www.vheadline.com Posted: Wednesday, January 29, 2003 - 1:37:17 PM By: Oliver L Campbell

Date: Wed, 29 Jan 2003 12:35:17 -0800 From: Oliver L Campbell oliver@lbcampbell.com To: Editor@VHeadline.com Subject: Mr Willke's Letter

Dear Editor: I refer to Mr. Willke’s interesting e-mail of 28 (www.vheadline.com) January where he expounds the problems of education and inequitable income distribution in Venezuela ... I would, however, have liked him to suggest some solutions as well.

I passionately believe that a lack of sellable skills is main problem of the poor in Venezuela. In a recent article I wrote “It is essential these people (the poor) are brought into the economy by learning useful skills. This means reforming the education system so more technical institutes are created which provide practical instruction and training to those who are not cut out for an academic education. A technical qualification will be given the recognition it deserves and carry its own prestige. At the same time, a host of young people will acquire the dignity and intense satisfaction that come from being employed and doing a worth while job.”

I do not disagree with Mr. Willke that inequitable income distribution is a problem in Venezuela as, indeed, it is in many countries. The trouble is how do you reduce it?

Venezuela already has a progressive system of income tax and an inheritance tax of 40% ... we all know that value-added taxes hit the poor more than the rich. The only thing I can think of is a wealth tax of some kind, and that certainly would be difficult to introduce.

The centrally-managed economies had some success because they could dictate salaries. The result was, for instance, that a medical doctor with years of training did not earn substantially more than, say, an electrician. However, this type of economy proved to be very inefficient and most countries that had it (including Russia), have now moved to a market economy.

My point is, that in a market economy, it is very difficult to reduce inequitable income distribution. For instance, how do you lessen the large differentials in salaries where the general manager earns, say, twenty times what one of his manual workers does?

The only practical way to eliminate this is through education or ... as I prefer to put it ... through the acquisition of skills required in the market place. Those countries that have tried to introduce an incomes’ policy, like the United Kingdom, have soon abandoned it as unworkable.

You can, of course, throw money at the problem of the poor by giving them hand-outs, allowing them to use public services free of charge, and improving the infrastructure of the sectors where they live e.g. the 'ranchos' of the large cities ... this has all been done, but it is only a temporary palliative (panitos calientes), and the aim surely must be to enable them to earn a reasonable living.

The Chinese have a saying "Give a hungry man a fish and he will be hungry again ... teach him how to fish and he need never be hungry again." If money has to be thrown somewhere, it should be at the construction of technical schools all over the country. This will mean increasing taxation ... but it is the cost of rectifying the indifference of governments over the last 50 years.

I agree with Mr. Willke that whichever government is in power, it will have to address the problem of the poor: it is not a problem that will quietly go away.

Oliver L Campbell oliver@lbcampbell.com

www.vheadline.com Posted: Thursday, January 30, 2003 - 5:01:56 PM By: Oscar Heck

VHeadline.com commentarist Oscar Heck writes: Mr. Oliver L. Campbell's recent letter to Vheadline.com (www.vheadline.com) brought up some interesting points and reminded me of a recent discussion I had with a young tourist from Zimbabwe who was on an adventure tour in Los Llanos ... the vast central plains of Venezuela.

I mentioned to this young man, the son of a British-born merchant and businessman, that I was in the process of transferring a portion of my business to Venezuela. His immediate response was "...so you can take advantage of the low wages?" My reply was "...no, because I love Venezuela and its people, and because I can now handle my business through the internet and it does not matter where I work from.  I will be paying my employees maybe 3 times the present minimum wage ... a deserved wage for the work required in comparison with the cost of living here ... and I still make a very good profit!" He was surprised, and responded with a question "but why would you do that?" My response was simple "because I believe in it!" He never spoke to me again.

Perhaps people who are listening can consider something similar in nature. That is, since many businesses can now be managed through the internet, covering an ever-increasing international market (versus a local market), it may be worthwhile for the Venezuelan government and private enterprises to promote the establishment of small "international scope" operations offices throughout rural areas of Venezuela (and pay the employees decent wages).

