On 6/27/06, Jim Devine <[EMAIL PROTECTED]> wrote:
I guess you could say that Chavez in Venezuela is also practicing something like that, but he has a big pot of oil revenues that he can did into to pay for his programs (as long as oil prices stay high).
Precisely, and Iran's very much like Venezuela, in that regard.
me: > > to what > > extent will the 180% increase in expenditures in rural areas be > > undermined by inflation? Yoshie: > The IMF says that average CPI inflation was "hovering above 15 > percent" in 2004/05 and that "[r]eflecting the impact of improved > weather conditions on food prices, the price freeze on certain goods > and services -- including on highly-subsidized petroleum products -- > and some exchange rate appreciation, average inflation is expected to > decline to 13 percent in 2005/06," though it expects the decline to be > temporary and exhorts -- you guessed it! -- the government to bring it > down into the single-digit range if Ahmadinejad makes a lot of promises that aren't sustainable, for which he doesn't have revenues to pay for, it could cause excessive external debt and/or serious inflation. Perhaps we aren't seeing that yet. Price freezes unfortunately do not solve the problem of inflation. It just changes the form, creating shortages. (If there are ways to get rid of market ineffiiciencies, then controls can work without shortages, but I don't know if that works in Iran.) It's nice for Iranians that the government is subsidizing oil products, but that comes out of the government budget. In terms of long-term conservation and the avoidance of global warming, the opposite of subsidization seems needed. The IMF is horrible, but they're right that beyond (say) 15% inflation, there's no benefit to a country to have inflation.
The IMF says that "Venezuela's inflation -- although declining -- remains in the 17-18 percent range" (Anoop Singh, Director, Western Hemisphere Department, International Monetary Fund, "Global Context and Regional Outlook for Latin America and the Caribbean," Symposium Sponsored by the Banco de la Republica, Bogota, Colombia, October 13, 2005," <http://www.imf.org/external/np/speeches/2005/101305.htm>). You can also see wild fluctuations of Venezuela's inflation rates between 1995 and 2006 at <http://www.latin-focus.com/latinfocus/countries/venezuela/vencpi.htm>. I'm afraid that American leftists take a rosier view of Venezuela and a dimmer view of Iran than reality warrants. -- Yoshie <http://montages.blogspot.com/> <http://mrzine.org> <http://monthlyreview.org/>
