Tuesday, February 20, 2007
Attention Democrats: Economics in action
Congressional Democrats, who've advocated placing price controls on pharmaceuticals and gasoline, should pay particular attention to what's happening in Venezuela. Steve Verdon checks in:
"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. [Emphasis mine]
"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 Unión Radio on Thursday. 'The difference between real market prices and controlled prices is very high.'"
"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. [Emphasis mine]
"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 Unión Radio on Thursday. 'The difference between real market prices and controlled prices is very high.'"
# posted by Joltin' Django @ Tuesday, February 20, 2007 