An example of this occurred in Canada several years ago ... the New Brunswick Provincial Government (one of the 10 Canadian Provinces - with a high level of unemployment), promoted the establishment of "call centers" in rural areas of New Brunswick: representing hundreds, if not thousands of jobs for people who were mostly on welfare, or who only had seasonal jobs.

Such a venture, for example, can be initiated from almost any place in the world that has reliable telephone/internet access. In addition, it is relatively easy to train personnel.

With respect to paying better than the minimum wage (the minimum wage in Venezuela is pittiful), I discussed this with one of the promoters of international manufacturing investments for the Zona Libre, State of Merida (in the Venezuelan Andes). His response to me was "you can pay whatever wages you want, so long as it complies with the laws ... if you decide to pay better than the norm, it's your choice ... but it will be better for everyone ... better for the employees, the people will respect you more ... and you will have honest, devout employees ... they will not steal from you, because you will be treating them well ... and you will have employees from other companies asking to work for you!"

These are perhaps thoughts worthy of consideration?

Oscar Heck oscarheck111@hotmail.com

www.deepikaglobal.com

Greece seeking special enlarged EU meeting on Iraq

U.S. warns North Korea, welcomes U.N. review   Bush, Blair to meet at White House, not Camp David   Schroeder upholds U.S. right to use bases, airspace in Germany   U.N. arms experts search more suspect Iraq sites   Putin anxious about aggravated tensions in Iraq   Israel rejects Arafat's offer to move back to Gaza HQ   UK's Blair heads for crucial Iraq talks with Bush   Pakistan foreign minister campaigns against U.S. immigration laws   Iraq invites top U.N. arms inspectors to visit Iraq in February

www.faz.com By Doug Bandow

Chancellor Gerhard Schröder says Germany “will not take part in a military intervention in Iraq,“ although it is less clear whether his government will oppose war when the UN Security Council votes. France also offers resolute ambiguity, threatening, but not promising, a veto.

Yet Washington remains skeptical that its critics are serious, and U.S. Secretary of State Colin Powell has indicated that he expects Paris to give in - as it always does. It is noted that Schröder won reelection by running against the Bush administration's plan for war in Iraq but later promised to send German troops to Turkey to crew AWACS planes sent by NATO. Even the refusal of NATO to approve America's request for assistance is seen as only temporary.

Over the years, Washington has learned that it can browbeat most any nation into submission on most any issue, but the coming showdown over Iraq offers Europe another chance. Simple criticism, however, whether from angry demonstrators or frustrated diplomats, will not dissuade President George Bush from ordering an attack on Iraq. Concrete practical steps are necessary.

First, France must do more than bluster. Only by vetoing any UN war resolution can France hope to stop the Bush administration's war plans. And only by making a commitment and sticking to it will Paris be able to encourage China and Russia to join it. A veto by two or three of the Security Council's permanent members, supported by the negative votes of Germany and perhaps other states, would demonstrate a sobering lack of international support.

Second, Schröder must prove that opposition to Washington is more than a cheap election stunt. The U.S. doesn't need Berlin's approval if it nevertheless allows unfettered American use of German airspace, permits Washington to shift forces from bases in Germany, and even mans AWACS planes supporting the war. If the chancellor believes Washington's Iraq policy to be misguided, even dangerous, he must say so - and vote against any Security Council resolution, bar the use of German troops in any fashion, and deny Washington use of German airspace and bases.

Third, France and Germany must encourage other governments to join them. A protest by several European states carries more weight than criticism by one or two. An opposition that included Pakistan and Syria - like Germany, temporary members of the Security Council - as well as India, Indonesia, and perhaps Japan would be more impressive still.

Fourth, Berlin and Paris should encourage Jordan, Saudi Arabia, and Turkey, where a new government faces a public that opposes war by a nine-to-one margin, to stand firm against any war. Fifth, Britain's Labour Party must say no to war in its name. Prime Minister Tony Blair is supporting Bush administration policies, but this will not be Tony Blair's war.

