Harvard professor Ricardo Hausmann is a “bandit” on a mission to destroy Venezuela, says the country’s President Nicolas Maduro.
Last week he announced live on television that he ordered prosecutors to go after the Cornell-trained economist.
“We have proof of the declarations and articles that you’ve [Hausmann’s] written in those mansions that you live in over there — [proof] of the money you’ve taken from Venezuela,” said Maduro.
Hausmann — a former planning minister for the Venezuelan government just before late President Hugo Chavez took over in 1999 — recently wrote an article for Project Syndicate that took the government to task for using money to pay back foreign investors as food shortages and inflation ravage the country’s population.
It’s called “Should Venezuela Default” — which is a particularly incendiary way to frame things. That ‘D-word’ conjures horrible memories in Latin America. It turns countries into pariahs. It brings economies to their knees.
Hausmann, however, says the Venezuela is already on its knees. It has four separate exchange rates and a huge fiscal deficit. Instead of pretending to take the moral high ground by paying Wall Street and wealthy Venezuelan bondholders, the government should take care of its people, he argues.
All of this chaos is the consequence of a massive fiscal deficit that is being financed by out-of-control money creation, financial repression, and mounting defaults — despite a budget windfall from $US100-a-barrel oil. Instead of fixing the problem, Maduro’s government has decided to complement ineffective exchange and price controls with measures like closing borders to stop smuggling and fingerprinting shoppers to prevent “hoarding.” This constitutes a default on Venezuelans’ most basic freedoms, which Bolivia, Ecuador, and Nicaragua — three ideologically kindred countries that have a single exchange rate and single-digit inflation — have managed to preserve.
Hausmann is the Director of Harvard’s Center for International Development and Professor of the Practice of Economic Development at the Kennedy School of Government. He has also served as
Chair of the IMF-World Bank Development Committee and was on the board of Venezuela’s Central Bank.
For his part, Hausmann doesn’t seem worried at all about Maduro’s threats. He told the Harvard Crimson that he was going to “disregard” them entirely and that he feels completely free.
“I know that this is the government that it is. I’m not surprised at that… My surprise comes from the stupidity of the president’s reaction,” he said, adding, “I have the protection of the U.S.. I have the protection of Harvard. I feel a free man.”
Watch part of Maduro’s speech (in Spanish) below:
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.