing charges against an opponent and where multiple members of the National Assembly have been summarily stripped of their seats, any Ley Habilitante is just a formality that simply takes the rubber-stamp congress out of the process.

Finally, there is some speculation that this might make other Latin American governments less likely to speak up. This is probably true. However, no major country in Latin America was ever likely to say anything anyway. So, in reality, the choice was between the US acting against Venezuela’s human rights abusers and Latin American countries feeling relieved they had an excuse to not say anything and the US not doing anything, and Latin America countries still finding a reason to not say anything. The strongest reaction in Latin America “against” Venezuela in the past year was Brazil’s foreign ministry, “expressing concern” at the actions of both sides after a Venezuelan police officer shot a 14 year old student in the head and killed him during a protest. That says a lot.

If anything, this move might fire up Maduro’s base. The average Venezuelan, it seems, will probably be making jokes about this while they stand in line hoping to be able to buy toilet paper and milk.

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Losing the war he invented

Last night, I floated on Twitter a question about how many long Nicolás Maduro can blame Venezuela’s troubles on an economic war waged against him before his supporters come to believe that he’s too weak to succeed in winning it. Obviously this question rests heavily on the assumption that there are a good number of Maduro supporters who believe that Venezuela really is the victim of some sort of vast conspiracy, and not just the predicatble consequences of poor policy decisions over the past 15 years. Recent surveys, however, indicate that one in five Venezuelans still supports Maduro and reporters have to problem finding people to interview in the now-ubiquitous grocery store lines who at least claim to believe his claims, so there is at least a bit of a constituency.

The threat in this propaganda line for Maduro isn’t really in the opposition so much as within the chavista coalition. Few people who support the opposition are likely to believe that the problem is anything other than the government anyway. However, things are different among chavistas who continue to believe that chavismo is a path to prosperity. For these people, the country’s continued economic malaise might not demonstrate the failure of the model so much as show that Maduro is too weak to protect the gains brought by Hugo Chávez. This is exacerbated by the fact that the policies Maduro has selected to fight the economic war–currency and price controls, taking over producers and distributors, etc–will mostly only contribute to the problem, whatever positive optics they might give. If anything, those positive optics (fighting contraband on the border, taking over stores, seizing “hoarded” inventories) might simply cast into starker relief how little those efforts are doing to alleviate the shortages and inflation wracking the Venezuelan economy right now.

So what happens if the loyal chavista base decides that Maduro is too weak to win the war he says he’s fighting? The conspiracy-minded might say that this is the machiavellian plan of some high ranking officials who have allowed–or even encouraged–Maduro to founder while enriching themselves off the distortions, only to swoop in and save the day once the situation starts to risk chavismo’s hold on power. Whether that’s someone’s plan or not, any clear-eyed people close to Maduro must be concerned about what happens if the chavista base ends up in the streets protesting. Considering how openly authoritarian the government has become in recent times, it seems difficult to believe that the opposition would be able to end up in power, at least immediately.

What mattered this year in Latin America

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 (Photo credit: ®Dave)

As it’s New Year’s Eve, I thought I would take a stab at a best-of list for a post, if only because this gives me a chance to write about several different topics at once. So, without further ado, and in no particular order, here are five of the most important things that happened in Latin America this year.

1. Hugo Chávez dies

This is probably the most obvious choice because of the preeminent role that Chávez played over the previous 14 years in Latin American politics. Chávez’s death in March to a still-undisclosed cancer created a vacuum both in Venezuela’s domestic politics and on the Left in Latin America. Nicolás Maduro has attempted, and to some degree succeeded, in filling both gaps. Internationally, he has probably been less successful; he is not the leading voice among leftist politicians in the region, but at the same time, neither has anyone else seized the mantle. Domestically, Maduro has been surprisingly adept at solidifying himself in power.  Chavismo has lined up behind him and Diosdado Cabello—the man perceived to be his biggest rival for power—has, at least for now, dutifully played the role of attack dog rather than potential challenger.

