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Venezuela: Socialism and chicken feet
Posted by: McQ on Friday, February 09, 2007

The lesson this week in Venezuela is socialist policies like price controls beget chicken feet:
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 Chavez's administration blames the food supply problems on unscrupulous speculators, but industry officials say government price controls that strangle profits are responsible. Authorities on Wednesday raided a warehouse in Caracas and seized seven tons of sugar hoarded by vendors unwilling to market the inventory at the official price.

Major private supermarkets suspended sales of beef earlier this week after one chain was shut down for 48 hours for pricing meat above government-set levels, but an agreement reached with the government on Wednesday night promises to return meat to empty refrigerator shelves.
You see the two emphasized lines. While Chavez may be right he's noting the "effect". The "cause" is to be found in the second line. Chavez will never acknowledge that and thus the problems will continue.

The official reason for price controls?
Shortages have sporadically appeared with items from milk to coffee since early 2003, when Chavez began regulating prices for 400 basic products as a way to counter inflation and protect the poor.
And the result? Not so good:
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 the Venezuelan broadcaster Union Radio on Thursday. "The difference between real market prices and controlled prices is very high."
Remember my post about Zimbabwe yesterday? Remember this particular paragraph?
Seeking to revive farm production, for example, the government sells gasoline to farmers at a bargain rate of 330 Zimbabwe dollars per liter - and farmers promptly resell it on the black market for 10 times that, leaving their fields idle.
The same dynamic is in place in Venezuela.
Gonzalo Asuaje, president of the meat processors association Afrigo, said that costs and demand have surged but in four years the government has barely raised the price of beef, which now stands at $1.82 per pound. Simply getting beef to retailers now costs $2.41 per pound without including any markup, he said.

"They want to sell it at the same price the cattle breeder gets for his cow," he said. "It's impossible."
Any guess where the beef is actually being sold?

In both cases, there exists a willful ignorance of economics which has the leaders in each country believing that they can become the exception to economic law. As Ludwig von Mises pointed out, economic law is completely blind to the "morality" of price controls. They simply won't work regardless of the intentions of those controlling prices:
"Economics does not say that isolated government interference with the prices of only one commodity or a few commodities is unfair, bad or unfeasible. It says that such interference produces results contrary to its purpose, that it makes conditions worse, not better, from the point of view of the government and those backing its interference. Before government interfered, the goods concerned were, in the eyes of government, too dear. As a result of the maximum price their supply dwindles or disappears altogether. The government interfered because it considered these commodities especially vital, necessary and indispensable. But its action curtailed the supply available. It is therefore, from the view of government, absurd and nonsensical.

If the government is unwilling to acquiesce in this undesired and undesirable outcome and goes further and further, if it fixes the prices of all goods and services of all orders and obliges all people to continue producing and working at these prices and wage rates, it eliminates the market altogether ... The consumers no longer direct production by their buying and abstention from buying: the government alone directs it." (Human Action, p 764)
And we've seen the result in other economies over the last century. Yet somehow this lesson is never learned by the new socialists (neosocialists?) of this century.

So while they plan and implement their new socialist utopias in the teeth of economic law, their people are left with chicken feet.
 
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Previous Comments to this Post 

Comments
excuse my ignorance, but why cany chavez control all the prices from start to finish to get the end price he wants? At what point is there an influencer he cant control?
 
Written By: josh b
URL: http://
Next step: Blame the Jews!
 
Written By: History as Farce
URL: http://
At what point is there an influencer he cant control?
At the point the producer decides he can’t produce at the price point established and quits producing.

See the example about cattle in the story and the empty shelves in the stores.
 
Written By: McQ
URL: http://www.qando.net/blog
And our own left snuggles up to this putz.... Including Hitlery Clinton.
Ponder that for a few... let it sink in.
 
Written By: Bithead
URL: http://
The funny thing is, the dynamic is so clear in food stuffs and commodities, but easily disguised, or more accurately explained away, in services. Think health care where there is no fixed good, like a pound of beef (though debasement by substitution can occur there as well) but the product is steadily degraded relative to what it otherwise would be in a controlled, rationed system. So proponents of massive health care intervention can cite official statistics of the availability of care while queuing, substitution and other measures keep the system afloat.

