Monday, November 12, 2007

Being a Consumer in Venezuela

Fresh on the heels of the cooking-oil stampede in the Shapingba district in southwest China, where three died and 31 were injured, comes a story that Brian Ellsworth filed for Reuters on the challenge of providing staple foods for a family in Venezuela:

Venezuelan construction worker Gustavo Arteaga has no trouble finding jobs in this OPEC nation's booming economy, but on a recent Monday morning he skipped work as part of a more complicated search -- for milk.

The 37-year-old father-of-two has for months scrambled to find basic products like cooking oil, beef and milk, despite leftist President Hugo Chavez's social program that promises to provide low-cost groceries to the majority poor.

"It takes a miracle to find milk," said Arteaga, who spent two hours in line outside a store in the poor Caracas neighborhood of Eucaliptus. "Don't you see I'm here slaving away to see if I can get even one or two of those (containers)?"

Venezuelan consumers are increasingly facing periodic shortages of basic food products as the economy shows signs of overheating amid record revenues from an oil boom.

It is only too easy to read an account like this as evidence that, for all his grandstanding, Chavez is not running his country as well as he would like us to believe (including those of us seduced by all that propaganda about the emphasis on music education in Venezuela). However, as always, there is a subtext that demands deeper attention. In this case the subtext that interests me has to do with the way in which the media, regardless of political dispositions, have been quick to label both China and Venezuela as "economic miracles." Upon close inspection, however, we find that the reporters that invoke this epithet tend to base it on revenue figures, comfortably avoiding having to examine any social indicators that try to capture the impact of that revenue on the general population. This is probably a revival of that old cliché from the days of Ronald Reagan's first campaign for the Presidency having to do with a rising tide lifting all boats. It did not take long for us to recognize that this precept was not true when the Reagan camp promoted it; and now we see that it is still not true, even in other countries under markedly different political ideologies.

Billy Wilder once said that the way to follow the plot in a movie is to follow the money. This advice has worked just as well in the world of non-fiction, perhaps best illustrated by the investigative methodology of Carl Bernstein and Bob Woodward, which they documented in All the President's Men. Financial reporting, on the other hand, is not all about plot (notwithstanding the narrative perspective that Deirdre McCloskey, an economist with Reagan credentials, by the way, has brought to the study of economics). Rather, it is about the fabric of life that weaves together those who produce and provide and those who consume and benefit. Reporters drugged by the Kool-Aid rhetoric of "economic miracles" almost deliberately seem to lose sight of any of the factors that impact the quality of that fabric of life.

This returns us, once again, to the wisdom of Mr. Dooley. In recognizing the impact of the newspaper on the banks, he implicitly recognized that the news of banks, or any other economic institutions (including entire countries), deserved to be delivered in a form that would communicate to all readers, even those, like Mr. Dooley, who lacked "expert knowledge" of finance. Such a form would relate the numbers on the balance sheets to their impact on day-to-day life, which included such matters as not only the price of milk but the availability of that milk. Today's newspapers have forgotten this wisdom, leaving us with little more than our own abilities to scrape an odd item or two from the RSS feeds provided by the (slowly deteriorating) wire services, which is basically what this post has tried to do.

As an afterthought, lest the prospect of the preceding paragraph comes off as too bleak, credit should be given to Peter Coy, who, with the assistance of Nanette Byrnes, Dawn Kopecki, and Mara Der Hovanasian, prepared the "Economy on the Edge" story for the latest issue of BusinessWeek. The Web page for this story even prompted a comment from reader "Backspan," which reinforced the point of I have trying to make: "You guys explain how economic number have a direct impact on life as we know it." Whatever grief Mr. Dooley may get from other journalistic practices, he would probably take comfort in at least this one piece!

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