How to handle inflation, subsidies? November Bolivian Economics 101

Certainly not the way current Bolivian government is doing, if you don’t believe, just take a look at these:

This cartoon is from El Diario (11/09/11). Two of the most powerful and yet visible for now political leaders of the MAS, are engaged in a conversation: “…We have allowed entry of 100 thousand vehicles to the country..! without thinking that the gasoline is subsidized by our government. Now what!” And the other replies “100,000 smuggled  and legalized..! From the same leather come the subsid.. I mean! come the straps..!” Back in December 2010, at the time of justifying the price increases, one of the arguments was that vehicles were benefitting in excess from gasoline, diesel, gas subsidies… then over a 100K junk/old/used vehicles were smuggled, legalized and that alone represented a direct increase of the demand for fuel.

This cartoon is from El Diario, 11/16/11. Current Bolivian president apparently thinks he is a wonderful, talented speaker, so he talks and talks… long time ago Cuban Fidel Castro, who is a mentor of this president, liked to speak for hours! In this case, when president opens his mouth, most of the times he causes the opposite effect; so a government official (minister, assembly delegate) has to come in his rescue and “reinterpret” what everybody listened. In this case, no matter how long he talks, inflation is about to explode just behind him, while people begin to scape.

This cartoon is also from El Diario, 11/18/11. As he continues to talk, his tongue gets twisted as a result of last December 2010, when government raised the price for gasoline and other fuels and then had to cancel that price increase, while standard of living, basic goods, and overall prices kept on rising. This year, in more than an occasion he spoke about the prices, subsidies and just created the opposite effect. Economic behaviour is an extremely complicated human nature to predict, let alone to understand.

So… Loose lips sink ships… is it too much to ask for?

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