Economically, the inevitable fruits of populism have begun to blossom in earnest this year, and Maduro has proven thoroughly incapable of dealing with Chávez’s biggest legacy. The Central Bank only finally published its November inflation figures yesterday. And they were ugly: 4.8 percent for the month, which works out to an annual inflation over 50 percent. Moreover, the scarcity index remained well over 20 percent, meaning that there were shortages of more than 1 in 5 products. There is little reason to believe either number will fall in the months to come—well, they might, but that’s just because the BCV is considering changing its methodology à la argentine—as the deficit continues to be covered by printing money and the government implements more price controls.

Economic distress in Venezuela is important for two reasons. One is that Venezuela has the fourth largest economy in Latin America and economic contraction, and especially crisis, would affect the whole region. Perhaps more important, though, is that Venezuela is a major giver of aid to the Caribbean and Central America through PetroCaribe. PetroCaribe offers oil to a majority of Caribbean and Central American countries at preferential terms and often in exchange for other commodities or with extremely long-term payment plans with very low rates. For the energy poor countries participating in the program, PetroCaribe is an important economic policy that helps shield them from high and volatile energy prices. However, as the situation in Venezuela worsens, its willingness to be generous with its neighbors will likely dissipate. Guatemala has already left, citing increasingly unappealing conditions and major revisions to the terms for other countries are certainly possible. This could be devastating for several countries. Jamaica, is particularly vulnerable, as it gets most of its power from imported oil and its economic situation is so fragile that a sudden increase in the price it pays for oil could mean an economic crisis.

2. El Pacto por México

This could be formulated in several different ways, focusing on the presidency of Enrique Peña Nieto in general or the series of reforms passed in the latter half of this year. The Pacto por México is best, however, because it encapsulates the important reforms that were passed and represents an important moment of civic responsibility from Mexico’s political class.

The Pacto was an agreement signed by all of Mexico’s three major political parties, the Partido Revolucionario Institucional (PRI), Peña Nieto’s party and the dominant force of Mexican politics from the end of the Mexican Revolution until 2000; the Partido Acción Nacional (PAN), the center-right opposition party which broke the PRI’s stranglehold on power by winning the presidency in 2000 and 2006; and the Partido Revolucionario Democrático (PRD) a left-wing part which finished second the past two presidential elections. The three parties agreed to work together to pass a series of reforms relating to education, telecommunications, taxes and the sacred cow of Mexican politics, the energy sector. This agreement came after two sexenios in which the PRI did everything it could to stymie the legislative agendas of the PAN presidents. For the three parties to agree to work together was momentous. Even more momentous was that the Pacto held together and passed all of the reforms plus a political reform despite often acrimonious negotiations—the PAN nearly abandoned the Pacto after the tax reform was passed, potentially killing chances for energy reform, and the PRD eventually abandoned it during the energy reform process.

The reforms passed via the Pacto were also largely considered to be successful. Apart from the tax reform—which has been criticized for failing to raise sufficient new revenue, among other things—the reforms were viewed by analysts as being significant positive changes which will make Mexico’s economy more productive in dynamic both in the short and long term. There remains significant secondary legislation to be passed in 2014 that will really define the scope of the reforms. But as it stands now, Mexico’s monopolistic and uncompetitive telecommunications sector will be opened in earnest to outsiders and subject to real regulatory scrutiny, the quality of primary and secondary education should improve dramatically in the coming years and the moribund energy sector will be liberalized more than all but the most optimistic dared hope six months ago.

Through the Pacto por México, Mexico proved that the different political parties in the country can work together productively and in the process passed a series of structural reforms that could power the Mexican economy in the future. Considering that Mexico already has the second largest, and by many measures, most dynamic economy in the region, this could be historically significant as the moment Mexico pulled away from the rest of Latin America economically.