Sixth, other U.S. allies must look after their own interests. Australia, for example, has strongly backed the Bush administration, yet war against Iraq would create additional Muslim grievances and encourage the use and transfer of whatever weapons of mass destruction Baghdad possesses, increasing the likelihood of an even more devastating, Bali-like attack.

South Korea and Japan are understandably focused on the prospect of North Korea restarting its nuclear program, but war in Iraq makes war in Korea more likely. Although Bush has proclaimed his intentions on the Korean Peninsula, no one should take him at his word. Once the conquest of Iraq is complete there will be rising demands inside the administration for military action against the North, and at that point opposition by Seoul and Tokyo may be too little, too late.

Lastly, other governments must warn Washington that they will not bail it out after any war.

The Bush administration is counting on European nations to furnish many of the tens of thousands of troops who will be needed for years to preserve some pretense of order among Baathists, Kurds, Shiites, and returning émigrés. Berlin, Paris, and others should tell Washington that it will be not only a U.S. war, but a U.S. peace.

If Berlin and Paris back down after publicly avowing their opposition to war in such strong terms, they will reinforce the justifiable contempt in which they are held in Washington. And U.S. administrations will continue to ignore them in foreign crises.

The credibility of European and other critics of Washington is at stake. Giving in will feed Washington's conviction that it can impose its will without constraint. The Iraq process will inevitably be repeated, only with Iran or North Korea as the next target. Or with a plan for coercive “regime change“ in Saudi Arabia or Venezuela.  Or perhaps one to forcibly disarm Pakistan.

It will be difficult to stop Washington's rush to war. United foreign opposition offers the only hope of doing so.

Doug Bandow is a Senior Fellow at the Cato Institute in Washington. and a former Special Assistant to President Ronald Reagan.

This article first appeared in the Frankfurter Allgemeine Zeitung. Jan. 31

www.forbes.com Reuters, 01.30.03, 4:21 PM ET

NEW YORK, Jan 30 (Reuters) - Investment bank Morgan Stanley said on Thursday it raised its recommendation on Brazilian sovereign bonds to outperform from market perform amid optimism for the legislative agenda of the country's new government.

Morgan Stanley said in a report it advised clients to move their positions to overweight from market weight, a move that comes on the heels of last week's nomination of ex-president Jose Sarney, an ally of new President Luiz Inacio Lula da Silva, to head the Senate.

After weeks of negotiations, the deeply divided Brazilian Democratic Party (PMDB) agreed on Sarney as its candidate, a move likely to bolster congressional support for Lula's agenda of economic reforms. Lula, who ran on the Workers Party (PT) ticket, took office earlier this month.

"The recently sealed agreement between the PMDB and the PT provides positive prospects for the new administration's congressional agenda," said Morgan Stanley.

The decision comes as investor fears about the economic fallout of a possible U.S.-led military strike on Iraq weigh on emerging markets. Despite the uncertainty over Iraq, Morgan Stanley said it still was moving to buy Brazil.

"Brazil and Latin American assets are currently participating fully in the global sell-off in risky assets. To the degree that it is Iraq-related, we expect that this sell-off will be temporary and we are buying Brazil heading into it," it said.

Morgan Stanley said it also raised Venezuela to market perform from underperform, thanks to the prospects for a solution to a two-month-old general strike, the government's efforts to maintain reserves through capital controls and increased oil output.

Foes of Venezuelan President Hugo Chavez are staging the work stoppage in a bid to force the leader's resignation or spawn new elections. The strike has strangled oil production, the government's chief source of revenues, and raised concerns the nation may be left without enough cash to pay its debts.

Morgan Stanley said that as the strike loses steam, it expects the opposition to reach an agreement with Chavez for an August referendum on his rule, a move that Chavez may concede to because of international pressure.

This, along with the government's plans for a single fixed exchange rate and a recovery in oil output sufficient to keep the government and state oil giant PDVSA from defaulting on its debt, support the move to market weight, the bank said. (Reporting by Susan Schneider; Editing by Stuart Doughty; Reuters Messaging: susan.schneider.reuters.com@reuters.net, tel: +1 646 223 6319)