Now of course much of the Democratic party and an uncomfortable number of Republicans want to do to the pharmaceutical industry what Chavez has done to chicken.
 
Written By: Lance
URL: http://asecondhandconjecture.com
President Hugo Chavez’s administration blames the food supply problems on unscrupulous speculators...
He should issue a myDD Action Alert.
 
Written By: Aldo
URL: http://
OMG no steaks for the Venezuelans? Those DOGS! What a corrupt system they have!

Oh Good Lord, what are you whining about this time, McQ? After all, is this not exactly what you want?

Another ’oil-trophy’ country to ’save for democracy’ from a ’tyrant’? Guys like you are MIC sidemen. You waste your talents to play their stringless old fiddles and wail their same old songs.

Look, Hank, it is his country, not yours. Why do you care, except to ridicule a philosophy you are diametrically opposed to? What was the purpose of your post again, except to acomplish the above statement?

You are an apologist for the Wrongs of the Right. That is why you spare no attempt to attack anything not exactly in line with your hawkish hogwash. Boo!

External market forces who ’loath’ lefties like Chavez undermine the Venezuelan economy in subtle ways this article never touches. Sources? Honestly, disproving your skewered POV is not high on my lists of Things to Do today.

I’ll leave that chore to the brighter minds here...
 
Written By: Rick Day
URL: http://goplobby.org
Why does he care? Uhhh because if some people here in teh US had their way we would be doing exactly what he is. Thats why we care.
 
Written By: josh b
URL: http://
Rick Day, who has now run out of facts to support Chavez, has taken to insult anyone who points out Chavez’s failures.

First was denial. Now it’s anger. Pretty soon will come bargaining, then depression, finally acceptance.
 
Written By: steverino
URL: http://steverino.journalspace.com/
I gotta admit, Rick Day just made MK look coherent....hell, he even made Erb seem reasonable
 
Written By: shark
URL: http://
It’s been ages since I’ve seen the movie, so I no doubt misremember the scene a bit, but all this pulling numbers out of the air and stamping them on the price tags of various commodities reminds me of Woody Allen’s Bananas when the dictator is droning on and on, decree after decree, and announces, essentially in passing, something along the lines of: Effective tomorrow, all children under the age of 18 (pregnant pause, at least in my recollection) will be 18.

I thought that was a perfect and perfectly hilarious depiction of someone drunk on power, taking it entirely for granted that reality awaited and would immediately conform to his directive. And just imagining the whole apparatus of government scrambling to support that delusion, and the dazed citizenry accommodating it as best they could – it really cracked me up.

Shame, though, that this kind of schtick remains so popular in real life, where it isn’t nearly as funny.
 
Written By: Linda Morgan
URL: http://
First was denial. Now it’s anger. Pretty soon will come bargaining, then depression, finally acceptance.
Uh, no. Going from step two to step three assumes some level of critical thinking and rationality and that’s never been evident in Rick’s comments.

But he is entertaining.
 
Written By: McQ
URL: http://www.qando.net/blog
Did anyone predict riots in Venezuela in 2007?
 
Written By: Harun
URL: http://
Honestly, disproving your skewered POV is not high on my lists of Things to Do today.
I think that should read
Honestly, disproving your skewered POV is top on my lists of Things I Do Not Have the Ability to Do today.
since that would involve complete sentences and coherent paragraphs.
 
Written By: Robb Allen
URL: http://blog.robballen.com
Hasn’t it occurred to the collectivists that attempting to repeal the law of supply and demand works about as well as attempts to repeal the law of gravity?

Heck, they’re both only theories...but you still end up on your butt.
 
Written By: blackwing1
URL: http://
Note Ricks concern for the people of Venezuela
Look, Hank, it is his country, not yours. Why do you care, except to ridicule a philosophy you are diametrically opposed to? What was the purpose of your post again, except to acomplish the above statement?
Got that it is his country, not yours so if he wants to visit economic disaster and physical misery upon the citizens of that country well I guess that is just to bad. After all it is his country.
 
Written By: TJIT
URL: http://
Got that it is his country, not yours so if he wants to visit economic disaster and physical misery upon the citizens of that country well I guess that is just to bad. After all it is his country.
The logic is that the Venezuelans are "his" people, so Chavez can do to them them what he wants. (Jimmy Carter sprinkled holy water on his regime, after all).