3. Street Protests in Brazil

The massive street protests that erupted during the Confederations Cup over the summer likely marked a turning point for governance in Brazil. The protests initially stemmed from a hike in bus fares but quickly morphed into generalized protests against many of the perceived failings of the state, including corruption, misplaced spending priorities (World Cup and Olympics instead of hospitals, for instance) and the poor quality of government services. Many observers have celebrated the protests, arguing that they mark a maturation of Brazilian society into one with middle class attitudes which demands a higher standard from its government. This is probably the best way to interpret it (and also similar protests in Chile and Colombia) but also underscores the difficulty that the government in Brazil will face going forward. These protests arrived right as the bonanza of the past decade looks to be ending. The commodity supercycle which benefited Brazil so much looks to be ending and commodity prices will rise much more slowly in the coming years than they did since 2002, if they rise at all. Indeed, Brazil’s leaders are going to be representing an increasingly demanding society at a time when they will have much less room to maneuver than they did. Coupled with major structural issues with the economy that must be addressed and which will require unpopular measures to correct, Brazil’s leaders will have a much more difficult decade ahead of them than the one they left behind.

4. Honduras’s presidential election

Honduras itself is a small, impoverished and politically weak country in Latin America, but following its most recent presidential elections, it continues to be a flashpoint in the region over what exactly counts as democracy and political legitimacy. Since Manuel Zelaya was removed from power in a coup in 2009, Honduras has served as the main battleground over the various ways that democracy is understood in the region. For many on the right, particularly in the United States, Zelaya’s flirtations with Hugo Chávez and his disregard for a Supreme Court ruling saying he could not push forward with a non-binding referendum over allowing future presidents to seek reelection made him a threat to democracy and his removal from power an act to protect democracy. For others, particularly the leftist presidents of the region, Zelaya’s removal was a gross injustice and invalidated the legitimacy of the already scheduled elections that brought conservative Porfirio Lobo to the presidency in November, 2009. These same debates played out in Honduras as well, and Lobo limped through his term with little support, domestically or internationally, while violence continued to spiral out of control.

The most recent elections last month did little to ameliorate the situation. Juan Orlando Hernández of the conservative National Party was declared the winner with 36.89 percent of the votes while left-wing candidate Xiomara Castro of the LIBRE party—and Manuel Zelaya’s wife—finished second with 28.78 percent and the Liberal party and Anti-Corruption Party received 20.30 and 13.43 percent respectively. The results have been met with suspicion by many on the left, and Castro has disputed the results saying that there was massive fraud, intimidation and vote-buying that cost her the election. Zelaya, for his part, won a seat in the National Congress and has announced his intentions to pass a series of major reforms to strengthen the opposition parties in the legislature.

However tainted the election results were—and for their part, the OAS and UN say it was fair enough—it is virtually impossible to imagine that Castro won more than 35 percent of the vote. Similarly, the leading party in the National Congress won only 31 percent of the vote to win 48 of the 128 seats. In fact, no political force in the country won more than a third of the votes, yet both Castro and Hernández behave as though they won a resounding majority. It is here that the competing ideas of democracy play out most strongly. Most salient is the amount of power winning an election gives you. In many places in Latin America, the perception is that if you win 50 percent plus 1 of the votes (or in some cases just a plurality) you are given carte blanche to govern however you chose without having to listen to or respect the voices of the rest. This stands in stark contrast to the idea of democracy epitomized by the Pacto por México, where the opposition is given a real say in governing. Honduras certainly seems to be opting for the former understanding, with both sides claiming victory and attempting to impose their will upon the other side, though successfully achieving such an outcome in such a heavy polarized country will be difficult without resorting to strongly anti-democratic measures.

5. Uruguay legalizes marijuana

During the presidency of José “Pepe” Mujica, Uruguay has emerged as the most socially progressive country in Latin America. Mujica has signed laws that decriminalized abortion during the first 12 weeks, allowed for gay couples to marry and, most controversially, he signed a law earlier this month that legalized marijuana for Uruguayans through the state control of the industry. Legalization of marijuana, and perhaps other narcotics, has become a cause célèbre among Latin American former presidents and those opposed to the drug war. However, no state had ever legalized its sale and consumption—though two states in the US have and several other places have decriminalized possession and consumption, though not its sale. Within official circles in the United States, Europe, Latin America and the UN, legalization has been viewed as a radical idea. Uruguay’s decision, therefore, represents a very direct challenge to the conventional wisdom that has governed drug policy around the world for the past century and, if it proves reasonably successful, could serve as a model for other countries who increasingly are frustrated with the negative externalities of drug prohibition.

