Bob Adelmann writes for The New American about price controls put in place by Venezuelan President Hugo Chavez.
Prices are going through the roof in the South American country and it’s all the fault of the hoarders according to Chavez. So while the dictator figures he’ll nip this in the bud with price controls, citizens are lined up to buy necessities that they can—hoard.
Adelmann writes,
The fact that the government’s central bank has doubled the money supply over the past four years has nothing to do with prices going up, according to Chavez. With price inflation running at an annual rate approaching 30 percent, the President prefers to blame the consumer and ignore the natural consequences of the government’s actions. Karlin Granadillo, who heads up the price control agency, said, “The law of supply and demand is a lie. These are not arbitrary measures. They are necessary.”
Like all inflating governments, Chavez has put currency controls in place leaving Venezuelans no choice–spend the depreciating currency as fast as possible.
Adelmann cites Murray Rothbard who wrote, “In every age, in every culture, price controls have never worked. They have always been a disaster.”
Dictators never learn, they can’t overturn economic law.
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The next step is to impose outrageous, draconian penalties for violating the price controls.
How many times does humanity have to go around this particular carousel?
The law of supply and demand is a lie. Next, we refute gravity AND the heliocentric model of the solar system. I love totalitarian rulers, so much ignorance packed into one tiny little space!
They are right because even if they are not they can still kill you and your family.
I’m brazilian and someday in a Economics undergraduate class, my professor said the brazilian price controls never worked because of all the reasons we all know and I was happy. So, at the end of the class I got to him and said: “Price controls never work, isn’t it true?”. Returning to the keynesian statist side of the Force, he answered: “Oh, no, just because we are brazilians and we don’t know how to do things, maybe they would work in United States”.
Your prof was giving undue respect to the supposed competence of people he thought were superior. Well, guess what. There are no superior beings. Brasilians know full well how to do things for themselves, just the same as other Americans. There is no magic power imparted only to those who are born to the north of you, just as there is no magic power imparted to those born to the south, west or east of Brasil either. The prof needs to get up of his intellectual knees…
Cheers
Sione
Lisa, in this house, we obey the law of gravity!
Love the reference, but Homer actually says “…we obey the law of thermal dynamics!”
Quality, nonetheless…
http://3.bp.blogspot.com/_djgssszshgM/TMVZayzaxVI/AAAAAAAABMk/JvfppgNTV-0/s1600/prices+in+venuzuela.JPG
” I´m from Venezuela. And this picture shows the kind of things you find when you go to a Mercado Bicentenario in Venezuela (which is the new name of a chain of private markets -Cada and Exito- recently expropiated and now runned by the Government).
This one is from Mercado Bicentenario, in Centro Comercial Ciudad Tamanaco (CCCT), a mall, in Caracas, Venezuela.
It says:
Description of the product: Diana Oil.
Fair Price: 4,73 Bfs.
Capitalist Price: 7 Bfs.
% of savings: 32%.”
originally from Mankiw’s blog
Unbelievable! Ignorance is the opiate of the masses and its rulers.
Rising prices prevents hoarding, if the market is free. Inflation caused by central bankers and governments is why people spend cash as quickly as they can.
The sick part of all of this is that the central banking cartels in all countries are controlling the price of capital through the interest rates. This leads to shortages of savings. We see this in the USA and EU today where consumers are indebted and have stopped saving because of the artificially low interest rates.
Prices are through the roof in America and it’s all the fault of the hoarders according to Chavez, so while authoritarian figures he would nip this in the bud by the price control that people are lined up to buy essential to them. he was able to accumulate.
How far away are we from this happening in America? (I wasn’t around in the early 70′s for the Whip Inflation Now government activities.)
You don’t lose for waiting, my friend. It will be awesome.
Of course it isn’t really Chavez vs. Rothbard, it is Chavez vs. the Venezuelan people.
I think this dictator has a pretty good grasp of economic law. He prints money and uses it to benefit himself, his family and his friends. Strangers whom he has never met then complain that they can’t afford anything and he uses it as an excuse to nationalize (i.e. steal) more businesses and assume more and more control over private businesses and private wealth.
To view the situation in Venezuela as a lack of knowledge or a failure of ideology is to misunderstand human behavior. Chavez is acting purposefully in a way which benefits himself and the people whom he cares about most.
The lack of knowledge is on the part of any Venezuelan who thinks that a government of any kind will work for the public benefit and not for the personal benefit of those who control the government.
I agree, he knows exactly what he’s doing.
But like a savage he chokes the goose to death rather than gently pluck the feathers over a long period of time.
Why should he keep the goose alive? Once he has gathered all the golden eggs he can, he and his eggs , will retire somewhere else. All that is required is an utter indifference to the fate of Venezuelans.
I have a feeling that Chavez will believe that there’s gotta be just one more golden egg for him to gather. I recall two dictators, in the last 10 years, who stayed WAY past their welcome and couldn’t get out in time: Qaddafi and Hussein.
If Chavez retired after totally privatizing the Venezuelan government (e.g. by selling all government assets or even by organizing it into a privately-traded joint-stock company), then he could retire in Venezuela. Hell, he could become the CEO of Compañía de Defensa de Venezuela. But, I won’t be holding my breath.
Wouldn’t hoarding bring prices down?
In the long run, potentially. But in the short term there is a spike in the demand. If there is a higher demand than supply, prices will rise. But here is the case, as prices continue to rise, people will start potentially hoarding more.
Spike in demand for what? When people hoard, they have decided to hold onto their money, instead of going out to spend. Shouldn’t this decrease in money in the market bring prices down? How can a merchant increase his prices when there is now less money flowing through the market?
People are hoarding goods, not money. As a matter of fact, “hoarding” applied to money is really just “saving”. Keynesian economics is the only place where you’ll consistently find “saving” referred to as “hoarding”, at least in my experience.
Of course Chavez (by his actions) shows he does not believe his own doctrines.
If government can simply declare its fiat money worth X by passing regulations (and sending people to prison if they break these regulations) then why is Chavez so desperate to have the Venezuelan gold reserves physically moved to the country (the first shipment has already arrived from London).
If “money” is whatever government says it is, and if the value of money (in terms of prices) is whatever government says it is (the doctrine of Chavez) then why is Chavez so desperate for gold? Why not just use this metal to make public toilets for the workers ? As “Lenin” promised.
Chavez is a hypocrite.
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