more price controls in action

In a hilarious article, it is being reported that Venezuela is going to import 50M rolls of toilet paper. When one sees headlines like this, the first thought that should run through their head is “price controls”. 10 out of 10 times they will be correct. The sure fire signs of price controls are lines and shortages. From the article:

Patience is wearing thin among consumers who face shortages and long lines at supermarkets and pharmacies. Last month, Venezuela’s scarcity index reached its highest level since 2009, while the 12-month inflation rate has risen to nearly 30 percent. Shoppers often spend several days looking for basic items, and stock up when they find them.

Of course the reason is price controls. Everywhere and always they cause shortages. This is because people consume more of something the lower the price is. At a price lower than the natural market price, more people want to consume that good than there are goods to go around. If you had a pizza with 10 slices, 10 people in line, and told everyone that each slice was 10 cents, how much would the last person get? Multiply that by 2.9 million and you have Venezuela.

The US imposed price controls in the 1980s on gasoline. Price controls were placed on gasoline after hurricane Katrina. Soviet Russia and Red Germany set prices. The results were always the same: long lines and harsh shortages. The government creates this misery.

And now for the funniest line of the article:

President Nicolas Maduro, who was selected by the dying Hugo Chavez to carry on his “Bolivarian revolution,” claims that anti-government forces, including the private sector, are causing the shortages in an effort to destabilize the country.

The scary “lets run them out of toilet paper” plot.

Also remember this news story.

About christopher fisher

The blog is meant for educational/entertainment purposes. All material can be used and reproduced in any length for any purpose as long as I am cited as the source.
This entry was posted in Econ 101, Economics, Goverment. Bookmark the permalink.

One Response to more price controls in action

  1. Pingback: price controls topple regime | reality is not optional

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