What was now devalued in Venezuela was the official exchange rate of the bolivar, not the much less valued real rate

Sir, I need to point out a certain lack of preciseness in my friend Moises Naim’s “Venezuela’s devaluation is another desperate Chavez move” February 14. What was now devalued was the Venezuelan official exchange rate, since Venezuela’s “real” exchange rate, the result of dividing all the bolivares paid for all dollars purchased, has been suffering much larger devaluations for a long time. Just the fact that in Venezuela it is prohibited to make reference to a FX rate other than the official, does not mean it does not exist. Here you find for instance a link to the Green Lettuce.

In fact devaluing the cheap official rate for accessing dollars can in some circumstances could even help to revalue the “real” rate, at least initially, for a short while.

And in reference to domestic gas prices I also I believe it is important to point out that the current government, which calls itself socialists, has used up more value giving out gas basically for free, than the value in all their other social programs put to together, and, be amazed, this fact was not even an issue in the recent elections… the opposition has kept mum about it too, for about a decade.

Venezuela must stop being a nation so amenable to Goliaths

Sir, I refer to Moisés Naím’s“Goliath wins, but Venezuela is at a turning point”, October 10. 

In Venezuela, the central government, meaning the president, receives and decides now over 97 percent of all the nations export revenues. Clearly that makes a mockery out of any democracy, and there is no constitution able to generate the checks and balances that could reign in an oil autocrat willing to exercise his powers to the fullest extent. 

In this respect I have always wondered why intelligent fellow Venezuelan citizens like Moises Naím, spend so much efforts trying to change who is to be the democratically elect oil autocrat and basically none on trying to change the system so that we could have a regular president, for instance by promoting oil revenue sharing among all Venezuelan citizens. 

Could it be that for all the Davids the possibility of becoming a Goliath, or one of his ministers, is something too tempting to abandon?

If the net oil revenue that goes directly to government exceeds 5 percent of GDP, then oil is a curse

Sir Moisés Naím writes that “Oil can be a curse on poor nations” August 19 and of course he is right. That said I would hold that when net oil revenues amounting to more than 5 percent of GDP of a country goes directly to the government, making it independently wealthy, then simply put, the oil is a curse, on any nation, and any evidence to the contrary is just waiting for a disaster to happen.

You see when people hear about oil they think of richness and the citizens expect that richness to be distributed to them by the government, without really knowing how much they should get, and then all start jockeying for positions to be favoured by the mighty, and society breaks down.

I am the President of an NGO in Venezuela, Petropolitan, which starting in the last millennium has been working among other for oil revenue sharing. Notwithstanding more than 100 articles published on the subject our agenda has not move a lot forward and so lately we have been calling out for help to other countries trying to establish a global alliance of oil cursed citizens.

Do you know who represent some of our major obstacle? Strangely enough some of those well intentioned groups like Revenue Watch Institute and the Extractive Industry Transparency Initiative (EITI) and who, by somewhat naively pushing the illusions of good partial solutions, play right into the hands of our oil autocrats.

Liberty and security also requires consensus

Sir, although Willem Buiter might be fundamentally correct when he says “For the sake of liberty and security: legalise all drugs” August 8, he should also remember that for the sake of that same liberty and security he needs to frame his idea in such a way that it is acceptable for the majority. 

In this respect and making reference to Moisés Naim’s interesting book “Illicit: How Smugglers, Traffickers and Copycats are Hijacking the Global Economy”, (2005) and that reminded us of how much of the illegal world was interconnected, perhaps a more consensus reaching approach could be to identify the whole world market of illicit and legalize it at a rate of 5 per cent a year starting with the more digestible. 

Otherwise they way the world is going its illicit part is soon going to be wealthier and stronger than the licit… and that is more dangerous than hundred al-Qaeda put together. Also while discussing these issues let us never forget that strict social sanctioning is normally a far more efficient route to go than the strictest of the law enforcements.

Careful with the growth of the market for illegal and illicit products

Sir, let us hope that Moises Naim’s book Illicit: How smugglers, traffickers, and copycats are hijacking the global economy, Doubleday, 2005, and discussed by Martin Wolf, November 16, opens up a long overdue debate on some issues that have been considered almost sacrosanct.

For instance, when society awards intellectual property rights and is thereby expected to invest scarce resources enforcing them, there is an implicit assumption that these rights are to be reasonably exploited. When then one of these manmade properties rights is violated, like through pirated CDs, this might be the market answer to a lack of regulatory control over the monopoly. In this respect, under some circumstances, pirates and counterfeits could indeed perform a useful regulatory service to the society, like when vultures do the cleaning.

As the temptation-ratio to use a pirated good, defined as the potential savings in relation to the income per capita, is obviously larger in poor developing countries than in the rich developed countries, does this fact mean that the poor countries should have to invest relatively much more in fighting piracy?

Also though you need an original to create a fake parasite, who is to tell us that the original is not sometimes well served by the existence of its fakes? Might not the value and the number of buyers of truly original Louis Vuitton in fact be larger because all the rest of the world has to settle for fakes? Should then the pirates get a fee?

Another related issue and that needs much discussion is whether society is well served by criminalizing behaviors that are the subject of any significant social sanction, as in these Intellectual Property Right matters hypocrisy is truly rampant.

Finally, every time something is declared illegal or illicit by society an economic feasibility study should be required, not only to see if we can afford the enforcement, or if the protected should have to pay for the protection, but also, mucho more important, that we do not stimulate those markets to grow faster than our legal economies, as they could then turn into the more powerful.

Sent to FT November 18, 2005