Multiple exchange rates

The Financial Post reports that the upcoming Venezuelan devaluation is going to be somewhat...odd.

Items classified as nonessential now have an exchange rate of 4.3 bolivars per U.S. dollar, up from 2.15 and compared with a new rate of 2.6 for essential imports such as food and medicine.

This rather confused me until I remembered that

1. This is the rate at which Venezuelans can buy and sell foreign currency from the Venezuelan government, who do not promise to always meet demand at the stated rates
2. The official exchange rate remains inaccessible to most Venezuelans, who trade currency in the grey market at worse rates
3. This is more an accounting device to boost the reported Venezuelan dollar profits of oil exporters (who can sell oil for US dollars then report income in Venezuelan dollars at the 4.3 rate while buying foreign-built equipment at the 2.6 rate)

See also the Wall Street Journal.

I'm told that in the bad old days in New Zealand, folks needed permission to get foreign currency; academics needed government permission for the foreign exchange to get a journal subscription. And that Muldoon wanted to devalue the NZ Dollar, but only against the Australian dollar (and got angry that Treasury/RBNZ told him it couldn't be done without...large problems). The dual exchange rate made me think of the Muldoon move....

Offsetting behaviour and KPI measures

The first 5 minutes of this BBC video give wonderful examples of the perils of target based assessment in the public sector.

Set the target as being time on the hospital waiting list and they'll prioritize the easiest surgeries. Set the target as time to being seen in the Emergency Department and they'll assign a "Hello Nurse" (and not the good kind from Animaniacs either). Patients don't hurt targets about numbers left on gurneys if you take the wheels off the gurneys and call them beds. And so on.

Reminds me of the old stories of socialist planning bureaus. If the target were tons of widgets, you make one MASSIVE widget; if the target is number of widgets, you make all kinds of itty bitty ones. If it's number of shoes, why bother making both left and right?

The video goes on later about how this is all the fault of the market and of governments moving too much towards a market model, but I've never had my grocery store mess me about in this way. It only happens in the state sector where there is no performance measure OTHER than whatever the target is. In the competitive sector, profit and loss provide discipline. So if you hurt productivity trying to skew performance along one measure, the customers will make sure you pay for it. The video talks about problems in the UK's league tabling of schools where rich folks would move into good schools' zones, keeping poor kids from getting into good schools. But isn't the problem then less the league table and more the restrictions on zoning? If they'd have combined league tables with vouchers and zero zoning, wouldn't outcomes have been just a little different?

The lesson the BBC should have drawn was that giving customers vouchers and letting them choose their own providers, whenever possible (hospitals, schools yes; police, maybe not) makes an awful lot more sense than assessing bureaucratic performance against KPI measures when principal agent problems are rather severe.

Hammer and Sickle Humour

The National Business Review's email update points me to Spiegel's collection of East German jokes. The West German intelligence service kept an ear out for political jokes as a measure of public mood in the East; they've now released their joke files. Spiegel reports on some of the best.

Did East Germans originate from apes? Impossible. Apes could never have survived on just two bananas a year.

What would happen if the desert became communist? Nothing for a while, and then there would be a sand shortage.

Why does West Germany have a higher standard of living than we do? Because communists can't get work permits there.

A new Trabi has been launched with two exhaust pipes -- so you can use it as a wheelbarrow.

There are people who tell jokes. There are people who collect jokes and tell jokes. And there are people who collect people who tell jokes.

Whole article worth reading, especially on the role of humour in totalitarian states.

Chilling

Every death-cult has its followers. And so there exists a Pol Pot appreciation society. It's a Geocities site, and Geocities is on its way down, so check it out while it lasts.

This is the webpage for Group for the Study of the Theories of Pol Pot. We work to understand the ideology of Brother Number 1, so that they can be used to achieve Year Zero on world scale.

For the wonders achieved under Pol Pot, consult Bryan Caplan's Museum of Communism and follow the links to the Cambodian Killing Fields archive.
HT: TGGP