Deep Scars: Bolivia, Venezuela and the Effect of Crisis

After an embarrassingly long time, I finally finished reading Globalization and Austerity Politics in Latin America by Stephen B Kaplan, who was one of my favorite professors in grad school and also my boss for a year. This happened to (roughly) coincide with a fantastic blog post by Omar Zambrano comparing a similar “País X” with Venezuela. The two countries share a number of common characteristics. For instance, both depend heavily on natural resources for export earnings and government funding. Both countries also have heavy state involvement in the economy and both have benefitted enormously from the period of high commodity prices since 2002. However País X runs fiscal surpluses, has stable inflation, consistent high growth, no shortages and no capital controls. The big reveal is that País X is Bolivia, the ideological compatriot of Venezuela and one of the “bad children” of Latin America of the 21st Century.

I mention Zambrano’s post because he hypothesizes that a way to explain the divergence between Venezuela and Bolivia is that Bolivia experienced a severe economic crisis in the 1980s that resulted in hyperinflation and a massive economic dislocation. Essentially, he hypothesizes that Bolivia follows more conventional macro policies because even revolutionaries in Bolivia understand the consequences of bad macro policies. Venezuela, by contrast, has never had an economic crisis on the level of many Latin American countries, and therefore lacks the institutional checks that restrain even Evo Morales.

It turns out that Zambrano’s speculation happens to be the topic of Kaplan’s book and appears to be borne out by the statistical evidence. Kaplan argues that severe economic crises, particularly inflationary episodes (defined as 100% annual inflation) leave a lasting influence on how policy makers behave. Whereas traditional political economic theory postulates that politicians will attempt to use looser fiscal and monetary policy to encourage employment growth in the run up to an election, Kaplan hypothesizes politicians in countries that have experience inflation crises will actually behave in the opposite way; enacting policies designed to rein in inflation, even at the expense of jobs and growth. Furthermore, countries with high bond market exposure will behave even more conservatively, fearing that bondholders might become skittish at any sign of reckless fiscal behavior and begin selling off, triggering a sudden stop crisis.

Kaplan divides countries into four quadrants: those who have had inflationary episodes and those that haven’t and then those who have high exposure to bond markets and those who don’t. He hypothesizes that those who have both an inflation crisis and high bond exposure will behave most conservatively, while those without either will be the most spendthrift and those with an inflation crisis will be more conservative even without the pressure of bondholders. He runs a series of regressions that largely confirm the hypothesis, though with the slightly unexpected finding that left-leaning politicians in inflation-scarred countries are actually slightly more conservative in handling macroeconomic policy than right-leaning ones. He also includes several case studies to compare the empirical results with the specific motivations of the actors involved. His interviews with relevant policy makers essentially confirms that politicians are sensitive to the collective memory of inflation and perceive that voters prefer economic stability to rapid growth, as rapid growth is associated with eventual chaos and crisis.

This comes back to Zambrano’s post from before. When one looks back at Venezuela’s economic history there are plenty of missed opportunities and also some crises, but nothing of the magnitude of a country like Argentina or Brazil in the late 1980s or early 1990s, to say nothing of the catastrophe that struck Bolivia in the mid-1980s. If anything, Venezuela’s recent history of stagnant growth without any real shocks has made its citizenry willing to embrace an iconoclast willing to aggressively pursue growth the way that Hugo Chávez did. Bolivia experienced a similar period of economic stagnation that resulted in the election of a president who vociferously opposed neoliberal policy reforms. Bolivia, however, also experienced an inflationary episode in the mid-80s that ranks among the worst since the end of World War I. Consumer prices rose by 124% in 1982, 276% in 1983, 1,281% in 1984 and an incredible 11,750% in 1985. Since 1986, when inflation was *only* 276%, inflation has only topped 20% one time and has typically been below 10%, even in the years since Morales came to power and moved strongly away from the neoliberal camp.

