Just a few quick notes before we head Down The Rabbit Hole for a little “Control Freaks.”
The Maduro regime is still trying to avoid the truth from coming out on the international stage.The ICC rejected a request by the Chavistas for judicial control over the investigation on human rights violations and crimes against humanity. “Methinks thou doth protest too much.” There isn’t even an official investigation but maybe they’re getting a bit nervous now that the chief prosecutor that has protected Nicolas for years is gone?
Reporters Without Borders has put out their worldwide list of tyrants and to nobody’s surprise, certainly not ours, Nicolas made the list of the 37 worst guys on the planet.
Voice Of America put out a report that shows why the Chavistas were so upset with UN High Commissioner for Human Rights, Michele Bachelet. The UN report detailed 97 cases in the last year of criminalization against dissenters, primarily human rights defenders.
There was a piece in The Guardian on the Maicao refugee camp at Colombia’s border with Venezuela. It highlighted the malnutrition and disease, bad or no water, etc. not to mention the language barrier among the indigenous people,and other concerns among the general population of the camp. It again raises the question I bring up to people all the time. Why is it that more than 10 times the money per refugee has been spent helping Syrian refugees as has been spent to help the Venezuelans? Is a full blown civil war just a sexier story than the day by day, slow motion, destruction of a nation that should be prospering? Is it the fact that many prominent figures both in the US and around the world rushed in to heap praise on “21st Century Bolivarian Socialism” before they showed their true colors and everyone could see the Chavistas for what they really are? Who knows?
There was a good piece in Caracas Chronicles by Alex Samsa (pseudonym) titled “A Glimse of the Country in the SAIME Line.” You may remember from my great escape tale that SAIME is the Venezuelan government department tasked with passports and government IDs. He used a pseudonym so nobody could put the kibosh on his passport request. The stories relayed to him by other people waiting in line shed light on various aspects of life in V-land and there was plenty of time for story telling. Only in Venezuela can 8 hours in line to get the process started for a passport be considered a success. It took me days to get my travel release (not to mention $500).
Anyway, let’s get Down The Rabbit Hole….
Chapter 5 / Control Freaks
If there’s anything that can match the failure rate of socialism it’s price controls. They simply never work…anywhere.I don’t know about you but when I hear the phrase “This time it will be different” I know failure is assured. It’s never different! When the housing bubble was questioned in 2007 we heard it as well as when the tech bubble was questioned in 1999 and in so many other instances. I believe “this time will be different” about as much as I believe, as Ronald Regan famously referred to, “I’m from the government and I’m here to help.”
A few years ago,when Venezuela was going through yet another bout of food shortages, one of the things that were abundantly available were eggs. Cholesterol concerns aside, it’s hard to worry too much about cholesterol when you’re starving, eggs are an excellent source of protein. It’s not like the people were clamoring for the government to do something about egg prices. While they weren’t particularly cheap they weren’t prohibitively expensive either and they were plentiful. Seems like a good balance of relevant factors. Well, we can’t have that now, can we?
At that time,Maduro, who has never enjoyed anything close to a positive approval rating (remember,current approval rating – 13%), felt he needed to do something to boost his popularity. Since he ruled by decree due to the emergency powers that he granted to himself he needed no approval and could impose any conditions he wanted. If you are looking for a good example of the kind of ideas you get when there is no one in the cabinet with an understanding of economics and the president has no experience in economics nor business this is a good one.
When Maduro went to bed the sale price for a flat of 30 eggs was 1,200 bolivares and the cost was 800. In the morning he announced that he was going to lower the price and stressed that he came up with the idea himself and no greedy capitalist could influence him. (or anyone with any common sense) He was doing this for The People Of Venezuela! Effective immediately, including those already in stores, the price of a flat of eggs would be 400 bolivares. Viva La Revolucion!!
I’m sure you already know what’s coming. The retailers,with no other choice, sold off what they had in stock,took the hit, and didn’t order any more eggs. The wholesalers and producers weren’t interested in doing business at a loss either since no subsidies were announced. Almost overnight eggs just disappeared from stores. it did, however, add another item to the list for the “bachequeros” as the black marketers are called.
The producers produced less but commanded a higher price. Those that could afford it paid the higher price charged by the bachequeros so they were OK. The wholesalers and retailers redirected their efforts (no eggs) so after taking the initial financial hit they were OK. As is so often the case with “Socialismo” those hurt most are those it’s supposed to be trying to help.
This is just one of many examples of failed price controls in the Chavismo era. Strangely enough, no matter how many times it fails to produce the desired outcome, they keep coming back to the well of price controls. The reason, it sounds good and plays into the ideology. They can always fall back on the excuse the socialists always trot out there. It would have worked if not for those greedy capitalists!
Despite it’s failures the number of items subject to price controls grew over the Chavista years before reaching a peak of 250. Since the government couldn’t afford to subsidize everything once all the oil revenue dried up (and no more credit) whatever didn’t make the subsidy list made a second list, the shortage list. Until I lived there I had never heard of such a thing. Fedecamaras, the Venezuelan equivalent of The Better Business Bureau, keeps track of this as the government would never expose how many things they had forced to disappear.While there were always some items in short supply, in Venezuela it became completely out of control. Even products that were available morphed from high quality brands to low quality products due to a number of factors we’ll get into later.
To be continued……
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