Venezuela: Where Workers Make 21 Cents an Hour While Cronies Reap Millions from Thin Air.
Socialism has brought misery and desolation everywhere it has been tried, and in Venezuela its appalling consequences have been most severe for precisely the people it claimed to protect. Now, what has happened to the minimum wage in Venezuela is indisputable evidence of the disdain the socialists feel for their own people, and how they are driving the workforce into hunger and deprivation. All the while, the ruling elite loots the country in broad daylight.
Since Nicolas Maduro took power in April of 2013, Venezuela’s minimum wage has been hiked an amazing fifteen times. Tracking the change in Venezuela’s currency, the “integral minimum wage” (salary plus food stamp benefits) grew from 3,634.02 Bolivares Fuertes (BsF) to more than 200,000– an increase of a whopping 5,404 percent. That alone illustrates the vicious inflation in the country. But what’s worse, in dollar terms – and calculated at the black market rate – the minimum wage actually fell from $143 a month to just $32.
According to official figures, 32 percent of the Venezuelan workforce earns the minimum wage, and an additional 20 percent earn between that and twice the minimum wage. That’s more than 52 percent of workers trying to survive on less than $65 each month. In fact, minimum wage breadwinners in the country earn below the World Bank poverty line of $1.90 daily, at just $1.64. In hourly terms that’s less than a quarter an hour: 21 cents to be precise.
In the case of Venezuela, these calculations are not as straightforward as they would be for other countries. There are many challenges in the way of getting a precise figure in terms of purchasing power parity. Nonetheless, the fact that hard working minimum wage earners are below the World Bank poverty line speaks volumes about how catastrophic socialism has been for workers in Venezuela.
History teaches us that, under socialism, some are more equal than others. While the vast majority of the population bears the consequences of awful policy prescriptions, another part reap unspeakable benefits, such as making millions of dollars out of thin air.
Here is how they do it.
The free convertibility of the national currency – the Bolivar Fuerte – has been controlled since 2003. This means that individuals and corporations can’t exchange their Bolivares Fuertes for U.S. dollars, Pounds Sterling, Swiss Francs or any other currency in an open market. Instead they must either go through a Kafkaesque government agency or the illegal black market. The illegal market represents the ‘real’ exchange rate felt by most residents of the country, while the official government rate pegs the Bolivar Fuerte much higher.
As of June 1st, the black-market rate was 1USD- 6,081BsF but the official government rates (rates at which a few cronies get to exchange their Bolivares Fuertes) are: 1) 1 USD – 10 BsF, and 2) 1 USD – 2000 BsF
So, imagine you get a “license” to purchase one million dollars at the official rate of 10 VEF – 1 USD. That would mean that in other to get your million dollars you would need 10 million Bolivares Fuertes.
Because we know that the black-market rate is 6,081 BsF – 1 USD It is easy to see the sham nature of the transaction. In fact, to get the 10 million Bolivares Fuertes that you need to purchase your million dollars at the fictional government rate, you would only need $1,645.
So, a 60,710-percent difference between the back-market rate and one of the artificial “official” exchange rates allows government cronies to make millions of dollars out of thin air, literally. Meanwhile, the 51.7 percent of Venezuelan that earn between one and two times the minimum wage are not only going hungry, but are seeing the value of their work and efforts turn to almost nothing – at 21 cents an hour.
This, in a nutshell, is Venezuelan socialism at its core. Some loot the country in plain sight and others – the vast majority of hard working Venezuelans – go hungry. They see progressively less value in their work, turning their best efforts into nothing more than a few pennies an hour.
It is true that socialism brings equality for the people, if by “equality” you mean making everyone equally poor and miserable.