Food Shortages Making People Fat?

It is no secret that Venezuela has been facing food shortages for quite some time, but things are getting worse by the minute. It is becoming increasingly difficult for people to find basic items and desperation is growing.

Venezuelan empanadas and sought out ingredients 

Nonetheless, it is really remarkable how the people of Venezuela are trying to adjust to their new norm by putting together meals with whatever items they can find. You can often see people replacing rice with yucca, or corn flour with plantains, etc.  The notion of eating three meals a day is far gone and most people are lucky if they have enough food in their cupboard for three meals a week. If you live in America, it may be difficult to fathom this, but nothing is quite as effective in getting the point across as images. Carlos Garcia Rawlins, a photographer for the Reuters, captured the images of food scarcity and empty cupboards from actual families living in Caracas, Venezuela.

These changes in food consumptions are beginning to have an effect on everyone's waist line. It is simply not possible for people to have a balanced diet. As mentioned by one of the Venezuelan residents featured on Rawlins' photographs, "if we have lunch, not dinner and if we have dinner, not breakfast." People are resorting to eating unhealthy foods that can fill them up for longer periods of time because they know that they will need to skip a meal, or even two. These unhealthy eating habits will eventually increase cases of diabetes, heart conditions, etc.

President Maduro is encouraging citizens to grow their own crops. This, he says, will help put a stop to the "economic warfare" that he claims is being orchestrated by the opposition to sabotage his administration. The only problem with the suggested solution is that eighty percent of Venezuelans live in an urban setting so their abilities to grow food at home are limited.

This is an example of yet another unintended consequence of economic policies followed by a solution to the wrong problem. The silver lining is that Coca-Cola has announced that it will stop production in Venezuela because they are not able to find sugar. With minimal food options, the last thing Venezuelans need is a sugary drink to add to their woes.  

Update: I'm back!

Much has happened in the last eight months. Starting with the culmination of a challenging pregnancy, the birth of my daughter in October, and the many sleepless nights that followed. In a blink of an eye, I went back to school to complete my undergraduate degree. I am happy to report that my hard work paid off when I received my degree last Saturday. My daughter and husband were there to cheer me on. My parents were also there to witness that their struggles and sacrifices were well worth it and I couldn't have been more proud to have such incredible support.

 More good news: I am not going to turn this into a mommy blog or a "follow my every move" webpage. Instead, I am going to continue to use this medium as a way to highlight some of the injustices, inefficiencies, and unintentional consequences that come from a government's negligent decisions.

I look forward to providing updates on some of the continuing issues facing the people of Venezuela as well as some of the new challenges that have emerged.

Oh Baby! Taking a Look at The Big Picture

These past few days I have been thinking about the many things still left for me to do before my due date in early October.

At the same time, I have been in contact with several family members in Venezuela that have been keeping me up to date with the very different circumstances faced by new mothers and women with small children in Venezuela.

Before I go into detail on the negative aspects, I do have to say that Venezuela's labor laws are much more favorable towards expecting mothers than most countries. By law:

• Venezuelan women can get up to six months of PAID maternity leave. 
• They can choose to take the leave as early on or as late as they please.
• Women who have rollover vacation and sick days can also combine these days and get up to one year of paid leave. Combining maternity leave and vacation leave has become very common as it is quite difficult to find child care for an infant younger than 12 months old. 
• Most employers also need to provide their employees with a stipend for childcare until the child is four years old.

These benefits sound quite wonderful right about now. I mean, who wouldn't want to get a salary for staying home from work for a year to raise their child? But these perks come with a high price. The three main problems with this approach are:

1. Many companies are unwilling to hire young women for fear that they will get pregnant and then the company will have to pay them a full salary for endless months. 
2. Some of these companies will have to hire a temporary worker and incur additional costs. 
3. Other companies will just have to make the best with less people and as a result the productivity of the company will suffer.

The Shortage Problem

Alas, these advantages have not been enough to encourage women of childbearing years to have more children. The facts is that maternity leave benefits do not make up for the terrifying food and medicine shortages in the country. Diapers (disposable as well as cloth), baby formula, wipes, and any other baby products you can think of, have become virtually impossible to find.

