Four Years of Price Controls
Many Americans have a very healthy level of skepticism for price controls in general. Apparently Hugo Chavez doesn’t and now his country is paying the price.
CARACAS – Meat cuts vanished from Venezuelan supermarkets this week, leaving only unsavory bits like chicken feet, while costly artificial sweeteners have increasingly replaced sugar, and many staples sell far above government-fixed prices.
President Hugo Chávez’s administration blames the food supply problems on speculators, but industry officials say government price controls that strangle profits are responsible.
Such shortages have sporadically appeared with items from milk to coffee since early 2003, when Chávez began regulating prices for 400 basic products as a way to counter inflation and protect the poor.
Yet inflation has soared to an accumulated 78 percent in the last four years in an economy awash in petrodollars, and food prices have increased particularly swiftly, creating a widening discrepancy between official prices and the true cost of getting goods to market in Venezuela.
”Shortages have increased significantly as well as violations of price controls,” Central Bank director Domingo Maza Zavala told UniÃ³n Radio on Thursday. “The difference between real market prices and controlled prices is very high.”
Let me see, shortages, black markets, high prices in the black markets…yep standard results for price controls. Funny how the price controls are supposed to curb inflation and yet inflation has risen 78% in four years. That is a staggering rate of inflation that is comparable to the worst inflation we had in this country back in the late 1970’s early 1980’s.
That this actually ends up hurting the very people that it is intended to help is also quite usual. The rich can always find the items they want. They may not be happy paying higher prices, but they are rich and pay they will. The poor on the other hand do not have this flexibility and simply have to do with an alternative and inferior good or do without. Why some on the Left think he’s doing something good is beyond me.
Via Lynne Kiesling who finds these kinds of policies nauseating.