Venezuela Sets Price Controls on Toilet Paper, Causes Shortage
September 23rd, 2013
In recent months, Venezuela’s socialist-leaning government has been systematically dismantling its own economy. First, the South American nation’s central bank began devaluing its currency, leading to massive inflation. As prices for basic necessities like food and groceries surged in response, the government reacted by fixing the prices of those goods, leading to shortages.
Now, citizens in Venezuela struggle to find grocery items, hospitals are running out of basic supplies, and major cities are experiencing power outages. To make matters worse, the government even fixed the price of toilet paper, causing a supply failure. Venezuelan President Nicolás Maduro then sent in the National Guard to seize a toilet paper factory, accusing the private company Manpa, which operates the facility, of hoarding bathroom tissue.
Nicolás Maduro Plays the Blame Game
Venezuelan President Nicolás Maduro’s socialist policies are destroying his country. First of all, efforts to devalue the nation’s currency have thrown civil society into chaos, as Venezuela’s central bank has changed presidents thee times this year alone. Currency devaluation led to surging prices in consumer goods, which were then blamed on businesses, even though the companies were merely adjusting prices to keep up with runaway inflation. In response, the government fixed the prices of certain grocery items, resulting in severe shortages.
When toilet paper began disappearing from shelves, government officials blamed the crisis on a media conspiracy to create false demand. Manufacturers were also accused of hoarding toilet tissue. President Maduro expressed his belief that his nation’s woes are America’s fault, alleging that the US is engaging in a conspiracy to disrupt Venezuela’s economy on purpose.
Venezuela’s Government Is Putting on a Clinic on What Not to Do to the Economy
Price controls fundamentally do not work. When the government sets a maximum price on a good or service, manufacturers of those products still face rising costs from suppliers. This necessarily forces companies to slow down production. As shortages emerge in the supply of a particular good, existing inventories begin to rise even further in price, as wealthy people will pay high prices for toilet paper, for example, when there isn’t enough to go around.
It’s worth noting that, while Maduro’s socialist policies have caused shortages in basic provisions needed by the poor, they have also stimulated record highs in the nation’s stock market. This is significant when one considers that the US stock market is sitting in record territory after the Fed announced that it would not begin tapering off of quantitative easing this month.
Wealthy financiers are doing just fine under Maduro’s version of socialism. The poor, however, are the true victims of Venezuela’s experimental tinkering. Plagued by rolling blackouts and food shortages, the people of Venezuela can’t even count on a sanitary trip to the restroom anymore.
Sadly, Venezuela’s government has given new meaning to the concept of reducing a currency to the value of “toilet paper.”
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