Pregnant women and those with small children are becoming increasingly desperate to find these products. Nursing mothers need to wake up very early and stand on long lines for up to ten hours in hopes of finding the products they need. Most days, they stand on these lines in vain as the products are never in stock or they are quickly snatched by the people in the front of the line.


The Healthcare Problem

It is not just baby products that these women are in search for, medicine and medical supplies are also well sought out. The truth is that if you do not have the money to give birth at a private clinic, you will have to bring your own gloves, gauze, and catheters as chances are that hospitals will not have enough. These items are hard to come by and even if you do find them, many times you will get turned away by overcrowded public hospitals that are lacking surgical supplies and doctors. Many of these hospitals do not have proper ventilation (due to shortages on air conditioning parts) which makes these hospitals a breeding ground for bacteria and infections. Moreover, insufficient lighting and lack of security have caused robberies of babies and personal belongings to become common in maternity wards.

Many doctors (as well as other health professionals) have fled the country due to the economic crisis. Because of this, most hospitals are short on staff. The idea is to get you in and out of the hospital as soon as possible. This attitude is in part responsible for the growing cesarean sections performed in the country. It is a no-brainer, a surgery is much quicker and more expensive than having to attend to a woman for 12 to 16 hours of labor. Most women, and especially those of a lower socioeconomic status, are coerced by doctors to get a C-section. Lack of education and minimal options leave women with no choice.

The ugly truth of public hospitals in Venezuela has been well documented by Betty Laura Zapata, a Venezuelan photojournalist who lives in London. In 2014, she visited some of the public hospitals in the country and interviewed doctors, nurses, and supporting staff in hopes of getting a clearer picture of what is going on in the country. You could see some pictures on Betty's research at Project X-Ray. I should warn you that some of the images are graphic. She also put together a written report on her findings which you can read in the following link: Betty Zapata's report on Venezuelan hospitals. In addition, I am also including a video which aired on Channel 4 News last week.

The Birth Control Problem

Unwanted pregnancies (which are pretty much all pregnancies given the current economic crisis) are becoming more common these days. The reason for this is that the country has virtually run out of all forms of contraceptives. Women are going from pharmacy to pharmacy furiously looking for birth control pills. A recent article in Bloomberg Business, The Latest Indignity in Venezuela, reports that due to inflation rates and shortages, a pack of condoms (if you are lucky enough to find them) can cost upwards of 4,760 bolivares which represents the monthly salary of a worker making minimum wage or $755.

This has also caused teenage pregnancies to spiral out of control with Venezuela becoming the South American country with the second highest teenage pregnancy rate. Women are exploring the possibilities of obtaining long term contraceptive methods such as intrauterine devices which had been used by very few Venezuelan women in the past. However, due to the lack of available information on these methods, many working class women feel apprehensive about exploring this option. In addition, intrauterine devices will do little to address the high rate of HIV/AIDS in the country which is currently one of the highest in Latin America. With women growing more frantic each day, it is only a matter of time before women who are not able to get their hands on preventive methods will resort to illegal abortions in order to eliminate the additional stress that may come with feeding an additional mouth. Talk about a slippery slope!

I present these issues with as much data and details as possible in order to show the big picture. It is important to see and to understand all of the unintended consequences that come with failing economic policies and how the same are affecting the people that these same policies vowed to protect—the poor, the needy, women, elderly, children, and all those whose voice is not being heard. I want to continue being that voice. Until next time.

Whose Land Is It Anyways?

If you have been keeping up with my recent blogs, you may know that Venezuela is pretty much divided between chavista or pro-government, and those that are of the opposition or anti-government. Miraculously, in the recent weeks they have managed to find one issue in which they can both agree.

President Nicolas Maduro has been riling the people of Venezuela to take back the land that rightfully belongs to them. The property in dispute is Essequibo, which currently belongs to Guyana, a country that borders with Venezuela. The territory in question is no small plot of land; it represents about two-third of Guyana's territory.

The area shaded in dark green is the disputed territory

The dispute over this land is one that has been going on for centuries. In 1899, the territory was granted to Great Britain when Guyana was still a colony. Seventy years later, Venezuela defied the ruling and deemed it unfair. The Geneva Agreement dictated that the two countries would need to come up with a viable solution. The talks died down and neither country did much more to address the situation.