Kaplan even quotes members of Morales’ economic team touting their sound macro management, something unimaginable in Venezuela, where inflation is treated (apparently seriously) as the result of speculation by greedy capitalists and not the natural byproduct of poor economic management that history and economic theory have shown it to be. Clearly, the episode in the 1980s was sufficient to temper even the most radical revolutionaries in Bolivia, much as similar—though smaller, if not necessarily less catastrophic—crises did in Chile, Brazil and Argentina.

Does this mean that Venezuelan politicians 20 years from now will be inflation hawks obsessed with sound fiscal and monetary management of their economies, perhaps even to the point of sacrificing safely obtainable economic growth? It’s obviously impossible to know, though there is plenty of reason to believe the current crisis will have a lasting effect on how Venezuelans perceive the political economy of their country. That said, inflation right now is *only* 50% (only half the rate Kaplan defines as an inflationary crisis), and while this clearly misstates the level of economic dislocation since it’s impossible to quantify the inflationary effect of scarcity, it’s also nowhere near the magnitude of the four crises I mentioned earlier. Nicolás Maduro could still implement some drastic measures to try to bring the economy out of its nosedive—or China and Japan could go to war over those stupid little islands the Senkakus and cause oil prices to spike—and forestall a truly horrific crisis that would have the kind of effect on the public and political class that Zambrano and Kaplan describe.

As of yet, there is little reason to believe, unfortunately, that things won’t get much worse in Venezuela before they begin to get better. Maduro truly seems to believe that sabotage, speculation and economic war against him, rather than the disastrous economic management of the past 14 years, are responsible for the current problems. However it plays out, I think the comparison between Bolivia and Venezuela and the factors affecting their behavior that Zambrano and Kaplan highlight are very important; crises have a prolonged effect on how politicians behave and what publics expect from them. I also think that Venezuela’s experience in the 1980s and 1990s is important to understanding the past 14 years as well. Perhaps if Venezuela’s decade and a half of economic malaise had been accompanied by a severe crisis chavismo would have governed with more restraint. However, the fact that Venezuela spent a decade and a half muddling through with declining real incomes and growing inequality is equally important because without that Hugo Chávez would never have been elected.

Decades of mediocre to bad economic management in Venezuela begot chavismo just as it did in Bolivia with Evo Morales. That even worse economic management before means that Morales governs better than the chavistas is an indictment of Latin American politicians in general, who have almost uniformly failed to deliver economic growth to their countries and have created openings for reckless—as opposed to just bad—governments to emerge.

Leave the IMF alone!

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I’m currently reading Globalization and Austerity Politics in Latin America by Stephen Kaplan, which deals with the way globalized and decentralized financial markets have affected economic policy in Latin America. I will do a full review of it later this week or next when I finish it, but in the meantime wanted to touch on the role of the International Monetary Fund (IMF) in the debt crises of the 1980s.

The conventional story is that, when the debt crises started following Mexico’s 90 day moratorium on debt repayment in 1982, the IMF came into the region, and in exchange for emergency loans to the affected countries, forced them to adopt harsh and unpopular cuts as conditionality. To a large degree this I true; the IMF did require countries to sign agreements to implement certain reforms in exchange for releasing funds. The problem with the traditional narrative is that the countries rarely actually implemented the reforms. As Kaplan documents in various case studies, a diverse array of Latin American countries would promise reforms, half implement them for a couple of years and then renege on them when it came time to get reelected.

Kaplan argues persuasively that governments could behave this way because most of the debt Latin American countries had accumulated was in the form of bank loans from just a handful of financial institutions. This dynamic meant that the banks had a strong incentive to ensure that the debtor countries remained solvent so that they could eventually be paid back. As a result, Latin American governments could count on receiving more loans even if they failed to implement reforms because the lenders did not want to write down the losses on the huge exposures they had to Latin America since doing so would have cost them billions of dollars in losses. Throughout the 1980s Latin American governments were therefore able to continually secure new loans even as they failed to live up to the conditionality of the previous ones.

