Rumor has it that during the year and a half that Venezuelan President Hugo Chávez spent in jail for his role in a 1992 coup attempt against the government, he was a voracious reader. Too bad his prison syllabus seems to have been so skimpy on economics and so heavy on Machiavelli.
“Money Fun in the Venezuela of Hugo Chávez,” The Economist, February 13, 2004
It's late afternoon on March 10, 2004, and Santiago opens the window of his office in Caracas, Venezuela. Immediately he is hit with the sounds rising from the plaza—cars honking, protesters banging their pots and pans, street vendors hawking their goods. Since the imposition of a new set of economic policies by President Hugo Chávez in 2002 such sights and sounds had become a fixture of city life in Caracas. Santiago sighed as he wished for the simplicity of life in the old Caracas.
Santiago's once-thriving pharmaceutical distribution business had hit hard times. Since capital controls were implemented in February of 2003, dollars had been hard to come by. He had been forced to pursue various methods—methods that were more expensive and not always legal—to obtain dollars, causing his margins to decrease by 50 percent. To add to the strain the Venezuelan currency, the bolivar (Bs), had been recently devalued (repeatedly). This had instantly squeezed his margins as his costs had risen directly with the exchange rate. He could not find anyone to sell him dollars. His customers ...