By this logic, the plight of the Venezuelans under Chavez is not a legitimate subject for discussion on a blog any more than the plight of your neighbor’s starving dog.

The irony, though, is that most liberals would consider the plight of a starving dog a legitimate subject of concern.
 
Written By: Aldo
URL: http://
The logic is that the Venezuelans are "his" people, so Chavez can do to them them what he wants. (Jimmy Carter sprinkled holy water on his regime, after all).
And obviously Rick buys into that bit about essentially "owning" Venezuela’s people and thus having the right to do what he wishes. Can’t say I’m surprised.

Given Rick’s crackpot argument,’nuff said.
 
Written By: McQ
URL: http://www.qando.net/blog
their people are left with chicken feet.
That’s a bad thing?
 
Written By: Mark A. Flacy
URL: http://
At one time it was considered a sign of liberal/left enlightenment to care about people less fortunate than themselves, even if they lived overseas. people might disagree about the way to help other people, and even argue that you didn’t really care about other people because they couldn’t accept that people held opposing views in good faith.

Unfortunately Rick demonstrates something I have heard more and more from the left, the very idea of having concerns about the welfare of people overseas is suspect. The sovereignty of every dictator in the world trumps all other concerns, and Rick has now unbelievably asserted that sovereignty extends to our thoughts as well. Chavez now owns the territory in our minds that might consider the fate of Venezuelans as worthy consideration. I guess Rick has been given the okay by the crazy totalitarian thug so his thoughts are to roam as they will.

I guess that might even explain what Rick must mean by by his implication of some hawkish aims to your post. he considers it an illegal invasion an attack.

He is just saying you need to apply for your intellectual visa McQ.
 
Written By: Lance
URL: http://asecondhandconjecture.com
Rick Day hates brown people. He doesn’t CARE about their well-being.

Rick is a racist. RACIST. Call him for what he is.

Rick Day = Nazi
 
Written By: True Social Justice
URL: http://
Got that it is his country, not yours so if he wants to visit economic disaster and physical misery upon the citizens of that country well I guess that is just to bad. After all it is his country.
The logic is that the Venezuelans are "his" people, so Chavez can do to them them what he wants. (Jimmy Carter sprinkled holy water on his regime, after all).
So to extend that logic, we don’t have to bother with Darfur, or any humanitarian relief following a tsunsmi, earthquake etc etc. because they’re not "our" people.

Interesting....
 
Written By: shark
URL: http://
...the very idea of having concerns about the welfare of people overseas is suspect.
Selective Lance, not suspect. We must have concerns about the welfare of Palestinians for example. We had concerns about the welfare of South Africans under PM’s Vorster and Botha and Chileans under Pinochet.

Humm... Vorster & Pinochet bad bad bad; Castro & Chavez must not comment. All lip service aside, it is not autocratic states that the left objects to, it is non-socialist autocracies that get the panties in such a twist.
 
Written By: bains
URL: http://
External market forces who ’loath’ lefties like Chavez undermine the Venezuelan economy in subtle ways this article never touches. Sources? Honestly, disproving your skewered POV is not high on my lists of Things to Do today.
Rick, why don’t you just prove your point by noting how the USSR won the Cold War.
 
Written By: Don
URL: http://
And cake.... make sure there’s lots of cake...
 
Written By: Bithead
URL: http://
excuse my ignorance, but why cany chavez control all the prices from start to finish to get the end price he wants? At what point is there an influencer he cant control?
There are two reasons he can’t control all of the prices:

1) We live in a global market, he can only control the prices in his country.

2) He can’t control the prices in his country without creating a black market where, by definition, he can’t control prices. See the former USSR and our drug war for examples.

But, if he could control all prices, it wouldn’t work. He would have to know what the price should be, and there is no way for him to know that*. The problem is called the "economic calculation problem", and it is the key problem that resulted in the failure of the USSR to compete economically with the US.

Essentially, in a free market prices indicate how resources should be allocated. Controlling prices destroys the information of how resources should be allocated.

*Some socialists propose using computers to ’solve’ this problem, but it isn’t clear that even in principle that would work.
 
Written By: Don
URL: http://

 
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