All of this changed a few months ago when a large oil field was discovered in the area. Exxon Mobil is in the process of coming to an agreement with the government of Guyana to commence drilling.  The Venezuelan government is doing all in its power to prevent Exxon Mobil from getting access to this land. President Maduro is appealing this matter to the U.N. accusing Guyana of "attacking the dignity of the Venezuelan people" and of "undermining a peaceful diplomatic solution." Maduro is also planning to issue Venezuelan ID cards to the Guyanese people living in Essequibo and to fund an advertising campaign in hopes of convincing the people of Guyana that they are better off denouncing their Guyanese nationality and living under Venezuelan rule.

Unlike the border of Colombia and Venezuela, the border that separates Venezuela and Guyana is not open for crossing as this land is part of the disputed territory. Relations between both countries did start to improve under president Hugo Chavez who was in favor of financing several projects within Guyana including a homeless shelter which was named after him and is still operating under the name Hugo Chavez Centre for Rehabilitation and Reintegration.

It seems clear that the Venezuelan government's real issue is not the land itself, but the fact that Exxon Mobil, an American company, will be getting their hands on this land to drill oil. As if the plunging oil prices weren't a big enough problem for the economy of Venezuela, if Exxon Mobil gets their way, the United States would be importing even less oil from Venezuela. Hence, these desperate measures seem to be driven by economic and political motives rather than patriotic ones. I am curious to see how conquistador Maduro is planning to convince the people of Guyana that they would be better off as Venezuelans. I highly doubt that the Guyanese people will be jumping at the opportunity.

Where's the Booze?

If there is one thing you should know about Venezuelans is that they love their beer. In fact, it is the most consumed alcoholic beverage in the country, but this can all change by the beginning of next month. Local breweries have announced that they have virtually run out of beer and have no hope of replenishing their inventory.

Cerveza Zulia - Venezuelan beer

Due to the strict exchange restrictions, it has been very difficult for breweries to obtain the imported raw material needed to make beer, which includes barley and malt. In an attempt to control high inflation, the government has forced companies to use dollars when conducting international business. The problem is that these brewing companies cannot afford to get dollars in order to pay foreign suppliers. U.S. dollars have become a commodity in and of itself for companies that are already in the hole more than $200 million with foreign suppliers.

Cerveza Polar

Chances are that these companies can find U.S. dollars in the black market. However, the black market is not a charity organization so if they are going to exchange your bolivares (local currency) for dollars, they are going to charge you three times more than the official rate. The brewing companies simply cannot afford to do business with the black market and the government does not have enough dollars to go around. Government-owned companies and a select few private companies are allowed to purchase dollars from the government for a fraction of the costs, but no such break has been given to brewing companies.

To add insult to injury, Fray Roa, the general director of the Venezuelan Federation of Liquor Producers, was arrested this past Friday for going on record saying that the government was responsible for the current beer crisis. He also called for a "zero-hour" planned protest to denounce the government policies that have contributed to the shortages. The government's reaction sent a clear message to all: this kind of public attack against the government will not be tolerated.

Many of you may be thinking: So what if there is no beer in the country? In a time of economic crisis, should people be inebriated anyways? Well, the problem does not lie in people getting their beer fix. The uneasiness of the situation is that if the brewing companies have to shut their doors, as many as half a million people will lose their jobs. Venezuela is simply in no condition to allow this to happen without causing a major ruckus.

Maria's Exodus: A Narrative

Today I want to share Maria's story of struggles and triumphs as an immigrant.

Maria was born in Barranquilla, Colombia. She was the youngest of seven children which consisted of four girls and three boys. Her father was a sailor and her mother was a homemaker. Since Barranquilla is located at the coast of Colombia, there were many merchants, fishermen, and sailors. During the late 60s, violence and corruption erupted in the country. Tragically, Maria's sister and nephew were kidnapped during this time never to be seen again. The family believed that they were captured by one of the many groups that had been selling organs in the black market.

At the age of seventeen, Maria's parents decided to move to Venezuela in search for a better life. Maria's older siblings decided to stay because they did not want to leave their children and jobs behind. They applied for a "border visa" and took the nine hour bus trip to Venezuela. They settled in Maracaibo, Venezuela which is located just a few hours from the border. The family adjusted very quickly; Maria found a job as a maid and her father became a merchant. Nonetheless, her parents became increasingly homesick and were lacking the energy they once had. After five years of working in Venezuela, they decided it was time to go back home. Maria made the difficult decision to stay in order to be able to send money to her elderly parents. She stayed in Maracaibo for another four years before moving to Caracas, the capital.

