Venezuelan President Hugo Chavez has this ridiculous idea that inflation is the fault of traders, distributors, and shop keeps. To Chavez, inflation happens because prices go up, not because the value of the currency is falling. Some eight years ago, Chavez attempted to implement price controls. When certain producers were unwilling to continue selling at what they considered a low price, he expropriated some of them (including the U.S. based food corporation, Cargill).
The August 20th issue of The Economist reports that he has decreed that inflation is illegal as well and has set up a commission to determine the "fair price" of many goods and services. The concept of a fair or just price is not new, Saint Thomas of Aquino determined that charging over the costs of production is immoral in the thirteenth century! This idea has waned considerably in the past seven to eight centuries. Naturally, any attempts to fix a price below equilibrium price will cut supply. This has already been happening in recent years, and it will become very bad again. So what could be responsible for this idiocy? Chavez has elections next year, and of course, it's hard even for a dictator to be elected in a fake election with inflation at 100%.
So how do you get rid of inflation? Outlaw it, duh!
I can't wait to see how much the government will have to shell out to subsidize food this year, just to make it look as though there aren't shortages. This is a perfect example of how governments can completely mess up economies. Venezuela has so many resources, and that is precisely why the Chavez government has been enabled to perform so poorly. Despite their resources, they will undergo shortages just because of TERRIBLE policies. Woe to the Venezuelan peoples who not only have to bear with a repressive and idiotic Chavez regime, but also have all of their resources wasted on his programs. When the oil is gone, and they do not have much to show for it, they will look back on decisions like this and cringe.
This is the first in my (hopefully infrequent) idiotic economics series.
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| (photo: Guillermo Ramos Flamerich) |
The August 20th issue of The Economist reports that he has decreed that inflation is illegal as well and has set up a commission to determine the "fair price" of many goods and services. The concept of a fair or just price is not new, Saint Thomas of Aquino determined that charging over the costs of production is immoral in the thirteenth century! This idea has waned considerably in the past seven to eight centuries. Naturally, any attempts to fix a price below equilibrium price will cut supply. This has already been happening in recent years, and it will become very bad again. So what could be responsible for this idiocy? Chavez has elections next year, and of course, it's hard even for a dictator to be elected in a fake election with inflation at 100%.
So how do you get rid of inflation? Outlaw it, duh!
I can't wait to see how much the government will have to shell out to subsidize food this year, just to make it look as though there aren't shortages. This is a perfect example of how governments can completely mess up economies. Venezuela has so many resources, and that is precisely why the Chavez government has been enabled to perform so poorly. Despite their resources, they will undergo shortages just because of TERRIBLE policies. Woe to the Venezuelan peoples who not only have to bear with a repressive and idiotic Chavez regime, but also have all of their resources wasted on his programs. When the oil is gone, and they do not have much to show for it, they will look back on decisions like this and cringe.
This is the first in my (hopefully infrequent) idiotic economics series.
The Dream Academy - "Please Please Please Let Me Get What I Want"
How French Revolution! They only have to add execution for "hording"!
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