The object lesson of Venezuela
Notes from a high school economics classroom in Caracas: brutal reality
CCARACAS, Venezuela onsider the economic situation in Venezuela: staggering inflation, massive trade deficits, pending federal default, and debilitating fiscal and monetary policies. As a teacher in Caracas, I find that my students face the daily effects of these and other economic crises that challenge their lives. Uniquely, Venezuela may be the perfect place to teach economics to high schoolers.
To track inflation, my students and I discuss and graph the currency exchange rate between the U.S. dollar the Venezuelan bolivar (known as the “b”). Noting that the country actually has three different daily exchange rates, we focus on the black-market purchase of the dollar (a common hedge against inflation), which shows most clearly the decay of the national currency. Since the start of this school year, the purchasing power of the bolivar has diminished five-fold.
We observe how our lunchroom prices rise to adjust to the meteoric cost increases (or absence) of staples like sugar, butter and flour. Students measure these price increases compared to other nations, and we graph the length of lines people stand in to obtain single loaves of bread at state-mandated prices.
We follow websites that track the daily price of arepas (a national dish) as well as the Café Con Leche Index — which measures the daily price increase of a cup of coffee in Caracas. Students share personal experiences where inflation rises so quickly that each day a student holds onto currency, his spending power diminishes. We note that Reuters, the International Monetary Fund and others expect inflation in our city to rise by as much as 800 percent during this school year alone.
In economics, obtaining reliable data is critical for graphing, discussion and policymaking. However, the Venezuelan government has been defiant with honest reporting on things like inflation, the homicide rate and teen pregnancy (all of which are likely to be the world’s highest). Even government officials themselves claim that obtaining accurate data on the nation’s gross national product is impossible.
I recently filled my car’s gas tank at a cost of 40 b.’s — an “offmarket” cost of less than 10 U.S. cents. No students were impressed, as gas here is cheaper than any other liquid including water. In Venezuela petroleum output accounts for over 90 percent of national revenue, but most have no way of accurately tracking exports other than to count oil tankers leaving coastal ports and estimate.
For nearly 20 years, while oil was exporting for a per-barrel price significantly higher than today, the Venezuelan government nationalized much of the privately held oil industry and shifted policy toward the expansion of debt and import-based products based on the assumption that oil prices would continue to rise. Oil prices have fallen dramatically. This has left a massive annual federal debt and triggered hyperinflation. Additionally, the reduction in export diversity has greatly added to Venezuela’s monetary troubles.
I asked my students, “Is Venezuela a ‘developed’ or ‘developing’ country?” An important question for economists and policymakers, it was not so easy for my students to decide. As one stated, “Maybe Venezuela is a DE-veloping country — a developed country that is moving in the opposite direction.”
When I asked for evidence for his statement, he noted the crumbling infrastructure we all observe on the way to school: everincreasing potholes and daily sewer water running along the street curb.
Our classroom at Colegio Internacional de Caracas is safe and engaging, but the downside for students is that Caracas as a city is one of the world’s most unstable for a country not at war. In the last month alone more than 30 people were reported killed during protests — including women and students — a much tougher topic to discuss in class.
As civil unrest escalates and the economy freefalls in Venezuela, schools across Caracas have been closing regularly, leaving students to learn independently or on a virtual school network. These closures are called the evening prior, to ensure that students remain at home and away from the potentially deadly protests.
Our overseas teachers at CIC who call Pennsylvania, Minnesota and Maine home equate these days to times where winter storms abruptly arrive and close school to students. As such, teachers and students have coined these school closures due to political unrest “snow days.” In an equatorial country, the snow day is as paradoxically unpredictable as the Venezuelan economy — though most have grown accustomed to the days off as well as the political and economic upheaval.
We have had 10 snow days so far this year and more are assured. Like snow days, the first few have been a reprieve, but frustration is mounting as school closures continue.
My students are learning economic policy in an authentic, though concerning setting. Most will leave this Venezuela for universities abroad soon, and only a few expect to Caracas return to work as adults. Like most students, they seem to appreciate the snow days, but I wonder how their snow days — and their current situation — will impact their lives.