At the time, Caracas was the epicenter of the world (or at least that's how it appeared to her) and it was a known fact that people were making twice as much money in Caracas than they were making in any other part of the country. Maria went to Caracas in search for a better pay and that is exactly what she found. She started working as a live-in maid and nanny to a Venezuelan attorney and his family. When this family relocated, she started to work for a Jewish surgeon and his family as a live-in nanny. Although the pay was good, she had dreams of going into another line of work that would provide her with a more stable job. She started to work during the day as a nanny and in the evenings she attended Beauty School.

(second from the left) Maria at 1978 Christmas Party, Sandro's Salon

When she obtained her certificate from Beauty School, she started working at a salon as a helper—washing hair and sweeping the floor. After gaining some experience and establishing her own clientele, she moved on to work as a stylist in Barberia La Pescara in Caracas, Venezuela. She was making very good money and this allowed her to send money frequently to her parents back home.

While working at the salon, she met a handsome young Dominican fellow who worked as a shoemaker nearby. In the early 80s, there was an influx of Dominican immigrants coming to Venezuela. They were looked down upon by the locals who considered them loud and vulgar. Maria was no exception, she ignored the man for over a year when she encountered him on her way to work even when he would send a friendly "good morning" her way. Eventually, she decided to reply to his greetings and gradually started to accept his invitations for coffee. It would be another two years before they would marry and soon thereafter have two daughters. Things were finally going well for Maria at the time.

Then on February 18, 1983 something occurred that changes things forever; this particular day is still known in Venezuela as Black Friday. Up until this point and for over 20 years, the exchange rate to U.S. dollars was fixed to 4.30. The bolivar, the local currency, was one of the most valuable currencies in the world at the time. When Maria sent money to her parents in Colombia, it went a long way because the Venezuelan currency had a much greater value than the Colombian one. But on Black Friday, the government of then president Luis Herrera Campins, devalued the local currency by 100% and imposed exchange controls.

Maria in Barberia Pescara, 1981

The effects were felt instantly by the people in Venezuela, including Maria. Many of the immigrants that had flocked to Venezuela a decade ago were now desperately trying to apply for U.S. visas. Maria soon followed suit and applied for a U.S. visa to provide a better life for her family. During the course of five years, her visa was denied multiple times before finally getting an approval in 1988. Maria and her family traveled to the United States in a chilly November morning in 1988. With just a couple of hundreds of dollars to her name, she left behind her job and friends to find a better life for her family.

Maria and her family lived in a rented room on Tremont Avenue in the Bronx for a few months before getting their own apartment. Within two weeks of her arriving to the U.S., she found a job in Caribe Salon in Washington Heights where she established her clientele. Only a few weeks later a client gave her a lottery ticket in lieu of a tip. This proved to be a winning ticket and she won $2,500. She used this money to get an apartment in Washington Heights and to rent a space to open up her own beauty salon.

Maria would go on to eventually own four salons and have two more children in the United States. She was forced to sell the salons when she had an accident that required knee surgery. Notwithstanding, she continues to work on a part-time basis and has no plans of retiring any time soon.

Maria's life as an immigrant is one of many barriers and heartaches. It is also a story of determination, achievement, and a bit of luck. I am overwhelmingly proud to call this hard working woman my mother.

The Inside Scoop from a Lead Economist of The Pre-Chavez Era

This week, I had the opportunity to chat with Darryl McLeod, Associate Professor and Chair of the Economics department at Fordham University.

Professor McLeod was Lehman Brothers' lead economist for Venezuela and Mexico from 1995-1996, a very difficult period for both countries. In 1998 he was part of a Inter-American Development Bank (IADB) mission which recommended labor market and tax reforms. Later he supervised Latin American group at Wharton Econometric Forecasting Associates (WEFA) where he worked with Juan Pablo Fuentes, the economist who was covering Venezuela. You can check out the interview below.