Certainly, many agreed upon reforms were implemented, but often only partially. This was in many ways far worse than the reforms themselves. For instance, a state owned enterprise (SOE) might be privatized, but without an accompanying regulatory framework, resulting in continued poor quality yet higher prices. Or price hikes and wage freezes would not be accompanied by measures to improve productivity, making the reform just a sudden reduction in living standards. However, it is unfair to blame this on the IMF the way that many do since it really lacked significant leverage over these countries. While there are certainly reasons to criticize the IMF for how it’s handled developing world crises (i.e. the Asian Financial Crisis), this is not one of those instances. Even when Latin America did begin to embrace orthodox policies more seriously, it was driven by factors related more to the shifting nature of the international financial system than by the IMF, though the IMF was supportive of many of those policies

A few good reads

Over the weekend, I read a few great pieces about Latin America; two on Cuba and one on US policy in the region. I don’t have much to add but I highly recommend all three.

The Blind Spot– David Rothkopf (Foreign Policy)
A harsh rebuke of American foreign policy in the region which he characterizes as outdated, negligent, and as a result, defined by its blunders and crises.

Cuba’s Economy: Money Starts to Talk (The Economist)
Reporting on some of the reforms on the island and their economic effects.

Cuba After Communism: The Economic Reforms That Are Transforming the Island– Julia E Sweig and Michael J Bustamante (Foreign Affairs)
A more in-depth look at the economic reforms in Cuba under Raúl and the political pressures both on and off the island that are driving the pace and shape of the reforms.

Another piece in the Rube Goldberg Machine

Professor_Lucifer_ButtsIn the last couple of weeks, both Venezuela and Argentina have implemented new programs that will function essentially as de facto mechanisms for loosening currency controls in each country to fight depreciation pressures.

In Venezuela, it takes the form of a program called SICAD (Sistema Complementario de Administración de Divisas), which will allow Venezuelans to buy an unlimited amount of foreign currency through all types of financial intermediaries provided it be for travel, health or education. While still a severe impediment to convertibility, it still represents a step forward from the current CADIVI system—which is now likely in its death throes—which made legal dollars almost impossible to obtain for many citizens and spurred a massive arbitrage scheme.

The Argentine novelty is CEDIN (certificado de depósito para inversión), which is attempting to simultaneously achieve three goals: encouraging people to declare heretofore illegal dollars to bring them into the official system, channeling investment into the moribund property market and closing the gap between the black market dollar (el dólar blue) and the official rate. Essentially, Argentines will be able to declare dollars without facing any penalty in exchange for CEDIN certificates which, depending on the type, can be used to purchase property or inputs for construction and some other goods. The CEDIN can then be exchanged back for dollars.

Neither SICAD nor CEDIN appears likely to do much to ease the currency pressures in either country and a formal devaluation is a near certitude in both countries within the next two years. Instead, these programs are emblematic of a commonality between both kirchnerismo and chavismo in economic matters; an overweening focus on the short-term that breeds a proclivity toward accumulating quick fixes rather than addressing underlying problems. The reasons for this are twofold: both governments have staked their economic legitimacy on a heterodox model and reform is painful, even in economies less distorted than those in Venezuela and Argentina.

I’ve written before about how Cristina Fernández de Kirchner’s devotion to el modelo has left her hamstrung in dealing with its failings, and, quite obviously, the chavista model of 21st Century Socialism is tightly wedded to a similar opposition to orthodox economic policy. This leaves little politically acceptable wiggle room for either government when the models lead to distortions in the economy, which incentivizes the governments toward adopting piecemeal solutions. These solutions can temporarily ameliorate whichever symptom they have been devised to combat, but often create further distortions or avenues for corruption necessitating further measures creating a vicious cycle of bad macroeconomic governance.

Reform is never an easy task; when times are good, politicians often lack the incentive and when they go bad, they’re often faced with a cure is worse than the disease scenario. SICAD and CEDIN won’t do anything to address the reasons why Argentines and Venezuelans are so desperate to have dollars instead of pesos and bolivares and in the meantime add one more layer of complexity to each economy. Looking forward, the question is, how much longer can these governments tinker while ignoring the real problems?