The economy of Venezuela continues to get worse with each passing day. It doesn’t even appear that the people of the oil-rich Latin American country care anymore because they ardently support the administration of President Nicolas Maduro – it’s like this in nearly every socialist country.
So what’s going on now in Venezuela? Well, the government announced last week that it would raise the minimum wage by 30 percent in an effort to combat the collapsing economy and helping those who are suffering from this administration’s policies, according to the Wall Street Journal.
Under the new minimum wage, workers can expect to earn 7,421 bolivars each month, which is equal to $37 under the government’s new three exchange rates with the dollar. The minimum wage in the underground economy would be $27.
Maduro told his Socialist supporters, who sported red and rallied on International Workers Day, that he has to do what he can to aid those who need it. Unfortunately, it hasn’t dawned on Maduro that the assistance he thinks he’s giving is actually creating more harm than good.
As any business would do in the event of an increase in the minimum wage, they would raise prices to afford such a wage hike. However, Venezuela is prohibiting businesses from doing so because of price controls. Rampant shortages in basic staples, like rice, toilet paper and corn, can be blamed on this destructive policy of price controls.
Local business advocacy groups have stated many times that interventionist policies of this government are destroying supplies. Price controls do not help cover the cost of production and the policy can’t allow the government to paid $10 billion in debts to importers.
Opposition leader Henrique Capriles tweeted that price inflation is 11 percent per month and this 30 percent does nothing. “Do the math and do you think a 30% increase covers it? The solution is to end with inflation, but what does this do? Nothing.”
Nevertheless, the move will further spike inflation and devalue the bolivar – it has been eroded by 75 percent in the past year alone.
If you thought the damage would end there then you are mistaken. Maduro has already promised that his government will do more in the name of a good cause and helping average citizens under the constitution. Moreover, he plans to introduce civilian councils to inspect food production factories and other private institutions – Maduro has accused the private sector of producing an economic crisis (if it were that simple).
Ostensibly, these moves are part of an attempt by the president to quash any revolution and create greater support in time for parliamentary elections in a couple of months.
No word yet if any of the socialists in the United States are planning to move to Venezuela.
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