While at Lehman Brothers you and John Welch prepared a comprehensive economic recovery plan for Venezuela emphasizing privatization, flexible labor markets, a market based on exchange rates and transparent management of oil revenues to encourage private investments. Why do you think your plan was not implemented? 

The main reason the plan failed was because of the change in government. Once Hugo Chavez took power in 1999, many foreign, and especially U.S. companies, were viewed with suspicion and the government began to cancel or renegotiate contracts with PDVSA for example, whose ambitious investment plan was key to Venezuela’s future. Many of us saw the need for redistribution and better government, which Chavez promised, but over time most of my colleagues became disillusioned with heavy handed intervention and political repression that characterized the new regime. 

In your opinion, what government policies have been responsible for the country's economic downturn?

First, it is somewhat ironic that many other Latin American countries have benefited from Hugo Chavez regime more than Venezuela. The sharp turn to the left in Latin America in 1999  struck fear into Latin America’s elite and they took steps to redistribute income and economic power in part to prevent a Chavez style regime in their country. Chavez did create many programs to help the poor and other countries followed Venezuela’s lead. The key difference is the policies used to redistribute income. 

There are two ways to help the poor and redistribute wealth. One is to provide cash subsidies to the needy. The other and more problematic way is price controls to make goods cheaper for the poor (and the middle class). The second method can create shortages: firms cannot profitably supply or import the needed goods so store shelves are empty: people have money but there is nothing to buy. So the main problem with Chavez and Maduro style regime is not that they redistribute wealth, but unintended consequences of poorly executed social policy.  

The rationing of dollars and multiple exchange rates is another chronic problem, that fuels inflation and creates economic uncertainty, reducing private investment even further.  Venezuela now has the highest inflation rate in the world, but to its credit it reports price increases accurately (unlike Argentina).  Since I focus on poverty data, I find it strange that SEDLAC and the World Bank do not report income data after 2006 (though the UN CEPAL does). I am not sure if this is data reliability or a political disagreement, reliable data and transparency also helps encourage investment and creates confidence in a government.    

What do you think about the recent wage increases? Will this resolve some of the economic problems in the country?

Ideally it should, but it won't be of much help if the people have more money if there is nothing in the stores to buy. The problem is not having money, but the fact that key necessities are not available to buy at official prices. Easing price controls to end shortages is necessary to restore real purchasing power, raising wages is not enough. 

What policies should the government set forth in order to alleviate the problem?

First the government must restore macroeconomic stability. They can do this by unifying the foreign exchange rate, setting up a sovereign wealth fund, and loosening their grip on the market. Oil price is low, so their external debt may need to be restructured.  The may also need to find partners to invest in the oil sector as Mexico is doing. Once these reforms are credibly in place tax revenues should increase as well as private investment. 

Addressing the crime problem in Caracas is also essential. After ending these fundamental insecurities and uncertainties, they can return to the labor maker and pension reforms our IDB mission recommended just before Chavez took power. People need jobs and goods and services to buy, it is that simple.

In a recent speech, president Nicolas Maduro referred to the practices of the International Monetary Fund as "financial terrorism". What are your thoughts on this?

The IMF has made some fundamental errors in Venezuela, mismanaged food and fuel price increases in 1989 for example that led to “IMF riots” or Caracazo and many deaths.  However the IMF has learned from its mistakes and had recently emerged as an unlikely opponent of austerity and is now a strong advocate for debt relief in Greece for example. And with oil prices this low, Venezuela may need some temporary loans. Venezuela may be able to get loans from Russia or China, but these will not come with the certification, monitoring and credibility that the IMF can provide. 

The Maduro government needs to convince its own people, in Caracas and Miami, that Venezuela has a bright future again.  Other left leaning regimes in Brazil, Bolivia and Ecuador have managed to encourage private investment and reduce inequality, Venezuela should follow their example. Better economic policies would help everyone, not just the poor and the current government. 

Interviewing Prof. McLeod made me realize that most of the issues that the country is facing today were foreseen many years ago. Had the government followed the proposal at the time, the country would be in a much better economic situation and less dependent on oil prices. Notwithstanding, it is not too late for Venezuela to revisit some of these recommendations to come up with a viable solution. 

A big thanks to Darryl McLeod, PhD. for taking time from his busy schedule for our chat!